Delhi District Court
Dharam Singh vs Lal Babu Shah on 3 March, 2025
IN THE COURT OF SH. ABHISHEK GOYAL, ADDITIONAL
SESSIONS JUDGE-03, CENTRAL DISTRICT, TIS HAZARI
COURTS, DELHI
CNR No.: DLCT01-002760-2024
CRIMINAL APPEAL No.: 62/2024
DHARAM SINGH,
S/o. Shri. Chunni Lal,
R/o. H. No. 100, Gali No. 5/6,
Near Hanuman Mandir,
Sangam Vihar, Wazirabad,
Burari, Delhi. ... APPELLANT
VERSUS
LAL BABU SHAH,
S/o. Shri. Ram Lakhan Shah,
R/o. Khasra No. 29/16/2, Gali No. 9,
Surender Colony, Part-II,
Jharoda Mazra, Burari,
Delhi. ... RESPONDENT
Date of Institution : 23.02.2024
Date when judgment was reserved : 20.01.2025
Date when judgment is pronounced : 03.03.2025
JUDGMENT
1. The present appeal has been preferred under Section 374 of the Code of Criminal Procedure, 1973 (hereinafter, referred to as 'Cr.P.C.') against the judgment dated 11.12.2023 (hereinafter referred to as 'impugned judgment'), passed by learned Metropolitan Magistrate-05/Ld. MM-05 (NI Act), Central, Tis Hazari Courts, Delhi (hereinafter referred to as the 'Ld. Trial Court/Ld. MM Court') in case bearing; "Lal Babu Shah v. Dharam Singh, CC No. 13519/2017", convicting the appellant for the offence punishable under Section 138 Negotiable Instrument Act, 1881 (hereinafter referred to as the 'NI Act'), and the consequent order of sentence dated 24.01.2024 CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 1 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.03.03 16:41:13 +0530 (hereinafter referred to as 'impugned order'), passed by the Ld. Trial Court, awarding the appellant; simple imprisonment for a period of 01 (one) month and fine to a tune of Rs. 3,55,000/- (Rupees Three Lakhs Fifty Five Thousand only) along with simple interest to be computed at the rate of 9% (nine percent.) per annum as quantum of loss and reasonable amount of litigation cost suffered by the prosecution for more than six years, to be paid as compensation by the appellant to respondent/complainant, and in default of payment of fine/compensation, the appellant, being further directed to undergo simple imprisonment for a further period of 03 (three) months (hereinafter impugned judgment and impugned order are collectively referred to as the 'impugned judgment and order'). 2.1. Pithily put, the genesis of the present proceedings is the complaint, filed by the respondent/complainant before the Ld. Trial Court in terms of the provisions under Section 138 of NI Act. Under the said complaint, the respondent inter alia asserted that the respondent and appellant were acquainted with each other for quite some time and that in August 2016, the appellant was in heavy financial crises. At that point in time, the appellant is asserted to have approached the respondent with a proposal for friendly loan to a tune of Rs. 2,25,000/- (Rupees Two Lakhs Twenty Five Thousand only), without interest. As per the respondent, convinced with the insistence of the appellant as well as the fact of their acquaintance, the respondent loaned a sum of Rs. 2,25,000/- (Rupees Two Lakhs Twenty Five Thousand only) to the appellant against Receipt-cum-Undertaking dated 10.08.2016 (hereinafter referred to as the 'loan receipt/undertaking/receipt-cum-undertaking'). Notably, under the undertaking, the appellant is proclaimed to have inter alia CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 2 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date: 2025.03.03 16:41:18 +0530 undertaken to repay the said amount to the respondent on or before 31.08.2017, failing which, the appellant further conceded that he would be liable to further pay an interest @ 12% (twelve percent) per annum on the said amount/principal amount.
Relevantly, the respondent further avowed under his complaint that he demanded his money from the appellant and approached him for the repayment of his loan, whereupon the appellant issued a cheque bearing no.; 058561, dated 18.08.2017 for a sum of Rs. 2,25,000/- (Rupees Two Lakhs Twenty Five Thousand only), drawn on Oriental Bank of Commerce, Shalimar Bagh, Delhi-110052 branch (hereinafter referred to as the 'cheque in question/dishonoured cheque'), to the respondent. 2.2. As per the complainant/respondent, the appellant, at the time of issuance of the cheque in question had assured the complainant/respondent that the same would be honored upon presentation. Subsequently, on the assurance of the appellant, the respondent presented the cheque in question with his banker, i.e., ICICI Bank, Sant Nagar, Main Road, Burari, Delhi-110007 branch for encashment. However, the same was returned, dishonoured with the remarks, "Funds Insufficient" vide return memo dated 31.08.2017 (hereinafter referred to as the 'cheque dishonour memo/cheque return memo'). Consequently, the complainant/respondent issued a legal demand notice dated 23.09.2017 (hereinafter referred to as the 'demand notice/legal demand notice') to the appellant in terms of the provisions under Section 138 NI Act. However, despite the same, no payment was made by the appellant to the respondent. Ergo, under such circumstances, the respondent filed the aforenoted complaint in terms of the provisions under Section 138 NI Act before the Ld. Trial Court.
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 3 of 44
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ABHISHEK GOYAL
GOYAL Date:
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2.3. Notably, consequent upon pre-summoning evidence by way of affidavit having been tendered by the respondent and thereupon, Ld. Trial Court's taking cognizance of the offence under Section 138 NI Act on 03.11.2017, summons was issued to the appellant/accused. Subsequently, upon the appellant entering appearance before the Ld. Trial Court, notice under Section 251 Cr.P.C. was framed against him vide order dated 01.08.2018, to which, the appellant plead not guilty and claimed trial. Correspondingly, the appellant admitted the cheque dishonour memo [Ex. CW1/C] and postal/courier receipts [Ex. CW1/E] on the said date, in terms of the provisions under Section 294 Cr.P.C. Relevantly, during the course of trial, the respondent examined himself as CW-1 as well as tendered his Evidence by way of Affidavit as CW-1/1, besides proved/adduced documents, i.e., Original receipt-cum-undertaking dated 10.08.2016 (Ex. CW1/A); Original cheque bearing no.; 058561, dated 18.08.2017 for a sum of Rs. 2,25,000/- (Rupees Two Lakhs Twenty Five Thousand only), drawn on Oriental Bank of Commerce, Shalimar Bagh, Delhi-110052 branch (Ex. CW1/B); Original cheque return memo dated 31.08.2017 (Ex. CW1/C); Copy of Legal Notice/demand notice dated 23.09.2017 (Ex. CW1/D); Original postal/courier receipt (Ex. CW1/E); tracking receipt (Ex. CW1/F); and original returned registered AD ( Ex. CW1/G). Correspondingly, the complainant/respondent further summoned/produced, Mr. Ramnath as CW-2. Subsequently, on conclusion of the complainant's/respondent's evidence, statement of the appellant was recorded in terms of the provisions under Section 313/281 Cr.P.C. on 14.07.2022. Strikingly, at the time of recording of appellant's statement under Section 313/281 Cr.P.C., the appellant proposed to lead defence evidence, with the Ld. CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 4 of 44 Digitally signed ABHISHEK by ABHISHEK GOYAL GOYAL Date: 2025.03.03 16:41:26 +0530 Trial Court, whereupon, the appellant entered as witness (DW-1) as well as produced/summoned, Ms. Sunita as DW-2. Needless to mention, subsequently, arguments were addressed by/on behalf of the appellant and the complainant/respondent before the Ld. Trial Court, whereupon conclusion of arguments on behalf of the parties, as aforementioned, the Ld. Trial Court vide impugned judgment and order, while holding the appellant guilty of the offence punishable under Sections 138 NI Act, sentenced him in the manner, as noted hereinabove.
3.1. Learned Amicus Curiae1 for the appellant 1 Relevantly, subsequent to the reference of the parties before the Delhi Mediation Centre, Tis Hazari Court by this Court vide order dated 01.04.2024, the appellant and the respondent executed a Mediation Settlement Agreement on 04.04.2024. However, subsequently, the appellant failed to abide by the terms of said settlement, as submitted by/on behalf of the respondent on 10.05.2024 and 27.05.2024. Subsequently, on 31.05.2024, the appellant's sister, namely, Ms. Sunita, entered appearance before this Court (though appellant did not appear before this Court) and undertook to pay a sum of Rs. 70,000/- (Rupees Seventy Thousand only) to the appellant, which was paid on 05.06.2024 with an undertaking to pay further sum of Rs. 70,000/- (Rupees Seventy Thousand only) to the respondent. However, subsequently, on 15.07.2024, no payment was made by/on behalf of the appellant. On the contrary, subsequently, on 23.07.2024, fresh vakalatnama was filed by the newly engaged counsel for the appellant and again on 23.08.2024, fresh vakalatnama was again filed by/on behalf of the appellant by his newly engaged counsel. Thereupon, on 23.09.2024, neither the appellant was present nor was he represented, leading to appointment/nomination of Amicus Curiae on behalf of the appellant. Subsequently, on 08.10.2024, 20.11.2024, 07.12.2024, 24.12.2024 and 20.01.2025, the appellant opted not to appear before this Court. Even the newly engaged counsel did not enter appearance. Accordingly, arguments in the instant case were addressed by Ld. Amicus Curiae on behalf of the appellant and the matter was reserved for judgment/orders. At this stage, this Court deems it pertinent to make a reference to the decision of the Hon'ble Supreme Court in Surya Baksh Singh v. State of U.P., (2014) 14 SCC 222, wherein the Hon'ble Court in a situation akin to the present, observed;
"17. The criminal justice delivery system is being held to ransom by convicts who have developed the devious and dishonest practice of escaping punishment or sentence by filing appeals, obtaining bail or suspension of sentence and thereafter disappearing beyond the reach of the arms of the law. The inherent powers under Section 482 CrPC, which the Supreme Court has on several occasions expounded to have existed from time immemorial, predating the present as well as the previous CrPC, must be pressed into action lest the already fragile policing and prosecuting branches of governance are rendered redundant. Since Section 482 CrPC was not considered by either of the three-Judge Benches of this Court, we have not found it necessary to resort to recommending the matter for being laid before a larger Bench. The facts and pronouncement in Bani Singh [Bani Singh v. State of U.P., (1996) 4 SCC 720: 1996 SCC (Cri) 848: AIR 1996 SC 2439] cannot be extrapolated to the factual matrix before us. On the contrary the opinion in Ram Naresh Yadav [Ram Naresh Yadav v. State of Bihar, (2014) 14 SCC 238: AIR 1987 SC 1500: 1987 Cri LJ 1856] as well as in Kishan Singh [Kishan Singh v. State of U.P., (1996) 9 SCC 372: 1996 SCC (Cri) 1010:
1992 Supp (2) SCR 305] are available to us to ensure that preventive action is devised to combat the abuse of court process so that facilitative steps are taken to secure the ends of justice.***24. It seems to us that it is necessary for the appellate court which is confronted with the absence of the convict as well as his counsel, to immediately proceed against the persons who stood surety at the time when the convict was granted bail, as this may lead to his discovery and production in court. If even this exercise fails to locate and bring forth the convict, the appellate court is empowered to dismiss the appeal. We fully and respectfully concur with the recent elucidation of the law, profound yet perspicuous, in K.S. Panduranga v. State of Karnataka [K.S. Panduranga v. State of Karnataka, (2013) 3 SCC 721: (2013) 2 SCC (Cri) 257: (2013) 1 SCC (L&S) 791]. After a comprehensive analysis of previous decisions our learned Brother had distilled the legal position into six propositions: (SCC p. 734, para 19)***"19.1. that the High Court cannot dismiss an appeal for non-prosecution simpliciter without examining the merits;***19.2. that the Court is not bound to adjourn the matter if both the appellant or his counsel/lawyer are absent;***19.3. that the court may, as a matter of prudence or indulgence, adjourn the matter but it is not bound to do so;***19.4. that it can dispose of the appeal after perusing the record and judgment of the trial court .***19.5. that if the accused is in jail and cannot, on his own, come to court, it would be advisable to adjourn the case and fix another date to facilitate the appearance of the appellant-accused if his lawyer is not present, and if the lawyer is absent and the court deems it appropriate to appoint a lawyer at the State expense to assist it, nothing in law would preclude the court from doing so; and***19.6. that if the case is decided on merits in CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 5 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date: 2025.03.03 16:41:30 +0530 vehemently contended that the impugned judgment and order were passed by the Ld. Trial Court on mere conjunctures, surmises and in contravention of the settled principles of law, deserving their setting aside at the outset. Ld. Counsel further submitted that the Ld. Trial Court failed to appreciate that in the instant case, there are numerous yawning holes in the case put forth by the respondent/complainant and that the respondent's story does not inspire confidence, nor appeals to the senses of a prudent man. In this regard, Ld. Amicus Curiae further submitted that the Ld. Trial Court failed to appreciate that the appellant, in his statement recorded under Section 313 Cr.P.C., asserted that he had taken only Rs. 50,000/- (Rupees Fifty Thousand only) as loan from the respondent, however, despite repeated requests, the respondent failed to return the original cheque. Correspondingly, it was averred that the Ld. Trial Court failed to appreciate that in the instant case, there are no specific allegations against the appellant, besides the respondent has failed to produce any document(s)/material on record to prove that the appellant has taken loan from the respondent. Further, as per the Ld. Amicus Curiae, the Ld. Trial Court failed to consider that the respondent had taken signatures on blank paper as the appellant as illiterate.
3.2. Ld. Amicus Curiae for the appellant further vigorously argued that the Ld. Trial Court did not even consider that the respondent failed to give any detail of the alleged loan, against which the cheque in question was given by the appellant to the respondent. Further, as per Ld. Amicus Curiae, the Ld. Trial Court failed to evaluate the evidence placed on record, the absence of the appellant, the higher court can remedy the situation."..." (Emphasis supplied). Reference is further made to the decision in; Kabira v. State of U.P., 1981 Supp SCC 76, wherein the Hon'ble Supreme Court inter alia observed, "...The appeal could not be dismissed by the learned Judge for default of appearance. If the appellant was not present, the learned Judge should have appointed some advocate as amicus curiae and then proceeded to dispose of the appeal on merits..." (Emphasis supplied).
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ABHISHEK GOYAL
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meticulously, on the contrary, passed the order of conviction mechanically, without appreciating the evidence brought forth and the statements/evidence of defence witnesses. Even otherwise, as per Ld. Amicus Curiae, no finding qua the financial capacity of the appellant to give huge loan amount was brought forth on record. It was further contended by Ld. Amicus Curiae that the Ld. Trial Court also failed to appreciate that in the cross examination of the complainant/respondent, the appellant was able to rebut the presumption of 139 NI Act and had further put forward his/appellant's case/defence, as mandated under law on preponderance of probabilities. Accordingly, Ld. Amicus Curiae for the appellant submitted that not only did the Ld. Trial Court failed to consider the truth of circumstances and passed the impugned judgment in haste, rather, did not properly appreciate/examine the facts of the present case, wrongly holding the appellant guilty of the aforementioned offences. Even otherwise, as per the Ld. Amicus Curiae for the appellant, the impugned order on sentence was passed by the Ld. Trial Court, inconsiderate of the correct factual scenario, awarding an exorbitant sentence and order of compensation against the appellant. In this regard, it was strenuously contended that the appellant was unwell/medically unfit and first-time offender, with no other cases pending against him or registered against him in any court of law. Further, as per the Ld. Amicus Curiae, the appellant is solely liable for the take care/look after of his family members, which factors were not considered by the Ld. Trial Court while passing the impugned order on sentence. Consequently, the Ld. Amicus Curiae for the appellant inter alia prayed that the present appeal be allowed, and the impugned judgment and order be set aside, and the appellant be acquitted of CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 7 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.03.03 16:42:03 +0530 the alleged charges. In the alternate, Ld. Amicus Curiae for the appellant prayed that the appellant be entitled to the benefit of probation, by adopting a reformative approach.
4. Per contra, Ld. Counsel for the respondent submitted that the impugned judgment and order were passed by the Ld. Trial Court after due appreciation of the facts and circumstances of the case as well as in consonance with the settled judicial precedents. Even otherwise, Ld. Counsel outrightly contended that the instant appeal has been filed by the appellant with a sole motive to delay compliance of the impugned judgment and order, besides cause undue harassment to the complainant/respondent. Further, as per the Ld. Counsel, the appellant is guilty of persistently playing a fraud upon this Court as well as the Ld. Trial Court, as manifest from his conduct of neither surrendering before the Ld. Trial Court nor complying with the repeated undertakings tendered before this Court as well as to the respondent. As per the Ld. Counsel, the appellant preserved to buy time by mediating with respondent, however, not abiding by the terms of said settlement, besides avoiding appearance before this Court despite repeated adjournments, exemptions and issuance of process(es) for appearance, disentitling him to seek any indulgence/relief from this Court. Even otherwise, as per the Ld. Counsel, even on merits, the appellant has wrongly/falsely contended that the dishonoured cheque was not filled by him or that there was no legally recoverable debt or liability due and payable by the appellant to the respondent. Ld. Counsel further submitted that the appellant further made contradictory and conflicting statements at different stages during trial, which are sufficient to prove appellant's malaise, besides the appellant, besides only denying the receipt CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 8 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.03.03 16:42:07 +0530 of legal notice, opted not to lead any evidence in support of his said averment. Even otherwise, it was fervently argued by the Ld. Counsel that the appellant has been unable to rebut the presumption under Section 139 NI Act, even on preponderance of probabilities. Ld. Counsel further strenuously reiterated that the facts and circumstances put forth as well as the evidence placed on record, unerringly point out towards the guilt of the appellant and that no fault can be attributed to the finding of the Ld. Trial Court, which is based on proper appreciation of facts as well as law. Lastly, as per the Ld. Counsel, the evidence/witnesses tendered by the appellant in support of his case are also grossly unreliable and do not support the version put forth by the appellant. Accordingly, Ld. Counsel for the respondent contended that the present appeal deserves to be dismissed at the outset, as grossly malicious and devoid of merits.
5. The arguments of Ld. Amicus Curiae for the appellant as well as that of Ld. Counsel for the complainant/respondent, heard and the record(s), including the Trial Court Record have been thoroughly perused.
6. At the outset, this Court deems it apposite to enunciate the scope of jurisdiction of this Court in an appeal. In this regard, this Court it is pertinent to outrightly make a reference to the decision of the Hon'ble Supreme Court 1 in Atley v. State of U.P., 1955 SCC OnLine SC 51 , wherein the Hon'ble Court, while delving into the 'scope an ambit' of appellate court's jurisdiction inter alia noted as under;
"8. ... It is also well settled that the Court of appeal has as wide powers of appreciation of evidence in an appeal against an order of acquittal as 1 Reference further made to; Padam Singh v. State of U.P., (2000) 1 SCC 621.
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in the case of an appeal against an order of conviction, subject to the riders that the presumption of innocence with which the accused person starts in the trial court continues even up to the appellate stage and that the appellate court should attach due weight to the opinion of the trial court which recorded the order of acquittal. If the appellate court reviews the evidence, keeping those principles in mind, and comes to a contrary conclusion, the judgment cannot be said to have been vitiated..."
(Emphasis supplied)
7. Correspondingly, the Hon'ble Apex Court in Narendra Bhat v. State of Karnataka, (2009) 17 SCC 785, iterated in respect of the foregoing as under;
"3. This Court has in a series of judgments held that a court exercising appellate power must not only consider questions of law but also questions of fact and in doing so it must subject the evidence to a critical scrutiny. The judgment of the High Court must show that the Court really applied its mind to the facts of the case as particularly when the offence alleged is of a serious nature and may attract a heavy punishment."
(Emphasis supplied)
8. Quite evidently, from a conjoint reading of the aforenoted judicial dictates it can be perspicuously deduced that the jurisdiction of this Court in an appeal extends to reappreciation of the entire material placed on record of the trial court and to arrive at an independent conclusion as to whether the said evidence can be relied upon or not. In fact, as aforenoted, court(s), while exercising appellate power is not required to consider the question of law, rather, also question of facts to affirmatively reach a conclusion of guilt or innocence of an accused. In fact, it is trite law1 that non-re-appreciation of the evidence on record in an appeal may affect the case of either the prosecution or even the accused. Needless to reemphasize that the appellate court is to be further wary of fact that presumption 1 State of Gujarat v. Bhalchandra Laxmishankar Dave, (2021) 2 SCC 735.
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of innocence of an accused, even extents until an accused is held guilty by the final court of appeal and that such a presumption is neither strengthened by an acquittal nor weakened by a conviction in the trial court.
9. Therefore, being cognizant of the aforesaid principles, however, before proceeding further with the appreciation of the merits of the case as well as rival contentions of/on behalf of the parties, this Court deems it pertinent to outrightly reproduce the relevant provisions under law/NI Act, for the purpose of present adjudication, as under;
"118. Presumptions as to negotiable instruments- Until the contrary is proved, the following presumptions shall be made:
(a) of consideration: that every negotiable instrument was made or drawn for consideration, and that every such instrument when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
(b) as to date: that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance: that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
(d) as to time of transfer: that every transfer of negotiable instrument was made before its maturity;
(e) as to order of indorsement: that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stamp: that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course: that the holder of a negotiable instrument is a holder in due course:
Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud or CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 11 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.03.03 16:42:21 +0530 for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
*** *** ***
138. Dishonour of cheque for insufficiency, etc., of funds in the account-Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless-
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.
Explanation-For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
139. Presumption in favour of holder-It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability."
(Emphasis supplied)
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10. At the outset, this Court observes that the objective behind the introduction of the provision(s) under Section 138 under the NI Act, by virtue of amendment/insertion in the year 1989, is to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instrument. Notably, at the time of introduction of the said provision(s), the executive was cognizant of the fact that the civil remedies were found to be inadequate to curb the menace on the part of unscrupulous persons and an imminent need was felt for introduction of a penal provision to cease the propensity on the part of dishonest persons to exploit negotiable instruments for personal gains. Consequently, being wary of the impending requirement for a penal provision to bring about faith in monetary transactions, Chapter XVII was introduced in the NI Act, comprising of the provisions from Sections 138 to 148. In particular, penal provisions under Section 138 NI Act were designed to1, "safeguard the faith of the creditor in the drawer of the cheque, which is essential to the economic life of a developing country like India. The provision has been introduced with a view to curb cases of issuing cheques indiscriminately by making stringent provisions and safeguarding interest of creditors". Notably, the Hon'ble Supreme Court in Goa Plast (P) Ltd. v. Chico Ursula D'Souza, (2004) 2 SCC 235 , while inter alia analyzing the intent of introduction of Section 138 NI Act as well as scope and objective of the said provision(s) observed as under;
"26. The object and the ingredients under the provisions, in particular, Sections 138 and 139 of the Act cannot be ignored. Proper and smooth functioning of all business transactions, particularly, of cheques as instruments, primarily depends upon the integrity and honesty of the parties. In our 1 Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd., (2008) 2 SCC 305.
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country, in a large number of commercial
transactions, it was noted that the cheques were issued even merely as a device not only to stall but even to defraud the creditors. The sanctity and credibility of issuance of cheques in commercial transactions was eroded to a large extent. Undoubtedly, dishonour of a cheque by the bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious setback. Parliament, in order to restore the credibility of cheques as a trustworthy substitute for cash payment enacted the aforesaid provisions. The remedy available in a civil court is a long-drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee."
(Emphasis supplied)
11. Relevantly, in order to attract culpability under the provisions of 138 NI Act, the prosecution is inter alia required to prove1; (a) that the cheque was issued/drawn by a person on an account maintained by him for payment of any sum of money to another person from out of that account; (b) the cheque must have been issued against the discharge, either in whole or in part, of any debt or other liability, though, in the absence of proof to the contrary, it shall be presumed that it was issued for the same; and (c) the cheque was returned by the bank unpaid either because the amount of money standing to the credit of that account is insufficient to honour the cheque; or because it exceeds the amount arranged to be paid from the account by an agreement with that bank. Reference in this regard is further made to the decision of Hon'ble Supreme Court in Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745, wherein the Hon'ble Court, while conscientiously analyzing the provisions under Section 138 NI Act inter alia explicated the ingredients of the said provision/offence, as under;
1N. Doraisamy v. Archana Enterprises, 1995 SCC OnLine Mad 25.
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"10. On a reading of the provisions of Section 138 of the NI Act it is clear that the ingredients which are to be satisfied for making out a case under the provision are:
(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;
(ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(iii) that cheque is returned by the bank unpaid, either because the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
(iv) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice."
(Emphasis supplied)
12. Here, it is further pertinent to observe that the statute/NI Act also provides for raising of a presumption/statutory presumption, casting/permitting a reverse burden on an accused and requiring the accused to prove the non- existence of the presumed fact. Quite evidently, Section 139 NI Act provides for/creates one such exception(s) to the general rule as to the burden of proof and shifts the onus on an accused to rebut the presumption envisaged under law, against him. Another such presumption under law being, under Section 118 NI Act. Reference in this regard, is made to the decision of the Hon'ble Supreme Court in Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148 , wherein the Hon'ble Court noted in regard the foregoing as CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 15 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.03.03 16:42:38 +0530 under;
"33. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that "unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability". It will be seen that the "presumed fact" directly relates to one of the crucial ingredients necessary to sustain a conviction under Section 138...
34. Section 139 of the NI Act, which takes the form of a "shall presume" clause is illustrative of a presumption of law. Because Section 139 requires that the Court "shall presume" the fact stated therein, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. But this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary as is clear from the use of the phrase "unless the contrary is proved"..."
(Emphasis supplied)
13. Strikingly, the Hon'ble Supreme Court in Rangappa v. Sri Mohan, (2010) 11 SCC 441, while painstakingly evaluating the intent and purpose behind the introduction of Section 139 under the Statute books/NI Act, observed as under;
"26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat [(2008) 4 SCC 54: (2008) 2 SCC (Cri) 166] may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 16 of 44
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ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
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27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard or proof."
(Emphasis supplied)
14. Markedly, it is observed from above that the presumption envisioned under Section 139 NI Act not only pertains to the fact that the cheque in question was drawn in discharge of debt or liability, rather, also includes 1 a presumption that there exists a legally enforceable debt or liability at the time of such drawing. Indisputably2, the burden to rebut the presumption lies on an accused, by establishing probable defence. Needless to further observe here that, though, in order to rebut the statutory presumptions3, "an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial" , however, the law is settled 4 that a bare denial of the passing of the consideration or of existence of debt/liability by an accused, would not serve the purpose or come to the aid/rescue of an accused. In fact, law is well settled that under such circumstances, it is expected from an accused to 1 S. Natarajan v. Sama Dharman, (2021) 6 SCC 413.
2Rajaram v. Maruthachalam, 2023 SCC OnLine SC 48.
3Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106.
4Kishan Rao v. Shankargouda, (2018) 8 SCC 165.
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 17 of 44
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ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
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bring 'something which is probable', on record for getting the burden of proof shifted to the complainant. Reference in this regard is made to the decision in Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513, wherein the Hon'ble Apex Court, explicated the law in regard the foregoing as under;
"20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non- existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act."
(Emphasis supplied) CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 18 of 44 Digitally signed ABHISHEK by ABHISHEK GOYAL GOYAL Date: 2025.03.03 16:42:51 +0530
15. Further, Section 118(a) NI Act provides for a presumption in favour of the complainant1 inter alia to the effect that the negotiable instrument or the endorsement was made or endorsed for consideration. Concomitantly, it is further apposite to make a reference to the presumption visualized under Section 118(e) NI Act at this stage, which pertains to the endorsement appearing upon negotiable instruments, being genuine. Relevantly, it is trite law that the said presumption operates in favour of the holder in due and in case an accused intends to rebut such presumption, he would be required to lead evidence, rather than a mere denial of his signatures on the cheque. Significantly, the Hon'ble Supreme Court in Ajitsinh Chehuji Rathod v. State of Gujarat, (2024) 4 SCC 453 , while assessing the provisions under Section 118(e) NI Act, remarked as under;
"13. Section 118 sub-clause (e) of the NI Act provides a clear presumption regarding indorsements made on the negotiable instrument being in order in which they appear thereupon. Thus, the presumption of the indorsements on the cheque being genuine operates in favour of the holder in due course of the cheque in question which would be the complainant herein. In case, the accused intends to rebut such presumption, he would be required to lead evidence to this effect.
14. Certified copy of a document issued by a bank is itself admissible under the Bankers' Books Evidence Act, 1891 without any formal proof thereof. Hence, in an appropriate case, the certified copy of the specimen signature maintained by the bank can be procured with a request to the court to compare the same with the signature appearing on the cheque by exercising powers under Section 73 of the Evidence Act, 1872."
(Emphasis supplied)
16. Ergo, being cognizant of the aforenoted principles, this Court would now proceed with the assessment of the rival contentions of the appellant and the respondent. Pertinently, the 1 Kundan Lal Rallaram v. Custodian, Evacuee Property, 1961 SCC OnLine SC 10.
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 19 of 44
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ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
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Ld. Amicus Curiae for the appellant has outrightly contended that the particulars of the cheque such as the name of the payee, amount in words and figures, etc., were neither filled by the appellant nor the same were in his handwriting so as to attract culpability against him. In this regard, Ld. Amicus Curiae for the appellant has referred to the appellant's response to Q.1 and Q.4 at the time of recording of statement of the appellant, in terms of the provisions under Section 313 Cr.P.C., on 14.07.2022, wherein the appellant specifically asserted that he had not filled in other particulars on the cheque, though, admitted his signatures on the cheque in question. Strikingly, under such factual scenario, Ld. Amicus Curiae for the appellant has ardently contended that no liability under Section 138 NI Act can be attributed to/attracted against the appellant, especially when (as per the appellant) the particulars appearing on the dishonoured cheque was not filled by the appellant. However, the said contention does not find favour with this Court. In fact, in this regard, this Court is conscious of the settled law that filling of particulars of cheque by any person, other than the drawer does not invalidate the cheque and the liability under Section 138 NI Act/presumption under Section 139 NI Act would still be attracted under such situation(s), when the signatures on the cheque in question is duly admitted by the drawer/accused. Reference in this regard is made to decision in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197, wherein the Hon'ble Supreme Court in an akin context, remarked as under;
"33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 20 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.03.03 16:43:03 +0530 of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.
34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars.
This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.
*** *** ***
36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
(Emphasis supplied)
17. Markedly, under the present situation, when both the appellant and the respondent affirm that the cheque in question/dishonoured cheque was signed and handed over by the appellant to the respondent, the contention of the Ld. Amicus Curiae for the appellant that the cheque in question was not filled in the appellant's handwriting, i.e., the date of cheque and/or the payee's details thereon were not filled by the appellant, albeit only subsequent, would not, in the considered opinion of this Court, come to any aid/rescue of the appellant, in view of the aforenoted judicial dictate(s). Needless to reiterate that the law is well settled that even when a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars and that the same would not, in itself, invalidate the cheque. On the contrary, even under such circumstances, presumption under Section 139 NI Act would be attracted, burden lying on the drawer of cheque to rebut the same as per law/by preponderance of probabilities.
18. Apropos the present discourse, this Court now CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 21 of 44 Digitally signed ABHISHEK by ABHISHEK GOYAL GOYAL Date: 2025.03.03 16:43:07 +0530 deems it apposite to deal with the contention of the Ld. Amicus Curiae for the appellant at this stage inter alia to the effect that the notice/legal demand notice, as mandated under the provisions envisaged under Section 138 NI Act was not received by the appellant. In this regard, it is apposite to reproduce the relevant extracts from the notice under Section 251 Cr.P.C. framed against the appellant by the Ld. Trial Court vide order dated 01.08.2018, as under;
"...Q. Do you have any defence to make, if yes, what is your plea of defence?
Ans. I had not received the legal demand notice and my liability is less than the cheque amount since I had borrowed only Rs. 50,000/- from complainant..."
(Emphasis supplied)
19. Reference in respect of the foregoing is further made to the statement of the appellant, recorded on 14.07.2022 in terms of the provisions under Section 313 Cr.P.C., wherein the appellant further inter alia, proclaimed as under;
"...Q. 3. It is in evidence against you that despite service of legal demand notice U/S. 138 of the NI Act Ex. CW1/D (corresponding postal receipt which is Ex. CW1/E, you failed to make payment. What do you have to say?
Ans. I have not received the legal notice. The address on the legal notice is correct..."
(Emphasis supplied)
20. Markedly, it is observed from a conjoint reading of the above that, though, the appellant denied the receipt of legal notice/legal demand notice from respondent as per the mandate of Section 138 NI Act, however, the address mentioned on the legal demand notice was affirmed by the appellant to be his. Quite palpably, except for a bare denial of receipt of legal demand notice/notice dated 23.09.2017 (Ex. CW1/D), the appellant has opted neither to lead any affirmative evidence in CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 22 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.03.03 16:43:13 +0530 support of his said assertion nor is anything forthcoming from the cross examination of any of the complainant's/respondent's witnesses, including the complainant, that the legal demand notice was not issued and/or received by him, as mandated under law. In order to appreciate the said contention, this Court deems it prudent to outrightly make a reference to the provisions under Section 94 of the NI Act, which provides as under;
"94. Mode in which notice may be given-Notice of dishonour may be given to a duly authorized agent of the person to whom it is required to be given, or, where he has died, to his legal representative, or, where he has been declared an insolvent, to his assignee; may be oral or written; may, if written, be sent by post; and may be in any form; but it must inform the party to whom it is given, either in express terms or by reasonable intendment that the instrument has been dishonoured, and in what way, and that he will be held liable thereon; and it must be given within a reasonable time after dishonour, at the place of business or (in case such party has no place of business) at the residence of the party for whom it is intended.
If the notice is duly directed and sent by post and miscarries, such miscarriage does not render the notice invalid."
(Emphasis supplied)
21. Correspondingly, reference is made to Section 27 of the General Clauses Act, 1897 (hereinafter referred to as the 'GC Act'), which provides as under;
"27. Meaning of service by post-Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression "serve" or either of the expressions "give"
or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post."
(Emphasis supplied)
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 23 of 44
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ABHISHEK GOYAL
GOYAL Date:
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22. Consequently, upon a conscientious analysis of the aforesaid provisions, further in light of the provisions under Section 1141 of the Indian Evidence Act, 1872 (hereinafter referred to as the 'Evidence Act'), this Court unwaveringly reaches a conclusion that once notice is sent by registered post by correctly addressing to the drawer of the cheque, the service of notice is deemed to have been affected under law. However, it is only upon a drawer, under such circumstances, to rebut this presumption by leading evidence to the contrary. Reference in this regard is made to the decision of the Hon'ble Supreme Court2 in N. Parameswaran Unni v. G. Kannan & Ors., MANU/SC/0327/2017, wherein the Hon'ble Court, whilst confounded with an akin situation, remarked as under;
"13. It is clear from Section 27 of the General Clauses Act, 1897 and Section 114 of the Indian Evidence Act, 1872, that once notice is sent by registered post by correctly addressing to the drawer of the cheque, the service of notice is deemed to have been effected. Then requirements under proviso (b) of Section 138 stands complied, if notice is sent in the prescribed manner. However, the drawer is at liberty to rebut this presumption."
(Emphasis supplied)
23. Apposite in this regard to further make a reference to the decision in C.C. Alavi Haji v. Palapetty Muhammed & Ors., MANU/SC/2263/2007, wherein the Hon'ble Apex Court, in the context of foregoing, earlier, observed as under;
1"114. Court may presume existence of certain facts-The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case...."2
Reference is further made to the decision in Ajeet Seeds Ltd. v. K. Gopala Krishnaiah, MANU/SC/0630/2014, wherein the Hon'ble Apex Court, iterated, "10. It is thus clear that Section 114 of the Evidence Act enables the Court to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. Section 27 of the GC Act gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. It is not necessary to aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business." (Emphasis supplied).
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 24 of 44
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ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
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15. As noticed above, the entire purpose of requiring a notice is to give an opportunity to the drawer to pay the cheque amount within 15 days of service of notice and thereby free himself from the penal consequences of Section 138. In Vinod Shivappa (supra), this Court observed:
One can also conceive of cases where a well- intentioned drawer may have inadvertently missed to make necessary arrangements for reasons beyond his control, even though he genuinely intended to honour the cheque drawn by him. The law treats such lapses induced by inadvertence or negligence to be pardonable, provided the drawer after notice makes amends and pays the amount within the prescribed period. It is for this reason that Clause (c) of proviso to Section 138 provides that the section shall not apply unless the drawer of the cheque fails to make the payment within 15 days of the receipt of the said notice. To repeat, the proviso is meant to protect honest drawers whose cheques may have been dishonoured for the fault of others, or who may have genuinely wanted to fulfil their promise but on account of inadvertence or negligence failed to make necessary arrangements for the payment of the cheque. The proviso is not meant to protect unscrupulous drawers who never intended to honour the cheques issued by them, if being a part of their modus operandi to cheat unsuspecting persons.
16. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation, of the proviso would CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 25 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.03.03 16:43:25 +0530 defeat the very object of the legislation. As observed in Bhaskarans case (supra), if the giving of notice in the context of Clause (b) of the proviso was the same as the receipt of notice a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act."
(Emphasis supplied)
24. Ergo, in light of the foregoing and considering the objective of mandating the issuance of legal demand notice, i.e., "protect honest drawers whose cheques may have been dishonoured for the fault of others, or who may have genuinely wanted to fulfil their promise but on account of inadvertence or negligence failed to make necessary arrangements for the payment of the cheque", this Court is in concurrence with the finding of the Ld. Trial Court that the averment of the Ld. Amicus Curiae for appellant/appellant regarding non-receipt of demand notice/legal demand notice by him would not come to the aid and rescue of the appellant in the instant case. Needless to reiterate that the appellant not only admitted the address specified on the legal demand notice/notice dated 23.09.2017 (Ex. CW1/D), as his correct address, rather, even failed to fulfil his obligation/make payment within a period of 15 (fifteen) days of service of summons on him, as per the dictate in C.C. Alavi Haji v. Palapetty Muhammed (Supra.). Clearly, the appellant is precluded to take advantage of his own wrong. Needless to reiterate that in light of the aforenoted judicial dictates, legal provisions as well as the facts and circumstances hereinunder noted, the contention of the appellant of 'alleged' non-receipt of legal notice dated 23.09.2017 would not come to his rescue, in the considered opinion of this Court.
25. Proceeding with the contention of the Ld. Amicus Curiae for the appellant/appellant that the cheque in question was CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 26 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.03.03 16:43:32 +0530 issued as security to the complainant/respondent and that the appellant had taken loan of Rs. 50,000/- (Rupees Fifty Thousand only) from the respondent, which he/the appellant duly paid, this Court deems it apt to reproduce the relevant extracts from the statement of the accused, recorded on 14.07.2022 in terms of the provisions under Section 313 Cr.P.C., as under;
"Q. 4 It is in evidence against you that you took a friendly loan in the sum of Rs. 2,25,000/- from the complainant and also executed receipt-cum- undertaking dated 10/08/2016 Ex. CW1/A regarding receipt of the amount. That in consideration of the above mentioned amount, you issued the cheque in question, which got dishoboured. What do you have to say?
Ans. It is correct. I had taken a loan of Rs.
50,000/- from the complainant. The cheque in question was given as security. I have repaid the said amount to the complainant. I admit my signatures on the document Ex. CW1/A but the same were taken on blank paper..."
(Emphasis supplied)
26. Unmistakably, it is noted from above that the appellant admitted his signatures on the cheque in question as well as of issuance of the same to the respondent. However, it was asserted by the appellant that the said cheque/dishonoured cheque was issued by him to the respondent as blank signed security cheque. Quite evidently, except for asserting that the cheque in question was issued as security and subsequently, misused by the respondent, the appellant did not raise any plea to aver/contend that the cheque in question was ever sought to be returned by the appellant from respondent in writing or that the appellant, had, at any point in time made any complaint/initiated any proceedings against the respondent against the alleged non- return/misuse of the cheque in question. Even otherwise, this Court deems it apposite here to note that even as general CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 27 of 44 Digitally signed ABHISHEK by ABHISHEK GOYAL GOYAL Date: 2025.03.03 16:43:36 +0530 proposition of law1, repeated affirmed by superior courts, the question whether a post-dated cheque is for 'discharge of debt or liability' or a mere 'security deposit', depends on the nature of the transaction. Consequently, where on the date of the cheque, liability or debt exists or the amount has become legally recoverable, the provisions under Section 138 NI Act would be attracted in an instant case, otherwise not. Reference in this regard is further made to the recent dictate of the Hon'ble Supreme Court in Sripati Singh, through his Son Gaurav Singh v. State of Jharkhand & Ors., MANU/SC/1002/2021, wherein the Hon'ble Court, while revaluating the issue regarding the maintainability of the proceedings under Section 138 NI Act in the event of dishonour of security cheque(s), noted as under;
"16. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated Under Section 138 and the other provisions of N.I. Act would flow."
(Emphasis supplied)
27. Clearly, it is only when legal debt or liability exists against a drawer on the date of presentation of cheque, which eventually gets dishonoured, provisions under Section 138 NI 1 Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd., (2016) 10 SCC 458.
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 28 of 44
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by ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.03.03
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Act would be attracted in a case. As a corollary, no liability can be attributed to a drawer where a security cheque is presented prior to the loan or installment maturing for repayment against which the cheque was issued or where the liability or debt is discharged prior to such presentation or in the cases of (altered) understanding in relation to such presentation. Consequently, for a drawer to avoid its liability under Section 138 of the NI Act on the basis of 'security deposit' defence, is required to demonstrate that on the date of the cheque, no legally recoverable debt or liability was under existence. However, in the considered opinion of this Court, from a conscientious analysis of the material placed on record, it is quite lucid that the appellant, in the instant case, has failed to rebut the presumption under Section 139 NI Act, besides, even from the material put forth by the complainant/respondent and cross examination of complainant witnesses, the appellant has failed to demonstrate that no debt or liability was due and payable by the appellant to the respondent in the instant case. In fact, in this regard, reference is outrightly made to the testimony of CW-1/Sh. Lal Babu Shah/complainant/respondent before the Ld. Trial Court, wherein he tendered his evidence in form of an Affidavit (Ex. CW1/1), reiterating the stand taken by him in his complaint, besides averring that the cheque amount was due and payable by the appellant to him against the friendly loan disbursed by him/the respondent to the appellant to a tune of Rs. 2,25,000/- (Rupees Two Lakhs Twenty Five Thousand only). Markedly, in order to prove the factum of receipt of said loan by the appellant, the respondent has further produced/proved original receipt-cum- undertaking, asserted to be executed on 10.08.2016 (Ex. CW1/A) inter alia recording as under;
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 29 of 44
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ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
16:43:46 +0530
"...I, DHARAM SINGH S/o Sh. Chunni Lal R/o H. No. 1200, Gali No 5/6, Near Hanuman Mandir Sangam Vihar, Wazirabad, Burari, Delhi-110084 today on 10th August, 2016 borrowed and received Rs.2,25,000/- (Rupees Two Lakhs & Twenty Five Thousand only) as a friendly loan from SH. LAL BABU SHAH S/o Shri Ram lakhan Shah R/o Khasra No. 29/16/2, Gali No. 9, Surender Colony Part-II, Jharoda Mazra, Burari, Delhi-110084, without any interest for one year. I promise or undertake that I shall pay the said loan amount on or before 31/08/2017 to SHRI LAL BABU SHAH. I further promise that if I fail in fulfill my above promise to return the said loan amount on or before 31/08/2017 then I shall paid the interest on said principal amount i.e. Rs.2,25,000/- from today till the repayment of the said amount @ 12% per annum as compensation or damages to SHRI LAL BABU SHAH. It is also upon to SHRI LAL BABU SHAH to recover the said principal amount with interest from the date of 31/08/2017 @ 12% per annum through Court of Law, if I will fail to repay the said amount on or before 31/08/2017..."
(Emphasis supplied)
28. Pertinently, CW-1 in respect of the foregoing specifically asserted that at the time of disbursal of the aforesaid loan amount, the appellant further executed the receipt-cum- undertaking dated 10.08.2016 (Ex. CW1/A), whilst, the said transaction happened in the presence of Mr. Ramnath, who was his/respondent's neighbour as well as Mr. Neeraj, tenant of respondent. In particular, in respect of disbursal of the loan amount, the respondent, under his cross examination by/at the behest of the appellant specially asserted that he had, "..given the money in my office at Khasra No./141/16, Main Pusta Road, Milan Vihar, Burari, Delhi in the presence of Mr. Ramnath who is my neighbourer and Mr. Neeraj was a tenant at that time..." Correspondingly, CW-1/respondent further denied the suggestion that the receipt-cum-undertaking (Ex. CW1/A) was signed by the appellant on blank paper and the cheque in question was given by the appellant as security purpose(s). Strikingly, reference in CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 30 of 44 Digitally signed ABHISHEK by ABHISHEK GOYAL GOYAL Date: 2025.03.03 16:43:54 +0530 respect of the foregoing is further made to the deposition of CW-2/Mr. Ramnath, who specifically asserted and proved his Affidavit of evidence (Ex. CW2/A), wherein CW-2, specifically proclaimed that the document, "exhibited as Ex. CW1/A which is a receipt-cum-undertaking dated 10/08/2017 was executed by the accused Dharam Singh in my presence and I had signed on this document as Witness at point 'A' in document Ex. CW1/A. That the accused Dharam Singh signed on this document in my presence with their own free will without any pressure or fear..." Remarkably, CW-2/Mr. Ramnath further reaffirmed in his testimony of the appellant signing the receipt-cum-undertaking, dated 10.08.2016 (Ex. CW1/A) in his/CW-2's presence, besides also affirmed that the said document bore his/CW-2's signatures at point 'A' thereof. Apposite at this stage to further reproduce the relevant extracts from cross-examination of CW-2 as under;
"XXXX by Sh. ***, counsel for accused.
I am 6th class pass. I cannot read English language. My counsel has not told about the contents. I do not know about the facts mentioned in my affidavit. The signature at points A and B belongs to me in affidavit Ex.CW2/A. I am a property dealer. I know the complainant from last 15-20 years. The complainant had given an amount of Rs.2,25,000/- to accused in cash in my presence. One other person who was tenant of the complainant was also present at the time of said deal. The said deal was executed on August, 2016 at about 3-4 p.m. in the office of the complainant which is situated at Milan Vihar, Buari, Delhi. I do not know the exact date. The already Ex. CWI/A had been signed by me at point A. I do not the know the exact date when I had signed on Ex. CWI/A at point A. I do not know whether the money given by the complainant to the accused was on interest or not. I do not know about the correct date mentioned on Ex. CWI/A. It is incorrect to suggest that no deal was executed on August, 2016 at about 3-4 p.m. in the office of the complainant situated at Milan Vihar, Buari, Delhi in my presence. It is wrong to suggest that I am deposing falsely..."
(Emphasis supplied) CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 31 of 44 Digitally signed ABHISHEK by ABHISHEK GOYAL GOYAL Date: 2025.03.03 16:43:58 +0530
29. Quite evidently, it is seen from above that CW-2 even in his cross examination corroborated the version of the respondent/CW-1 that the amount/loan of Rs. 2,25,000/- (Rupees Two Lakhs Twenty Five Thousand only) was disbursed by the respondent to the appellant in his presence and the presence of another person, as well as reaffirmed that receipt-cum- undertaking, dated 10.08.2016 (Ex. CW1/A) was signed by him/CW-2. Needless to mention that nothing is forthcoming from the cross examination of either CW-1/respondent/complainant or CW-2/Sh. Ramnath, whereby the appellant has been able to rebut their consistent stand. On the contrary, even while adducing himself as defence witness/DW-1, the appellant though asserted that he had obtained loan of Rs. 50,000/- (Rupees Fifty Thousand only) from the respondent on 10.08.2016, however, he/the appellant paid of the entire amount in installments to the respondent. Correspondingly, under his evidence, DW-1/the appellant asserted that he had given blank cheque and also signed blank papers at the time of disbursal of such loan. Markedly, under his cross examination, the appellant/DW-1 asserted as under;
"XXXXX by Sh. ***, counsel for complainant. I know the complainant as a neighbourer. I am retired person.
At this stage, witness is shown document Ex. CW1/A and asked to identify his signature. Witness admit his signature at point A. I cannot say whether thumb impression at point B on Ex. CW1/A is related with me or not but complainant took the thumb impression on blank paper.
I do not remember the date when I had returned the amount to the complainant. The complainant did not used to give the receiving of my repayment. I had asked him for the receipt and he told that he will give the same later. I did not send any notice to the complainant or filed any police complaint against the CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 32 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.03.03 16:44:07 +0530 complainant for not returning cheque and blank papers.
My sister Sunita was present every time when I made payments to the complainant. I cannot tell the exact date or month when I made payments to the complainant but I had made the payments between the period 2016 to 2017. It is wrong to suggest that I do not remember the date of payment nor do I have any receipt of the same because no such payment was made the complainant. I know Ram Nath Singh and he used to work in the office of the complainant. It is correct that Ram Nath Singh was present when complainant had given loan to me. Ram Nath Singh was not present during any of the time when I made payments to the complainant. It is wrong to suggest that I am still liable to pay Rs. 2,25,000/- to the complainant and that I have not returned any amount to him. It is correct that I had signed Ex. CW1/A at the time of taking the loan from the complainant. It is wrong to suggest that I am deposing falsely..."
(Emphasis supplied)
30. Appreciably, it is noted form above that even the appellant/DW-1 under his cross examination affirmed that the receipt-cum-undertaking (Ex. CW1/A) bore his/DW-1's signatures, however, proclaimed that his signatures were obtained on blank paper by the respondent. Correspondingly, DW-1/appellant acknowledged that he had issued no notice or made any complaint against the respondent for the return of cheque in question or alleged blank paper, when the same were not returned by the respondent to the appellant. Further, quite evidently, the appellant despite proclaiming that he had repaid the entire loan amount to the respondent, failed to produce any receipts against such payments or to even recollect the dates of such alleged repayment, except for mere oral assertion in this regard. Ominously, another striking aspect of DW-1's cross examination is that he/the appellant conceded that Ramnath/CW-2 was present at the time when loan was disbursed by the respondent to him/the appellant. Apropos the present CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 33 of 44 Digitally signed ABHISHEK by ABHISHEK GOYAL GOYAL Date: 2025.03.03 16:44:12 +0530 discourse to refer to the deposition of DW-2/Ms. Sunita, who inter alia asserted in her Evidence by way of Affidavit ( Ex. DW2/A) as under;
"...2. That I state that my brother namely Dharam Singh had taken Rs. 50,000/- (Rupees Fifty Thousand only) from the complainant namely Lal Babu Shah as a friendly loan on dated 10.08.2016 for one year without interest.
3. That I state that in front of me the complainant Lal Babu Shah had taken the blank cheque as a security and blank signing paper in lieu of Rs. 50,000/- (Rupees Fifty Thousand only) from my father on 10.08.2016.
4. That in the office of the complainant, the brother of deponent had returned the whole amount of Rs. 50,000/- with interest by way of cash in several installments in front of me hence there my brother has no liability towards the said loan..."
(Emphasis supplied)
31. Noticeably, in her cross examination, DW-2/Ms. Sunita proclaimed as under;
"XXXXX by Sh. *** counsel for complainant. I have studied till 8th class. I do not know the contents of Ex. DW2/A. Accused is son of my maternal aunt. Accused had taken Rs. 50,000/- from the complainant and only I, accused and complainant was present at that time. The amount was given at the office of the complainant at Jharoda but I do not know the exact address. I do not remember the exact date but it was in the year 2016. At the time of taking the loan the accused had only given blank signed cheque to the complainant and no receipt /acknowledgment was signed. It is wrong to suggest that I have not met the complainant after advancement of loan. I do not remember the date or month when repayments were made to the complainant. I had handed over the repayments in cash by my own hands. It is wrong to suggest that accused was not present at the time of repayment. Vol. He was always present when repayments were made to the complainant. I had asked for the receipt of repayments from the complainant, but he told me that once the payment was complete, he will return the cheque. I had come to depose today on the asking of accused. It is wrong to suggest that I am deposing the facts as asked by accused. had told my counsel CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 34 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date: 2025.03.03 16:44:16 +0530 that I had given the money by my own hands It is wrong to suggest that I was not present when the loan advanced by the complainant nor I was present at the time alleged repayments. It is wrong to suggest that I do not remember the date or month of repayment because no such payment was made by the accused and because I have come to depose falsely at the instance of accused. The accused had his godown of tyres. At present it is closed. I cannot say if I know a person namely Ram Nath as I cannot remember at present. Again said Ram Nath may be the employee / servant of the complainant. It is correct that he was present at the time of signing of the receipt /acknowledgement by the accused. Vol. Ram Nath was sitting outside. It is wrong to suggest that I am deposing falsely..."
(Emphasis supplied)
32. Significantly, it is noted from above that though, DW-2 also asserted that the appellant obtained loan of Rs. 50,000/- (Rupees Fifty Thousand only) from the respondent, which was repaid by the appellant in installments to the respondent, however, there are material contradictions in the testimonies of DW-1 and DW-2, besides there are variation in the version propounded by DW-2, itself, making her unworthy of credit. In this regard, this Court outrightly notes that while, DW-2 proclaimed in her cross examination that at the time of disbursal of loan, only she/DW-2, the appellant/DW-1 and the respondent were present, however, as aforenoted, DW-1 acknowledged the presence of CW-2/Ramnath at time of such disbursal. However, even subsequently, in her cross examination, DW-2 gave varying versions regarding the presence of CW-2/Ramnath at the time of loan disbursal by initially asserting that she could not state whether she/DW-2 knew Ram Nath. However, again said that Ramnath, "may be the employee / servant of the complainant. It is correct that he was present at the time of signing of the receipt /acknowledgement by the accused..." Concomitantly, while DW-2 in her cross examination asserted that she/DW-2 CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 35 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.03.03 16:44:19 +0530 made repayments to the respondent of the alleged installment against the loan. However, as aforenoted, DW-1 proclaimed that such alleged repayments were made by him. Needless to mention/reiterate that both, DW-1 and DW-2 did not depose regarding the exact dates, times or places where such installments were paid to the respondent by the appellant. Needless to further mention that in her cross examination, DW-2 merely declared that only blank signed cheque was handed by the appellant to the respondent and that no receipt/acknowledgement was signed. Clearly, DW-2 nowhere avowed under her cross examination regarding any blank signed paper or the return thereof by the respondent to the appellant, as otherwise proclaimed by DW-1 in his cross examination. The same is despite the fact that DW-2 in her cross examination merely proclaimed that she had, "...asked for the receipt of repayments from the complainant, but he told me that once the payment was complete, he will return the cheque..."
33. Conspicuously, in light of the foregoing, this Court unambiguously observes that the defence of the appellant pertaining to the dishonoured cheque being issued for security or there being no liability as the alleged loan amount of Rs. 50,000/- (Rupees Fifty Thousand only) was repaid by the appellant to the respondent in installments, does not appeal to the senses of this Court. On the contrary, the said defence not only, in considered opinion of this Court, an afterthought, flimsy and insubstantial, rather, unbelievable, and unconvincing. Needless to reiterate that the appellant has been unable to rebut the consistent stand of the witnesses adduced by the respondent, including that of CW-2/Ramnath, who proclaimed regarding disbursal of loan amount of Rs. 2,25,000/- (Rupees Two Lakhs Twenty Five CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 36 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.03.03 16:44:24 +0530 Thousand only) by the respondent to the appellant in his presence, besides also asserted regarding the factum of appellant's executing a receipt cum undertaking (Ex. CW1/A) in his presence in lieu of said disbursal. On the contrary, as aforenoted, the evidence of the appellants is replete with contradictions, variations, and improvements, besides does not even appeal to the sense of prudent man. Needless at this stage to further reiterate that in order to rebut the statutory presumption under Section 118/139 NI Act, it is not expected from an accused/appellant herein to prove his defence ' beyond reasonable doubt' and that the same may be done by bringing ' something which is probable' on record for getting the burden of proof shifted to the complainant. However, in the instant case, the appellant has failed to bring forth any such facts and circumstances, upon consideration of which, this Court may either believe that the consideration and debt did not exist, or its non-existence was so probable that a, "prudent man would under the circumstances of the case, act upon the plea that it did not exist." On the contrary, as aforenoted, the inherent inconsistencies and discordances in the various version put forth by the appellant in his defence, make the same highly implausible and trifling. Congruently, this Court concurs with the finding of the Ld. Trial Court that the appellant has not been able to rebut the initial presumption raised against him.
34. In as much as the contention of the Ld. Amicus Curiae for the appellant/appellant pertaining to respondent's lack of financial capacity to lend the loan of Rs. 2,25,000/- (Rupees Two Lakhs Twenty Five Thousand only) is concerned, it is outrightly observed that the law in aspect is trite 1 that it is not 1 APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers, (2020) 12 SCC 724; and K. CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 37 of 44 Digitally signed ABHISHEK by ABHISHEK GOYAL GOYAL Date: 2025.03.03 16:44:28 +0530 obligatory on the complainant to first assert his financial capacity in the case of cheque dishonour, unless an accused sets up a case regarding such complainant's wherewithal. Reference in this regard is made to the decision of the Hon'ble Supreme Court in Tedhi Singh v. Narayan Dass Mahant, (2022) 6 SCC 735, wherein the Hon'ble Court expounded the law regarding the foregoing as under;
"10. The trial court and the first appellate court have noted that in the case under Section 138 of the NI Act the complainant need not show in the first instance that he had the capacity. The proceedings under Section 138 of the NI Act is not a civil suit. At the time, when the complainant gives his evidence, unless a case is set up in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity. To that extent, the courts in our view were right in holding on those lines. However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents. It is also open to him to establish the very same aspect by pointing to the materials produced by the complainant himself. He can further, more importantly, achieve this result through the cross-examination of the witnesses of the complainant. Ultimately, it becomes the duty of the courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence"
(Emphasis supplied)
35. However, in the instant case, it is noted form the material placed on record that the appellant, nowhere before the Ld. Trial Court, challenge the financial capacity of the respondent either by issuing any reply to legal demand notice Ilayarajalingam v. K. Karthikeyan, Crl. R.C. No. 1123 of 2017, dated 20.06.2022 (Madras HC).
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 38 of 44
Digitally signed
by ABHISHEK
ABHISHEK GOYAL
GOYAL Date: 2025.03.03
16:44:31 +0530
(Ex. CW1/D) nor at the time of framing of notice on 01.08.2018 or during the trial, rather, it is only during the present stage of appeal, the appellant has sought to raise the said defence of respondent's alleged financial incapacity, without any basis or background thereof, which, as aforenoted, the appellant is precluded to do so at this stage.
36. Conclusively, in conspectus of the above and inter alia keeping in view consistent testimony of the complainant/respondent/CW-1 and CW-2/Sh. Ramnath as well as the documents placed on record, the only conclusion which can be arrived at in the facts and circumstances brought forth pertains to the guilt of the appellant for the commission of the offence under Section 138 NI Act. Needless to mention that the defence raised by the appellant and the evidence/witnesses produced by/on behalf of the appellant are not only unworthy and uninspiring confidence, rather, irreconcilable as well as unworthy of credence. Accordingly, this Court has no hesitation in reasonably reaching a conclusion that the complainant/respondent has proved its case 'beyond reasonable doubt' against the appellant for the offence under Section 138 NI Act. On the contrary, the appellant has failed to raise a probable defence/defence by 'preponderance of probabilities' in his favour for the reasons hereinunder noted.
37. Significantly, in as much as the aspect of sentence awarded to the appellant by the Ld. Trial Court is concerned, this Court, at the outset, notes that the superior courts have persistently cautioned towards the grant of just and appropriate sentence, post-conviction, as well as cautioned 1 that mere long pendency of case is no ground to award lesser sentence. In fact, 1 State of M.P. v. Ghanshyam Singh, (2003) 8 SCC 13.
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 39 of 44
Digitally signed
ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
16:44:35 +0530
in the instances of cheque dishonour cases, law is settled 2 that the sentence imposed must be such as to give proper effect to the object of the legislation and to dissuade unscrupulous drawers of such negotiable instruments from taking advantage of their own wrongs. In this regard, reference is made to the decision in Suganthi Suresh Kumar v. Jagdeeshan, (2002) 2 SCC 420, wherein the Hon'ble Apex Court unswervingly opined as under;
"12. The total amount covered by the cheques involved in the present two cases was Rs 4,50,000. There is no case for the respondent that the said amount had been paid either during the pendency of the cases before the trial court or revision before the High Court or this Court. If the amounts had been paid to the complainant there perhaps would have been justification for imposing a flea-bite sentence as had been chosen by the trial court. But in a case where the amount covered by the cheque remained unpaid it should be the lookout of the trial Magistrates that the sentence for the offence under Section 138 should be of such a nature as to give proper effect to the object of the legislation. No drawer of the cheque can be allowed to take dishonour of the cheque issued by him light- heartedly. The very object of enactment of provisions like Section 138 of the Act would stand defeated if the sentence is of the nature passed by the trial Magistrate. It is a different matter if the accused paid the amount at least during the pendency of the case."
(Emphasis supplied)
38. Correspondingly, the Hon'ble Supreme Court in R. Vijayan v. Baby, (2012) 1 SCC 260 , while fervently professing towards the grant of reimbursement of the loss by way of compensation to the complainant/victim in cheque dishonour cases, avowed as under;
"17. The apparent intention is to ensure that not only the offender is punished, but also ensure that the complainant invariably receives the amount of the cheque by way of compensation under Section 357(1)(b) of the Code. Though a complaint under Section 138 of the Act is in regard to criminal 2 H. Pukhraj v. D. Parasmal, (2015) 17 SCC 368.
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 40 of 44
Digitally signed
ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
16:44:39 +0530
liability for the offence of dishonouring the cheque and not for the recovery of the cheque amount (which strictly speaking, has to be enforced by a civil suit), in practice once the criminal complaint is lodged under Section 138 of the Act, a civil suit is seldom filed to recover the amount of the cheque.
This is because of the provision enabling the court to levy a fine linked to the cheque amount and the usual direction in such cases is for payment as compensation, the cheque amount, as loss incurred by the complainant on account of dishonour of cheque, under Section 357(1)(b) of the Code and the provision for compounding the offences under Section 138 of the Act. Most of the cases (except those where liability is denied) get compounded at one stage or the other by payment of the cheque amount with or without interest. Even where the offence is not compounded, the courts tend to direct payment of compensation equal to the cheque amount (or even something more towards interest) by levying a fine commensurate with the cheque amount. A stage has reached when most of the complainants, in particular the financing institutions (particularly private financiers) view the proceedings under Section 138 of the Act, as a proceeding for the recovery of the cheque amount, the punishment of the drawer of the cheque for the offence of dishonour, becoming secondary.
18. Having reached that stage, if some Magistrates go by the traditional view that the criminal proceedings are for imposing punishment on the accused, either imprisonment or fine or both, and there is no need to compensate the complainant, particularly if the complainant is not a "victim" in the real sense, but is a well-to-do financier or financing institution, difficulties and complications arise. In those cases where the discretion to direct payment of compensation is not exercised, it causes considerable difficulty to the complainant, as invariably, by the time the criminal case is decided, the limitation for filing civil cases would have expired. As the provisions of Chapter XVII of the Act strongly lean towards grant of reimbursement of the loss by way of compensation, the courts should, unless there are special circumstances, in all cases of conviction, uniformly exercise the power to levy fine up to twice the cheque amount (keeping in view the cheque amount and the simple interest thereon at 9% per annum as the reasonable quantum of loss) and direct payment of such amount as compensation. Direction to pay compensation by way of restitution in regard to the loss on account of dishonour of the cheque CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 41 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.03.03 16:44:42 +0530 should be practical and realistic, which would mean not only the payment of the cheque amount but interest thereon at a reasonable rate. Uniformity and consistency in deciding similar cases by different courts, not only increase the credibility of cheque as a negotiable instrument, but also the credibility of courts of justice."
(Emphasis supplied)
39. Ergo, wary of the aforenoted judicial dictates, facts and circumstances of the present case as well as the arguments addressed by the Ld. Amicus Curiae for the appellant as well as the respondent, this Court unswervingly observes that the Ld. Trial Court has acted quite leniently with the appellant by awarding sentence/simple imprisonment for a period of 01 (one) month and fine to a tune of Rs. 3,55,000/- (Rupees Three Lakhs Fifty Five Thousand only) along with simple interest to be computed at the rate of 9% (nine percent.) per annum as quantum of loss and reasonable amount if litigation cost suffered by the prosecution for more than six years, to be paid as compensation by the appellant to respondent/complainant, under the impugned order/order of sentence 24.01.2024. Needless to further mention that the appellant has failed to demonstrate any mitigating factor, convincing this Court to grant any relaxation in favour of the appellant. On the contrary, from a perusal of the records of the Ld. Trial Court and this Court, it is observed that the conduct of the appellant has been grossly dilatory and recalcitrant, delaying the proceedings, both, before the Ld. Trial Court as well as this Court by repeated deliberate non-appearance and non-compliance of the directions passed by the Ld. Trial Court as well as this Court, besides violating the undertaking given to the respondent as well as this Court. Clearly, under such circumstances, this Court is of the considered opinion that no interference in the quantum of sentence awarded by Ld. Trial Court is warranted by CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 42 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.03.03 16:44:46 +0530 this Court, while determining the present appeal, as the sentence awarded to the appellant by the Ld. Trial Court not only corresponds with the crime involved, rather, falls in tandem with the resolute declarations of the superior courts, as hereinunder noted. However, it is apposite to note here that during the proceedings before this Court, a sum of Rs. 70,000/- (Rupees Seventy Thousand only) was paid by/on behalf of the appellant to the respondent on 05.06.2024, which requires due consideration/adjustment, while determining the quantum of fine/compensation directed to be paid by the appellant in the instant case. Needless to mention that the appellant deliberately opted not to deposit 20% (twenty percent) of the fine amount, in terms of the provisions under Section 148 NI Act, as directed by this Court on 23.02.2024, leading to this Court vacating the order of stay of operation of the impugned order of sentence on 01.08.20241.
40. Conclusively, in view of the above discussion, the present appeal deserves to be rejected/dismissed and is hereby dismissed. The judgment dated 11.12.2023 and the consequent order of sentence dated 24.01.2024, passed by the learned Metropolitan Magistrate-05/Ld. MM-05 (NI Act), Central, Tis Hazari Courts, Delhi in case bearing; " Lal Babu Shah v. Dharam Singh, CC No. 13519/2017", convicting the appellant for the offence punishable under Section 138 Negotiable Instrument Act and awarding the appellant, in the manner as hereinunder noted, are hereby upheld.
41. Trial Court Record be sent back along with a copy of this order/judgment with directions to proceed against the appellant as per law. Needless to mention, the appellant has 1 In terms of the decision in Gulshan Arora v. State (NCT of Delhi, 2023 SCC Online Del. 2616.
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 43 of 44 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.03.03 16:44:50 +0530 deliberately opted not to appear before this Court since 23.09.2024, despite repeated notices as hereinunder observed and this Court had appointed Ld. Amicus Curiae, to represent the appellant in the present case, considering that persistent absence of the appellant and the change of counsel. Needless to reiterate, arguments on the present appeal have been duly addressed by Ld. Amicus Curiae as well as by the Ld. Counsel for the respondent.
Copy of this order/judgment be also given dasti to Ld. Amicus Curiae for the appellant.
42. Appeal file be consigned to record room after due compliance. Digitally signed by ABHISHEK GOYAL ABHISHEK Date:
GOYAL 2025.03.03
16:44:55
+0530
Announced in the open Court (Abhishek Goyal)
on 03.03.2025. ASJ-03, Central District, Tis Hazari Courts, Delhi CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 44 of 44