Delhi District Court
Complainant vs . on 9 June, 2022
IN THE COURT OF METROPOLITAN MAGISTRATE (NI-05),
WEST, TIS HAZARI COURTS, NEW DELHI
Presided over by- Devanshu Sajlan, DJS
Case No. - Ct. Cases 7935/2016
Unique Case ID No. - DLWT02-004737-2015
In the matter of :-
Sanjiv Puri
... Complainant
VS.
Mohit Sethi
... Accused
1. Name of Complainant : Sh. Sanjiv Puri
2. Name of Accused : Sh. Mohit Sethi
3. Section 138, Negotiable Instruments
Offence complained of or proved :
Act, 1881.
4. Plea of Accused : Not Guilty
5. Date of Filing : 09.03.2015
6. Date of Reserving Order : 30.05.2022
7. Date of Pronouncement : 09.06.2022
8. Final Order : Acquitted
DEVANSH Digitally signed by
DEVANSHU SAJLAN
U SAJLAN Date: 2022.06.09
13:18:44 +05'30'
CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 1 OF 19
Argued by: Sh. Saurabh Tewari, learned counsel for the complainant.
Sh. Vikash Kumar, learned counsel for the accused.
BRIEF STATEMENT OF REASONS FOR THE DECISION:-
A. FACTUAL MATRIX
1. The present complaint has been filed by Sh. Sanjiv Puri (hereinafter "complainant")
against Sh. Mohit Sethi (hereinafter "accused") under section 138 of the Negotiable
Instruments Act, 1881 (hereinafter "NI Act").
2. The substance of allegations, as contained in the complaint and the evidence affidavit
of the complainant, are as follows:
(a) The complainant and the accused had friendly relations since they were neighbours.
In August 2013, the accused approached the complainant for seeking financial aid of
Rs. 20,00,000 since the accused was facing some financial problem in his business. It
has been further submitted that on account of cordial relationship between the
complainant and the accused, the complainant provided a loan of Rs. 20,00,000 to the
accused in few instalments from August 2013 to October 2013.
(b) It has been further submitted that in discharge of the aforesaid legal debt, the accused
issued a cheque bearing no. 356639 dated 12.11.2014 for Rs. 20,00,000/-, drawn on
Punjab National Bank, Sadar Bazaar Branch.
(c) It has been further submitted that upon the assurance of the accused, the complainant
presented the aforesaid cheque for encashment. However, the cheque was returned
unpaid by the bank for the reason "Payment Stopped by the Drawer" vide return
memo dated 15.11.2014. Thereafter, the complainant sent a legal demand notice
CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 2 OF 19
dated 26.11.2014 to the accused for repayment of the loan amount.
(d) It has been further alleged that upon receiving the legal demand notice dated
26.11.2014, the accused contacted the complainant and assured him that he has all the
intentions to repay the loan amount and accordingly, the accused requested the
complainant to present the cheque again in the last week of January 2015.
Accordingly, the complainant presented the cheque again on 29.01.2015. However,
the cheque was dishonoured again vide return memo dated 31.01.2015 for the reason
"Payment Stopped by Drawer". Left with no option, the complainant again sent a
legal demand notice dated 12.02.2015 to the accused for repayment of the loan
amount.
(e) However, the accused allegedly failed to pay the cheque amount within 15 days and
therefore, the complainant filed the present complaint.
3. Accused's stance, on the contrary, is that he has no legal liability towards the
complainant since he had not taken any loan from the complainant. The accused
further submitted that the cheque in question was taken by the complainant, his wife,
and other persons in the garb of floating a jewelry rental scheme. As per the accused,
wife of the complainant, Smt Vimmi Puri, used to do the business of renting artificial
and real jewelry to her clients on rent basis. The accused has further submitted that
between 2009-2014, wife of the complainant used to take jewelry from the accused
and his wife on rent for further giving the same on rent to her customers. Thereafter,
in 2014, Smt. Vimmi Puri had taken all the jewelry of the accused and his wife on
rent but did not return the same as she had said that the demand for jewelry is very
high (on account of peak wedding season) and that she will pay huge rent to the
accused later. However, wife of the accused had demanded the jewelry back for
attending some family function. Instead of returning the jewelry, wife of the
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complainant had pitched a scheme to the accused and his wife under which a person
could purchase jewelry by paying 10% of the value of jewelry in advance and the
remaining 90% in monthly instalments. As per the accused, the accused and his wife
had given the cheque in question (and other cheques) for payment of monthly
instalment amount for purchase of jewelry from the complainant's wife (as per the
scheme floated by her). When the wife of the complainant did not give any new
jewelry to the accused and his wife, they issued 'stop payment' instructions to the
bank and filed a police complaint against them (complainant and his wife), on which
an FIR has already been registered and a criminal case is pending against the
complainant and his wife in relation to the same.
B. PRE-SUMMONING EVIDENCE & NOTICE
4. Pre-summoning evidence was led by the complainant and on finding a prima facie
case, the accused was summoned to face trial vide order dated 18.03.2015. On
appearance, the accused was served with the notice of accusation under Section 251,
Code of Criminal Procedure, 1973 (hereinafter "CrPC") on 01.06.2015, to which
the accused pleaded not guilty and claimed trial. The accused admitted his signature
on the cheque in question at the stage of framing of notice.
5. Thereafter, the accused moved an oral application u/s 145(2) NI Act which was
allowed vide order dated 01.06.2015 and the complainant was allowed to be cross-
examined by the accused.
C. COMPLAINANT'S EVIDENCE
6. During the trial, the complainant has led the following oral and documentary
evidence against the accused to prove his case beyond reasonable doubt:-
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Oral Evidence
CW1 Sanjiv Puri (Complainant) (tendered his evidence by way
of affidavit and the same is exhibited as CW1/A)
Documentary Evidence
Ex.CW1/1 Cheque in question
Ex. CW1/2 Return Memo dated 16.11.2014
Ex.CW1/3 Legal demand notice dated 26.11.2014
Ex. CW1/4 Return Memo dated 31.01.2015
Ex.CW1/5 Legal demand notice dated 12.02.2015
Ex.CW1/6-Ex. CW1/13 Postal Record
D. STATEMENT OF ACCUSED
7. Thereafter, before the start of defence evidence, in order to allow the accused to
personally explain the circumstances appearing in evidence against him, his statement
under Section 313 CrPC was recorded without oath. In reply, the accused denied all
the allegations against him. The accused submitted the following in his statement
under section 313 CrPC:
The wife of complainant got blank signed cheques from me and my wife for buying
jewellery on instalment basis from jeweller. The jewellery of my wife was already in
the possession of the complainant's wife as she used to give the same on rent. When
we demanded our jewellery back for our personal use, she told us that she will buy new
jewellery from her known to jeweller on instalment basis, for which she asked for
blank signed cheques. Accordingly, I give the blank signed cheques to her. After
sometime, on our demand, when the wife of complainant did not provide any new
jewellery to us and kept on lingering us on one pretext or other, when we demanded
our cheques and old jewellery back, complainant and his wife threatened us that we
should either wait or they will misuse our cheques. On seeing the behaviour of the
complainant and his wife, we got the payment stopped in our bank and filed a
complaint against the complainant, his wife and their associates in PS Kirti Nagar, on
which FIR was lodged against them. Thereafter, we had filed a civil suit for the
cancellation of cheques as well as recovery of jewellery, which is pending before the
court. We do not have any liability as we had never taken any single penny from the
complainant. They have misused our cheques by filing this false case against me.
CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 5 OF 19
E. DEFENCE EVIDENCE
8. After recording of his statement under section 313 CrPC, the accused moved an
application under section 315 CrPC and filed his list of witnesses, which was allowed
vide order dated 09.10.2019. The accused led the following evidence in his defense:
Oral Evidence
DW1 Accused Mohit Sethi
DW2 Wife of the accused Amita Sethi
Documentary Evidence
Ex.DW2/A Certified copy of complaint dated 03.11.2014 lodged
with PS Kirti Nagar against the complainant, his wife
and other persons
Ex. DW2/B Certified copy of FIR bearing no. 133/2016, PS Kirti
Nagar u/s 420, IPC
Ex. DW2/C Certified copy of Seizure Memo along with bills of
jewelries
9. Thereafter, the matter was listed for final arguments. After listening to final
arguments from both sides, the matter was reserved for pronouncement. I have heard
the learned counsels on both the sides and have given my thoughtful consideration to
the material appearing on record. I have also gone through the written submissions
filed by both parties.
F. INGREDIENTS OF OFFENCE AND DISCUSSION
10. Before dwelling into the facts of the present case, it would be pertinent to discuss the
legal standards required to be met by both sides. In order to establish the offence
under Section 138 of NI Act, the prosecution must fulfil all the essential ingredients
of the offence, as highlighted below:-
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First Ingredient: The cheque was drawn by a person on an account maintained by
him/her for payment of money and the same is presented for payment within a period
of 3 months from the date on which it is drawn or within the period of its validity;
Second Ingredient: The cheque was drawn by the drawer for discharge of any
legally enforceable debt or other liability;
Third Ingredient: The cheque was returned unpaid by the bank due to either
insufficiency of funds in the account to honour the cheque or that it exceeds the
amount arranged to be paid from that account on an agreement made with that bank;
Fourth Ingredient: A demand of the said amount has been made by the payee or
holder in due course of the cheque by a notice in writing given to the drawer within
thirty days of the receipt of information of the dishonour of cheque from the bank;
Fifth Ingredient: The drawer fails to make payment of the said amount of money
within fifteen days from the date of receipt of notice.
11. In addition to the above, the conditions stipulated under Section 142 NI Act have to
be fulfilled.
12. Notably, the first, third, fourth and fifth ingredient have been duly proved without
there being any controversy regarding the same:
(a) The complainant has proved the original cheque, Ex. CW1/1, which the accused has
not disputed as being drawn on the account of the accused. The accused has also
accepted his signature on the said cheque. Therefore, the first ingredient is duly
CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 7 OF 19
satisfied.
(b) The cheque in question was returned unpaid vide return memo Ex. CW1/2 and Ex.
CW1/4 due to the reason, "Payment Stopped by Drawer". The Hon'ble Apex Court
has made it clear that even if a cheque is dishonoured because of "stop payment"
instructions given to the bank, Section 138 of the NI Act would get attracted and onus
would be upon the accused to prove that he had issued 'stop payment instructions' for
some valid reasons (see M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P)
Ltd. [(2002) 1 SCC 234], Laxmi Dyechem v. State of Gujarat (2012) 13 SCC 375
and Pulsive Technologies (P) Ltd. v. State of Gujarat, (2014) 13 SCC 18). Therefore,
the third ingredient is duly satisfied.
(c) The complainant has proved on record legal demand notices Ex. CW1/3 and Ex.
CW1/5, along with the postal record (Ex. CW1/6 to Ex. CW1/13). The accused has
duly accepted in his statement under section 251 CrPC that he received both the legal
demand notices Ex. CW1/3 and Ex. CW1/5. Therefore, the fourth ingredient is duly
satisfied.
(d) The fact that the payment was not made within 15 days of the receipt of the legal
notice is also not disputed. As such, on the basis of the above, the first, third, fourth
and fifth ingredient of the offence under Section 138 NI Act stands proved against
the accused.
13. The controversy in the present complaint case pertains to second ingredient.
14. As far as the proof of second ingredient is concerned, the complainant is required to
prove that the cheque in question was drawn by the drawer for discharging a legally
CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 8 OF 19
enforceable debt. In the present case, the issuance of the cheque in question is not
denied. As per the scheme of the NI Act, once the accused admits signature on the
cheque in question, certain presumptions are drawn, which result in shifting of onus
on the accused.
15. The combined effect of section 118(a) NI Act and section 139 of the NI Act is that a
presumption exists that the cheque was drawn for consideration and given by the
accused for the discharge of debt or other liability. Both the sections use the
expression "shall", which makes it imperative for the court to raise the aforesaid
presumptions once the foundational facts required for the same are proved (Hiten P.
Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16). Further, it has been held by the
Hon'ble Apex Court in Rangappa v. Sri Mohan, (2010) 11 SCC 441 that the
presumption contemplated under Section 139 of NI Act includes the presumption of
existence of a legally enforceable debt. In order to rebut the statutory presumption u/s
139 NI Act, the standard of proof is that of preponderance of probabilities, by which
the accused is required to raise a probable defence. To rebut the presumption, it is
open to the accused to rely on evidence led by him/her or the accused can also rely on
the materials submitted by the complainant or the circumstances upon which the
parties rely in order to raise a probable defence (Basalingappa v. Mudibasappa,
(2019) 5 SCC 418).
16. Further, it is pertinent to note that it is a settled position of law that the accused, to
rebut the statutory presumption, 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 (Kumar
Exports v. Sharma Carpets, (2009) 2 SCC 513, ¶ 20).
CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 9 OF 19
17. In this case, arguments raised by the learned counsel for the accused to rebut the
presumption are discussed below.
Contention 1: Material Discrepancies/ Serious Lacuna in the Version of the
Complainant
18. In order to discharge the statutory burden and raise a probable defense, it has been
contended by learned counsel for the accused that there are inherent inconsistencies in
the version of the complainant, as listed below, which create a serious lacuna in the
version of the complainant and lead to a probable defence in favour of the accused:
(i) It has been submitted that in the complaint and the evidence affidavit of the
complainant, it has been stated that the loan amount of Rs. 20,00,000 was
given in instalments between August and October 2013. However, in the list
of dates/ events, filed along with the complaint, it has been stated that the
complainant advanced the loan between August 2013 and January 2015. The
complainant was duly confronted with this discrepancy during his cross-
examination, and he admitted that the loan was advanced in instalments
between August 2013 and January 2015 (and not August 2013 to October
2013). It has been contended that this timeline creates a serious discrepancy in
the version of the complainant, since as per the version of the complainant
itself, the cheque in question was issued in November 2014 for a sum of Rs.
20,00,000 and if the loan amount was advanced till January 2015, the accused
had no legal liability to pay Rs. 20,00,000 to the complainant in November
2014.
(ii) The complaint nowhere mentions the exact dates on which money was
advanced to the accused. During his cross-examination as well, the
CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 10 OF 19
complainant could not remember the exact dates when the money was
advanced to the accused.
(iii) The complainant has deposed in his evidence affidavit that the cheque in
question was handed over on 12.11.2014. However, it has been contended that
the accused had already filed a police complaint against the complainant on
03.11.2014 in which he had specifically mentioned that the cheque in question
(along with other cheques) were in the wrongful possession of the
complainant and hence, it is evident that the complainant's version is
untruthful and suffers from serious lacuna.
19. In support of the aforesaid contention, learned counsel for the accused has relied upon
the judgment of John K. Abraham v. Simon C. Abraham, (2014) 2 SCC 236.
20. It is indeed a settled position of law that serious lacuna in the evidence of the
complainant or material discrepancies in the version of the complainant, which strikes
at the root of a complaint under Section 138 NI Act, can lead to creation of a probable
defense in favour of the accused. In this regard, it is pertinent to reproduce the
following extracts from the judgment of Hon'ble Apex Court in John K. Abraham v.
Simon C. Abraham, (2014) 2 SCC 236:
6. When we examine the case of the respondent complainant as projected before
the learned Chief Judicial Magistrate and the material evidence placed before the trial
court, we find that the trial court had noted certain vital defects in the case of the
respondent complainant. Such defects noted by the learned Chief Judicial Magistrate
were as under:
6.1. Though the respondent as PW 1 deposed that the accused received the
money at his house also stated that he did not remember the date when the said
sum of Rs 1,50,000 was paid to him.
6.2. As regards the source for advancing the sum of Rs 1,50,000, the respondent
claimed that the same was from and out of the sale consideration of his share in the
family property, apart from a sum of Rs 50,000, which he availed by way of loan from
the co-operative society of the college where he was employed. Though the respondent
stated before the court below that he would be in a position to produce the documents
CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 11 OF 19
in support of the said stand, it was noted that no documents were placed before the
court below.
6.3. In the course of cross-examination, the respondent stated that the cheque
was signed on the date when the payment was made, nevertheless he stated that he
was not aware of the date when he paid the sum of Rs 1,50,000.
6.4. According to the respondent, the cheque was in the handwriting of the accused
himself and the very next moment he made a contradictory statement that the cheque
was not in the handwriting of the appellant and that he (complainant) wrote the same.
6.5. The respondent also stated that the amount in words was written by him.
6.6. The trial court has also noted that it was not the case of the respondent that the
writing in the cheque and filling up of the figures were with the consent of the
appellant-accused.
9. It has to be stated that in order to draw the presumption under Section 118 read
along with Section 139 of the Negotiable Instruments Act, the burden was heavily
upon the complainant to have shown that he had the required funds for having
advanced the money to the accused; that the issuance of the cheque in support of the
said payment advanced was true and that the accused was bound to make the payment
as had been agreed while issuing the cheque in favour of the complainant.
11. We find that the various defects in the evidence of the respondent, as
noted by the trial court, which we have set out in para 6 of the judgment, were
simply brushed aside by the High Court without assigning any valid reason. Such
a serious lacuna in the evidence of the complainant, which strikes at the root of a
complaint under Section 138, having been noted by the learned trial Judge, which
factor was failed to be examined by the High Court while reversing the judgment
of the trial court, in our considered opinion would vitiate the ultimate conclusion
reached by it. In effect, the conclusion of the learned Judge of the High Court would
amount to a perverse one and, therefore, the said judgment of the High Court cannot be
sustained. (Emphasis added)
21. Based on the above, it is evident that the accused can raise a probable defense by
showing material discrepancies/serious lacuna in the version of the complainant. I am
of the humble opinion that there are inherent inconsistencies in the version of the
complainant, which strike at the root of the matter, for the reasons as enumerated
hereunder.
22. While the complainant has specifically deposed in his evidence affidavit that the loan
amount was advanced between August 2013 and October 2013, he has taken a
completely contradictory stance in his cross-examination to the effect that the loan
amount was advanced between August 2013 and January 2015. The relevant extract
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from the cross-examination of the complainant is reproduced below for reference:
Q. At this stage, the complainant has [been] shown the copy of the affidavit
showing the date of loan as starting from August 2013 till October 2013. What
[do] you have to say?
A. That might be a clerical mistake. . . The events as mentioned in the list of
events filed by me in present complaint regarding date of payment of loan
installment is correct. It is wrong to suggest that I am not relying on the contents
of my affidavit with regard to dates of payment of loan amount in instalments.
Today, I do not remember the exact dates when the money was advanced to the
accused.
23. Therefore, the complainant has taken a contradictory stance in his cross-examination
as compared to his examination-in-chief with respect to the factum of timeline of
grant of loan. This contradiction cannot be brushed aside as a mere clerical mistake
since it goes to the very factum of grant of loan. It is further pertinent to note that the
contradiction is repeated in the two legal demand notices as well. In the first legal
demand notice dated 26.11.2014 (Ex. CW1/3), it has been stated that the loan amount
of Rs. 20,00,000 was tendered in the last week of August 2013. However, in the
second legal demand notice dated 12.02.2015, Ex. CW1/5, it has been stated that the
loan amount was advanced in instalments from August 2013 to October 2013.
Therefore, at each stage, the complainant has taken a contradictory stance regarding
the timeline of grant of loan:
(i) At the stage of issuance of legal demand notice, two timelines have been
mentioned in relation to grant of loan (i.e., last week of August 2013, in one
tranch, in first legal demand notice and three months, i.e., August to October
2013, in the second legal demand notice).
(ii) Thereafter, at the stage of filing of complaint and evidence-in-chief affidavit,
again two timelines have been mentioned (i.e., August to October 2013 in the
complaint and evidence affidavit as opposed to August 2013 to January 2015
CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 13 OF 19
in the list of dates/ events).
(iii) Thereafter, in his cross-examination, the complainant again changed his
stance and deposed contrary to his examination-in-chief (by deposing that the
loan amount was advanced between August 2013 and January 2015).
24. The said contradiction becomes even more glaring if the date of issuance of cheque is
perused. As per the evidence affidavit, the cheque in question was issued on
12.11.2014. Now, if the version of the complainant, as deposed by him in his cross-
examination, is considered, it becomes evident that the entire loan amount of Rs.
20,00,000 was not advanced by 12.11.2014, since, as per the version of the
complainant, the loan amount of Rs. 20,00,000 was advanced in instalments till
January 2015. Therefore, as on 12.11.2014, the accused did not have a liability to
repay Rs. 20,00,000. In this regard, it is pertinent to note that it is a settled position of
law that where the cheque amount is more than the underlying debt, the complaint is
not maintainable. In Angu Parameswari Textiles (P) Ltd. v. Sri Rajam & Co., 2001
SCC OnLine Mad 922, the Hon'ble Madras High Court has held that:
4. Section 138 of the Negotiable Instruments Act reads that where any cheque was
drawn for payment of any amount of money for the discharge in whole or any part of
any debt or other liability and the same is dishonoured by the Bank, the person who
drew the cheque shall be punishable. Therefore, the cheque drawn should be
towards the discharge of either the whole debt or part of the debt. If the cheque
is more than the amount of the debt due, I am afraid, Section 138 cannot be
attracted. This is a case where the cheque amount was more than the amount due on
the date when the cheque was presented. The presentation of the cheque and
subsequent dishonour alone raises a cause of action. When the cheque cannot be said
to be drawn towards the discharge of either the whole or part of any debt or liability,
Section 138 is not attracted. On this sole ground, the complaint is liable to be quashed
and is accordingly quashed. (emphasis laid)
25. Further, the Hon'ble High Court of Delhi, in Lyca Finance Ltd. v. State, 2016 SCC
OnLine Del 4198, has held that:
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Trial court has meticulously scrutinized evidence adduced by the parties and on the
basis thereof has held that, as per the loan agreement Ex. CW1/B, petitioner had
advanced Rs. 42,600/-. As agreed the interest of Rs. 14,400/- was also payable. Thus,
total amount payable in instalments was Rs. 57,000/-. CW1 admitted in his cross-
examination that respondent no. 2 had already paid about Rs. 40,000/- to petitioner.
Statement of account Ex. CW1/1 indicated that as on 16th February, 2009 Rs.
17,100/- was outstanding balance. Over and above this, overdue charges of Rs.
12,451.48 were added. Even the aggregate of this amount comes to Rs. 29,551.48;
whereas cheque amount was much more than this. Thus, the cheque being of
higher amount could not be taken towards discharge of the existing legal
liability.
26. The said position of law has also been re-iterated in M/s. Alliance Infrastructure v.
Vinay Mittal, 2010 SCC OnLine Del 182.
27. In light of the aforesaid dictum, the present complaint cannot be held to be
maintainable for the reason that the cheque amount (Rs. 20,00,000) is more than the
alleged underlying debt as on 12.11.2014. It is not the case of the complainant that the
cheque in question was given as an advance for payment of future liability. There is
not even a whisper to this effect in the entire complaint or evidence affidavit. It is
further pertinent to note that the cheque in question was dishonoured for the first time
on 15.11.2014. Therefore, the complainant had presented the cheque in question even
before the last instalment in January 2015 was even advanced to the accused (as per
the complainant's own version).
28. Therefore, viewed from the perspective of any timeline, there are inherent
inconsistencies in the version of the complainant. The timeline of August to October
2013 is inherently inconsistent since the complainant has himself resiled from the
same in his cross-examination. With respect to the other timeline of August 2013 to
January 2015, it is evident that the said timeline has inherent inconsistencies since if
the said timeline is relied upon, the debt had not even been advanced completely
when the cheque in question was presented for the first time, and hence, there was no
CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 15 OF 19
legal liability equal to the cheque amount. Accordingly, there are material inherent
inconsistencies and serious lacuna in the version of the complainant which goes to the
root of the present matter and hence, the complaint is liable to be dismissed on this
account only.
29. Secondly, the version of the complainant that the cheque in question was handed over
on 12.11.2014 is also doubtful in light of the contents of Ex. DW2/A (police
complaint dated 03.11.2014). In the said police complaint, the accused and his wife
have stated that they have given 40 blank signed cheques to the wife of the
complainant, Smt. Vimmi Puri for purchase of jewelry and the cheque in question is
duly mentioned (356639) in the said police complaint. The said police complaint was
filed on 03.11.2014 (DD No. 62B) and hence, it is improbable that the cheque in
question would have been handed over on 12.11.2014 once the accused had already
filed a police complaint against the complainant and his wife in relation to the cheque
in question on 03.11.2014. Therefore, the version of the complainant is extremely
doubtful and cannot be relied upon.
30. In light of the above, the accused has been able to show serious lacuna in the version
of the complainant which goes to the root of the matter.
Contention 2: Loan amount not reflected in the ITR
31. Learned counsel for the accused has also contended that the complainant has neither
produced any books of account reflecting the grant of the alleged loan to the accused,
nor has he reflected the said loan amount in the ITR. Accordingly, it has been
contended that the said loan is not a legally enforceable debt since Section 269 SS of
Income Tax Act prohibits a loan of more than Rs. 20,000 in cash, and the said section
specifically states in case of such a loan, it has to be by way of writing reflected in the
books of account. Moreover, it has been contended that the complainant has admitted
CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 16 OF 19
that he has not reflected the loan amount in his ITR and hence, the alleged loan is
based on unaccounted cash, which is not legally enforceable debt.
32. It is a settled position of law that the breach of Section 269 SS of the Income Tax Act
or non-reflection of a loan transaction in ITR does not make such a transaction null
and void (Sheela Sharma v. Mahendra Pal, 2016 SCC OnLine Del 4696; Dilip
Chawla v. Ravinder Kumar, 2017 SCC OnLine Del 9753). To further substantiate,
the penalty for breach of Section 269 SS of the Income Tax Act is provided under
Section 271D of the Income Tax Act, which does not provide that such a transaction
would be null and void. Accordingly, the present complaint case cannot be dismissed
on this account.
33. However, at the same time, it has been held in some decisions that an adverse
inference can be drawn against the complainant if a large amount of loan is not
reflected in the ITR. In Devender Kumar v. Khem Chand, 2015 SCC OnLine Del
12578, it has been held that:
22. Keeping the above proposition of law in mind, on an analysis of fact, the scale of
balance tills in favour of the respondent. The respondent appears to have rebutted the
presumption under Section 139 of the NI Act, namely, the existence of a legally
enforceable debt by establishing that no loan was advanced to him even though there
was an agreement and a corresponding promissory note and an affidavit. The
aforesaid loan was not shown in the ITR return of the petitioner. An adverse
inference could be drawn against the petitioner on that account. The loan amount
also appears to be doubtful.
34. Further, in Kulvinder Singh v. Kafeel Ahmed, 2013 SCC OnLine Del 34, it was held
that:
He has not reflected the loan advanced to the respondent in his income-tax
return nor is he able to tell to the court the Ward in which the income-tax return is
filed. The learned Magistrate has rightly placed reliance on the provisions of Section
269 SS of the Income-Tax Act wherein it is specifically laid down that if a loan is
advanced which is more than Rs. 20,000/-, it has to be by way of writing reflected in
the books of account but nothing of that sort has been done in the instant case.
Obviously, this clearly creates a doubt regarding the truthfulness of the stand
CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 17 OF 19
taken by the petitioner that he had advanced a loan of Rs. 9,30,000/- to the
respondent.
35. Perusal of the aforementioned decisions of the Hon'ble Delhi High Court suggests
that in cases involving a huge amount of loan (as opposed to small/meagre amounts),
the Courts are generally inclined towards treating a loan not disclosed in the income
tax return as unaccounted money which cannot be recovered u/s 138 of the NI Act.
The present case also involves a huge amount of loan of Rs. 20,00,000 and non-
mentioning of the same in the ITR creates a grave doubt as to the grant of loan to the
accused.
36. The non-mentioning of the loan amount in ITR must also be seen in the context of the
fact that the dates on which the loan amount has been advanced is also not clear since
the complainant has taken mutually contradictory stands in relation to the date of
grant of loan (as discussed already above).
G. CONCLUSION
37. In light of the inherent inconsistencies in the version of the complainant, as
highlighted above, there is no need to test the veracity of the defense raised by the
accused. It is a settled position of law that the accused is not required to lead evidence
in each case and the accused can raise a probable defense by showing inherent
inconsistencies in the version of the complainant. It is an elementary principle of law
that the prosecution has to prove its case on its own legs and cannot derive advantage
or benefit from the weakness of the defence. Therefore, the inconsistencies in the
deposition of the accused (as highlighted in the written submissions of the
complainant) are not relevant in light of the serious lacuna in the version of the
complainant, which goes to the root of the matter.
CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 18 OF 19
38. In the backdrop of the above discussion, I am of the considered opinion that the
accused has successfully raised a probable defence in his favour and the complainant
has failed to prove his case beyond reasonable doubt.
39. In the result of analysis of the present case, the accused Mohit Sethi is hereby
acquitted from the charge of offence punishable under Section 138 of the Negotiable
Instruments Act. The bail bond furnished earlier during trial is accepted for the
purposes of section 437-A CrPC.
ORDER :- ACQUITTED.
DEVANSH Digitally signed by DEVANSHU SAJLAN U SAJLAN Date: 2022.06.09 13:19:20 +05'30' Announced in the Open (Devanshu Sajlan) Court on 09.06.2022 MM (NI Act-05), West, THC DELHI CC NO. 7935/2016 SANJIV PURI VS. MOHIT SETHI 19 OF 19