Delhi District Court
Raj Creation vs Mohd. Irfan on 11 June, 2025
In The Court of Sh. Divyam Lila, Municipal Magistrate, East, Delhi
CC NI ACT/2700/2018
CNR DLET020046172018
No.
Presented
on : 30-06-2018.
Registered on : 30-06-2018.
Decided on : 11-06-2025.
Duration : 6 years, 11 months, 11 days.
(Complainant): M/s Raj Creations
Through its Proprietor Sh.Vivek Singh,
R/o: At IX/6786, Ground Floor, 719/2, Kapoor Basti,
Gandhi nagar, Delhi-110053
DIVYAM
VERSUS LILA
Digitally signed by DIVYAM
(Accused) Sh. Mohd. Irfan S/o Sh. Shaukat Ali, LILA
Location: Court Room no.
12, KKD, East, Delhi
R/o B-9/58, Gali no.1, Kabir Nagar, Delhi Date: 2025.06.11 17:02:15
+0530
_______________________________________________________________
Advocate appearing for the complainant: Sh. Manoj Chauhan
Advocate appearing for the accused: Sh. Fahimuddin
Offence punishable under: 138 of Negotiable Instruments Act 1881
Final Order: Acquittal
_______________________________________________________________
-:Index of Judgment:-
1.Introduction:-.................................................................................................. 2
2. Brief Facts of the Case:-................................................................................. 2
3. Notice Framed on the Accused and Plea of the Accused.............................3
4. Issues for Determination:............................................................................... 3
5. Evidence on Record........................................................................................ 3
6. Legal Position:.................................................................................................7
7. Arguments of the parties:.............................................................................10
8. Analysis and Findings:................................................................................. 13
10. Conclusion and Reason for decision:........................................................ 22
11. Order:...........................................................................................................22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi
-:Judgement:-
1. Introduction:-
a. This judgment adjudicates a complaint filed under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "NI Act") by the complainant against the accused for the alleged dishonour of a cheque in the case based on the commercial transaction due.
2. Brief Facts of the Case:-
a. The case of the complainant is that complainant is running business of manufacturer and traders of own kinds of jacket, jeans and fancy pants etc. at Gandhi Nagar Delhi and accused approached to the complainant office to purchased goods on dated 30.12.2017 vide invoice No. 016 worth amount Rs. 1,64,692.50/- and on dated 30.12.2017 vide invoice No. 017 worth amount Rs. 1,72,095/- and on dated 31.12.2017 vide invoice No. 018 worth amount Rs.
1,63,222.25/- total amount Rs 5,00,009.75/-. The case of the complainant is that the cheque in question was issued to discharge the said liability.
b. The present case pertains to the cheque (No. 000073, dated 30.04.2018, for Rs. 5,00,000) drawn on HDFC Bank, Yamuna Vihar Branch, Delhi, to discharge a liability of Rs. 5,00,009.75. (hereinafter referred to as cheque in question.) The cheque was dishonored on 01.05.2018 for "Funds Insufficient," and despite a legal notice dated 15.05.2018, the accused failed to pay within 15 days, committing an offence under Section 138.
c. Hence, the cognizance in the present matter was taken, and the accused was summoned for the purpose of trial.
CC no. 2700/2018 Raj Creations vs Mohd Irfan page 2/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi
3. Notice Framed on the Accused and Plea of the Accused a. The accused was served notice under Section 251 Cr.P.C and he pleaded "not guilty".
b. The accused denied filing the name of the payee on the cheques but admitted filling the particulars on the cheque in question. The accused also denies receiving the legal notice. The accused also denied issuing the cheques to the complainant.
c. In his defense, the accused claimed that he had given the cheque in question to one Sajid Ali for security, and he did not issue the cheque to the complainant. The accused stated that he had a business of construction and his cheque had been misused by the complainant.
4. Issues for Determination:
a. The cheque was issued in discharge of a legally enforceable debt or liability.?
b. The cheque was presented within the period of validity of three months?.
c. The cheque was dishonoured for insufficiency of funds.? d. A legal notice was duly served.?
e. The accused failed to make payment within the prescribed period. f. The accused has successfully rebutted the statutory presumption under Sections 118 and 139 of the NI Act.?
5. Evidence on Record a. Complainant's Evidence: The complainant, Sh. Vivek Singh, proprietor of M/s Raj Creation, presented his case through an evidence affidavit (marked as the statement of CW-1) and oral testimony before the court. He reiterated the contents of the CC no. 2700/2018 Raj Creations vs Mohd Irfan page 3/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi complaint in his chief examination. The cross-examination of Sh. Vivek Singh (CW-1) was conducted by Sh. Fahimuddin, the learned counsel for the accused, revealing several inconsistencies and weaknesses in the complainant's case. Key points include:
i. The complainant could not specify his earnings from Raj Creation in 2014-2015 or total sales in 2016-2017, admitting he lacked precise records. He stated current monthly sales are Rs. 5-6 lakh but could not recall sales figures for 2017.
ii. He was unsure whether Sales Tax was paid in 2015-2016 but confirmed obtaining a GST number when mandated. No balance sheet or sundry debtor list for 2016-2017 or 2017-2018 was filed, though he promised to consult his CA to produce them.
iii. His ITR for 2017-18 (Ex. CW-1/N) showed a personal income of Rs. 2,58,220, and he admitted no separate PAN for the firm exists.
iv. He admitted the original bill book was lost during shifting and is still being searched for, with invoices (Ex. CW-1/C, D, E) generated from Tally software. He promised to provide Tally data and GST payment proof but could not produce the physical sales register, claiming it was lost.
v. No E-Way Bills were generated for transactions exceeding Rs. 1 lakh (Invoices No. 016 and 017), despite GST rules mandating them, and no acknowledgment or delivery proof was available.
CC no. 2700/2018 Raj Creations vs Mohd Irfan page 4/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi vi. He stated the Sales Register (Ex. CW-1/L) and GST records (Ex. CW-1/M) were computer-generated, lacking his signature or seal, and the GST Portal data did not specify payments against individual invoices.
vii. He claimed the accused was introduced by Zubair, whose phone number he recalled during cross-examination, but admitted Zubair was not involved in the transaction and was not contacted for credit approval. Zubair was not examined as a witness.
viii. He last visited the accused's shop five years ago and had no other transactions with him, contradicting claims of a business relationship. The accused's address was not verified, and no E-Way Bill or delivery receipt was prepared.
ix. He relied on his counsel to send the legal notice (Ex.
CW-1/F) but could not confirm its receipt by the accused.
x. He admitted his father managed the business post-Corona and that account books, including the sundry debtor list, were not maintained or filed, though debtors existed.
xi. He acknowledged Rajkumar, a relative and former landlord, as a business contact for denim washing, but denied knowledge of Rajkumar's wife or property dealings with Sajid Ali, despite the accused's allegations of cheque misuse through them.
xii. He denied suggestions of forging invoices, colluding with Rajkumar, or filing a false case, asserting all documents were genuine and GST was paid (though unproven for the CC no. 2700/2018 Raj Creations vs Mohd Irfan page 5/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi specific invoices). He could not bring ITR for 2016-2017, as his CA confirmed filings began in 2017-18 after obtaining a GST number.
b. Statement of accused : Under Section 313 Cr.P.C. r/w Section 281 Cr.P.C; the accused denied the complainant's allegations, asserting that he had no business dealings with Raj Creation or its proprietor, Sh. Vivek Singh, and met the complainant for the first time in court. He claimed the cheque in question was not issued to the complainant but was given as security to one Sajid Ali, a resident of Kardampuri, Shahdara, Delhi, in connection with a construction-related transaction. He admitted the cheque pertains to his HDFC Bank account and bears his signature, but contended that the payee's name was not filled by him, suggesting misuse. He denied receiving the legal notice dated 15.05.2018 (Ex. CW-1/F), though he confirmed the address was correct, and disclaimed knowledge of the complainant's invoices (Ex. CW-1/C, D, E), Sales Register (Ex. CW-1/L), GST records (Ex. CW-1/M), and ITR (Ex. CW-1/N). He alleged the complaint was false and fabricated, asserting no liability towards the complainant, and expressed his intent to lead defense evidence.
c. Defence Evidence: The accused, Mohd. Irfan, examined himself as DW-1 being the sole witness of the defence. In his defence he gave the complete denial of any transactional relationship with the complainant. He reiterated his stand taken in his statement under Section 313 of the Cr.P.C that he asserted that he had no business dealings with the complainant and met him for the first time in court, labeling the complaint as false and fabricated. He further supported his defense by filing a complaint against Sajid Ali, CC no. 2700/2018 Raj Creations vs Mohd Irfan page 6/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi Rajkumar, Kavita Kumari, Vivek Singh/Raj Creation, and Shakil Ahmad (Ex. DW-1/1, a bundle of 51 pages), alleging misuse of the cheque, which remains pending disposal. He described his business activities as running a mobile shop and engaging in property dealing and construction, providing context for his dealings with Sajid Ali, and maintained that he has no liability towards the complainant. During cross-examination by Sh. Manoj Chauhan, the complainant's counsel, the DW-1 faced scrutiny but adhered to his defense. He firmly denied any cordial business relations with the complainant or receiving goods such as jeans and jackets, rejecting the authenticity of the invoices (Ex. CW-1/C, D, E) as evidence of such transactions. He refuted the suggestion that he issued the cheque to Raj Creation to repay a debt, insisting it was given to Sajid Ali as security. He also denied receiving the legal notice dated 15.05.2018 or responding to it, though he acknowledged filing a complaint against the complainant after the present case was initiated. When challenged that this complaint was a counterblast devoid of merit, he disagreed, asserting that the annexed documents were unrelated to the complainant and supported his claim of cheque misuse. He consistently denied a Rs. 5 lakh liability towards Raj Creation and rejected suggestions that he was deposing falsely, maintaining the integrity of his defense throughout the cross-examination.
6. Legal Position:
a. In order to constitute an offence under Section 138 of the Negotiable Instruments Act, 1881, the following essential elements must be satisfied as per the judgement in Kusum Ingots & Alloys CC no. 2700/2018 Raj Creations vs Mohd Irfan page 7/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi Ltd. Vs. Pennar Peterson Securities Ltd. AIR 2000 SC 954 ,both in the complaint and the evidence presented by the complainant:
i. Drawing of the Cheque: The accused must have drawn a cheque on an account maintained by them, for the payment of a legally enforceable debt or liability to another person. ii. Timely Presentation: The cheque must be presented to the bank for payment within three months from the date on which it was drawn, or within the period of its validity, whichever is earlier.
iii. Dishonour of the Cheque: The cheque must be dishonoured by the bank due to either insufficient funds in the account or because the amount exceeds the arrangement made with the bank.
iv. Notice of Demand: The payee or holder of the cheque must issue a written demand for payment to the drawer, within 30 days of receiving information from the bank regarding the dishonour.
v. Failure to Pay: The drawer must fail to make payment within 15 days of receiving the notice of demand.
b. Additionally, the provisions of Sections 139 and 118 of the Act further strengthen the case for the complainant. Section 139 creates a presumption in favour of the holder of the cheque, mandating that the court shall presume, unless proven otherwise, that the cheque was issued for the discharge of a debt or other liability. Section 118, on the other hand, provides that there is a presumption that every negotiable instrument, including a cheque, was made for consideration, and that it was transferred for consideration. c. In the case of Basalingappa v. Mudibasappa (2019) 5 SCC 418;, the Hon'ble Supreme Court has laid down that once the execution CC no. 2700/2018 Raj Creations vs Mohd Irfan page 8/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi of the cheque is admitted, Section 139 imposes a rebuttable presumption in favour of the complainant, establishing that the cheque was issued for the discharge of a debt or liability. The presumption is rebuttable and the accused has the opportunity to raise a probable defence. The standard of proof for rebutting this presumption is based on the preponderance of probabilities. d. The court further held that it is not mandatory for the accused to enter the witness box to prove their defence. They may rely on the evidence presented by the complainant or any other available materials. The onus to rebut the presumption lies on the accused, but it is important to note that this is an evidentiary burden, not a persuasive one.
e. Thus, Section 138 operates on the principle of reverse onus of proof: once the complainant proves the essential elements of dishonour, the burden shifts to the accused to raise a plausible defence. The presumption of guilt is strong, but not irrebuttable, and the accused is entitled to challenge it through a preponderance of evidence.
f. In the backdrop of legal position as enunciated above, it is to be examined by this Court that whether the accused on a scale of preponderance of probabilities has been able to rebut the presumption which has been raised against him and in favour of the complainant, or has been able to demolish the case of the complainant to such extent so as to shift the onus placed upon the accused again on the complainant. As held by Hon'ble Supreme Court of India in case of Kumar Exports vs Sharma Carpets (2009) 2 SCC 513, the accused can either prove the non−existence of the consideration and debt by direct evidence or by bringing on record such facts and circumstances, upon consideration of which, CC no. 2700/2018 Raj Creations vs Mohd Irfan page 9/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi the Court may either believe that the consideration and debt either did not exist or their non−existence was so probable that a prudent man may act upon the plea that they did not exist. If the Court comes to the conclusion that the accused has not been able to rebut the presumption raised against him by failing to bring on record direct evidence or by even failing to sufficiently perforate the case of the complainant, the complainant is entitled to a decision in his favour.
7. Arguments of the parties:
a. Arguments by Ld. Counsel for the Complainant : The learned counsel for the complainant submitted that the case is squarely covered under Section 138 of the Negotiable Instruments Act, 1881, and the accused is liable for the dishonour of the cheque. The key arguments advanced by the counsel urged the court to convict the accused, are as follows:
i. Prima Facie Case Established Under Section 138 NI Act:
The complainant has fulfilled all requirements of Section
138. The accused failed to pay, committing an offence under Section 138.
ii. Presumption of Legally Enforceable Debt: Under Section 139 NI Act, it is presumed that the cheque was issued for a legally enforceable debt. The complainant supplied goods worth Rs. 5,00,009.75 to the accused on 30.12.2017 and 31.12.2017, as evidenced by invoices (Ex. CW-1/C, D, E).
The accused has not rebutted this presumption with credible evidence (ref. Rangappa v. Sri Mohan, (2010) 11 SCC 441). iii. Documentary Evidence Supports Transaction: The complainant produced Invoices (Ex. CW-1/C, D, E) detailing CC no. 2700/2018 Raj Creations vs Mohd Irfan page 10/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi the supply of jackets, jeans, etc. Sales Register (Ex. CW-1/L) and GST Portal screenshot (Ex. CW-1/M) showing tax compliance. ITR for 2017-18 (Ex. CW-1/N) and Section 65B certificate (Ex. CW-1/O) for electronic records. These documents corroborate the transaction, and minor gaps (e.g., missing E-Way Bills) are not fatal, as Section 138 focuses on cheque dishonor, not transaction formalities.
iv. Accused's Admission Strengthens Case: The accused admitted the cheque bears his signature and handwriting (except the payee's name), confirming its authenticity. His claim of issuing it to Sajid Ali as security is vague, unsupported by evidence (e.g., Sajid Ali's testimony), and a mere afterthought to evade liability.
v. Legal Notice Served: The accused's denial of receiving the legal notice is baseless, as it was sent to his correct address via registered post. Courts presume service in such cases. b. Arguments by Ld. Counsel for the Accused : The learned counsel for the accused vehemently argued that the complainant has failed to prove the existence of a legally enforceable debt, and the case is based on a fabricated narrative to extort money. The key arguments advanced by the counsel, while praying for the acquittal of the accused, are as follows:
i. No Transaction with Complainant: The accused denies any business dealings with Raj Creation or purchasing goods worth Rs. 5,00,009.75. He met the complainant for the first time in court, and no evidence (e.g., communication records, delivery receipts) links him to the alleged transaction. ii. Cheque Issued as Security to Third Party: The cheque was issued to Sajid Ali as security in a construction-related deal, CC no. 2700/2018 Raj Creations vs Mohd Irfan page 11/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi not to the complainant. The accused admitted his signature and handwriting (except the payee's name), suggesting a blank cheque was misused.
iii. Complainant's Evidence Unreliable: The complainant's case is riddled with gaps as Transactions exceeding Rs. 1 lakh (invoices Ex. CW-1/C, D) required E-Way Bills under GST rules, but none were produced, casting doubt on the supply. No acknowledgment or transport receipt proves goods were delivered to the accused. The original bill book is lost, and the Sales Register (Ex. CW-1/L) lacks authentication (no signature/seal). No sundry debtor list names the accused. The complainant's ITR (Rs. 2,58,220 income) contradicts claimed monthly sales of Rs. 5-6 lakh, undermining the capacity for a Rs. 5 lakh transaction.
iv. Rebuttal of Section 139 Presumption: The accused has rebutted the presumption of a legally enforceable debt under Section 139 by raising a probable defense of cheque misuse, supported by the complainant's evidentiary deficiencies.\ v. Pending Complaint Against Misuse:The accused filed a complaint against Sajid Ali, Vivek Singh, and others (Ex. DW-1/1) for cheque misuse, which is pending. This supports his claim of a third-party transaction and disputes the complainant's narrative, creating reasonable doubt.
8. Analysis and Findings:
a. Issue 1 - Issuance of Cheque: This ingredient pertains to the issuance of the cheque in question itself. The Accused, in his notice of accusation has stated that his signature was present on the CC no. 2700/2018 Raj Creations vs Mohd Irfan page 12/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi cheque in question. The plea of the accused that the date of the cheque in question was not filled by him is of no help; as the signature of the accused on the cheque is not disputed. Reliance can be placed, at this juncture, wherein Hon'ble High Court of Delhi in Ravi Chopra Vs. State and Anr. (2008) 102DRJ147, held:
"Section 20 NI Act talks of "inchoate stamped instruments" and states that if a person signs and delivers a paper stamped in accordance with the law and "either wholly blank or have written thereon an incomplete negotiable instrument" such person thereby gives prima facie authority to the holder thereof "to make or complete as the case may be upon it, a negotiable instrument for any amount specified therein and not exceeding the amount covered by the stamp." "A collective reading of the above provisions shows that even under the scheme of the NI Act it is possible for the drawer of a cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up at a subsequent point in time and presented for payment by the drawee. There is no provision in the NI Act which defines the difference in the handwriting or the ink pertaining to the material particulars filled up in comparison with the signature thereon as constituting a 'material alteration' for the pur- poses of Section 87 NI Act. What is essential is that the cheque must have been signed by the drawer." Further, in Bir singh Vs. Mukesh Kumar, (2019) 4 SCC 197 it was held that:-"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." Hence, In the present case, Prima facie the ingredient that the cheque was issued to the complainant has been CC no. 2700/2018 Raj Creations vs Mohd Irfan page 13/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi satisfied as the accused tacitly admitted her signature on the cheque and the account of society. Having admitted the basic ingredient, the presumption is drawn against the accused and now the accused would have to prove that the cheque in question was not issued by him for discharge of the liability; by way of rebuttal of the presumption drawn against him. Whether the accused was able to successfully rebut the adverse presumption is dealt in detail in the issue no. 6; However, the issue no. 1 is decided in favour of the complainant and the presumption is drawn against the accused.
b. Issue 2 - Presentation within Validity: The essential requirement of the offence under section 138 NI act is that the cheque has to be presented within three months of the date of the cheque. This ingredient stands satisfied on a bare perusal of the cheque in question Ex. CW1/3 and the return memo Ex. CW1/4 being presented within the period of validity. The cheque is also not dishonoured with the remark "instrument stale"; as the cheque has been dishonoured with a return memo noting the reason for return as "Funds Insufficient". The defence has led no evidence to controvert the same and hence, this ingredient stands fulfilled as against the accused. Hence, this issue is also decided in favour of the complainant and the cheque has been proved to be dishonoured within the period of validity.
c. Issue 3 - Dishonour of Cheque: The essential requirement of the offence under section 138 NI act is that the cheque has to be dishonoured; and the cheque in question must not have been encashed upon subsequent presentation. The bank return memo Ex. CW1/B records state that the cheque in question has been returned dishonoured for the reason "Funds Insufficient". The defence has CC no. 2700/2018 Raj Creations vs Mohd Irfan page 14/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi led no evidence to contradict the same and hence, this ingredient also stands satisfied as against the Accused. Hence, this issue is also decided in favour of the complainant and the cheque has been proved to be dishonoured.
d. Issue 4 - Legal Notice: The essential requirement of the offence under section 138 NI act is that notice on the accused demanding the amount of cheque shall be issued by the complainant. Service of the legal notice is the legal fiction which constitutes the major ingredient of the offence u/s-138 NI Act. The objective of serving legal demand notice to the Accused before filing the case is to allow the accused to make the payment. As regards the service of legal demand notice, the Complainant has sent the same to the Accused. That the Accused has in his notice of accusation u/s 251 Cr.P.C denied receiving the legal demand notice and also in the statement of Accused u/s 313 Cr.P.C read with Sec-281 Cr.P.C. The accused has admitted that his address is correct as mentioned on the legal notice. The accused has also not led any positive evidence to prove that the legal notice was not served on him, nor any evidence to prove that the address on the legal notice is incorrect. The sec. 27 of the general clauses act provides for the presumption for the service. At this stage, reliance can be placed on the judgement of the Hon'ble Supreme Court of India in C.C. Alavi Haji Vs. Palapetty Muhammed, 2007 (6) SCC 555 while discussing the true intent behind the service of legal demand notice as a precursor to the launch of prosecution held that the service of summons of the court is opportunity enough for the accused to pay the cheque amount and evade prosecution and any accused who fails to pay the amount within 15 days of the service of summons, CC no. 2700/2018 Raj Creations vs Mohd Irfan page 15/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi clearly cannot protect himself/herself behind the technical demand of non-service of legal notice. Thus, in absence of any evidence against the presumption of service and admission of the accused with respect to address being correct, this issue is also decided in favour of the complainant and the service of legal notice has been proved.
e. Issue 5 - Non-Payment within 15 Days: The essential requirement of the offence under section 138 NI act is that upon issuance of the legal notice, the complainant must not have paid the whole of the cheque amount. In the present case, after the issue no. 4 is against the accused, the case of the accused is that he does not have any liability towards the complainant in form of cheque amount and his cheque was misused. Hence, it is an admitted position that no payment for the cheque in question was made and thus this ingredient of non-payment within 15 days also stands satisfied. Hence, this issue is also decided in favour of the complainant and the cheque has been proved to be not paid by the accused despite service of notice.
9. Issue 6 : Defence of the Accused and Rebuttal of Presumption: The accused had sought to bring on record the defense that the accused had no relationship with the complainant, no transaction was committed, the cheques were misused. In the present case, the accused had made following attempts towards rebuttal of the evidence against him; and with the following observations, it is held that the issue no. 6 is decided against the complainant and in favour of the accused:-
a. Inability to Produce Business Documents to Corroborate the Sale: The complainant alleged that the accused purchased goods CC no. 2700/2018 Raj Creations vs Mohd Irfan page 16/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi worth Rs. 5,00,009.75 on 30.12.2017 and 31.12.2017, as evidenced by invoices (Ex. CW-1/C, D, E). However on cross examination of the complainant, critical business records to substantiate this sale, were found to be conspicuously absent. The absence of these documents casts significant aspersions on the credibility of the underlying transactions. Following documents are absent:
i. Lost Original Bill Book: The complainant admitted the original bill book was lost during shifting, from which the invoices on record were purportedly issued . No explanation such as theft, fire, or natural calamity was provided for this loss, nor was any effort documented (e.g., police complaint or affidavit) to account for its destruction. The absence of the primary source document undermines the authenticity of the invoices on record.
ii. Unverified Sales Register: The Sales Register (Ex. CW-1/L) was a computer-generated document from Tally software, lacking the complainant's signature, firm's seal, or forensic audit trail to verify its integrity. The complainant has clearly stated that the CA prepared the said register and accounts in software, however the complainant did not examine the CA concerned to examine the accounts. This lapse is significant in the background information of the sales register itself being lost, as admitted by the complainant in his cross examination.
iii. Missing Balance Sheet: No balance sheet for 2016-17 or 2017-18 was produced to demonstrate the complainant's financial capacity to supply goods of such value. This omission casts doubt on transaction, and adverse inference CC no. 2700/2018 Raj Creations vs Mohd Irfan page 17/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi has to be drawn against the complainant that the evidence would have been against the complainant.
b. Failure to Prove Transactional Relationship: The complainant failed to establish a prior or ongoing transactional relationship with the accused, which is critical to proving a legally enforceable debt:
i. No Evidence of Prior Transactions: The complainant vaguely referenced prior dealings, including alleged cash transactions with his brother, but provided no documentary evidence (e.g., receipts, bank statements) or witness testimony to substantiate these claims. The non-examination of the complainant's brother, who allegedly interacted with the accused, is a glaring omission, especially given the accused's categorical denial of any business relationship with the complainant. The non examination becomes more glaring when the defence of the accused was clear that the accused was known to the brother of the complainant, and the accused did not know the complainant.
ii. Role of Zubair Unsubstantiated: The complainant claimed he knew the accused through a third person, Mr. Zubair, who assured the accused's creditworthiness. However, he admitted Zubair was neither involved in nor consulted about the transaction in question, and no communication (e.g., calls, messages) with Zubair was produced to verify the credit arrangement. Zubair's non-examination as a witness is fatal, as his testimony could have established the complainant's link to the accused. The omission to examine the person Zubair is more glaring when the accused has clearly suggested to the complainant/ CW-1 that no such CC no. 2700/2018 Raj Creations vs Mohd Irfan page 18/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi person exists and therefore adverse suggestions has to be drawn against the complainant.
iii. No Contractual Basis: The complainant did not produce any agreement, purchase order, or correspondence to formalize the alleged sale or credit terms. The claim of a 45-day credit period, supported only by the post-dated cheque, lacks independent verification, further eroding the transactional narrative.
iv. Failure to Prove GST Payment for Invoices: The complainant could not demonstrate that GST was paid specifically for the invoices in question (Ex. CW-1/C, D, E), each exceeding Rs. 1 lakh. The GST Portal screenshot (Ex. CW-1/M) shows monthly tax payments but does not link them to the alleged transactions. Under the Central Goods and Services Tax Act, 2017, transactions above Rs. 50,000 require E-Way Bills, yet the complainant admitted none were generated and no explanation was given by the complainant for the same. This non-compliance with GST regulations, coupled with the inability to prove invoice-specific tax payments, casts significant doubt on the transaction's legitimacy.
v. Financial Inconsistencies Undermine Complainant's Case:
The complainant's ITR for 2017-18 (Ex. CW-1/N) declared an income of Rs. 2,58,220, which is inconsistent with claimed monthly sales of Rs. 5-6 lakh. This discrepancy raises doubts about the complainant's capacity to undertake a Rs. 5 lakh transaction. The absence of a balance sheet, sundry debtor list, or ITR for 2016-17 further erodes the claim of a substantial commercial deal.
CC no. 2700/2018 Raj Creations vs Mohd Irfan page 19/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi c. Non-Examination of Key Witnesses: The complainant's case suffers from the failure to examine critical witnesses who could have corroborated the transaction. Zubair's testimony was essential to confirm the complainant's knowledge of the accused and the basis for extending credit. The complainant referenced prior cash transactions involving his brother, but the brother was not examined to substantiate these dealings or the accused's familiarity with Raj Creation. The complainant stated that a Chartered Accountant (CA) maintained ledgers on Tally software, yet no accountant was called to authenticate the Sales Register (Ex. CW-1/L) or explain the loss of account books. The absence of expert testimony to validate financial records is a critical evidentiary gap. No employee, transporter, or delivery agent was examined to confirm the physical supply of goods, leaving the complainant's claim of personal delivery by the accused uncorroborated. These omissions have eroded the credibility of the case of the complainant and appears fatal to the case. d. Probable Defense by the Accused: The accused presented a plausible defense that the cheque was issued as security to Sajid Ali in a construction-related transaction and misused by third parties, including Sajid Ali and Rajkumar. This defense gains traction due to several factors:
i. Complainant's Admission of Ties to Mr. Rajkumar: The complainant acknowledged a relationship with Mr. Rajkumar, a relative and former landlord who engaged in denim washing job work. The accused alleged that the cheque was misused through Sajid Ali and Rajkumar, with whom he had prior transactions. This connection, supported CC no. 2700/2018 Raj Creations vs Mohd Irfan page 20/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi by the complainant's admission, lends credibility to the defense.
ii. Pending Complaint Against Third Parties: The accused filed a complaint against Sajid Ali, Vivek Singh, Rajkumar, and others (Ex. DW-1/1), alleging cheque misuse, and produced documents related to cases against them. While the complaint is pending, it corroborates the accused's claim of a dispute involving third parties, creating a probable alternate scenario.
e. Rebuttal of Presumption under Section 139 NI Act: Section 139 presumes the cheque was issued for a legally enforceable debt, but the accused need only rebut this on a balance of probabilities (ref. Rangappa v. Sri Mohan, (2010) 11 SCC 441). The accused's consistent denial of any transaction, combined with the complainant's evidentiary deficiencies of missing E-Way Bills, no delivery proof, lost records, and unexamined witnesses; creates reasonable doubt. Here, the complainant's failure to substantiate the sale or relationship, alongside the accused's probable defense, satisfies this standard. The accused has successfully rebutted the presumption drawn against him.
10.Conclusion and Reason for decision:
a. The Issue no. 1, 2, 3, 4 and 5 were decided in favour of the complainant. In the issue no. 6, The accused was tacitly able to rebut the presumption drawn against him by fracturing the case of the complainant by rigorous cross examination to expose the latent defects, whereas the complainant has failed to discharge the burden CC no. 2700/2018 Raj Creations vs Mohd Irfan page 21/ 22 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi of proving that the accused owed a legally enforceable debt or that the cheque was issued to discharge such a liability. b. The accused is able to cross the threshold of preponderance of probabilities to prove his innocence and the complainant was unable to establish his case for setting up statutory presumption against the accused, due to failure of proving the transaction and the non examination of key witnesses. Hence, the benefit of doubt has to be extended to the accused, and thus the case of the complainant does not survive the rigours of trial.
11.Order:
a. The accused Mohd Irfan is acquitted of the offence under Section 138 NI Act.
b. The bail bonds of the accused and the sureties (in any), that are already filed in the court for the purpose of bail, are retained for the purpose of section 437 A Cr.P.C for the period of six months from today.
c. The signed copy of the judgement be uploaded on the CIS immediately.
d. Let the file be consigned to the record room, after due compliance. e. Pronounced in open court and in presence of both the parties/ or their Counsels. DIVYAM (DIVYAM LILA) LILA Municipal Magistrate, East District Digitally signed by DIVYAM LILA Karkardooma Court/Delhi Location: Court Room no. 12, KKD, East, Delhi Date: 2025.06.11 17:02:27 Date: 11.06.2025 +0530 ____________________end of the document__________________________ CC no. 2700/2018 Raj Creations vs Mohd Irfan page 22/ 22