Final Order 8

Order Details: COPY OF JUDGMENT
Pdf Text: IN THE COURT OF MS. SHEFALI BARNALA TANDON,
ADDITIONAL SESSIONS JUDGE-06,
NEW DELHI DISTRICT, PATIALA HOUSE COURT
NEW DELHI
Criminal Appeal No: 221/2024
CNR No. DLWT01-007428/2024
In the matter of :
Sh. Shamim Ahmad
S/o Sh. Najir Ahmad
R/o Mohalla Jainul Abedin,
Post Office Afzalgarh,
Tehsil Dhampur, District Bijnor,
Uttar Pradesh. ..... Appellant
VERSUS
Dhara Motors Finance Ltd.
A Non-Banking Financial Company
Incorporated under Companies Act, 1956
Having its Registered Office at :
Dhara Complex Civil Line - 1,
Bijnor, Uttar Pradesh - 246701.
Branch Office at :
K-814, Noratan Building,
Basant Kunj Road, Mata Chowk,
Mahipalpur, New Delhi-110037. ..... Respondent
Date of Institution 18.09.2024
Date of reserving order 29.11.2025
Date of pronouncement 06.12.2025
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J U D G M E N T
1. The present appeal has been preferred by the appellant
under Section 415 BNSS (374 Cr.PC) assailing the judgment dated
06.07.2024 and order on sentence dated 24.08.2024 (herein after
referred to as the ‘
Impugned Orders’) passed by Ld. MM (NI Act-02),
Patiala House Court, New Delhi (herein after referred to as the ‘Ld.
Trial Court’) in Complaint Case No. 8623/2019 titled as
Dhara Motor
Finance Ltd. Vs. Shamim Ahmad whereby Ld. Trial Court vide
Impugned Orders convicted the appellant/accused for the offence
under Section 138 N. I. Act and sentenced him only to pay fine of
Rs.3,36,632/- to the complainant as compensation and in the event of
failure to payment of fine amount, the appellant/convict shall undergo
simple imprisonment for a period of one month and the fine amount
shall also be recoverable as per the provision of Section 421 Cr.PC.
Arguments addressed on behalf of appellant/convict
2. Assailing the impugned order, Ld. Counsel for the
appellant submitted that the impugned order is based on conjectures
and surmises, against the settled law and material on record; that Ld.
Trial Court failed to appreciate that the complainant/respondent failed
to place any documents on record along with complaint to corroborate
the alleged loan amount to the appellant/convict; that legal demand
notice was never served upon him; that the alleged loan document
produced by the complainant during examination of witness does not
bear the signature of authorities of respondent/complainant company;
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that Ld. Trial Court failed to appreciate that the
complainant/respondent obtained signatures of the appellant on
various blank documents; that the dispute between the parties is civil
in nature and the Ld. Trial Court has no jurisdiction to entertain the
complaint as alleged loan document Ex.CW1/DA states that Courts in
Bijnor alone shall have jurisdiction for the purpose of this Agreement;
that Ld. Trial Court failed to consider that the essential ingredients of
Section 138 of NI Act have not been complied with by the
respondent/complainant.
Arguments addressed on behalf of respondent/complainant
3. Per contra, Ld. Counsel for respondent supporting the
Impugned Order argued that there is no infirmity and illegality done
by the Ld. Trial Court and has rightly convicted and sentenced the
appellant, hence impugned order passed by the Ld. Trial Court does
not warrant any interference by this Court. It has been further argued
that the appellant neither denied of deposition of cheque with
respondent company nor his signatures on the instrument, however,
raised baseless and frivolous grounds. It is further argued that the
cheque duly signed and voluntarily made over to payee towards
discharge of a legally enforceable debt, irrespective of whether cheque
was postdated or blank cheque for filling by payer or any other
person, raise presumption of law under Section 138 of NI Act in
favour of the complainant and it is upon the accused to rebut the
presumption with cogent evidence to prove the contrary, which
appellant failed to do.
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Brief facts on perusal of the record
4. The Court heard the arguments as advanced by Ld.
Counsels for both the parties and have gone through the material
available on record including Trial Court Record.
5. The brief facts necessary for disposal of the present case
are that the appellant/convict approached the respondent company (A
Non-Banking Financial Company incorporated under the provisions
of Companies Act, 1956) for availing Car Loan facility. The
respondent company facilitated the finance to appellant/convict under
the Loan Agreement No. HP3365 duly signed by the
appellant/convict. The said loan was to be repaid in equated monthly
installment, however, the appellant/convict failed to replay the regular
EMIs in term of aforesaid Loan Agreement and in discharge of his
legal liability had issued the cheque bearing No. 460265 dated
18.04.2019 for an amount of Rs.3,36,632 drawn on Punjab National
Bank, Afzal Garh, UP in question in favour of the complainant
company. The said cheque on representation was dishonored and
returned vide returning memo dated 07.05.2019 with remarks “Funds
Insufficient” for which legal notice dated 09.08.2018 was sent to
appellant/convict. Thereafter, the complaint under Section 138 N. I.
Act was filed against the appellant/convict.
6. Upon appearance before the Court, notice was served
upon appellant/convict to which he pleaded not guilty and claimed
trial. He admitted his signatures on the cheque in question but denied
that the same has been filled by him. He also denied of receipt of
legal demand notice. He also stated that he had got many trucks
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financed from the complainant company and he had given the cheque
in question for security purpose as a Guarantor, which has been
misused by the complainant company.
Essential ingredients of the offence U/s 138 NI Act
7. Before delving into merits of the case and dealing with
grounds of appeal, this Court finds it appropriate to discuss the
relevant provisions of law first.
8. To bring home the guilt of an accused for the offence
under Section 138 N. I. Act, Hon’ble Supreme Court of India has
summarized the essential ingredients of said Section in case of
Dashrathbhai Trimbhai Patel Vs. Hitesh Mahenderabhai Patel reported
in
(2023) 1 SCC 578, which reads as under:
“10. Section 138 of the Act provides that a drawer of a
cheque is deemed to have committed the offence if the
following ingredients are fulfilled:
(i) A cheque drawn for the payment of any amount of
money to another person;
(ii) The cheque is drawn for the discharge of the
‘whole or part’ of any debt or other liability. ‘Debt or
other liability’ means legally enforceable debt or other
liability; and
(iii) The cheque is returned by the bank unpaid
because of insufficient funds.
However, unless the stipulations in the proviso are fulfilled
the offence is not deemed to be committed. The conditions
in the proviso are as follows:
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(i) The cheque must be presented in the bank within
six months from the date on which it was drawn or
within the period of its validity;
(ii) The holder of the cheque must make 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 from the receipt of the notice from the
bank that the cheque was returned dishonoured; and
(iii) The holder of the cheque fails to make the
payment of the ‘said amount of money’ within fifteen
days from the receipt of the notice.”
Relevant Law
9. It is a well settled legal position that presumptions under
Section 118 and 139 N I Act are rebuttable presumptions and burden
lies on accused to prove that he had no liability/debt on the date of
issue of cheque.
10. Hon'ble Supreme Court of India in case of
Basalingappa
Vs. Mudibasappa reported in
(2019) 5 SCC 418, has held as under:
“25. We having noticed the ratio laid down by Court in the
above cases on Sections 118(a) and 139, we now
summarise the principles enumerated by this Court in
following manner:
25.1. Once the execution of cheque is admitted Section
139 of the Act mandates a presumption that the cheque
was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable
presumption and the onus is on the accused to raise the
probable defence. The standard of proof for rebutting the
presumption is that of preponderance of probabilities.
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25.3. To rebut the presumption, it is open for the accused to
rely on evidence led by him or the accused can also rely on
the materials submitted by the complainant in order to raise
a probable defence. Inference of preponderance of
probabilities can be drawn not only from the materials
brought on record by the parties but also by reference to the
circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the
witness box in support of his defence, Section 139 imposed
an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the
witness box to support his defence..."
11. Further, the ratio of decision in
Rangappa Vs. Sri Mohan
reported in
(2010) 11 SCC 441 is clear that the presumption mandated
Section 139 of the Act includes the presumption as regards existence
of a legally enforceable debt or liability. This presumption has been
held to be in the nature of a reverse onus clause that has been included
in furtherance of the legislative object of improving their credibility of
the negotiable instrument. Once, the execution of cheque/instrument
is admitted, the initial presumption under Section 139 of the Act
favours the complainant that there exists the legally enforceable debt
or liability.
Analysis of grounds of appeal
12. The first and foremost ground of appeal putforth by Ld.
Trial Court failed to appreciate that the complainant/respondent did
not to place any documents on record along with complaint to
corroborate the alleged loan amount to the appellant/convict
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13. However, it is the case of the complainant company that
they have extended loan of Rs.1,90,000/- to the appellant/convict
against loan document which is proved on record as Ex.CW1/D1
dated 18.03.2015. Statement of account has been proved on record as
Ex.CW1/D2 which shows that an amount of Rs.1,33,276/- has already
been repaid by the appellant/convict against aforesaid loan amount.
The appellant/convict in his statement recorded under Section 313 (1)
(b) Cr.PC read with Section 281 Cr.PC categorically stated that
"I had
executed the loan document Ex.CW1/D1.", however he denied to go
through the contents of the said agreement. This makes it abundant
clear that the appellant/convict had been advanced loan amount by the
complainant company which has been duly proved by loan document
Ex.CW1/D1.
14. The next ground of appeal putforth by the
appellant/convict is that the cheque in question was given as
‘Security’ by the appellant/convict as a 'Guarantor'.
15. The law is well settled on the aforesaid defence as laid
down by Hon’ble Supreme Court of India in
Sripati Singh Vs. The
State of Jharkhand & Anr. reported in
2021 SCC OnLine SC 1002, has
observed as under:
“16. When 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 fulfillment of an obligation to
which the parties to the transaction are bound. If in a
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transaction, a loan is advanced and the borrower
agrees to repay the amount in a specified time frame
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.
17. When a cheque is issued and is treated as ‘security’
towards repayment of an amount with a time period being
stipulated for repayment, all that it ensures is that such
cheque which is issued as ‘security’ cannot be presented
prior to the loan or the installment maturing for repayment
towards which such cheque is issued as security. Further,
the borrower would have the option of repaying the loan
amount or such financial liability in any other form and in
that manner if the amount of loan due and payable has been
discharged within the agreed period, the cheque issued as
security cannot thereafter be presented. Therefore, the prior
discharge of the loan or there being an altered situation due
to which there would be understanding between the parties
is a sine qua non to not present the cheque which was
issued as security. These are only the defences that would
be available to the drawer of the cheque in the proceedings
initiated under Section 138 of the N.I. Act. Therefore, there
cannot be a hard and fast rule that a cheque which is issued
as security can never be presented by the drawee of the
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cheque. If such is the understanding a cheque would also be
reduced to an ‘on demand promissory note’ and in all
circumstances, it would only be a civil litigation to recover
the amount, which is not the intention of the statute. When
a cheque is issued even though as ‘security’ the
consequence flowing therefrom is also known to the drawer
of the cheque and in the circumstance stated above if the
cheque is presented and dishonoured, the holder of the
cheque/drawee would have the option of initiating the civil
proceedings for recovery or the criminal proceedings for
punishment in the fact situation, but in any event, it is not
for the drawer of the cheque to dictate terms with regard to
the nature of litigation.”
16. It is an admitted case of appellant/convict that the cheque
in question was duly signed and issued by him. At this stage, this
Court deems it appropriate to reproduce the relevant Section i.e.
Section 20 of the Negotiable Instrument Act, 1988 which reads as
under:
“Sec. 20 - Inchoate stamped instruments.— Where one
person signs and delivers to another a paper stamped in
accordance with the law relating to negotiable instruments
then in force in India, and either wholly blank or having
written thereon an incomplete negotiable instrument, he
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. The person so
signing shall be liable upon such instrument, in the
capacity in which he signed the same, to any holder in due
course for such amount; provided that no person other than
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a holder in due course shall recover from the person
delivering the instrument anything in excess of the amount
intended by him to be paid thereunder.
17. Section 20 of the Negotiable Instruments Act enjoins as a
condition of liability that an individual signing and to deliver the
instrument to another. On reading of the above said provision, it
makes it clear that where one person signs and delivers to another a
paper stamped in accordance with law relating to negotiable
instruments either wholly blank or having written thereon an
incomplete negotiable instrument, he 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. Once the
authority is given to the complainant, it cannot be said that it is
materially altered.
18. Law is well settled that when the legally recoverable debt
became due, the holder of the cheque has every right to represent the
same for encashment. In the present matter, since blank signed
cheque as admitted by the appellant/convict was given to the
respondent/complainant, he has transferred his authority to fill the
same. Hence, this ground of appeal is devoid of any merits.
19. Another ground of appeal is that the legal demand notice
was never served upon him, hence, the complaint under Section 138
N.I. Act is not maintainable.
20. The sole purpose sending a notice to the drawer is to give
an opportunity to pay the cheque amount within 15 days of service of
notice and on failure to pay the said cheque amount, he has to ready
for the penal consequences of Section 138.
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21. Hon’ble Supreme Court of India in
Vinod Shivappa Vs.
Nanda Bettiappa report in
(2006) 3 SCC (Cr.) 114, has observed that:
"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, it being a part of their modus
operandi to cheat unsuspecting persons."
22. It is the argument of the appellant that the legal notice
was never served upon him, however, he has mentioned the address as
mentioned in the legal notice as his address in the present appeal.
Reliance is placed upon this Court upon judgment rendered by the
Hon’ble Supreme Court of India in
M/s. Ajeet Foods Limited Vs. K.
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Gopala Krishnaiah reported in
2014 (12) SCC 685, wherein it has
been held that:
“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 affected 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
affected at the time at which the letter would have been
delivered in the ordinary course of business.”
23. Further, the legal notice Ex.CW1/E was sent to the
appellant/convict vide postal receipt Ex.PW1/F and as per the tracking
report of the legal notice available on Trial Court Record shows that
the same was delivered to the addresses as the current status is shown
as ‘
Item Delivered’. Moreover, the appellant/convict in his statement
recorded under Section 313(1)(b) Cr. PC r/w Section 281 Cr.PC
categorically stated that the address on the legal demand notice is
mine. Hence, the said ground does not hold any water.
24. After discussing all the grounds raised by Ld. Counsel for
the appellant/convict, it is clear that the present appeal is devoid of
any merit and is liable to be dismissed since this Courts finds no
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infirmity and illegality committed by the Trial Court while passing the
impugned order of judgment.
25. Even arguments have been heard on the impugned order
on the point of sentence. Ld. Trial Court vide impugned order dated
24.08.2024, while considering the aggravating and mitigating
circumstances, has sentenced the convict to pay fine of Rs.3,36,632/-
to be paid to the complainant as compensation and in default of
payment of compensation, SI for a period of one month. This Court is
of the considered view that all the circumstances have been considered
as mentioned while sentencing the appellant/convict by the Ld. Trial
Court.
26. With the aforesaid discussion, this Court finds that the
Ld. Trial Court vide impugned order(s) has rightly convicted the
appellant/convict for the offence under Section 138 N. I. Act and
sentenced the appellant/convict to pay fine of Rs.3,36,632/- to be paid
to the complainant as compensation and in default of payment of
compensation, SI for a period of one month.. Accordingly, the
impugned judgment dated 06.07.2024 and order on sentence dated
24.08.2024 are hereby upheld.
27. In view of the aforesaid discussion, present appeal is
disposed of as dismissed.
28. Copy of this judgment be given to appellant/convict
against due acknowledgment. He is directed to appear before the
Court concerned on 16.12.2025 for execution of sentence.
29. As per directions passed by Hon’ble Supreme Court of
India vide dated 23.10.2024 in
Writ Petition No. W. P. (C) 1082/2022
titled as Suhas Chakma Vs. Union of India & Ors., requisite
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coversheet be appended with this judgment informing the
appellant/convict regarding availability of free legal aid facilities for
pursuing higher remedies.
30. The file of this appeal be consigned to record room after
due compliance.
Pronounced in the open
Court on 06.12.2025 (Shefali Barnala Tandon)
ASJ-06 / New Delhi District
Patiala House Court/06.12.2025
It is to certify that this judgment contains 15 pages and each
page bears the signatures of the under signed.
(Shefali Barnala Tandon)
ASJ-06 / New Delhi District
Patiala House Court/06.12.2025
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