Final Order 7

Order Details: COPY OF JUDGMENT
Pdf Text: CA No. 545/2025
MANOJ SARDANA
Vs.
VARUN JAYASWAL
IN THE COURT OF SH. SYED ZISHAN ALI WARSI,
ADDL. SESSIONS JUDGE-04, NEW DELHI DISTRICT,
PATIALA HOUSE COURTS: NEW DELHI
Criminal Appeal Nos. 545/2025
DLND010089232025
IN THE MATTER OF:
MANOJ SARDANA
S/o Sh. Manohar Lal Sardana
R/o F-201, Designer Park Apartments,
B-Block, Sector 62, Noida,
Gautam Budh Nagar,
Uttar Pradesh … Appellant
Versus
VARUN JAYASWAL
S/o Sh. Virendra Kumar Jayaswal
R/o E-519, GC Centrum,
Ahinsa Khand-2, Indirapuram,
Ghaziabad, Uttar Pradesh … Respondent
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Date of Institution : 15.10.2025
Date of arguments : 28.03.2026
Date of Judgment : 18.04.2026
JUDGMENT
1. The present appeal has been filed u/s 415 BNSS against
judgment dated 18.08.2025 whereby the appellant has been convicted
for an offence punishable u/s 138 NI Act and order on sentence dated
22.09.2025 whereby the appellant has been sentenced to undergo SI
for three months and to pay fine of Rs.21,07,500/- (Rupees Twenty
One Lacs Seven Thousand and Five Hundred Only) as compensation
to the complainant u/s 357 Cr.P.C. within 30 days.
BRIEF FACTS AS STATED IN THE COMPLAINT
2. Brief facts leading to the filing of complaint under
Section 138 of Negotiable Instrument Act (hereinafter referred to NI
Act) is that the accused/appellant approached the
complainant/respondent through a common friend and represented
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that he is running a manufacturing unit, which is catering to the
specific orders placed by Indian Railways. He further represented that
if his manufacturing unit, proprietorship concern running under the
name and style of M/S Associated Engineering Services, is infused
with additional capital of Rs.50 lakhs, the same would immensely
increase the manufacturing as well as profit making capabilities of the
same. The financial assistance was sought by the accused in his
personal capacity. The complainant believing the representation of
accused, agreed to grant financial assistance of Rs.25 lakhs as interim
capital infusion and as a consequence, an agreement between the
parties was entered into on 20.02.2019. It was specifically stipulated
in the said agreement that in case the agreement does not rectify, the
accused would return to the complainant amount of Rs.25 lakhs within
a period of six months bearing interest @ 8% per month. The accused
sought further financial assistance and therefore, an additional
agreement dated 26.04.2019 was entered into by the accused and
complainant and accordingly, amount of Rs.6 lakhs was disbursed by
the complainant in favour of the accused. It was agreed that the
separate agreement was entered with the intent that complainant
would be inducted as a proportionate equity holder and a company
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named M/s Precismith Industries Limited, was also incorporated. The
said agreement also stipulated that in case the object of the agreement
does not fructify, the accused would return amount of Rs.31 lakhs to
the complainant, within a period of six months bearing interest @ 8%
per month. That the business, as claimed by the accused failed to
deliver any profit and the accused proposed the complainant to enter
into a partnership deed with defined distribution of profit and loss. On
13.05.2019, a partnership deed was entered into between accused and
complainant and the complainant further disbursed amount of Rs.19
lakhs to the accused. The total capital influx received by the accused
stood at Rs.50 Lakhs and the said fact was duly admitted by the
accused in the partnership deed. It was also assured by the accused
that the entire loan amount would not be part of the partnership
business and same would be repaid by him personally. It was mutually
agreed between the accused and complainant that the said capital
influx was received by the accused in his personal capacity and the
said liability of Rs.50 lakhs was also admitted by the accused vide his
email dated 21.09.2019. In partial discharge of his liability, accused
Manoj Sardana issued cheque bearing no. 762956 dated 16.03.2021,
cheque bearing no. 762957 dated 16.03.2021 and cheque bearing no.
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762958 dated 16.03.2021, for amount of Rs.5 lakhs each, all drawn on
Dena Bank, Sector 63, Noida Branch. On presentation of the cheques
by the complainant to its banker at State Bank of India, 28 KG Marg,
New Delhi, the same were returned unpaid with the remarks 'payment
stopped by drawer' vide return memos dated 19.03.2021. Thereafter,
the complainant served a legal demand notice dated 01.11.2023 upon
the accused calling him to pay the cheque amount but despite the
service of the legal notice, accused gave reply dated 01.12.2021
through counsel admitting issuance of the said cheques.
Accused did not pay cheque amount within the stipulated period of 15
days as per in the Negotiable Instruments Act, 1881. Thereafter,
complainant has filed the present written complaint case under Section
138 of the Negotiable Instruments Act, 1881 before the Ld. JMFC.
2.1. Upon appreciation of the pre-summoning evidence,
cognizance of offence, u/s 138 NI Act was taken and summons were
issued by the Ld. Trial Court. Notice of accusation u/s 251 Cr.P.C. for
the offence u/s 138 NI Act was framed against accused Manoj
Sardana, to which he pleaded not guilty and claimed trial. Accused
admitted his signatures on the cheque and admitted receiving of legal
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demand notice. In his plea of defence, he stated that the cheques in
question were given to the complainant in order to make payment to
the suppliers in his absence as he used to work in partnership with the
complainant. The cheques in question were in custody of the
complainant and the same have been misused by him. He do not owe
any liability towards the complainant in the present case.
3. In order to prove his case, the complainant in his post-
summoning evidence has adopted his affidavit i.e. Ex.CW-1/A where
in the complainant affirmed the facts stated in the present complaint
and relied upon the following documents:
(i) Copy of email dated 21.09.2019, as Ex.CW1/A1.
(ii) Certificate under section 65B of IEA, as Ex.CW1/A2.
(iii) Copy of agreement dated 20.02.2019, as Ex.CW1/B (OSR).
(iv) Copy of agreement dated 26.04.2019, as Ex.CW1/C (OSR).
(v) Copy of partnership deed dated 13.05.2019, as Ex.CW1/D
(OSR).
(vi) Cheque bearing no. 762956 dated 16.03.2021, cheque
bearing no. 762957 dated 16.03.2021 and cheque bearing no.
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762958 dated 16.03.2021, are Ex.CW1/E1, Ex.CW1/E2 and
Ex.CW1/E3.
(vii) Return memos Ex.CW1/F1, Ex.CW1/F2 and Ex.CW1/F3.
(viii) Legal demand notice dated 01.11.2021, as Ex.CW1/G.
(ix) Original registered AD, as Ex.CW1/H.
(x) Tracking report and certificate u/s 65B IEA, as Ex.CW1/I1
and Ex.CW1/I2.
(xi) Reply to legal demand notice dated 01.12.2021, as
Ex.CW1/J.
(xii) Original Complaint, as Ex.CW1/K.
4. In the memorandum of statement of accused u/s 313
Cr.P.C., he admitted receipt of Rs.31 Lacs as financial assistance by
way of agreement executed between him and the complainant. He also
admitted execution of partnership deed dated 13.05.2019 and the total
capital influx received by him at Rs. 50 Lacs. It is also stated by him
that e-mail was a proposal from the accused to the complainant but
same was not accepted by the complainant.
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5. On the basis of the material and evidence adduced by the
parties, Ld. JMFC convicted and sentenced the appellant for the
offence u/s 138 NI Act.
GROUNDS OF APPEAL
6. The appellant has challenged the impugned judgment
and order on sentence on following grounds:
➢ That the Ld. JMFC has failed to appreciate that Delhi / Patiala
House Court has no territorial jurisdiction to try and entertain
the complaint filed by the respondent u/s 138 NI Act. It is
submitted that it is an admitted fact between the parties that
both the parties are resident of Noida, the entire negotiations in
relation to business transaction and for loan/investment of
money by the respondent into the business of appellant took
place in Noida, the agreements dated 20.02.2019 additional
agreement dated 26.04.2019, the partnership deed 13.05.2019
and supplementary agreement dated 13.06.2019 were executed
and signed at Noida. The Company M/s. Precismith Industries
Pvt. Ltd. where both the parties served as Directors had its
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registered office in Noida and the current account of the said
company bearing account no. 16561103110 was opened in
Noida at Dena Bank Branch, Noida. The respondent made the
investment / loan payments in Noida directly in the accounts of
M/s. Associated Engineering Services & in the account of M/s.
Precismith Industries Pvt. Ltd. The cheques bearing no. 762956
to 762958 all dated 16.03.2021 alleged to have been issued
from Noida. The email dated 21.09.2021 sent by the appellant
to the respondent from Noida. Therefore, from the perusal of
the above said admitted documents no cause of action has arisen
in Delhi and as such the complaint under section 138 of NI filed
by complaint at Patiala House Courts, was not maintainable and
liable to be dismissed.
➢ That the Ld. JMFC has failed to appreciate that the respondent
intentionally and deliberately opened and presented the cheques
in bank account at State Bank of India, K.G Marg, New Delhi
only for the purpose of this transaction though the respondent
was already maintaining his bank account at Noida. Moreover,
the respondent is neither maintaining his office in Delhi nor he
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was resident of Delhi, as such the complaint is not maintainable
and the Delhi courts have no territorial jurisdiction to try and
entertain the complaint of the respondent.
➢ That the Ld. JMFC has failed to appreciate that the locality
where the bank which dishonoured the cheques is situated
cannot be regarded as the sole criteria to determine the place of
offence.
➢ Without the prejudice to rights and contentions of the appellant
the Ld. JMFC has failed to appreciate that in terms of section
177 of CrPC / 197 of BNSS, the cause of action arose where the
offence was committed. In the instant case merely presentation
of cheque in SBI Branch at Delhi does not mean the offence
was committed in Delhi in terms of said section as the entire
transaction in relation to issuance of the alleged cheques took
place between the parties at Noida and as such only the Noida
Courts had the territorial jurisdiction to entertain the compliant
of the respondent.
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➢ That the Ld. JMFC has failed to appreciate that the respondent
had also filed a civil suit for recovery of Rs.65,62500/- against
the appellant before this Patiala House Court, Delhi, on the
basis of same cause of action based upon agreements entered
into between the parties, (supra) and email dated 21.09.2019
and the plaint of plaintiff was returned under Order 7 Rule 10
CPC. Therefore, complaint u/s 138 NI Act is also liable to be
dismissed/returned.
➢ That the Ld. JMFC has failed to consider that the legal notice
dated 23.10.2021 sent by respondent was itself defective and
hence no complaint under section 138 NI Act was maintainable.
As per legal notice Para 5, the respondent has invoked Clause 6
and 9 of the agreement dated 20.02.2019 and additional
agreement dated 25.04.2019 while those agreements were
declared null and void in terms of supplementary agreement
dated 13.06.2019.
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➢ That in the email dated 21.09.2019, the appellant has nowhere
admitted that he will issue the cheques in discharge of the
legally enforceable debt. That it was purely a civil dispute and
no complaint under section 138 NI Act was maintainable as the
respondent has failed to prove that the cheques issued by the
respondent against his legally recoverable debt. That the
respondent was taking the contradictory defense/ plea as such
the complaint under section 138 NI Act was not maintainable.
➢ That the Ld. JMFC has failed to appreciate that the respondent
had made the payment directly in the Dena Bank account of
M/s Associates Engineering Services and not in the personal
account of the appellant. Moreover, the cheques were issued by
the appellant from his personal account during Covid, 2019,
pandemic as the marriage of respondent was fixed in the month
of July, 2021 and not against the discharge of legally
recoverable dues and this personal transaction was altogether
different from the investment/ loan amount paid by respondent
to M/s. Associated Engineering Services & M/s. Precismith
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Industries Pvt. Ltd. Thus, the complaint against appellant was
not maintainable.
➢ That the Ld. JMFC has failed to appreciate that the respondent
till date has not resigned from the partnership firm. That email
dated 21.09.2019 sent by the appellant was an offer as to how
the parties will wind up there businesses mutually in terms of
the agreements entered into between them and to settle the
loan/invested amount. The respondent vide email dated
25.09.2019 in response to the email dated 21.09.2019, has also
given some proposal to wind up of their businesses. Thereafter,
no communication were exchanged between the parties as such
it cannot be said that the appellant had agreed upon to pay Rs.
50,00,000/- to the respondent and will issue cheque in discharge
of legally enforceable dues. From the perusal of the email dated
21.09.2019, sent by appellant it is evident that it was only a
Proposed Draft and not the agreement and the same was based
on certain terms and conditions to be reciprocally fulfilled by
both the parties.
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➢ That the Ld, JMFC has failed to appreciate that the appellant
has invoked the arbitration clause in terms of the partnership
deed dated 13.05.2019, in order to adjudicate the dispute
between the parties in relation to business transaction and Mr.
P.K. Jain was also appointed as an Arbitrator and the respondent
had also participated in the arbitration proceedings. That all the
payments were the liability of the partnership firm M/s
Associates Engineering Services and not the personal liability
of the appellant. That the appellant and the respondent have also
formed the company under the name and style of M/s
Precismith Industries Pvt. Ltd., on 25.04.2019, for running the
joint business in which both the parties were the Directors.
Later on, due to inter-se dispute between the parties aforesaid
Pvt. Ltd Company was sold buy respondent with the mutual
consent of the appellant and the amount lying therein has been
withdrawn by the respondent.
➢ That the Ld, JMFC has failed to appreciate that there were
various agreements were executed between the parties in
relation to the business transaction, the appellant apart from the
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said complaint under section 138 NI Act has also been facing
other litigation/ proceedings towards dishonour of cheques.
That the impugned judgment passed by Ld. JMFC is completely
based upon the presumption under section 139 of the NI Act.
➢ That the Ld. JMFC has failed to appreciate that the business
transactions between the parties and the surrounding
circumstances on account of which the alleged cheques have
been issued by the appellant to the respondent. That merely
issuance of cheques and appended signatures thereon does not
mean the cheques have been issued in discharge of the debt.
That the cause of action for filing the suit as well as filing of the
complaint under section 138 NI Act was based on same cause of
action and as such the complaint was ought to have been
returned to the respondent.
➢ That the Ld. JMFC has failed to appreciate that the respondent
being one of the partners of the firm M/s Associate Engineering
Services used to look after the day-to-day affairs of the said
firm. During the course of the business transaction of the firm
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the respondent misused the cheques. The respondent has not
only misused the cheques of the firm but also filed a false
complaint under 138 NI act against father of the appellant,
which got dismissed by the Ld. JMFC.
➢ That the Ld. JMFC has failed to appreciate that the respondent
cannot provide such type of huge loans to the appellant without
obtaining the permission/ license from RBI and as such granting
such loans was in violation of rules and regulations of RBI and
as such the complaint under section 138 NI Act is not
maintainable.
➢ Without the prejudice to rights and contentions of the appellant
the Learned Judicial Magistrate has failed to appreciate that in
terms of section 177 of CrPe (Old Act) and section 197 in New
Act, of BNSS, the cause of action arose where the offence was
committed. In the instant case merely presentation of cheque in
SBI Branch at Delhi does not mean the offence was committed
in Delhi in terms of said section as the entire transaction in
relation to issuance of the alleged cheques took place between
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the parties at Noida and as such only the Noida Courts had the
territorial jurisdiction to entertain the compliant of the
respondent.
➢ Reliance is placed on (a) Bharat Barrel & Drum Manufacturing
Company Vs. Amin Chand Pyarelal, 1999 (3) SCC 35 and (b)
Rangappa Vs. Sri Mohan, AIR 2010 SC 1898.
It is prayed that the judgment dated 18.08.2025 and order
on sentence dated 22.09.2025 be set aside.
ARGUMENTS ON BEHALF OF LD. COUNSEL FOR THE
APPELLANT:
7. During the course of arguments, it is submitted by Ld.
Counsel for the appellant that the cheques were not issued in discharge
of any legally enforceable debt or liability, but for the purpose of
business as the appellant and respondent were partners in the business
and the cheques were misused by the respondent. It is also submitted
that the complaint was filed without jurisdiction as the cause of action
has arisen at Noida and filing of complaint before Ld. JMFC, PHC is
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bad in law as Delhi Courts have no territorial jurisdiction in the
present case. During the course of his arguments, Ld. Counsel has
relied on certain judgments which are as follows:
➢ Sri Sai Sapthagiri Sponge Pvt. Ltd. Vs. The State (GNCT of
Delhi) & Anr., CRL, M.C. 1034/2017 of Hon’ble Delhi High
Court, decided on 27.10.2025.
➢ Krishna Janardhan Bhat Vs. Dattatraya G. Hedge (2008) 4
SCC 54 of Hon’ble Supreme Court, decided on 11.01.2018.
➢ Basalingappa Vs. Mudibaspara (2019) 5 SCC 418 of Hon’ble
Supreme Court, decided on 09.04.2019.
7.1. Lastly, it is also submitted that the civil suit for recovery
against the appellant was also filed as well as arbitration proceedings
are also pending due to which the complaint before the Ld. JMFC was
not maintainable and the judgment and order of sentence of Ld. Trial
Court is liable to be set aside.
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ARGUMENTS ON BEHALF OF LD. COUNSEL FOR THE
RESPONDENT:
8. Ld. Counsel for the respondent submits that the execution
of cheque has been proved in discharge of legally enforceable debt as
the same has been admitted by the accused/appellant via e-mail dated
21.09.2019. It is also submitted that all the essential conditions for
Section 138 NI Act has been fulfilled by the complainant in the
present case and the accused/appellant has failed to paid the amount
within stipulated time and the Ld. Trial Court has passed the proper
passed order after proper appreciation of evidence on record. At last, it
is also submitted that there is no jurisdictional error as the cheque was
presented through account and the same is proper by virtue of Section
142 of NI Act. It is further submitted that the present appeal is
misconceived and bad in law. It is prayed that the present appeal is
liable to be dismissed.
ANALYSIS AND FINDINGS
9. Heard. Record perused.
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10. Before proceeding further, it is essential to consider
Section 138 of NI Act which is reproduced as follows:
“138. Dishonour of cheque for insufficiency, etc., of funds in the
account.—
Where any cheque drawn by a person on an account maintained by him with
a banker for payment of any amount of money to another person from out of
that account for the discharge, in whole or in part, of any debt or other
liability, is returned by the bank unpaid, either because of the amount of
money standing to the credit of that account is insufficient to honour the
cheque or that it exceeds the amount arranged to be paid from that account
by an agreement made with that bank, such person shall be deemed to have
committed an offence and shall, without prejudice to any other provisions of
this Act, be punished with imprisonment for a term which may be extended
to two years, or with fine which may extend to twice the amount of the
cheque, or with both:Provided that nothing contained in this section shall
apply unless—
(a) the cheque has been presented to the bank within a period of six months
from the date on which it is drawn or within the period of its validity,
whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be,
makes a demand for the payment of the said amount of money by giving a
notice in writing, to the drawer of the cheque, [within thirty days of the
receipt of information by him from the bank regarding the return of the
cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount
of money to the payee or, as the case may be, to the holder in due course of
the cheque, within fifteen days of the receipt of the said notice.”
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Explanation- For the purposes of this section, “debt or other liability” means
a legally enforceable debt or other liability.
11. Thus, the essential ingredients of Section 138 NI Act are-
(i) That the person must have drawn a cheque on an account
maintained by him in a bank for payment for a certain sum of money
to another person from out of that account for the discharge of any
legally enforceable debt or liability;
(ii) Cheque has been presented to the bank within a period of
three months from the date on which it is drawn or within the period
of its validity whichever is earlier;
(iii) That cheque has been returned by the bank unpaid either
because of the amount of money standing to the credit of the account
is insufficient to honour the cheque or that it exceeds the amount
arranged to be paid from that account by an agreement made with the
bank;
(iv) The payee or the holder in due course of the cheque has
made a demand for the payment of the said amount of money by
giving a notice in writing, to the drawer of the cheque, within 30 days
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of the receipt of information by him from the bank regarding the
return of the cheque as unpaid; and
(v) The drawer of such cheque fails to make payment of the
said amount of money to the payee or the holder in due course of the
cheque within 15 days of the receipt of the said notice.
12. These essential ingredients were also laid down by the
Hon’ble Supreme Court in the case of Kusum Ingots and Alloys Ltd.
Vs. Pennar Peterson Securities Ltd. (2000) 2 SCC 745.
13. Now, coming to the case at hand, the drawing of the
cheques is admitted by the appellant/accused, but disputed as not
issued for legally enforceable debt or liability. The facts are also not
disputed that the cheques were returned back dishonoured with the
remarks “payment stopped by drawer” for both the cheques vide
return memos dated 19.03.2021. The issuance and receiving of legal
demand notice was not disputed and the complaint is also filed before
the Ld. Trial Court within the statutory time period (as the limitation
was relaxed due to Covid-19 Pandemic). Thus, essential ingredients
necessary for section 138 N.I. Act are satisfied except for the disputed
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fact, i.e. defence, that the cheque was issued not for legally
enforceable debt or liability but for payment to the suppliers and the
same has been by the respondent.
14. As the signature of the cheques, their return memos and
the legal notice with its delivery are admitted by the
appellant/accused, then the presumption u/s 118A and 139 of the NI
Act has to be raised against the accused.
15. It is relevant to consider here Section 118 and 139 of NI
Act which are reproduced as follows:
“118. Presumptions as to negotiable instruments.—Until the
contrary is proved, the following presumptions shall be made:— (a) of
consideration:—that every negotiable instrument was made or drawn
for consideration, and that every such instrument, when it has been
accepted, indorsed, negotiated or transferred, was accepted, indorsed,
negotiated or transferred for consideration; (b) as to date:—that every
negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance:—that every accepted bill of exchange
was accepted within a reasonable time after its date and before its
maturity; (d) as to time of transfer:—that every transfer of a
negotiable instrument was made before its maturity; (e) as to order of
indorsements:—that the indorsements appearing upon a negotiable
instrument were made in the order in which they appear then on; (f) as
to stamp:— that a lost promissory note, bill of exchange or cheque
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was duly stamped; (g) that holder is a holder in due course:—that the
holder of a negotiable instrument is a holder in due course: provided
that, where the instrument has been obtained from its lawful owner, or
from any person in lawful custody thereof, by means of an offence or
fraud, or has been obtained from the maker or acceptor thereof by
means of an offence or fraud, or for unlawful consideration, the
burden of proving that the holder is a holder in due course lies upon
him.”
“139. Presumption in favour of holder.—It shall be presumed, unless
the contrary is proved, that the holder of a cheque received the cheque
of the nature referred to in section138 for the discharge, in whole or in
part, of any debt or other liability.”
16. It is also relevant to consider that the Hon’ble Supreme
Court in Basalingappa v. Mudibasappa; (2019) 5 SCC 418; decided
on 09.04.2019, summarized the law. The following was laid down in
para 25: which is reproduced as below:
"25. We have noticed the ratio laid down by this 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.
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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.
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.”
17. The submission of the Ld. Counsel for the appellant that
the courts in Delhi has no jurisdiction as no cause of action has arisen
in Delhi and the complaint filed at Patiala House Court was not
maintainable and respondent intentionally and deliberately opened and
presented the cheques in bank account at State Bank of India at KG
Marg, New Delhi only for the purpose of this transaction. Has to be
perused as per Section 142 of the NI Act and interpretation to it given
by the Hon’ble Supreme Court in Jai Balaji Industries Ltd. & Ors.
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Vs. M/s HEG Ltd. 2025 SCC OnLine SC 2581. Section 142 NI Act is
reproduced as follows:
“142. Cognizance of offences.—
(1) Notwithstanding anything contained in the Code of Criminal Procedure,
1973 (2 of 1974)—
(a) no court shall take cognizance of any offence punishable under
section 138 except upon a complaint, in writing, made by the payee or, as
the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which
the cause of action arises under clause (c) of the proviso to section
138:Provided that the cognizance of a complaint may be taken by the Court
after the prescribed period, if the complainant satisfies the Court that he had
sufficient cause for not making a complaint within such period.
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial
Magistrate of the first class shall try any offence punishable under section
138.
(2) The offence under section 138 shall be inquired into and tried only by a
court within whose local jurisdiction,—
(a) if the cheque is delivered for collection through an account, the
branch of the bank where the payee or holder in due course, as the case may
be, maintains the account, is situated; or
(b) if the cheque is presented for payment by the payee or holder in
due course, otherwise through an account, the branch of the drawee bank
where the drawer maintains the account, is situated.
Explanation.— For the purposes of clause (a), where a cheque is delivered
for collection at any branch of the bank of the payee or holder in due course,
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then, the cheque shall be deemed to have been delivered to the branch of the
bank in which the payee or holder in due course, as the case may be,
maintains the account.”
18. In Jai Balaji Industries Ltd. & Ors. Vs. M/s HEG Ltd.
2025 SCC OnLine SC 2581, it is made clear that the jurisdiction to try
a complaint filed u/s 138 NI Act is within the jurisdiction where the
payee maintains the account and jurisdiction as per Cr.P.C. is not
applicable as NI Act is special legislation. Relevant para of the
judgment are reproduced as follows:
“76. In view of the aforesaid discussion, it is as clear as a noon day
that the jurisdiction to try a complaint filed under Section 138 in
respect of a cheque delivered for collection through an account, i.e.,
an account payee cheque, is vested in the court within whose local
jurisdiction the branch of the bank in which the payee maintains the
account, i.e., the payee’s home branch, is situated. Therefore, we find
no force in the petitioner’s argument that as per the relevant
provisions of the CrPC, the jurisdiction to try the complaint under
Section 138 is vested in the court within whose local bounds the
drawee bank is situated where the cheque was dishonoured. We say so
because the enactment of the Amendment Act, 2015 and the
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introduction of Section 142(2) thereby, being a special legislation,
occupies the field over a general procedural legislation viz. CrPC.
Thus, the MM, Kolkata does not have jurisdiction to try the case.”
19. Thus, this court is not in agreement with the submission
of Ld. Counsel that the courts in Delhi has no jurisdiction, the law in
this regard is well settled by the Hon'ble Supreme Court as discussed
in the preceding para of this judgment. And, in the present case, the
payee’s bank account in which the cheques were presented is situated
in Delhi. Thus, the Delhi Courts has the jurisdiction.
19.1. Further, the plea that civil suite was returned and
arbitration proceedings are pending due to which complaint u/s 138 NI
Act has to be returned/dismissed is also not acceptable as in the case
of D. Purushotama Reddy & Another Vs. K. Sateesh, 2008 AIR
SCW 5411, in paragraph No. 9, the Hon'ble Supreme Court has held
as under:-
"9. A suit for recovery of money due from a borrower indisputably is
maintainable at the instance of the creditor. It is furthermore beyond any
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doubt or dispute that for the same cause of action a complaint petition
under terms of Section 138 of the Act would also be maintainable."
20. In view of the aforesaid discussion, the plea against
maintainability of 138 NI Act proceedings can not be accepted. As it is
Section 138 of the Negotiable Instrument Act, 1881, defines a criminal
offence consequent upon the dishonour of a cheque drawn by a person
to discharge in whole or any part, his debts or any other liability. And
the same is penal provision provides for a sentence of imprisonment,
as well as of fine to the extent of an amount twice the sum of the
cheque, a proceeding thereunder cannot be construed to be for
recovery of the money in default. In other words, a proceeding under
Section 138 of the Negotiable Instrument Act, 1881, cannot be
construed to be an alternative or substitute to a suit or any other
proceeding for realization of the amount remaining unpaid as a debt
following the dishonour of a cheque by the debtor. The empowerment
of a Court under the legal provision to impose a fine of a sum, which
may extend to twice the cheque amount and it does not render the
proceeding to be only in the nature of recovery suit. The remedies
comprehended under the Negotiable Instrument Act 1881 and of civil
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suit or arbitration , are therefore, distinctively different and not similar
to each other ie they are different and separate remedies and the
present complaint u/s 138 NI Act before the Ld. JMFC was
maintainable.
20.1. The filing of a complaint under Section 138 of the NI Act
is provided by a special statute, on fulfilling certain conditions, i.e.,
existence of an legally enforceable debt between the parties and
issuance of cheque towards discharge of the said debt, and dishonour
of a cheque on presentation to the bank and issuance of notice
demanding the payment of the cheque amounts and failing to make
the payment within the stipulated period. Here in this case, the
aforementioned conditions seem to have been fulfilled, and as such, in
the considered opinion of this Court, there was no bar against the
respondent in filing the NI Act case before the learned Court below.
Thus, it is clear that there is no legal bar against the institution or
continuance of the proceedings in the present case either before the
Ld. Trial court or this court. Further, as provided in Jai Balaji
Industries Ltd. & Ors. (supra), the bar of Cr.P.C. is also not attracted
as NI Act is a special statute.
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21. On careful perusal of e-mail dated 21.09.2019,
Ex.CW1/A1, written by appellant/accused to respondent, he has stated
that the amount be returned as per their agreements and details were
also given to return the funds back. They would definitely be taking
some more loans to ease out the flow of money towards the
respondent and it was also swear to pay the monthly interest on 50
Lacs as @ 15% calculated on annual basis but paid on monthly basis
on actual till they return respondent’s money to the respondent starting
from September 2019 and from June-August 2019 it would be paid
out @ 12% calculated annually and paid on monthly basis. Further,
the principle amount would be started to be paid from the month of
November as till then he was not in a position to pay the principle
amount and would be paying the maximum amount possible every
month but would surely be finishing the same latest by July 2020 and
the same was honest and sincere way to return the funds back to the
respondent by the appellant. Thus, the accused/appellant via said e-
mail has committed as well as acknowledged his liability to pay a sum
of Rs.50 Lacs with interest to the respondent. And, as per partnership
deed dated 13.05.2019, Ex.CW1/D, para 4, it is specifically mentioned
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that the capital of party of second part (Varun Jayaswal/complainant)
will be Rs.50 Lacs. (Rs.35 Lacs has already been paid and Rs.15 Lacs
will be paid as and when required by the first part of purchasing of
raw materials). Thus, on the basis of aforesaid documents, it is clear
that investment was made by the complainant/respondent and the
same has been corroborated by the statement of CW-1 Sh. Varun
Jayaswal/complainant and in the cross-examination, nothing has came
on record to rebut his testimony while in memorandum of statement of
accused/appellant Manoj Sardana, he has admitted the receipt of Rs.25
Lacs and Rs.6 Lacs as financial assistance by way of agreement and
also admitted that after the execution of partnership dated 13.05.2019,
the total capital influx received by him stood at Rs.50 Lacs, however,
the cheques in question in individual capacity prior to constitution of
partnership firm was given in the year 2019. But, in his plea of
defence, he has stated that the cheques were given to the complainant
in order to make payment to the suppliers in his absence and the
cheques were misused by the complainant. However, no defence
evidence was laid by the applicant/accused to prove his plea or rebut
the presumption u/s 139 NI Act. The plea of accused/appellant can
also be not accepted as no notice or complaint was made by the
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accused /appellant in writing towards the complainant/respondent with
regard to demand of cheques or misuse of them.
22. The submissions of the Ld. Counsel for the appellant that
the notice is defective as Clause 6 and 9 of agreement dated
20.02.2019 and 26.04.2019 respectively were invoked and they
became null and void in terms of supplementary agreement dated
13.06.2019, is not appreciable as the notice was not issued only on
those grounds but also on the ground of communications, the legal
notice was sent. The relevant para of the notice is reproduced as
follows:
“WHEREAS upon much persuasion and follow-ups, you the Noticee
admitted the entire liability of Rs.50,00,000/- and agreed to repay the same.
My client has in his possession communications authored by you the
addressee thereby admitting the said liability and the same are retained for
legal recourse, if required.”
22.1. And, the complainant CW-1 Mr. Varun Jayaswal has
remained firm on his stand that the liability was established through a
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written communication i.e. e-mail dated 21.09.2019 which was sent
by the accused and as discussed above in the foregoing paras, the e-
mail dated 21.09.2019 has acknowledged the liability and
commitment for repayment. As the legal notice was sent on the ground
of communication i.e. e-mail in the present case and the same is
corroborated by CW-1 in his testimony, then it cannot be said that the
notice is defective
23. Thus, in the light of aforesaid discussion, the
presumption u/s 139 NI Act was drawn against the appellants/accused
and accused/appellants has failed to prove anything contrary on the
basis of preponderance of probabilities by way of evidence. As the
defence of appellants/accused is a bald defence with no evidence to
substantiate the same. As ingredients of Section 138 NI act is fulfilled
by the complainant and accused failed to rebut the presumption u/s
139 NI Act, this court is not in agreement with the grounds of appeal
as well as arguments of the counsel for the appellant/accused.
24. The other grounds of appeal and the submissions of Ld.
Counsel for the appellant that the respondent cannot provide such
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loans to the appellant without permission of RBI as well as well as the
e-mail was an offer as to how the parties will bind up their businesses
and the payments were the liability of the partnership firm are not
sustainable as per the partnership deed dated 13.05.2019, the amount
was disbursed for the purpose of business and not as loan. Further, the
personal liability to pay was admitted by the appellant/accused vide e-
mail dated 21.09.2019.
25. Further, the observations and findings of the Ld. Trial
Court in the opinion of this court is made after proper appreciation of
the evidence on record as can be seen from the following paras of the
Ld. Trial Court’s judgment which is reproduced as below:
“26. It is of considerable significance that during the course of cross
examination, the complainant has consistently and unwaveringly
maintained his reliance on the email communication dated 21.09.2019 as
the foundation of the accused's liability. The said email has been expressly
referred to by the complainant not only to establish the acknowledgment of
the monetary transaction involving Rs.50,00,000/- but also to demonstrate
the conscious and voluntary promise made by the accused to repay the said
amount along with interest. The complainant has reiterated, on more than
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one occasion, that the said email forms a crucial part of his case and is
central to establishing both the receipt of the amount and the existence of a
legal liability.
27. What is particularly striking is the fact that at no point during the
extensive cross-examination did the defence counsel challenge the contents,
authorship, or admissibility of the said email. Not a single question was put
to the complainant disputing the origin, context, or accuracy of the
communication. This silence is deafening and carries significant legal
weight. Under well-established principles of evidence law, failure to cross-
examine on a material aspect amounts to an implied admission of the truth
of that aspect. In other words, if the defence intended to dispute the contents
of the email, or its relevance in establishing liability, it was incumbent upon
the accused to put such a suggestion to the witness during cross-
examination. The complete omission to do so effectively precludes the
accused from now disputing the same at the stage of final arguments or
through a subsequent explanation.
..... 29. In his statement recorded under Section 313 of CrPC, the accused
has attempted to explain away the incriminating contents of the email dated
21.09.2019 by characterizing it as a mere "proposal" or "suggestion" made
in the context of ongoing financial discussions with the complainant.
According to the accused, the said communication was never acted upon or
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accepted by the complainant, and hence, it should not be construed as an
admission of legal liability. However, this line of defence appears to be both
legally untenable and factually unsubstantiated.
30. First and foremost, this purported explanation was introduced for the
first time during the accused's examination under Section 313 CrPC and
finds no prior mention in the pleadings or during the cross-examination of
the complainant. If, in fact, the accused had intended the email to be
understood merely as a tentative offer, it was essential for him to challenge
the complainant's interpretation of the document during cross-examination,
especially when the complainant expressly relied on it to establish liability.
The accused's failure to confront the complainant with this defence, when he
had the full opportunity to do so, creates a fatal omission and renders his
subsequent explanation an afterthought lacking in credibility.
31. Secondly, the language used in the email is plain, deliberate, and
unequivocal. The accused not only acknowledges the receipt of
Rs.50,00,000/- from the complainant but also voluntarily undertakes to
repay the same along with interest at specified rates, starting from a
particular month, and commits to complete repayment by July 2020. These
are not the words of a person merely making a proposal or engaging in
exploratory financial dialogue. Rather, they constitute a clear and
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enforceable admission of debt, complete with terms of repayment and
acknowledgement of default.
32. Further, if the complainant had indeed rejected the so-called proposal,
the natural course of action for the accused would have been to document
such rejection or produce any subsequent communication evidencing the
same. No such communication has been placed on record. The absence of
any follow-up by the accused undermines the credibility of his defence and
further affirms that the email was a binding acknowledgment, not a
conditional or exploratory proposal.
33. The accused has further contended that the subject cheques were Part of
a set of 10 blank cheques allegedly handed over to the complainant at the
time of executing the initial agreement. This plea, too, does not inspire
confidence. It is highly improbable, and indeed contrary to common
prudence, that any rational person would hand over blank signed cheques
of such significant value, amounting to several lakhs, without documenting
the same in a written agreement or contract. The subsequent agreements
filed by the complainant are elaborate in nature, setting out detailed terms
and conditions. However, none of these documents contain any reference to
the alleged handing over of blank cheques, thereby casting serious doubt on
the veracity of this claim
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34. Even assuming, for the sake of argument, that such blank cheques were
indeed handed over, it is telling that the accused made no attempt
whatsoever to seek their return. No legal notice, email, or communication
has been placed on record by the accused calling upon the complainant to
return the said cheques. There is also no complaint lodged before any
competent authority alleging misuse or wrongful retention of the cheques.
The accused's own conduct, thus, negates the very defence he now seeks to
set up. Furthermore, even in the accused's email, which purportedly lays
down a fresh financial arrangement, there is no reference whatsoever to any
cheques or any protest against their continued possession by the
complainant…...
........ 37. The accused also suggested to the complainant during cross-
examination that he was, in fact, a money lender. However, such a
suggestion, in the considered view of this Court, is of no consequence in the
present matter. The accused has already admitted to the execution of the
relevant agreements as well as the existence of a partnership between the
parties, and further, has not disputed the transaction out of which the
subject cheque arose. In such circumstances, raising a vague and
unsubstantiated suggestion regarding the complainant being a money
lender appears to be an afterthought, without any evidentiary backing. It
fails to create any dent in the complainant's case and does not absolve the
accused from his liability under the dishonoured cheque.
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38. It is trite law that once the execution of the cheque is admitted, a
presumption under Section 139 of the Negotiable Instruments Act arises in
favour of the complainant, to the effect that the cheque was issued in
discharge of a legally enforceable debt or liability. In the instant case, the
issuance of the cheques is not denied. The defence sought to be raised does
not rebut the statutory presumption, either by leading cogent evidence or by
pointing out serious infirmities in the complainant's case. The burden, thus,
remains undischarged.
39. In view of the above discussion, this Court is of the considered opinion
that the complainant has successfully discharged the initial burden of
proving that the cheques in question were issued by the accused in
discharge of a legally enforceable liability, and that upon presentation, the
said cheques were dishonoured for insufficient funds. The requisite legal
notice under Section 138 of the Act was duly served upon the accused who
failed to make the payment within the stipulated period, thereby attracting
the penal consequences as contemplated under the statute.”
26. In view of the above discussion and reasoning, this Court
does not find any merit in the appeal and the case laws relied by Ld.
Counsel for the appellant is not applicable to the facts and
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circumstances of the present case as the facts and circumstances of the
present case are different as the liability was admitted and
acknowledged by the accused/appellant vide e-mail dated 21.09.2019.
Accordingly, present appeal is dismissed. The impugned judgment
dated 18.08.2025 and order on sentence dated 22.09.2025 are
upheld.
Parties to bear their own cost of appeal.
TCR be sent back with copy of this judgment.
Appeal file be consigned to Record Room after necessary
compliance.
Announced in the SYED ZISHAN ALI WARSI
open court on 18.04.2026 ADDL. SESSIONS JUDGE-04,
NEW DELHI DISTRICT,
PATIALA HOUSE COURTS,
NEW DELHI/18.04.2026
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