Final Order 6

Order Details: COPY OF JUDGMENT
Pdf Text: Criminal Appeal No. 144/2025; 145/2025 & 148/2025
IN THE COURT OF SHRI PUNEET PAHWA,
ADDITIONAL SESSIONS JUDGE (SPECIAL JUDGE NDPS),
NORTH EAST DISTRICT, KARKARDOOMA COURTS,
DELHI
CNR No. DLNE01-002537-2025
Criminal Appeal No. 144/2025
CNR No. DLNE01-002536-2025
Criminal Appeal No. 145/2025
CNR No. DLNE01-002516-2025
Criminal Appeal No. 148/2025
MADAN LAL
S/o. Sh. Mam Raj
R/o. H. No. B-18/1, Gali No. 2,
West Kamal Vihar, Karawal Nagar,
Delhi-110094
…....... Appellant
Versus
1. THE STATE (GOVT. OF NCT OF DELHI)
2. HARISH CHAND
S/o. Sh. Man Singh
R/o. H. No. 16, Gali No. 1,
A Block Kamal Vihar Extn.,
Karawal Nagar, Delhi-110094
…......Respondents
Date of Institution of Appeals : 30.08.2025
Date of Completion of Arguments : 12.12.2025
Date of Judgment : 07.01.2026
Madan Lal v. State & Anr. Page 1 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
JUDGMENT
1. Vide this common detailed judgment, I shall dispose
of three connected criminal appeals bearing No. 144/2025,
145/2025 & 148/2025.
2. The abovesaid three criminal appeals are directed
against the impugned judgments dated 14.05.2025 passed
by the court of Sh. Vaibhav Mehta, Ld. CJM, North-East
District, Karkardooma Courts, Delhi and orders on
sentence dated 31.07.2025 passed by the court of Sh.
Deepak Kumar, Ld. CJM, North-East District,
Karkardooma Courts, Delhi in three different cases
bearing CC No. 756/2018, 443/2018 & 609/2018.
3. The case bearing CC No. 756/2018 qua cheque
bearing No. 000006 dt. 05.03.2018 of Rs.1,00,000/- &
cheque bearing No. 000007 dt. 20.03.2018 of Rs.80,000/-
was filed by the complainant (respondent no. 2 herein)
against the accused (appellant herein) under section 138 of
Negotiable Instruments Act, 1886 (herein after referred to
as the NI Act), vide which, the accused was convicted
under section 138 of NI Act and sentenced to undergo
simple imprisonment for a period of 4 months and directed
to pay compensation of Rs.2,80,000/- to the complainant
within one month from 31.07.2025 and in default of the
payment of compensation, the convict shall undergo
further simple imprisonment for one month.
4. The case bearing CC No. 443/2018 qua cheque
Madan Lal v. State & Anr. Page 2 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
bearing No. 000001 dt. 05.01.2018 of Rs.20,000/- &
cheque bearing No. 000002 dt. 20.01.2018 of Rs.50,000/-
was filed by the complainant (respondent no. 2 herein)
against the accused (appellant herein), vide which, the
accused was convicted under section 138 of NI Act and
sentenced to undergo simple imprisonment for a period of
3 months and directed to pay compensation of
Rs.1,10,000/- to the complainant within one month from
31.07.2025 and in default of the payment of compensation,
the convict shall undergo further simple imprisonment for
one month.
5. The case bearing CC No. 609/2018 qua cheque
bearing No. 000003 dt. 05.02.2018 of Rs.50,000/- &
cheque bearing No. 000005 dt. 20.02.2018 of
Rs.1,00,000/- was filed against the complainant
(respondent no. 2 herein) against the accused (appellant
herein), vide which, the accused was convicted under
section 138 of NI Act and sentenced to undergo simple
imprisonment for a period of 4 months and directed to pay
compensation of Rs.2,35,000/- to the complainant within
one month from 31.07.2025 and in default of the payment
of compensation, the convict shall undergo further simple
imprisonment for one month.
6. Feeling aggrieved with the impugned judgments and
orders on sentence, the appellant/convict has filed three
appeals. Notices of the appeals were issued to the
Madan Lal v. State & Anr. Page 3 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
respondent no. 2/complainant.
7. The record of the Trial Court is also requisitioned.
8. Brief facts of the case are that the complainant
(respondent no.2 herein) and the accused (appellant
herein) were having good friendly relations. On
20.11.2016, the accused had sought financial assistance
from the complainant of Rs.4 lakhs, as friendly loan for his
business purpose. The complainant had given Rs.4 lakhs to
the complainant, as friendly loan for a period of one year
and after completion of one year, when the complainant
demanded his money back from the accused, he delayed
making the payment on account of financial crises.
Thereafter, a written agreement was executed and the
accused had issued six cheques of different amounts in
favour of the complainant, however, when the complainant
presented cheque bearing No.000001 dated 05.01.2018 for
an amount of Rs.20,000/- for encashment, it was
dishonoured on account of ‘Payment stopped by Drawer’,
vide returning memo dated 05.01.2018. The complainant
presented another cheque bearing No.000002 dated
20.01.2018 for an amount of Rs.50,000/- for encashment,
it was dishonoured on account of ‘Payment stopped by
Drawer’, vide returning memo dated 20.01.2018. The
complainant presented cheque bearing No.000003 dated
05.02.2018 for an amount of Rs.50,000/- for encashment,
it was dishonoured on account of ‘Payment stopped by
Madan Lal v. State & Anr. Page 4 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
Drawer’, vide returning memo dated 15.02.2018. The
complainant presented another cheque bearing No.000005
dated 20.02.2018 for an amount of Rs.1,00,000/- for
encashment, it was dishonoured on account of ‘Account
Closed’, vide returning memo dated 22.02.2018. The
complainant presented another cheque bearing No.000006
dated 05.03.2018 for an amount of Rs.1,00,000/- for
encashment, it was dishonoured on account of ‘Payment
stopped by Drawer’, vide returning memo dated
22.03.2018. The complainant presented another cheque
bearing No.000007 dated 20.03.2018 for an amount of
Rs.80,000/- for encashment, it was dishonoured on
account of ‘Drawers signature differs’, vide returning
memo dated 22.03.2018. The complainant sent three
Legal Notices dated 06.02.2018 (qua dishonour of cheque
No. 000001 & 000002), dated 06.03.2018 (qua dishonour
of cheque No. 000003 & 000005) and dated 13.04.2018
(qua dishonour of cheque No. 000006 & 000007), but,
despite service of notices, the accused did not repay the
said loan amount. Consequently, three separate complaints
u/s. 138 of NI Act were filed by the complainant
(respondent herein) against the accused (appellant herein).
9. The accused had taken the plea that he had no
liability against the complainant and he had not issued any
cheque to the complainant. The complainant had misused
his cheque for grabbing of his committee amount of Rs.3
Madan Lal v. State & Anr. Page 5 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
lakhs. The accused admitted his signatures on the cheques
in question, and also admitted receiving of legal demand
notice in one complaint i.e. CC No. 443/2018, however, he
denied receiving of any legal demand notice in other two
complaints.
10. Since, the accused failed to rebut the presumption
u/s 139 N.I. Act, the Ld. Trial Court found him 'guilty' and
accordingly, accused Madan Lal was convicted of offence
u/s 138 N.I. Act, vide separate judgments dated
14.05.2025 and thereafter, he was sentenced, vide separate
orders on sentence dated 31.07.2025.
11. I have heard the Ld. Counsel for the appellant and
Ld. Counsel for the respondent no. 2.
12. Ld. Counsel for the appellant submitted that the
impugned judgments dated 14.05.2025 and orders on
sentence dated 31.07.2025 passed by the Ld. Trial Court
are bad in eyes of law and against the facts and
circumstances of the case. There is no substantial evidence
on record to prove the case of the respondent no. 2 and
there was no documentary proof on record to prove the
case beyond reasonable doubt. He also submitted that it
also reflected from the evidence that no documents were
prepared regarding the alleged loan. Even there was no
mentioning about the date of handing over the alleged loan
to the appellant in the said agreement dated 14.12.2017.
Madan Lal v. State & Anr. Page 6 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
Moreover, the said loan was not reflected in the ITRs of
the respondent/complainant.
13. Ld. Counsel for the appellant further submitted that
the Ld. Trial Court did not appreciate the material
available on record and passed the impugned judgment
and order without application of judicial mind. The Ld.
Trial Court did not consider the statement/evidence of
DW1. The Ld. Trial Court declined to consider the written
calculation of respondent no. 2 in regard to the committee
(chit fund company) on the ground that the same was not
signed by respondent no. 2 and altogether ignored it’s
relevancy. He also submitted that the complainant
/respondent no. 2 had not produced any documents
regarding his financial capacity, but the Ld. Trial Court did
not consider the said fact and passed impugned judgment
and order on sentence.
14. Ld. Counsel for the appellant further submitted that
the appellant/accused had taken plea in his defence that
the cheques in question were given by him to the
complainant/respondent no. 2 being member of committee
and out of them, two cheques were given as security being
member of committee and other cheques were misplaced,
for which, the appellant lodged a complaint before the
police, but, the Ld. Trial Court passed impugned judgment
and order on sentence without considering the said facts.
Madan Lal v. State & Anr. Page 7 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
He also submitted that the impugned judgments and orders
on sentence are bad, arbitrary and have not been passed
with proper judicial mind as the Ld. Trial Court has
completely overlooked the complaint, notice and
documents on record filed by the respondent no. 2 and if
the above said documents are properly looked into, the
document itself rebutted the presumption drawn against
the appellant. He also submitted that the appellant is not
liable to disprove the whole case of the respondent no. 2,
as the burden upon the appellant was only to raise a
reasonable and probable defence which the appellant had
raised in the present case successfully. The Ld. Trial Court
has illegally and unjustifiably convicted the appellant
relying on the presumption under section 139 and 118 (a)
of NI Act which has been successfully rebutted by the
appellant relying on the complaint, notice and documents
filed by the respondent no. 2 and prayed that the impugned
judgments and orders on sentences passed by the Ld. Trial
Court may kindly be set aside, in the interest of justice.
15. On the other hand, Ld. Counsel for the respondent
no.2/complainant submitted that in the case in hand, the
accused and complainant were known to each other having
friendly relations. He also submitted that in the trial court,
the accused has admitted his signatures on the cheques in
question. The Ld. Trial Court passed the impugned
judgments dated 14.05.2025 and orders on sentence dated
Madan Lal v. State & Anr. Page 8 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
31.07.2025, after considering the proper facts and
circumstances in a very judicious manner. He also
submitted that the appeals filed by the appellant/convict
are false, frivolous and baseless and prayed for dismissing
the appeals filed by the appellant/convict.
16. I have gone through the impugned judgments and
orders on sentence, the Trial Court record and also
heard the arguments advanced by both the parties.
17. Now, the relevant provision of law to settle the
entire dispute/controversy between the parties herein is
Sec. 138 of NI Act and the same is being reproduced
hereinafter for the ready reference:-
"138. Dishonour of cheque for insufficiency, etc., of funds in the
account.- Where any cheque drawn by a person on an account
maintained by him with a banker for payment of any amount of
money to another person from out of that account for the
discharge, in whole or in part, of any debt or other liability, is
returned by the bank unpaid, either because of the amount of
money standing to the credit of that account is insufficient to
honour the cheque or that it exceeds the amount arranged to be
paid from that account by an agreement made with that bank,
such person shall be deemed to have committed an offence and
shall, without prejudice to any other provision of this Act, be
punished with imprisonment for a term which may 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
three 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
Madan Lal v. State & Anr. Page 9 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
(c) the drawer of such cheque fails to make the payment of the
said amount of money to the payee or, as the case may be, to the
holder in due course of the cheque, within fifteen days of the
receipt of the said notice.
Explanation For the purposes of this section, "debt of other
liability" means a legally enforceable debt or other liability.
18. The essential ingredients in order to attract Sec.
138 of NI Act, 1881 are as following:
i) The cheque for an amount is issued by the drawer to the
payee/complainant on a bank account being maintained by
him.
ii) The said cheque is issued for the discharge, in whole or
in part of any debt or liability.
iii) The cheque is returned by the bank unpaid on account
of insufficient amount to honour the cheque or it exceeds
the amount arranged to be paid from that account by an
agreement made with the bank.
iv) The cheque is presented within 3 months from the date
on which it is drawn or within the period of its validity.
v) within 30 days a legal demand notice is issued by the
payee or the holder in due course to the drawer of the
cheque on receipt of information by him from the bank
regarding the dishonour of the cheque.
vi) The drawer of the said cheque fails to make payment
of the said amount of the money as demanded in the legal
demand notice to the payee or the holder in due course
within 15 days of the receipt of said notice.
vii) The debt or other liability against which the cheque
was issued is legally enforceable.
19. Now, coming to the facts of the present
complaints keeping in view the essential ingredients of
section 138 of NI Act.
20. In this case, it is not disputed and duly admitted
by the accused that the cheques in question bear his
signatures and drawn by him in favour of the
Madan Lal v. State & Anr. Page 10 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
complainant. Therefore, the essential ingredient (i) as
discussed in the preceding paragraph stands fulfilled.
Accused has further admitted the factum of dishonour
of the cheques in question, hence, another essential
ingredients (iii) and (iv) also stand proved by the
complainant. In one of the complaints i.e. CC No.
443/2018, accused has further admitted receiving of the
legal demand notice sent to him by the complainant.
Infact the same was duly replied by him. However, in
other two complaints i.e. in CC No. 756/2018 &
609/2018, he had denied receiving of legal demand
notices. But, perusal of the record of these two
complaints shows that notices in both these complaints
were sent at the same address, where the notice in CC
No. 443/2018 was served. The appellant has also not
disputed the address at which the said notices were sent.
The tracking reports filed by the respondent no. 2
alongwith the complaints show that the notices were
served. Thus, in these two complaints also notices shall
be deemed to be served. Hence, essential ingredients (v)
and (vi) also stand proved.
21. Now coming to the last and the remaining core
ingredients of Sec. 138 of NI Act, i.e. ingredient no. (ii)
and (vii) as discussed in the preceding paragraphs and
the real issue of controversy herein ie. whether the
cheques in question were issued in discharge of any
Madan Lal v. State & Anr. Page 11 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
debt or liability, whole or in part and whether the same
is a legally enforceable debt.
22. It is pertinent to mention here that the holder of
the cheque has the presumption of law in his favour as
per Section 118 of the NI Act and Section 139 of the NI
Act. According to Section 139 of Negotiable
Instruments Act, unless the contrary is proved, it is to
be presumed that the holder of a cheque received the
cheque of the nature referred to in Section 138 for the
discharge, in whole or in part, of any debt or other
liability. In the case in hand, since the appellant/convict
has admitted his signatures on the cheques in question,
presumption of section 118 and 139 of NI Act arise in
favour of the complainant which are being reproduced
hereinafter for ready reference:-
23. "Section.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
Madan Lal v. State & Anr. Page 12 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
appearing upon a negotiable instrument were made in the
order in which they appear thereon;
(f) as to stamps that a lost promissory note, bill of
exchange or cheque was duly stamped;
(g) that holder is a holder in due course - that the holder of
a negotiable instrument is a holder in due course:
Provided that, where the instrument has been obtained
from its lawful owner, or from any person in lawful
custody thereof, by means of an offence or fraud, or has
been obtained from the maker or acceptor thereof by
means of an offence or fraud, or for unlawful
consideration, the burden of proving that the holder is a
holder in due course lies upon him."
24. "139. Presumption in favour of holder. It shall be
presumed, unless the contrary is proved, that the holder
of a cheque received the cheque, of the nature referred
to in Section 138 for the discharge, in whole or in part,
of any debt, or other liability".
25. It is explicit in the said provision that the
presumption shall remain untill contrary is proved. In
K. Bhaskaran vs. Sankaran Vaidhyan Balan & Anr.,
(1999) 7 SCC 510 and also in Rangappa vs. Sri Mohan,
(2010) 11 SCC 441, the Hon'ble Supreme Court has
held that the presumptions under Sections 118(a) and
139 of the NI Act are rebuttable in nature and for
rebuttal of the same accused need not to step into the
witness box as he can rebut the same by placing
reliance on the material brought on record by the
complainant. It is also a well settled legal position that
the presumptions can be rebutted even by raising
Madan Lal v. State & Anr. Page 13 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
presumptions of fact and law on the basis of material
available on record. It is further well settled that the
standard required from the accused to prove his defence
is preponderance of probabilities and accused need not
prove his defence beyond reasonable doubts. Again in
Basalingappa vs. Mudibasappa, (2019) 5 SCC 418, the
Hon'ble Supreme Court categorically held as under:-
"10. The complainant being holder of cheque and the
signature on the cheque having not been denied by the
accused, presumption shall be drawn that cheque was
issued for the discharge of any debt or other liability. The
presumption under Section 139 is a rebuttable
presumption. Before we refer to judgments of this Court
considering Section 118 and 139, it is relevant to notice
the general principles pertaining to burden of proof on an
accused especially in a case where some statutory
presumption regarding guilt of the accused has to be
drown.”
26. Needless to mention herein that the presumption
contemplated under Section 139 of the Negotiable
Instruments Act, is a rebuttable presumption. However,
the onus of proving that the cheque was not in discharge
of any debt or other liability is on the accused drawer of
the cheque. In the present case initial presumptions in
terms of Section 118 (a) and 139 of the NI Act duly
arise not only regarding existence of legally enforceable
liability in favour of the complainant but also regarding
issuance of cheque in question by the accused in favour
of complainant in discharge of his aforesaid liability.
Now, whether or not the accused has been able to rebut
Madan Lal v. State & Anr. Page 14 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
the said presumption is a question of fact which needs
to be decided after appreciation of entire evidence led
on behalf of both the parties in the light of guiding
principles laid down by the Hon'ble Supreme Court as
mentioned herein above and depends upon the facts and
circumstances of each case.
27. Again, this court is not oblivious of the position
of law that the accused is only supposed to discharge
his/her onus not beyond the reasonable doubt but on the
principle of preponderance of probabilities which is
again a settled position of law and it has been reiterated
again and again through the judicial precedents that the
said appreciation depends upon the facts and
circumstance of each and every case and no air tight
formula can be adopted in order to ascertain as to
whether accused has been successful in dislodging the
testimony of complainant before the court.
28. On the aspects of preponderance of probabilities,
the accused has to bring on record such facts and such
circumstances which may lead the court to conclude
either that the consideration did not exist or that its
nonexistence was so probable that a prudent man
would, under the circumstances of the case, act upon
the plea that the consideration did not exist. The
Hon'ble Supreme Court in Rohitbhai Jivanlal Patel vs.
Madan Lal v. State & Anr. Page 15 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
State of Gujarat & Anr., (2019) 18 SCC 106 and in
various other rulings have time and again, emphasized
that though there may not be sufficient negative
evidence which could be brought on record by the
accused to discharge his burden, yet mere denial would
not fulfil the requirements of rebuttal as envisaged
under section 118 and 139 of the NI Act. Further, it has
been held in Rajesh Agarwal v. State, 2010 SCC online
Del 2501 that:-
"9...... There is no presumption that even if an accused
fails to bring out his defence, he is still to be considered
innocent. If an accused has a defence against dishonour of
the cheque in question, it is he alone who knows the
defence and responsibility of spelling out this defence to
the court and then proving this defences is on the
accused....."
29. The primary issue in the case in hand is to
determine whether the accused has succeeded in
discharging his burden i.e. whether he has successfully
raised a probable defence in order to create a reasonable
doubt in the case of complainant to discard the
presumption of law in favour of complainant.
30. As per the case put forth by the complainant
/respondent no.2, the loan of Rs.4 lakhs was advanced
by the complainant/respondent no.2 to the convict
/appellant in discharge whereof, the appellant had
issued six cheques in question. The convict /appellant
Madan Lal v. State & Anr. Page 16 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
admitted the signatures on the cheques in question,
however, he denied filling of the other particulars.
Receipt of legal demand notice was denied by the
appellant in two of the complaints, but admitted in one
of the complaint i.e. CC No. 443/2018. The judgments
date 14.05.2025, passed by the Ld. Trial Court has been
assailed by the appellant mainly on the ground that he
had no liability towards the complainant/respondent
no.2 and the cheques in question were issued as
security, as he was one of the members of the
committee being run by the complainant/respondent
no.2.
31. Ld. Counsel has argued that some of the cheques
were misplaced by the appellant, and complaint to that
effect was made by the appellant. Ld. Counsel for the
appellant/convict has vehemently argued that as per the
case of the complainant, the alleged loan was given on
25.11.2016, whereas, on 08.11.2016, the Govt. of India
had declared demonetization and thereby the legal
tender character of the then existing Rs.500/- &
Rs.1000/- bank notes was withdrawn and general public
was forbidden from dealing with the then existing bank
notes of Rs.500/- & Rs.1000/-. Ld. Counsel further
argued that at that time, there was limit on withdrawal
of the new currency notes from the bank account and it
was not possible for the complainant to have Rs.4 lakhs
Madan Lal v. State & Anr. Page 17 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
in cash in the new currency notes on 25.11.2016 i.e.
within two weeks of the declaration of the said
demonetization. Ld. Counsel for the appellant has also
disputed the financial capacity of the complainant and
also raised the argument that said loan amount was not
shown in the ITRs of the complainant. Lastly, it was
argued that Ld. Trial Court discarded the hand written
calculations furnished by the appellant to show that he
was the member of committee being run by the
complainant/respondent no.2.
32. On the other hand, Ld. Counsel for the
complainant/respondent no.2 has argued that there is no
infirmity and illegality in the judgment of the Ld. Trial
Court and the appellant has been rightly convicted. In
the present case accused has merely denied the liability
and failed to prove the same either by rebutting the
testimony of complainant through his cross examination
which may lead this court to believe the non-existence
of the consideration for which cheques in question were
allegedly issued to complainant by accused, nor his
defence is so probable that any prudent man would
consider the same in the facts and circumstances similar
to the case in hand or by leading any cogent and
believable evidence to support his defence.
33. It is pertinent to mention here that most of the
Madan Lal v. State & Anr. Page 18 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
contentions have already been considered by the Ld.
Trial Court, while passing the impugned judgment. The
relevant portion of the impugned judgment is
reproduced herein below:-
“The complaint of the accused to the SHO dated
07.02.2018 Ex. DW2/B is on record, however, the said
complaint does not bear the details of cheques which are
alleged to have been misplaced by the accused. Also the
letter to the Bank Manager of Bank of Baroda dated
31.07.2017, mentions the misplacement the cheques of the
accused, however, only cheque number 000007 is
mentioned as one of the cheques misplaced and cheque
no. 000006 is not mentioned. However, the accused has
taken an entirely different defence at the stage of notice
and at the stage of recording of statement of accused u/s
313 Cr.PC wherein he has stated that cheques in question
were given by him as security to the complainant as he
was member of the committee run by the complainant.
Also agreement dated 14.12.2017 Ex. CW1/A is on record
and in the said agreement, accused Madan Lal has
admitted his liability of Rs.4 lakhs towards the
complainant and the said document bears the signature
and thumb impression of both the complainant and
accused and also bears the signature of two independent
witnesses Manoj Kumar and Tushar Anuragi. Sh. Manoj
Kumar was called as a witness by the complainant and
CW2 Sh. Manoj Kumar has reiterated the version of the
complainant and stated that the complainant gave Rs.4
lacs to the accused in his presence. The said witness as
well as the complainant was duly cross examined by the
Ld. Counsel for the accused, however, no inconsistencies
or infirmities could be pointed out from the abovesaid
cross examination. Also the accused has admitted his
signature on the cheques in question and the abovesaid
agreement but has denied receiving the legal notice from
the complainant. The accused has taken different defences
at different stages of trial and he has not been able to
Madan Lal v. State & Anr. Page 19 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
show that the cheques in question were misplaced by him
or that he was member of any committee run by the
complainant. The accused has denied receiving the legal
notice but perusal of record reveals that it was sent on the
same address as that mentioned in the complaint. The
complainant has placed on record the tracking report
showing receipt of legal notice by the accused.
The complainant has been able to prove his case that he
had given loan of Rs.04 lacs to the accused and the
accused in discharge of his legal liability, handed over to
him six cheques (two in the present case) of different
amounts which were returned by the bank on their
presentation on the grounds "payment stopped by drawer"
and "drawers signature differs". The accused has admitted
his signature on cheques in question at the stage of
framing of notice and also during his examination in DE.
The complainant's case is supported by the documents
placed on record by him including the cheques, legal
notice, agreement dated 14.12.2017, etc. and the accused
has not been able to bring any concrete evidence
/documents on record to point out any infirmities/loop
holes in the testimony of the complainant and CW2 Sh.
Manoj Kumar.
Also noticing that the accused has not able to place on
record any document to show that his cheque was
misplaced or that he gave the cheques to the complainant
for security being member of his committee and
considering that the accused has taken different defences
during different stages of trial, this court is of the view
that the accused has not able to raise a probable defense
especially since no infirmity could be brought out by the
accused in the testimony of the complainant and the
accused has not been able to place anything on record to
prove his innocence and show that he owes no liability
towards the complainant. Also the accused has not been
able to explain his signatures (admitted by him) on the
agreement dated 14.12.2017 wherein he has
unequivocally admitted his liability of Rs.4 lacs towards
the complainant.
Madan Lal v. State & Anr. Page 20 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
After taking into account the material on record, this court
is of view that the accused has not been able to raise a
probable defence especially in light of the facts that the
accused has not placed on record any concrete evidence to
dispel the presumption raised in favour of the complainant
as per section 118 N. I. Act.
Conclusively, in light of the above discussions and
reasons, this court finds accused Madan Lal guilty of
offence punishable U/s 138 of the NI Act. Hence, accused
stands convicted for the said offence.”
34. In the considered opinion of this court, none of
the arguments raised by Ld. Counsel for the appellant is
sound enough so as to come to a different conclusion to
what was arrived at by the Ld. Trial Court. The
argument raised by the Ld. Counsel for the appellant
that in view of declaration of the demonetization by the
Govt. of India on 08.11.2016, it was not possible for the
complainant/respondent no. 2 to have such a huge cash
amount of Rs.4 lakhs in new currency notes within two
weeks of the declaration of the demonetization, is not
tenable and in itself is not sufficient to rebut the
presumption u/s. 118 & 139 of NI Act in the absence of
any other evidence furnished on record by the appellant.
No doubt, the Govt. of India had made declaration of
demonetization on 08.11.2016, thereby, withdrawing
legal tender character of the then existing Rs.500/- &
Rs.1000/- bank notes, but this in itself is not sufficient
to rebut the presumption raised against the appellant
Madan Lal v. State & Anr. Page 21 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
under the NI Act, as it is not a matter of presumption
that at that time, it was not possible for the complainant
to arrange such a huge amount of Rs.4 lakhs in new
currency notes. In fact, the complainant had examined
himself as CW-1 and also Sh. Manoj Kumar, as CW-2,
who had proved the factum of giving loan of Rs.4 lakhs
by the complainant to the appellant. Moreover, the said
oral testimonies of CW-1 and CW-2 have been further
corroborated by the agreement dated 14.12.2017. Thus,
the complainant had tendered not only the oral evidence
but also documentary evidence i.e. agreement dated
14.12.2017, so as to prove his case.
35. On the other hand, the appellant had failed to
show as to if there was no liability upon him and he had
not taken any loan from the complainant, then why he
had executed the said agreement, which was not only
signed by him, but he had also put his thumb
impressions on the same. He has further failed to show
as to why Sh. Manoj Kumar, who was an independent
person, had deposed against him. Further, it is worth-
noticing that in CC No. 443/2018, he had also replied to
the legal demand notice. In the said reply, neither the
appellant had denied his liability towards the
complainant/respondent no.2, nor he had disputed the
financial capacity of the complainant/respondent no.2,
nor there was any whisper about the fact that in view of
Madan Lal v. State & Anr. Page 22 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
demonetization, how could the complainant arrange
such a huge amount of Rs.4 lakhs, as alleged by the
complainant/respondent no.2. Reply to the legal
demand notice was the first possible opportunity for the
appellant to put his defence, but no such defence or
ground was raised by him in his reply, for the reasons
best known to him. Thus, the grounds raised by the
appellant during trial and also in the present appeals just
appear to be whimsical and an afterthought so as to
avoid his liability towards the complainant/respondent
no.2.
36. The Hon'ble Apex Court in the case of Tedhi
Singh v. Narayan Dass Mahant, (2022) 6 SCC 735 had
observed as under:
"10.... The proceedings under Section 138 of the NI
Act is not a civil suit. At the Time, when the
complainant gives his evidence, unless a case is set
up in the reply notice to the statutory notice sent, that
the complainant did not have the wherewithal, it
cannot be expected of the complainant to initially
lead evidence to show that he had the financial
capacity. To that extent, the Courts in our view were
right in holding on those lines. However, the accused
has the right to demonstrate that the complainant in a
particular case did not have the capacity and
therefore, the case of the accused is acceptable which
he can do by producing independent materials,
namely, by examining his witnesses and producing
documents. It is also open to him to establish the very
same aspect by pointing to the materials produced by
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
the complainant himself. He can further, more
importantly, achieve this result through the cross-
examination of the witnesses of the complainant.
Ultimately, it becomes the duty of the Courts to
consider carefully and appreciate the totality of the
evidence and then come to a conclusion whether in
the given case, the accused has shown that the case of
the complainant is in peril for the reason that the
accused has established a probable defence."
(Emphasis supplied)
37. Ld. Counsel also pointed out that there were
certain inconsistencies regarding the denominations of
notes which were given by the complainant. However,
this court does not find any major inconsistency or
contradiction in the testimonies of complainant
witnesses which raise any doubt in the case of the
complainant. Moreover, the agreement dated
14.12.2017 (Ex.CW1/A) was duly proved by the
complainant, which specifically proves not only the said
loan of Rs.4 lakhs, but also issuance of cheques in
question by the appellant to the complainant. The said
agreement bears signatures as well as thumb
impressions of the appellant and the appellant has failed
to disprove the said agreement.
38. The arguments regarding not showing of the said
loan in the ITR of the complainant and also discarding
of written calculations filed by the appellant are also of
not much force as merely non-showing of loan in ITR
Madan Lal v. State & Anr. Page 24 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
will not make it bad in law. Moreover, Ld. Trial Court
had rightly discarded the hand written notes as they
were neither proved as per law, nor they were having
any evidentiary value as such. The argument regarding
misplacing of some of the cheques by the appellant also
does not inspire much confidence, as in the complaint
regarding misplacing of cheques, all the cheques which
are the subject matter of present complaints are not
mentioned. Moreover, in his cross-examination, the
appellant had admitted that he had made the said
complaint after receiving of legal demand notice. Thus,
it appears that the said complaint was made just to raise
the false defence so as to evade his liability.
39. Thus, this court has no hesitation in holding that
apart from the presumption u/s. 118 and 139 of NI Act,
the complainant had produced positive evidence on
record to prove his case, whereas, the appellant had
failed to rebut the presumptions raised against him. In
the overall circumstances, the case put forth by the
complainant appears to be more plausible, whereas, the
defence raised by the appellant/convict does not inspire
much confidence. Therefore, this court is inclined to
hold that Ld. Trial court had rightly convicted the
appellant/accused, as the appellant failed to rebut the
presumptions raised against him. Thus, this court does
not find any illegality, infirmity or perversity in the
Madan Lal v. State & Anr. Page 25 of 26
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Criminal Appeal No. 144/2025; 145/2025 & 148/2025
impugned judgments under appeal, which may require any
interference therein. Therefore, the impugned judgments
under appeal passed by the Ld. Trial Court are upheld and
the appeals of the appellant/convict are hereby dismissed,
being devoid of merits.
40. Attested copies of this judgment be supplied to the
parties free of cost.
41. The record of the Ld. Trial court is ordered to be
returned with the attested copy of this judgment.
42. Appeal files be consigned to the record room, after
due compliance.
Announced in the open court
on 7th day of January, 2026
(PUNEET PAHWA)
Addl. Sessions Judge/Special Judge (NDPS)/
North East District/Karkardooma Courts/Delhi
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