Final Order 1

Order Details: Copy of Judgment .
Pdf Text: C.C. NO. 5606191/SC/2024 ::1:: JUDGMENT
(Para 44(i) of Chapter VI of Criminal Manual)
MHMM120139
012024 IN THE COURT OF JUDICIAL
MAGISTRATE
FIRST CLASS, 56th COURT,
MAZGAON, MUMBAI
(Presided over by Shri. D. A. Argade)
(Date of the Judgment 25/03/2026)
C.C.No.5606191/SC/2024
Offence punishable under Section 138 of the
Negotiable Instrument Act, 1881
Complainant Priyadarshana Chimanlal Shah
Age : 65 years, Occupation : Lawyer,
Address : Darshan Tower CSH Ltd., A-Wing, 3rd
floor, flat No.303, Sheth Motisha Lane, Mazgaon,
Mumbai
Represented
by
In person
Accused Khushiram Govardhan Patwa
Age : Adult, Occupation : Business,
Address : 1193, Vijay Nagar, Transit Camp Road,
Dhobi Ghat, Dharavi, Mumbai AND Shop No.30-
A, Ground Floor, Swami Narayan Building, Shree
Sahajanand Marg, Bhoiwada 3rd Lane,
Bhuleshwar, Mumbai
Represented
by
Adv. B. B. Dubey
(Para 44(ii) of Chapter VI of Criminal Manual)
Date of offence 09/01/2024
Date of FIR/Complaint 01/02/2024
Date of Charge sheet ---
Date of Framing of Charge / Plea 30/04/2024
Date of commencement of evidence 26/08/2024
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Date on which judgment is reserved ---
Date of the Judgment 25/03/2026
Date of the Sentencing order, if any 25/03/2026
Accused Details
Rank
of the
Accu
sed
Name
of
Accuse
d
Dat
e of
Arr
est
Date
of
Rele
ase
on
bail
Offenc
e
charge
d with
Wheth
er
acquitt
ed or
convic
ted
Sentence
imposed
Period of
Detention
undergone
during Trial
for purpose
of Section
428 Cr.P.C.
1 Khushi
ram
Govard
han
Patwa
--- --- U/s.138
of N.I.
Act
Convict
ed
Imprisonm
ent &
compensat
ion
---
Para 44(iii) of Chapter VI of Criminal Manual)
LIST OF PROSECUTION / DEFENCE / COURT
WITNESSES
A. Prosecution:
Rank Name Nature of Evidence
(Eyewitnesses, Police Witnesses, Expert
Witnesses, Medical Witnesses, Panch
witnesses, other witnesses)
1 Priyadarshana
Chimanlal
Shah
Complainant
B. Defence Witnesses, if any:
Rank Name Nature of Evidence
(Eyewitnesses, Police Witnesses, Expert
Witnesses, Medical Witnesses, Panch
witnesses, other witnesses)
1 Kamlesh
Ratilal Bhalja
Power of attorney holder of Trust
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C. Court Witnesses, if any:
Rank Name Nature of Evidence
(Eyewitnesses, Police Witnesses, Expert
Witnesses, Medical Witnesses, Panch witnesses,
other witnesses)
--- --- ---
LIST OF PROSECUTION / DEFENCE/ COURT EXHIBITS
A. Prosecution:
Sr.No. Exhibit No. Description
1 17 to 19 Disputed Cheques
2 21 to 22 Cheque Return Memos
3 23 Demand Notice
4 24 Postal Receipt
5 25 Postal Track Report
6 26 Reply
7 27 Reply
B. Defence:
Sr.No. Exhibit
Number
Description
--- --- ---
C. Court Exhibits:
Sr.No. Exhibit Number Description
--- --- ---
D. Material Objects:
Sr.No. Material Object
Number
Description
--- --- ---
J U D G M E N T
(Delivered on 25/03/2026)
1. The accused is facing trial for the offence punishable under
Section 138 of the Negotiable Instrument Act, 1881 (in short ‘the
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N.I. Act').
2. The case of the complainant in nutshell is as under-
Her family and the accused were in business of imitation jewelry.
She advanced him a friendly loan of Rs.5 lakh in cash on
04/03/2023. In discharge of the said liability, he issued her the
cheques bearing Nos.000210 dated 07/10/20243 for Rs.1 lakh,
000211 dated 31/10/2023 for Rs.2 lakh and 000212 dated
18/11/2023 for Rs.2 lakh. She presented the cheques in her bank.
On 14/12/2023, the cheques were dishonoured for the reason
funds insufficient. The bank issued a cheque return memos. On
21/12/2023, the complainant issued the accused a demand notice
by registered post. The notice was served upon him on
26/12/2023. He failed to pay the amount of cheques within 15
days. Hence, the complainant filed the compliant.
3. On presentation of the complaint, process was issued against
the accused for the offence punishable under Section 138 of the
N.I. Act. The particulars of the offence were read over and
explained to him in vernacular. He pleaded not guilty and claimed
to be tried. His statement was recorded vide Section 313 of the
Code of Criminal Procedure, 1973 (in short ‘the Cr.P.C.’). In
support of his defence, he has examined one witness.
4. The following points arise for my determination and I
record their findings, with reasons, as under.
SR. NO. POINTS FINDINGS
1) Does the complainant prove that the
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cheques Nos.000210 dated 07/10/20243
for Rs.1 lakh, 000211 dated 31/10/2023
for Rs.2 lakh and 000212 dated
18/11/2023 for Rs.2 lakh were drawn by
the accused for the discharge of any debt
or legally enforceable liability ? ….. Yes
2) Does the complainant prove that the
accused dishonoured the above
cheques ? ….. Yes
3) Does the complainant prove that she
made demand for the above cheques
amount by giving a notice in writing to
the accused within 30 days from the
receipt of information from the bank
regarding the return of the cheques
unpaid ? ….. Yes
4) Does the complainant prove that the
accused failed to make the payment of
the cheques within 15 days from the
receipt of the notice? ….. Yes
5) What order? ….. As per
operative
order
R E A S O N S
5. In order to substantiate the allegations levelled against the
accused, the complainant has examined herself. She has relied on
cheques, cheque return memos, office copy of demand notice,
receipt of post, postal track report and reply.
6. Now it would be apposite to examine some broad and
general submissions made by both parties. The complainant has
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submitted that the accused issued the disputed cheques for
repayment of friendly loan amount and the same were dishonored.
She has filed written notes of argument. Per contra, the learned
advocate for the accused has submitted that the complainant and
her family members have misused the cheques of the accused and
filed false case against him. He has also submitted that he is not
liable to pay the amount of the cheques to the complainant. He
has also filed written notes of argument.
7. In order to verify the authenticity of the rival arguments, the
case of the complainant and the defence raised by the accused,
oral and documentary evidence placed before the Court will have
to be scrutinized. It would be just to scrutinize the evidence while
discussing the points one by one. Before entering into the scrutiny
of the evidence, it is necessary to advert undisputed facts as seen
by the evidence of the complainant and the defence of the accused
for better appreciation. These are as under-
1) The complainant’s family members and the
accused are known to each other.
2) Total amount of the disputed cheques is Rs.5
lakh.
AS TO POINT NO. 1 :-
8. In order to appreciate the controversial aspects, a reference
is required to be made to evidence of the complainant. She has
filed her examination-in-chief by way of an evidence affidavit.
She has deposed in her evidence affidavit that she advanced the
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accused a friendly loan of Rs.5 lakh in cash on 04/03/2023. She
has also deposed in her evidence affidavit that in discharge of the
said liability, he issued her the disputed cheques and same were
dishonoured for the reason funds insufficient.
9. The disputed cheques at exhibit 17 to 19 were referred to in
evidence affidavit of the complainant. The said cheques show the
name of the accused as drawer and the name of the complainant
as payee. The signatures of the drawer appear thereon are the
same that of the signatures of the accused seen on his plea at
exhibit 12 and statement recorded under Section 313 of Cr.P.C. at
exhibit 37. Therefore, it is clear that the disputed cheques bear his
signature.
10. As revealed from cross-examination of the complainant
conducted by the accused, it is his defence that he purchased a
shop from her family members in 2014 for consideration of Rs.40
lakh and there was some short amount, therefore, he issued three
cheques to her family members as security. It is also his defence
that he paid the amount in cash and demanded back his security
cheques, but the same were not returned on the pretext that they
were stolen. According to him, he paid entire consideration in
cash and the complainant had her share in the said amount and
however, she misused his security cheques.
11. In her cross-examination, the complainant has categorically
admitted that the accused had given Rs.40 lakh and the same was
appropriated amongst landlord and shareholders. It has also come
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in her cross-examination that she donated her share to
Swaminarayan Trust. To support his defence, the accused has
examined his witness No.1 (DW1) Kamlesh Ratilal Bhalja. He is
power of attorney holder of Shree Laxminarayan Dev Temple
Wadtal in Gujarat. On going through his examination-in-chief, it
is seen that there is a temple of said trust at Bhuleshwar, Mumbai.
He has produced on record the photocopy of the power of
attorney deed at exhibit 60. He had brought the original power of
attorney deed when his testimony was recorded. The said copy of
power of attorney shows that he is the power of attorney of the
trust.
12. It has come in testimony of DW1 Kamlesh Bhalja that the
accused purchased the property at Swaminarayan Building. But
he did not remember whether the complainant gave a donation to
the trust. Hence, his testimony is of no help to show whether she
donated her share to the trust. Moreover, nothing has come on
record from his testimony to show that the accused issued the
disputed cheques to the complainant towards security. Therefore,
his testimony is of no help to the accused.
13. Though the accused raised a defence that he issued three
cheques to the family members of the complainant towards
security as there was shortage of some consideration amount for
the above shop transaction, but he replied to her demand notice
vide his reply at exhibit 26. In his reply, he contended that he does
not know her and never issued her any cheque. Therefore, his
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defence supra is marred by his such contention averred in his
reply.
14. Needless to say that the complainant has categorically
denied in her cross-examination that the disputed cheques were
issued towards security. On the contrary, it is clear from the
suggestion given by the learned advocate for the accused to her
that the accused issued her the disputed cheques. Therefore, it is
clear that the disputed cheques were issued by the accused to the
complainant and they bear his signatures. Thus, it is clear that the
disputed cheques were not issued towards security.
15. Though no document is on record to show a friendly loan
was advanced by the complainant to the accused, but it is clear as
discussed earlier that the disputed cheques were not issued
towards security. If the disputed cheques were not issued towards
security, a question will arise why the said cheques were issued
by the accused to the complainant. She has come with the case
that she advanced a friendly loan of Rs.5 lakh. Needless to say
that the total amount mentioned on the disputed cheques is Rs.5
lakh. In view of this, it can be held that the said cheques must
have been issued for repayment of loan amount. Therefore, it is
proved that the complainant had advanced a friendly loan of Rs.5
lakh to the accused and he issued the disputed cheques to her for
repayment of the said loan.
16. It is further defence of the accused that the alleged loan
transaction amount is unaccounted as the complainant did not
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show the loan transaction in her income tax returns. Though she
admitted that she did not reflect the said loan transaction in her
income tax returns, but she gave a reason in her cross-
examination that the loan was given for short period. Though she
did not show the loan transaction in her income tax returns, but in
this connection, there is decision of Hon‘ble Bombay High Court
in the case of Prakash Madhukarrao Desai V/s. Dattatraya
Sheshrao Desai. Wherein it has been held that a transaction not
reflected in the books of accounts and/or income tax returns of the
holder of the cheque in due course can be permitted to be
enforced by instituting proceedings under Section 138 of the N.I.
Act in view of the presumption under Section 139 of the N.I. Act
that such cheque was issued by the drawer for the discharge of
any debt or other liability, execution of the cheque being
admitted. In view of the ratio laid down in the decision supra, the
above defence of the accused cannot be sustained.
17. It is also the defence of the accused that a cash transaction
of more than Rs.20,000/- in the present case is a violation of
Section 269-SS of the Income Tax Act, 1961. To counter this
defence, the complainant has placed reliance on decision of
Hon’ble Supreme Court of India in case of Sanjabji Tari V/s.
Kishore S. Borcar and another, reported in 2025 ALL MR (cri)
4429 (S.C.). Wherein it has been held that any violation of
Section 269 SS of the Income Tax Act, 1961 would not render
transaction unenforceable under Section 138 of the N.I. Act or
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rebut the presumption under Sections 118 and 139 of the N.I. Act
because such a person, assuming him/her to be payee/holder in
due course, is liable to be visited by a penalty only as prescribed.
It has also been held therein that the view that any transaction
above Rs.20,000/- is illegal and void and does not fall within the
definition of legally enforceable debt cannot be countenanced. In
view of the said ratio laid down in the decision supra, the above
defence of the accused is of no help to him.
18. To support his argument, the learned advocate for the
accused has relied on decision of Hon’ble Supreme Court of India
in case of John K. Abraham V/s. Simon C. Abrahan and
another. It is on the point of various defects in the evidence of
PW1. In the present case, no material defects are found in the
evidence of the complainant. Therefore, the decision supra is of
no help to the accused.
19. The learned advocate for the accused has also relied on
decision of Hon’ble Supreme Court of India in case of
Basalingappa V/s. Madibasappa reported in AIR 2019 SC 1983.
It is on the point of financial capacity of the complainant when it
was questioned on behalf of the accused. In the present case, it
has come on record that the complainant is a lawyer and she files
income tax returns. Needless to say that the loan transaction
amount is Rs.5 lakh. Considering profession of the complainant
and her income tax returns, a question raised on her financial
capacity cannot be sustained. Therefore, the decision supra is of
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no help to the accused.
20. As discussed earlier, it is clear that the complainant
advanced a friendly loan of Rs.5 lakh to the accused and in
discharge of the said liability, he issued her the disputed cheques.
Thus, it is clear that the said transaction is legal.
21. The presumption under Section 139 of the N.I. Act places
the evidential burden on the accused for proving that the cheques
were not issued in discharge of his liability. Thus, burden was on
him to disprove the existence of any legally recoverable debt or
liability. But in vain. He has failed to disprove the existence of
any legally recoverable debt or liability. In view of this, the
disputed cheques issued by him to the complainant have legal
sanctity. Hence, the disputed cheques come under purview of the
above legal transaction. Therefore, it is proved that the disputed
cheques were drawn by the accused for the discharge of legally
enforceable liability. Thus, the finding of point No. 1 is recorded
accordingly.
AS TO POINT NO. 2 :-
22. It is to be ascertained as to whether the accused dishonoured
the cheque. Black's Law Dictionary defines the term 'Dishonour'
as follows :-
''Dishonour – to refuse to accept or pay a draft or
to pay a promissory note when duly presented. An
instrument is dishonoured when a necessary or
optional presentation is duly made and due
acceptance or payment is refused, or cannot be
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obtained within the prescribed time, or in case of
bank collection, the instrument is reasonably
returned by the midnight deadline; or presentation
is excused and the instrument is not duly accepted
or paid.''
23. As seen from evidence of the complainant, she deposited the
disputed cheques in Mumbai District Central Co-operative Bank
Ltd, Byculla branch, Mumbai. It is also seen in her evidence
affidavit that on 14/12/2023, the said cheques were returned with
memos by the bank unpaid with endorsement of “funds
insufficient”. The bank memos at exhibit 20 to 22 show that the
cheques were returned with endorsement “funds insufficient”. It
means the cheques were returned unpaid. Therefore, it is proved
that the accused dishonoured the cheques. Thus, the finding of
point No.2 is recorded accordingly.
AS TO POINT NO. 3 :-
24. It is to be ascertained as to whether the complainant made
demand of the amount of cheques by giving a notice in writing to
the accused within 30 days from the receipt of information from
the bank regarding the return of cheques unpaid. In examination-
in-chief of the complainant, she has deposed that she issued the
accused a demand notice dated 21/12/2023 by speed post for
demanding the cheque amount after dishonour. The office copy of
demand notice at exhibit 23 shows that the complainant
demanded the accused the amount of the cheques.
25. As seen from the postal track report exhibit 25, the demand
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notice was served upon the accused on 26/12/2023. The reply
dated 27/12/2023 to the demand notice has been produced by the
complainant at exhibit 26. It shows that the accused replied the
demand notice. In view of this, it is clear that he received the
demand notice. Needless to say that the cheques were returned by
the bank on 14/12/2023 and the accused received the demand
notice on 26/12/2023. Therefore, it is proved that the demand
notice dated 21/12/2023 issued by the complainant is duly served
on the accused and the said notice was issued to him within 30
days from the receipt of information from the bank regarding the
return of the cheques unpaid. Thus, the finding of point No. 3 is
recorded accordingly.
AS TO POINT NO. 4 :-
26. Now it is to be ascertained as to whether the accused failed
to make the payment of the said cheques amount within 15 days
from the receipt of notice. It is evident in testimony of the
complainant that he did not pay her the amount of the cheques
despite the receipt of notice. It is already proved that demand
notice dated 21/12/2023 was served upon him on 26/12/2023. In
his reply to the demand notice, he denied his liability. He failed to
make the payment of the mount of cheques within 15 days from
intimation. Therefore, it is proved that he failed to make the
payment of the amount of the cheques within 15 days from
receipt of notice. Thus, the finding of point No. 4 is recorded
accordingly.
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AS TO POINT NO. 5 :-
27. In the above discussions and findings of point Nos. 1 to 4, I
have tried to separate the grains from the chaffs i.e. truth from
falsehood. The fundamental ingredients of the offence under
Section 138 of the N.I. Act are proved against the accused. Hence,
this Court comes to conclusion that the offence punishable under
Section 138 of the N. I. Act is proved against him beyond
reasonable doubt. I, therefore, hold him guilty for having
committed an offence punishable under Section 138 of the N.I.
Act. This is an economical offence. Hence, I do not seem to be
justifiable to release the accused on his probation of good conduct
as per the Probation of Offenders Act, 1958.
28. In order to pass a sentence to the accused, he can be given
an opportunity. He and his learned advocate have submitted that
leniency may be shown to the accused.
29. The punishment provided for the offence under Section 138
of the N.I. Act is imprisonment for the term which may extend to
two years or with a fine which may extend to twice the amount of
cheque or with both. The accused did not repay the loan amount
to the complainant. To discharge the said liability, he issued the
disputed cheques. Moreover, he was well aware of the
consequences of issuing the cheques. If the complainant had
invested money with some other person, she would have earned
profit.
30. The punishment should be proportionate to the act. The
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main purpose of Section 138 of the N. I. Act is not just to punish
the drawer of a dishonoured cheque i.e. the accused, but to see
that the complainant gets the money due to her. Since the
dishonour of the disputed cheques involved a financial loss to the
complainant, awarding a compensation to her under Section
357(3) of the Cr.P.C. would serve the purpose of justice. Hence,
imposing a sentence of simple imprisonment for six months and a
compensation amount equal to the amount of disputed cheques
with 9% interest per annum from the date of the complaint till
actual realization as compensation would meet the ends of justice.
In the result, following order is passed.
ORDER
1) The accused is convicted of the offence
punishable under Section 138 of the Negotiable
Instruments Act, 1881 vide Section 255(2) of the
Code of Criminal Procedure, 1973 and sentenced to
suffer simple imprisonment for six months.
2) The accused shall pay the complainant a
compensation of Rs.5,00,000/-(Five Lakh only)
along with 9% simple interest per annum from the
date of filing of the complaint till actual realization
thereof vide Section 357(3) of the Code of Criminal
Procedure, 1973 and in default, shall undergo
simple imprisonment for three months.
3) The bail bond of the accused, if any, stands
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surrendered.
4) The copy of this judgment be given to the
accused free of cost.
(D. A. Argade)
Mazgaon Judicial Magistrate (First Class)
Date 25/03/2026 56th Court, Mazgaon, Mumbai
Dictated on 25/03/2026
Typed on 25/03/2026
Ready on 25/03/2026
Signed on 25/03/2026
Rgz.
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