Final Order 1

Order Details: Copy  of Judgment
Pdf Text: 1 C. C. NO. 3211/SS/2018
CNR No. : MHMM19-009377-2018
Received On : 14/08/2018
Registered On : 14/08/2018
Decided On : 28/08/2026
Duration :Y-08, M-00, D-14
IN THE COURT OF JUDICIAL MAGISTRATE (FIRST CLASS), ANDHERI
(Court No. 48), MUMBAI.
( Presided over by Y. P. Pujari )
C.C. No. 3211/SS/2018 Exh. 53
Mr. Anil C. Mistry in his capacity
of a Karta of Mr. Anil Chandravadan Mistry
(HUF) having residence situated at 1506/B,
DLH Orchid, Lokhandwala 1st Road,
Andheri West, Mumbai – 400 053. -- Complainant
Versus
Mr. Haresh Suresh Vaswani,
of Bombay, Adult, Indian Inhabitant,
Residing at 301, 403, Duplex Heights,
Parasrampuria Tower No. 6, Yamuna
Nagar, Oshiwara, Andheri (W),
Mumbai – 400 053. -- Accused
OFFENCE PUNISHABLE UNDER SECTION 138 OF THE NEGOTIABLE
INSTRUMENTS ACT
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Appearance:- Adv. Mr. Prajot H. Joggi for the complainant.
Adv. Mr. Ramlal Kushwah for the accused.
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JUDGMENT
(Delivered on 28th of August 2026)
The accused is facing trial for an offence punishable under
Section 138 of the Negotiable Instruments Act (Hereinafter referred as
“the Act” for short) for dishonor of two cheques for total amount of Rs.
8,75,000/-.
The brief facts of complainant's case are as under:
02. It is averred by the complainant that he is a Karta of his
own HUF and accused is well known to him. In the month of October
2015, the accused approached to him as accused was in need of friendly
financial assistance. Considering the relationship, he has given Rs.
75,000/- in cash and Rs. 8,00,000/- by way of cheque. Agreement
dated 01/10/2015 was executed between them.
03. Complainant has further submitted that, by way of refund
of the said amount along with interest, the accused issued two different
cheques bearing cheque No. 023271 dated 25/06/2018 for an amount
of Rs. 75,000/- and cheque No. 023270 dated 8,00,000/- for an amount
of Rs. 8,00,000/-, drawn on Axis Bank, Lokhandwala Branch, Andheri
(W), Mumbai. Thereafter, the complainant deposited the above said
cheques for encashment in his Bank. The same were returned unpaid
from drawee bank with endorsement ‘Funds Insufficient’. Accordingly,
the ICICI Bank issued memos dated 27/06/2018. Thereafter, he
contacted the accused and requested to pay cheque amount but the
accused intentionally not paid said amount. Thereafter, he issued
demand notice dated 09/07/2018 to accused. The notice was returned
with remark “Unclaimed”. Hence, the complainant constrained to file
present complaint.
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04. After recording statement of the complainant and perusing
all documents produced on record, process came to be issued against
the accused for the above offence. In response to summons, the accused
appeared. Particulars of offence recorded below Exh. 13 which were
read over and explained to the accused in vernacular, to which he
pleaded not guilty and claimed to be tried.
05. Accused has conducted the cross-examination of the
complainant in which he has raised following defences:-
a) Complainant did not prove the transaction.
b) The complainant did not show the financial
capacity to pay the amount
c) The complainant did not show the transaction
amount in the income tax return.
d) The present transaction is a money lending
transaction.
e) The cheque was given as a security.
f) Complainant did not give intimation before
depositing of cheque.
g) He is not liable to pay the cheque amount.
06. The complainant closed his evidence and matter was
posted for statement of accused U/s. 313 of Code of Criminal
Procedure. (Hereinafter referred as 'the Code' for short). The accused
was aware about the stage of matter. But in-spite of that, he could not
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secure his presence for recording his statement. Admittedly, the scope of
Section 313 of the Code, is very wide. It is not a mere empty formality.
The object of recording of Section 313 of the Code, is to put all
incriminating evidence to the accused so as to provide him an
opportunity to explain such incriminating circumstances appearing
against his in the evidence of prosecution/complainant. However, in-
spite of giving ample opportunity, the accused himself has not availed
his right to explain the incriminating circumstances by remaining
present. As per direction of Hon'ble Apex Court given in case of
Indian
Bank Association and others V/s. Union of India and others (Writ
Petition (Civil) No. 18/2013 Decided on 21/04/2014), the matter is
required to be kept for defence evidence after plea of accused and the
Court must ensure that examination-in-chief, cross-examination and re-
examination of the complainant must be conducted within three months
of assigning the case. In such circumstance, if we keep this matter
pending without progress and more particularly, when such
circumstances arose due to intentional act of accused, it will be against
the right of speedy trial of complainant. Ultimately it will defeat the
object of aforesaid directions of Hon'ble Apex Court regarding speedy
disposal of matter, which is filed for an offence punishable under
Section 138 of the Act. Further as per the decision of the Hon'ble
Bombay High Court in the case of Prakash Chimanlal Sheth V/s. T.
Ramalingam Nadar @ Ramalingam [decided in Criminal Application
No.490 of 2020 dated 14/09/2022] wherein in Para-35 the Hon'ble
High Court has observed as under :
35. Considering the fact that the proceedings under Section 138
of N.I. Act are required to be concluded expeditiously in the
light of guidelines issued by the Courts from time to time for
speedy disposal of the cases, the scope of Sections 141, 142, 143
and 145 of the N.I. Act, it was not necessary for the trial Court
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to wait for Accused to make his appearance. The facts of the
present case denote that the Accused was exempted from
appearing and thereafter they continued to disappear from
appearing before the Court. Warrants were issued. The warrants
could not be executed. The Accused even failed to appear before
this Court. In this circumstance, the Court is empowered to
proceed with the case without recording the statement of the
Accused under Section 313 of Cr. P.C. The decision relied upon
by learned APP
Reena Hazarika V/s. State of Assam (supra)
relates to scope of Section 313 of the Code. It is observed that
the Section 313 of the Code confers valuable right upon accused
to establish his innocence. The mere use of word 'may' cannot be
held to confer a discretionary power on the Court to consider or
not to consider such defence, since it constitutes a valuable right
of an accused for access to justice. However, in the present case,
accused have not bothered to remain present before the Court.
The complainant is victim. He is running from pillar to post for
prosecuting the accused. This is a fit case to exercise discretion
and proceed with case by dispensing with statement under
Section 313 of the Code. The accused has no regard for
directions of Court. The trial Court had already passed order of
no cross. Hence, the impugned order of trial Court is required to
be set aside with direction to dispense with statement of accused
under Section 313 of the Code and proceed with the case.
Further, I have perused the decision of Hon’ble Bombay High Court in
the case of Navneet Singh Gogia and 2. Simran Kaur Gogia V/s. 1. The
State of Maharashtra and 2. Sushma B. Chandak, Criminal Revision
Application No. 70 OF 2023 with Interim Application No. 1696 OF
2023, decided on 21/01/2025. It has held that,
“47. After considering the above observation in all the judgments, I
am inclined to take a view, in a case before this Court when it is
found out that the accused is not attending the trial, nor sought for
dispensing the personal attendance and not represented by the
advocate, the trial Magistrate is justified in proceeding in absence of
the accused and without recording 313 statement also. However,
when such power can be exercised is a question of fact. Trial Court
can consider :- a) for how many occasions accused has remained
absent b) steps taken by the complainant to secure presence of the
accused. c) reason why presence could not be secured. d) whether
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all modes permissible as per law were exhausted. After ascertaining
all factors, then only such power can be exercised. Above are few of
the factors.”
In the matter in hand, the Non-bailable warrants and
proclamation were issued against the accused. Complainant has taken
every efforts to secure the presence of accused and thereafter the
statement of accused U/s. 313 of Code of Criminal Procedure came to
be dispensed with.
07. Heard Ld. Advocate Shri. Prajot Joggi for complainant and
Ld. Advocate Shri. Ramlal Kushwah for accused and also perused and
considered the written notes of argument filed by accused at Exh. 50.
08. From perusal of complaint, record and defence of the
accused, following points arise for my determination. I have recorded
my finding and reasons thereon as under:
Sr. No. Points Findings.
1. Does the complainant prove that cheque No.
023270 (Exh. 28) and cheque no. 023271
(Exh. 51) were drawn by accused for legally
recoverable debt or other liability?
Yes.
2.
Does the complainant prove that the said
cheques returned unpaid for the reason
“Funds Insufficient”?
Yes.
3.
Does the complainant prove that he had issued
demand notice to the accused within
limitation demanding cheque amount?
Yes.
4.
Does complainant prove that the accused
failed to pay cheque amount to complainant
within statutory limit?
Yes.
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5.
Whether the accused has committed an
offence punishable under Section 138 of the
Negotiable Instruments Act ?
Yes.
6. What order? The accused
is convicted.
09. In order to prove his case, the complainant has filed his
evidence affidavit as a (C.W.1) at Exh. 16. The complainant also placed
his reliance upon following documents:
Description of documents Exhibit numbers
Original agreement and affidavit cum
Indemnity Bond
Exh.27 and 27-A
Copy of Bank Statement Article A
Original cheque Exh. 28 and Exh. 51
Cheque returned memo Exh. 29 and Exh. 52
Office copy of demand notice Exh. 30
Print out of E-mail Article – B
Returned envelope of Demand notice Exh. 31
REASONS
As to Point No.1:-
10. In order to prove the allegation leveled against the
accused, the complainant has filed his evidence affidavit as a (C.W.1) at
Exh. 16. As per his evidence, he is a Karta of his own HUF and accused
is well known to him. In the month of October 2015, the accused
approached to him as accused was in need of friendly financial
assistance. Considering the relationship, he has given Rs. 75,000/- in
cash and Rs. 8,00,000/- by way of cheque. Agreement dated
01/10/2015 was executed between them.
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11. It has further come in his evidence that, by way of refund
of the said amount along with interest, the accused issued two different
cheques bearing cheque No. 023271 dated 25/06/2018 for an amount
of Rs. 75,000/- and cheque No. 023270 dated 8,00,000/- for an amount
of Rs. 8,00,000/-, drawn on Axis Bank, Lokhandwala Branch, Andheri
(W), Mumbai. Thereafter, he deposited the above said cheques for
encashment in his Bank. The same were returned unpaid from drawee
bank with endorsement ‘Funds Insufficient’.
12. The accused has conducted the cross-examination of the
complainant. In his cross-examination, the accused has raised defences
that,
a) Complainant did not prove the transaction.
b) The complainant did not show the financial
capacity to pay the amount
c) The complainant did not show the transaction
amount in the income tax return.
d) The present transaction is a money lending
transaction.
e) The cheque was given as a security.
f) Complainant did not give intimation before
depositing of cheque.
g) He is not liable to pay the cheque amount.
13. Before adverting towards the merit of case, it is necessary
to deal with some legal principle regarding presumptions contemplated
in Section 118 and 139 of the Act and standards of proof for its
establishment or also for rebuttal. The Hon'ble Supreme Court of India
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in
T. Vasanthakumar v/s. Vijayakumari (2015) 8 SCC 378 has held that,
“the presumption mandated by Section 139 includes a presumption that
there exists a legally enforceable debt or liability. This is of course in
the nature of a rebuttable presumption and it is open to the accused to
raise a defence wherein the existence of a legally enforceable debt or
liability can be contested. However, there can be no doubt that there is
an initial presumption which favours the respondent complainant”.
14. The Hon’ble Supreme Court of India in the case Rangappa
V. Mohan reported in AIR 2010 SC 1898, has held that, “the
presumption mandated by Section 139 of the Act does indeed include
the existence of legally enforceable debt or liability.
” In the present
case, the accused has not sent reply to the demand notice of the
complainant. The accused has conducted the cross-examination of the
complainant. I have minutely perused the cross-examination of the
complainant and it seems that, the accused has not denied the issuance
of cheques nor denied his signature on the cheques. Accused has
admitted the signature on the cheques as it is not denied by the
accused. Therefore, it can be gathered that, accused has not challenged
the signature from cheques (Exh. 28 and 51). This shows that, the
signature of accused from cheques (Exh. 28 and 51) is not in dispute.
Therefore, the presumptions under Section 118 and 139 of the Act are
raised in favor of complainant.
15. The Hon'ble Supreme Court of India in case of
M.S.
Narayan Menon @ Mani V/s. State of Kerala and another (Appeal (Cri.)
1012 of 1999 decided on 04/07/2006) has laid down the rules
regarding the standards of proof for establishment of case as well as of
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rebuttal of defence in the case filed under Section 138 of the Act. The
Hon'ble Supreme Court of India has observed that
“It is not necessary for the defendant to
disprove the existence of consideration by way of direct
evidence. The standard of proof evidently is pre-
ponderance of probabilities. Inference of pre-ponderance of
probabilities can be drawn not only from the materials on
records but also by reference to the circumstances upon
which he relies. Presumption drawn under a statute has
only an evidentiary value. Presumptions are raised in terms
of the Evidence Act. Presumption drawn in respect of one
fact may be an evidence even for the purpose of drawing
presumption under another.”
16. The Hon'ble Supreme Court of India in case of Sumeti VIJ
V/s. M/s. Paramount Tech Fab, Criminal Appeal No(s) 292 of 2021,
(Arising out of SLP (Crl.) No (s). 8498 of 2019), in which the decision
of Rohitbhai Jivanlal Patel V/s. State of Gujarat and Another, 4 (2019)
18 SCC 106 is discussed and wherein it has laid down the procedure as
to how the accused can rebut the presumption under Section118 and
139 of the Act,
“The accused in a trial under Section 138 of the Act has
two options. He can either show that consideration and
debt did not exist or that under the particular circumstances
of the case the non-existence of consideration and debt is so
probable that a prudent man ought to suppose that no
consideration and debt existed. To rebut the statutory
presumptions an accused is not expected to prove his
defence beyond reasonable doubt as is expected of the
complainant in a criminal trial. The accused may adduce
direct evidence to prove that the note in question was not
supported by consideration and that there was no debt or
liability to be discharged by him. However, the court need
not insist in every case that the accused should disprove the
non-existence of consideration and debt by leading direct
evidence because the existence of negative evidence is
neither possible nor contemplated. At the same time, it is
clear that bare denial of the passing of the consideration
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and existence of debt, apparently would not serve the
purpose of the accused. Something which is probable has to
be brought on record for getting the burden of proof shifted
to the complainant. To disprove the presumptions, the
accused should bring on record such facts and
circumstances, upon consideration of which, the court may
either believe that the consideration and debt did not exist
or their non-existence was so probable that a prudent man
would under the circumstances of the case, act upon the
plea that they did not exist. Apart from adducing direct
evidence to prove that the note in question was not
supported by consideration or that he had not incurred any
debt or liability, the accused may also rely upon
circumstantial evidence and if the circumstances so relied
upon are compelling, the burden may likewise shift again
on to the complainant. The accused may also rely upon
presumptions of fact, for instance, those mentioned in
Section 114 of the Evidence Act to rebut the presumptions
arising under Sections 118 and 139 of the Act. The accused
has also an option to prove the non-existence of
consideration and debt or liability either by letting in
evidence or in some clear and exceptional cases, from the
case set out by the complainant, that is, the averments in
the complaint, the case set out in the statutory notice and
evidence adduced by the complainant during the trial. Once
such rebuttal evidence is adduced and accepted by the
court, having regard to all the circumstances of the case
and the preponderance of probabilities, the evidential
burden shifts back to the complainant and, thereafter, the
presumptions under Sections 118 and 139 of the Act will
not again come to the complainant's rescue”.
17. The Hon'ble Bombay High Court in the case of
Vishnu Vs.
State of Maharashtra (Cri. Rev. Application No. 176/2015 decided on
24/01/2019) observed that,
“There cannot be any manner of dispute with
the proposition that once the presumption arising under
Section 118 read with Section 139 of the Act is raised, it can
be rebutted by the accused on preponderance of probability
at the trial. This can be done on the basis of cross-
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examination of the complainant and his witnesses, if any,
and/or by leading independent defence evidence.”
18
. As accused has not challenged his signature on the cheques
(Exh. 28 and 51), the presumptions under Section 118 and 139 of the
Act are raised in favor of complainant. Therefore, in view of the
observations given in case of Rangappa V/s. Sri Mohan (Cited Supra),
the accused has to raise a probable defence which creates doubts about
the existence of a legally enforceable debt or liability and the
prosecution can fail. It also makes clear that, mere denial is not
sufficient to rebut the presumption which is raised in favor of
complainant. As observed in the case of
Vishnu Vs. State of Maharashtra
(cited supra), accused has many modes to bring on record his defence
e.g. by replying upon notice, complaint, complainant's evidence and
also by mode of cross examination, her own testimony or of other
witnesses, if cross examined and also through statement of accused
recorded under section 313 of the Code. In the present case, the
accused has conducted the cross-examination of complainant wherein
he raised defences that:-
a) Complainant did not prove the transaction.
b) The complainant did not show the financial
capacity to pay the amount
c) The complainant did not show the transaction
amount in the income tax return.
d) The present transaction is a money lending
transaction.
e) The cheque was given as a security.
f) Complainant did not give intimation before
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depositing of cheque.
g) He is not liable to pay the cheque amount.
19. So far as the first defence of the accused is concerned, the
accused has submitted that, the complainant did not file any document
to show the transaction. On the contrary, Ld. Advocate for the
complainant submitted that complainant has filed the agreement at
Exh. 27 and also filed indemnity bond at Exh. 27-A. I have perused the
agreement and indemnity bond filed at Exh. 27 and 27-A and perusal of
it, seems that it is clearly mentioned in these documents. The amount
of Rs. 8,75,000/- was given by the complainant to the accused and out
of which Rs. 75,000/- was given in cash and for the remaining amount
of Rs. 8,00,000/- the cheque No. 153607 dated 30/09/2015 of Bank of
Maharashtra, Lokhandwala Branch, Andheri West, Mumbai has been
issued to the accused. I have perused the cross-examination of the
complainant wherein suggestion was given to the complainant that he
has not given an amount of Rs. 75,000/- in cash to the accused but the
complainant has denied the suggestion. Therefore, perusal of the oral
as well as documentary evidence produced on record, it seems that the
complainant has proved the transaction.
20. I have perused the decision of Hon’ble Supreme Court of
India in the case of Rangappa’s Case (Cited supra) and perusal of it
makes clear that, once the accused has admitted her signatures on the
cheque and issuance of cheque then presumption U/s. 118 and 139 of
N. I. Act arises in favour of complainant. I have also perused the
decision of Hon’ble Supreme Court of India in the case of Sanjabij Tari
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V/s. Kishore S. Borcar & Anr., Criminal Appeal No. 1755 of 2010,
decided on 25/09/2025. It has held that,
“This Court also takes judicial notice of the fact that some District
Courts and some High Courts are not giving effect to the
presumptions incorporated in Sections 118 and 139 of NI Act and
are treating the proceedings under the NI Act as another civil
recovery proceedings and are directing the complainant to prove
the antecedent debt or liability. This Court is of the view that such
an approach is not only prolonging the trial but is also contrary to
the mandate of Parliament, namely, that the drawer and the bank
must honour the cheque, otherwise, trust in cheques would be
irreparably damaged.”
21. Perusal of the above cited decision, it makes clear that,
once the accused has admitted, his signature and issuance of cheques,
then burden lies on the accused to rebut the presumption arises U/s.
118 and 139 of Negotiable Instruments Act. In the case in hand, the
burden lies on the accused to rebut the presumption because the
accused did not deny his signature nor denied issuance of cheques. The
burden is on the accused to rebut the presumption and therefore it is
necessary to produce the evidence of the parties brought on record to
rebut the presumption.
22. The accused came with a defence that the complainant did
not file any document to show that he was having an amount of Rs.
8,75,000/- with him. In other words, it is the submission of the accused
that the complainant did not file any document to show his financial
capacity to pay the amount of Rs. 8,75,000/-. I have perused the
decision of Hon’ble Supreme Court of India in Sanjabij Tari’s case (Cited
supra), it has observed that,
“29. Furthermore, the fact that the accused has failed to reply to the
statutory notice under Section 138 of the NI Act leads to an inference
that there is merit in the Appellant-Complainant’s version. This Court in
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Tedhi Singh vs. Narayan Dass Mahant, (2022) 6 SCC 735 has held that
the accused has the initial burden to set up the defence in his reply to the
demand notice that the complainant did not have the financial capacity
to advance the loan. The relevant portion of the” said judgment is
reproduced hereinbelow:-
“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 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)
30. This Court in MMTC Ltd. and Another vs. Medchl Chemicals & Pharma
(P) Ltd. and Another, (2002) 1 SCC 234 has specifically held that when a
statutory notice is not replied, it has to be presumed that the cheque was
issued towards the discharge of liability.”
23. In the case in hand also the accused did not reply to the
demand notice and did not raise the defence of financial incapacity of
complainant. I have perused the cross-examination of the complainant,
wherein it has come on record that he is working as a Assistant
Engineer with Municipal corporation. His monthly salary of Rs.
1,70,000/-. These admissions shows the financial status of the
complainant. Further, the accused did not reply to the demand notice
of the complainant and did not raise the defence of the financial
incapacity of the complainant.
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24. The accused has raised an objection that the complainant
did not file the income tax returns to show and prove that the alleged
amount was shown in the income tax return. I have perused the
decision of Hon’ble Bombay High Court, Nagpur Bench in Prakash
Madhukarrao Desai Versus Dattatraya Sheshrao Desai in Criminal
Appeal No. 795/2018 decided on 19.08.2023. In the cited decision the
following question was under consideration,
“Whether in case the transaction, is not reflected in the Books of
account and/or the Income Tax Returns of the holder of the cheque in due
course and thus is in violation to the provisions of Section 269-SS of the
Income Tax Act, 1961 whether such a transaction, can be held to be “a legally
enforceable debt” and can be permitted to be enforced, by institution of
proceedings under Section 138 of the Negotiable Instruments Act ?”
The Hon’ble Bombay High Court, Bench at Nagpur has held that,
“ It can thus be said that the validity of Section 269-SS of the Act of
1961 having been upheld in Assistant Director, Inspection Investigation
(supra), breach thereof being subjected to penalty under Section 271-D with
a further provision for waiving the penalty under Section 273-B of the Act of
1961, it will have to be held that such transaction in violation of Section 269-
SS of the Act of 1961 at the behest of the drawer of a cheque cannot be
treated as null and void. Similar is the case when there is an omission of any
entry relevant for computation of total income of such person to evade tax
liability under Section 271-AAD of the Act of 1961. Such person, assuming
him to be the payee/holder in due course, is liable to be visited by penalty as
prescribed. Such act is not treated to be statutorily void. We may in this
context refer to paragraph 4 of the decision in M/s Gujarat Travancore
Agency, Cochin (supra) wherein reference has been made to the following
statement in Corpus Juris Secundum, Volume 85 page 580, paragraph 1023 ”
“A penalty imposed for a tax delinquency is a civil obligation, remedial
and coercive in its nature, and is far different from the penalty for a crime or
a fine or forfeiture provided as punishment for the violation of a criminal
penal laws.” Further, in Atul Mohan Bindal (supra), the penalty referred to in
Section 271(1)(c) of the Act of 1961 has been referred to as a civil liability
and not one which is criminal or quasi-criminal in nature. Thus, in the light
of statutory presumption under Sections 118 and 139 of the Act of 1881, it
would be for the accused to rebut such presumption in the light of what has
been held in Rangappa (supra).
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In view of the aforesaid discussion, it is 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 Act of 1881 in view of the presumption
under Section 139 of the Act of 1881 that such cheque was issued by the
drawer for the discharge of any debt or other liability, execution of the cheque
being admitted. Violation of Sections 269-SS and/or Section 271-AAD of the
Act of 1961 would not render the transaction unenforceable under Section
138 of the Act of 1881. The decisions in Krishna P. Morajkar, Bipin Mathurdas
Thakkar and Pushpa Sanchalal Kothari (supra) lay down the correct position
and are thus affirmed. The decision in Sanjay Mishra (supra) with utmost
respect stands overruled.”
I have also perused the decision of Hon’ble Supreme Court of
India in Sanjabij Tari’s Case (Cited Supra). It has observed that,
“19. Recently, the Kerala High Court in P.C. Hari vs. Shine Varghese &
Anr., 2025 SCC OnLine Ker 5535 has taken the view that a debt created
by a cash transaction above Rs. 20,000/- (Rupees Twenty Thousand) in
violation of the provisions of Section 269SS of the Income Tax Act,
1961 (for short ‘IT Act, 1961’) is not a ‘legally enforceable debt’ unless
there is a valid explanation for the same, meaning thereby that the
presumption under Section 139 of the Act will not be attracted in cash
transactions above Rs. 20,000/- (Rupees Twenty Thousand).
20. However, this Court is of the view that any breach of Section
269SS of the IT Act, 1961 is subject to a penalty only under Section
271D of the IT Act, 1961. Further neither Section 269SS nor 271D of
the IT Act, 1961 state that any transaction in breach thereof will be
illegal, invalid or statutorily void. Therefore, any violation of Section
269SS would not render the transaction unenforceable under Section
138 of the NI Act or rebut the presumptions under Sections 118 and
139 of the NI Act because such a person, assuming him/her to be the
payee/holder in due course, is liable to be visited by a penalty only as
prescribed. Consequently, the view that any transaction above
Rs.20,000/- (Rupees Twenty Thousand) is illegal and void and
therefore does not fall within the definition of ‘legally enforceable debt’
cannot be countenanced. Accordingly, the conclusion of law in P.C. Hari
(supra) is set aside.”
In the case in hand, it has come in the cross-examination of the
complainant that he do not remember whether the amount lend to the
accused is mentioned in the I. T. return. Perusal of the above cited
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decision, it makes clear that though the amount is not mentioned in the
I. T. return, then also, it can be recovered.
25. Ld. Advocate for the accused has submitted that the alleged
transaction is a money lending transaction without license. He
submitted that the alleged transaction is a money lending transaction
without license and therefore it is illegal transaction and money cannot
be recovered. I have perused the decision of Hon’ble Bombay High
Court in Bipin Vazirani V/s. V. Raheja Design Construction Private
Limited & Anr., Summons for judgment no.101 of 2018 in Comm.
Summary Suit No. 424 of 2018. The above cited decision is also
referred in Ganga Taro Vazirani vs Deepak Raheja on 16 February, 2021,
AIR ON LINE 2021 BOM 427. In this decision it has been observed that,
“12. I must note that a similar issue came up before another
learned Single Judge of this Court in the case of Bipin Vazirani Vs.
V. Raheja Design Construction Pvt. Ltd. & Anr. (Summons for
Judgment No.101 of 2018 in Comm. Summary Suit No. 424 of
2018, decided on 12th December, 2018). In the facts of that case
also there were two cheques that were issued by the 1st defendant
to the plaintiff and which were dishonoured for the reason "Funds
Insufficient". There too, an argument with reference to money
lending was raised. Negating the contention of the defendants in
that case, this Court held as under :-
"7. In that decision I considered the settled law on the subject
including amendments to the Money Lending Act and the
interpretation of the expressions 'loan', 'money lender', 'business
of money lending', and, in particular how such a defence could
be raised. In paragraph 36 of the Base Industries Group decision
money lending I culled out propositions that seemed to me to
emerge from that discussion:-
"36. From this discussion, the following propositions emerge:
(a) Not every loan is axiomatically a money-lending transaction
for the purposes of the 1946 or the 2014 Acts. There is no such
presumption in law.
(b) It is doing of the 'business of money-lending- that attracts
the provisions of the statute. In interpreting the phrase, the
correct emphasis is on the word 'business', not sj.45.2019.doc
'money-lending'. It is the word 'business' and not the expression
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'money-lending', that is determinative. Simply put, every
instance of lending money is not money-lending. Not every
lender is a Shylock.
(c) To constitute 'business', a single isolated instance does not,
and even several isolated stray instances do not, constitute 'the
business of money-lending'. To be engaged in the 'business of
money-lending', the activity must be systematic, regular,
repetitive, and continuous, and must generate an appreciable
revenue. The fact that the borrower is a stranger to the lender
does not on its own make the latter a 'money-lender'.
(d) A loan recovery action is not barred merely because there is
a loan. It has to be shown that the loan was part of 'the business
of money-lending'.
(e) A plaintiff seeking a recovery of a loan is not required to
show that his suit is not barred by the Money Lenders Act. It is
always for the defendant who puts up money-lending as a
defence to show that the transaction is forbidden by the Money
Lenders Act."
26. In the cited decision, it has been observed that every loan
is not axiomatically a money lending transaction for the purpose of
Money Lenders Act. There is no such presumption in law. It is doing
the business of money lending that attracts the provisions of the statute.
In interpreting that phrase, the correct emphasis is on the word
‘business’, not ‘money lending’. It is the word ‘business’ and not the
expression ‘money lending’, i.e. determinative. Simply put, every
instance of lending money would not amount to a money lending
transaction as contemplated under the Money Lenders Act. To constitute
business of money lending, a single isolated instance does not, and not
even several isolated stray instances, do not, constitute the business of
money lending. To be engaged in the business of money lending the
activity must be systematic, regular, repetitive and continuous and must
generate an appreciable revenue. A loan recovery action is not barred
merely because there is a loan. It has to be shown that the loan was part
of the business of money lending.
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27. Perusal of the above provision it makes clear that if any
person carries on the business of money lending without obtaining valid
license, then it is an offence. To constitute an offence u/s. 39 of the
Maharashtra Money Lending (Regulation) Act 2014, it is necessary that
the person should carry out the “business” of money lending, without
valid license. The term ‘business’ means the person must have engaged
in the business of money lending and therefore some transactions of
loan cannot be constitute as a ‘business’. In the case in hand accused
has not brought any other transaction of present complainant. Accused
has not brought on record that the complainant exclusively engaged in
the business of money lending without valid license.
28. Ld. Advocate for the accused has submitted that, the said
cheque was issued for security purpose and therefore this cheque does
not come within the purview of Section 138 of N. I. Act. On the
contrary, Ld. Advocate for the complainant has submitted that the
cheque issued for security purpose also can be used to recover the
legally enforceable due amount. I have perused the decision of Hon’ble
Supreme Court of India in Birsingh V/s. Mukesh Kumar, 2019 (4) SCC
197 has held that, “the cheque duly signed and voluntarily made over
the payee, was in discharge of debt or liability arise irrespective of
whether cheque was post dated or blank cheque for filing by payer or
any other person, in absence of evidence of undue influence or
coercion.” I have also perused the decision of Hon’ble Supreme Court
of India in Sripati Singh V/s. State of Jharkhand (Criminal Appeal No.
1269 -1270 of 2021 has held that,
“a cheque issued as a security pursuant to a financial transaction
cannot be considered as a worthless piece of paper under every
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circumstances. ‘Security’ in its true sense is the state of being safe
and the security given for a loan is something given as a pledge of
payment. It is given, deposited or pledged to make certain the
fulfillment of an obligation to which the parties to the transaction
are bound. If in a transaction, a loan is advanced and the borrower
agrees to repay the amount in a specified time frame and issues a
cheque as security to secure such repayment; if the loan amount is
not repaid in any other form before the due date or if there is no
other understanding or agreement between the parties to defer the
payment of amount, the cheque which is issued as security would
mature for presentation and the drawee of the cheque would be
entitled to present the same. On such Presentation, if the same is
dishonoured, the consequences contemplated under Section 138
and the other provisions of N. I. Act would flow.”
In the case in hand also it has come on record that the
amount is outstanding against the accused and therefore though the
cheque was issued as a security then also it can be used to recover the
outstanding amount.
29. It is the defence of the accused that the complainant did
not inform him before the depositing of cheque for encashment. I have
perused the cross-examination of the complainant wherein it has come
on record that he had given intimation to the accused before depositing
of cheque for encashment. The said admission is vital admission. On
the contrary, nothing has been brought on record by the accused to
show that no any intimation was given by the complainant to the
accused before depositing of cheque for encashment.
30. As I discussed above the accused has not brought on record
any material by way of cross-examination or in the statement of 313 of
the Code. Therefore, it becomes clear that the accused has utterly failed
to rebut the presumption raised under Section 118 & 139 of the Act.
Therefore, I hold that the complainant has duly proved that accused has
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issued the subject cheque from his account in favour of the complainant
towards the legally enforceable debt. Hence, point No. 1 is answered in
the “affirmative”.
As to Point No. 2:-
31. As per contentions and evidence of complainant, the
cheque No. 023270 (Exh. 28) and cheque no. 023271 (Exh. 51) were
presented for encashment. However, the cheques were returned with
remark as ‘Funds Insufficient’. In support of said contentions, the
complainant produced the cheque return memos of (Exh. 29 and 52).
Initially, the exhibit number was given to the cheque No. 023270 but
exhibit number was not given to cheque No. 023271. I have perused
the evidence affidavit of complainant filed at Exh. 16 and it seems that
in the evidence affidavit, it is mentioned that both these cheques were
issued by the accused and both the cheques were deposited for
encashment. It is also mentioned in the evidence affidavit of
complainant that exhibit number may be given to the both these
cheques. In the evidence affidavit of the complainant, both these
cheques were referred and proved and therefore exhibit number are
given to both these cheques. It is seen from the bank memos (Exh. 29
and 52) that, the cheques were returned with endorsement ‘Funds
Insufficient’. The exhibit number was given to the cheque returned
memo of cheque No. 023270 but the exhibit number was not given to
cheque returned memo of cheque No. 023271. These cheque returned
memos are referred in the evidence affidavit of complainant. The
memos (Exh. 29 and 52) bears seal and signature of concerned bank.
Therefore, here it is necessary to mention Section 146 of the Negotiable
Instruments Act;
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“
The Court shall, in respect of every proceeding
under this Chapter, on production of bank's slip or memo
having thereon the official mark denoting that the cheque
has been dishonored, presume the fact of dishonor of
such cheque, unless and until such fact is disproved”.
32. So, as per the aforesaid provision, the bank memos (Exh.
(Exh. 29 and 52), is having presumptive value as per Section 146 of the
N.I Act. Admittedly, the said presumption is rebuttable. However,
nothing is brought on record by the accused to rebut the presumption in
respect of bank memos (Exh. 29 and 52). After perusal of said memos,
it is seen that the cheque No. 023270 (Exh. 28) and cheque no. 023271
(Exh. 51) were dishonored for reason ‘Funds Insufficient’. However,
nothing is brought by the accused on record to show his bonafide as
well as also to show that at the relevant time, the amount mentioned in
the cheques was pending in his account. Hence, no hurdle to held that
the cheque was dishonored with reason ‘Funds Insufficient’.
Consequently, point No. 2 is answered in the “affirmative”.
As to Point Nos. 3 and 4 :-
33. As per evidence of Anil Mistry (C.W.1), after dishonor of
cheques (Exh. 28 and 51), he issued demand notice dated 09/07/2018
(Exh. 30). The complainant has filed postal envelope at Exh. 31 to
show that, the notice was issued on the correct address of the accused.
In support of said contention, the complainant produced demand notice
dated 09/07/2018 (Exh. 30) and postal envelope (Exh. 31). Upon
perusal of demand notice (Exh. 30), postal envelope (Exh. 31), it is
seen that, the complainant issued demand notice on 09/07/2018 to the
accused but it was returned with remark “ Returned to the sender”. The
demand notice was sent on the following address :-
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24 C. C. NO. 3211/SS/2018
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To,
Mr. Haresh Suresh Vaswani,
of Bombay, Adult, Indian Inhabitant,
Residing at 301, 403, Duplex Heights,
Parasrampuria Tower No. 6, Yamuna
Nagar, Oshiwara, Andheri (W),
Mumbai – 400 053.
34. Accused nowhere challenged his aforesaid residential
address. It seems from the postal envelope at Exh. 31 that, the said
notice was sent on the correct address of accused but it was returned as
“unclaimed”. Therefore, there is no hurdle to held that complainant
sent demand notice on the correct address of accused. Here, it is
necessary to mention the observations given by Hon'ble Supreme Court
of India in case of C. C. Alavi Haji V/s. Palapetty Muhammeed and anr
reported in All MR (Cri.) 2007. Wherein it is observed by Hon'ble
Supreme Court of India that,
“15. Insofar as the question of disclosure of necessary particulars
with regard to the issue of notice in terms of proviso (b) of Section
138 of the Act, in order to enable the Court to draw presumption
or inference either under Section 27 of the G.C. Act or Section 114
of the Evidence Act, is concerned, there is no material difference
between the two provisions. In our opinion, therefore, when the
notice is sent by registered post by correctly addressing the drawer
of the cheque, the mandatory requirement of issue of notice in
terms of Clause (b) of proviso to Section 138 of the Act stands
complied with. It is needless to emphasise that the complaint must
contain basic facts regarding the mode and manner of the issuance
of notice to the drawer of the cheque. It is well settled that at the
time of taking cognizance of the complaint under Section 138 of
the Act, the Court is required to be prima facie satisfied that a case
under the said Section is made out and the aforenoted mandatory
statutory procedural requirements have been complied with. It is
then for the drawer to rebut the presumption about the service of
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25 C. C. NO. 3211/SS/2018
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notice and show that he had no knowledge that the notice was
brought to his address or that the address mentioned on the cover
was incorrect or that the letter was never tendered or that the
report of the postman was incorrect. In our opinion, this
interpretation of the provision would effectuate the object and
purpose for which proviso to Section 138 was enacted, namely, to
avoid unnecessary hardship to an honest drawer of a cheque and
to provide him an opportunity to make amends.
17. It is also to be borne in mind that the requirement of giving of
notice is a clear departure from the rule of Criminal Law, where
there is no stipulation of giving of a notice before filing a
complaint. Any drawer who claims that he did not receive the
notice sent by post, can, within 15 days of receipt of summons
from the court in respect of the complaint under Section 138 of the
Act, make payment of the cheque amount and submit to the Court
that he had made payment within 15 days of receipt of summons
(by receiving a copy of complaint with the summons) and,
therefore, the complaint is liable to be rejected. A person who does
not pay within 15 days of receipt of the summons from the Court
along with the copy of the complaint under Section 138 of the Act,
cannot obviously contend that there was no proper service of
notice as required under Section 138, by ignoring statutory
presumption to the contrary under Section 27 of the G.C. Act and
Section 114 of the Evidence Act. In our view, any other
interpretation of the proviso would defeat the very object of the
legislation. As observed in Bhaskarans case (supra), if the giving of
notice in the context of Clause (b) of the proviso was the same as
the receipt of notice a trickster cheque drawer would get the
premium to avoid receiving the notice by adopting different
strategies and escape from legal consequences of Section 138 of
the Act.”
In the matter in hand also, as discussed earlier, it is duly
established that the complainant sent demand notice on the correct
address of accused. As observed by Hon’ble Supreme Court of India in
the case of
C. C. Alavi Haji V/s. Palapetty Muhammeed and anr. (cited
supra), when the notice is sent by registered post by correctly
addressing the drawer of the cheque, the mandatory requirement of
issue of notice in terms of Clause (b) of proviso to Section 138 of the
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Act stands complied with. Therefore, in matter in hand, the compliance
of Section 138(b) of the Act stands complied with by the complainant.
35. As already discussed in earlier points, it becomes clear that
the subject cheque No. 023270 (Exh. 28) and cheque no. 023271 (Exh.
51) were dishonored on 27/06/2018 for the reason of ‘Funds
Insufficient’. It is seen from the record that, the notice (Exh. 30) was
posted on 09/07/2018 to the accused and so, it is seen to be sent within
30 days of dishonor of cheque. As discussed earlier, notice was returned
as unclaimed and hence it is legal service of notice. It is not defence of
the accused that he repaid the cheque amount within 15 days of notice
and summons of this proceeding. So, point Nos. 3 and 4 are answered
in the “affirmative”.
As to Point No.5 :
36. In view of the above discussion, it reveals that the essential
ingredients of the offence punishable u/s 138 of the Act are proved by
the complainant. As already discussed in earlier points, it becomes clear
from memos (Exh. 29 and 52) that the cheque (Exh. 28 and 51) were
dishonored on 27/06/2018. The notice (Exh. 30) was sent on
09/07/2018 and so, it is seen to be issued within 30 days of dishonor of
cheques (Exh. 28 and 51). Therefore, the accused has to pay cheque
amount within fifteen days from 11/07/2018 but accused failed to pay
it. Therefore, the cause of action for this complaint was arose on
27/07/2018. The complainant has to file complaint with 30 days from
the day of cause of action. The complaint was filed on 14/08/2018.
Therefore, the complaint is seen to be filed within limitation. Hence, in
view of entire evidence of the complainant and failure of the accused to
rebut presumptions given under Section 118 and 139 of the Act, it
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becomes clear that the accused has committed an offence punishable
u/s 138 of the Act. Consequently, point No. 5 is answered in the
“affirmative”.
AS TO POINT NO.6
37. Taking into consideration answer of points Nos. 1 to 5, it
becomes clear that, the complainant has duly proved his claim with
cogent evidence against the accused. The offence P/u/s. 138 of the
Negotiable Instruments Act is established against the accused. After
considering the conduct of the accused and nature of offence, I do not
find any special reasons or justifications to extend the benefit of
probation to him vide Section 3 to 5 of the Probation of Offenders Act,
1958. Therefore, the accused is called upon to state on the point of
sentence.
Mumbai (Y. P. Pujari )
Date:- 28/08/2026 Judicial Magistrate (First Class)
48th Court, Andheri, Mumbai.
Hearing on the point of sentence:
38. Accused and his advocate are absent. Further, the
complainant is absent and his advocate is present. Ld. advocate for the
complainant submitted that, maximum punishment may be awarded.
39. Further it would not be illegal to pass the Judgment of
conviction in absence of accused as Sec. 353 (6) and Sec. 418 (2) of
Code of Criminal Procedure empowers the court to pronounce
Judgment even of conviction in absence of accused and to issue
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conviction warrant if court find it to be just and proper. Hence, coupling
the provisions laid down under section 353(6) and 418(2) of Code of
Criminal Procedure with the guidelines to dispose of the old cases
expeditiously. I have also perused the decision of Hon’ble Bombay High
Court in the case of Navneet Singh Gogia and 2. Simran Kaur Gogia
V/s. 1. The State of Maharashtra and 2. Sushma B. Chandak, CRIMINAL
REVISION APPLICATION NO.70 OF 2023 WITH INTERIM APPLICATION
NO. 1696 OF 2023, decided on 21/01/2025. It has held that,
“47. After considering the above observation in all the judgments,
I am inclined to take a view, in a case before this Court when it is
found out that the accused is not attending the trial, nor sought
for dispensing the personal attendance and not represented by the
advocate, the trial Magistrate is justified in proceeding in absence
of the accused and without recording 313 statement also.
However, when such power can be exercised is a question of fact.
Trial Court can consider :- a) for how many occasions accused has
remained absent b) steps taken by the complainant to secure
presence of the accused. c) reason why presence could not be
secured. d) whether all modes permissible as per law were
exhausted. After ascertaining all factors, then only such power can
be exercised. Above are few of the factors.”
Perusal of above referred decision and cited provisions, I found it to be
just and proper to pass the Judgment of conviction in absence of
accused where the accused is bent upon to cause delay rather exercising
his rights for defence. Thus, I do not find any reason to keep the case
pending when accused himself is not willing to defend himself or even
to appear before court. The accused has filed his written notes of
argument but chosen to remain absent. Considering the age of case and
the chances given to the accused I find it to be justifiable and proper not
to wait further and pronounce the Judgment in absence of accused.
40. The object of the Act is to enhance the credibility of the
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negotiable instruments. The cheques involved in the case in hand is of
Rs. 8,75,000/-. In the present matter, on 27/06/2018 the disputed
cheques were presented to the drawee bank. If it would have had
encashed regularly, complainant could have received the amount in the
month of June 2018. That amount is admittedly lying with the accused.
The Hon’ble Supreme Court of India in the case of
R.Vijayan V. Baby
and anthers AIR 2012 SC 528, has discussed and expressed several
aspects to determine the amount of compensation and interest on the
cheque amount. Para Nos. 14 to 18 of the above judgment needs to be
reproduced here and those are as under:
“As the provisions of Chapter XVII of the Act strongly
lean towards grant of reimbursement of the loss by way of
compensation, the courts should, unless there are special
circumstances, in all cases of conviction, uniformly exercise
the power to levy fine upto twice the cheque amount
(keeping in view the cheque amount and the simple interest
thereon at 9% per annum as the reasonable quantum of loss)
and direct payment of such amount as compensation.
Direction to pay compensation by way of restitution in
regard to the loss on account of dishonour of the cheque
should be practical and realistic, which would mean not only
the payment of the cheque amount but interest thereon at a
reasonable rate. Uniformity and consistency in deciding
similar cases by different courts, not only increase the
credibility of cheque as a negotiable instrument, but also the
credibility of courts of justice.”
41. After going through above guidelines issued by Hon'ble
Supreme Court of India, it needs to maintain uniformity by awarding 9
% per annum interest on the cheques amount by way of compensation
to the complainant. If interest on cheque total amount (Rs. 8,75,000/-)
at the rate of 9 % p.a. is calculated for the period of 96 months i.e. from
the filing of present complaint (14/08/2018 to 28/08/2026), it comes
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to Rs. 6,30,000/-. Thus, the amount of Rs. 15,05,000/- is necessary to
give to the complainant as an compensation.
42. The object of the Act is to enhance the credibility of the
negotiable instruments. There is no criminal antecedent of accused
came on record. Thus, after considering said circumstances, amount of
cheques, nature and manner of the offence, in my opinion, sentence to
suffer simple imprisonment for six months will be proper and justified.
43. Hon'ble Supreme Court of India in the case of
Sugandhi
Sureshkumar Vs. Jagdishan, reported in AIR 2002 SC 681, held that in
case of offences under section 138 of the Act a Magistrate can alleviate
the grievance of the complainant by making resort to Section 357 (3) of
Criminal Procedure Code. In this case Hon’ble Supreme Court of India
also held that the Court may enforce order of compensation by
imposing sentence in default. Resultantly, following order is passed:
ORDER
1. Accused Mr. Haresh Suresh Vaswani, Age : Adult, is
convicted under Section 255 (2) of the Code of
Criminal Procedure, 1973 for an offence punishable
under Section 138 of the Negotiable Instruments Act,
1881 and sentenced to suffer simple Imprisonment
for six months.
2. Accused is directed to pay compensation Rs.
15,05,000/- (Rs. Fifteen Lacs Five Thousand Only) to
the complainant within three months from today, in
default to suffer Simple Imprisonment for two
months.
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3. Accused to surrender to his bail bond.
4. Muddemal being an original cheque and bank memo,
be returned to the complainant after appeal period is
over.
5. No question of Set-off under Section 428 of the Code
of Criminal Procedure, 1973 as the accused has not
spent any period in the custody during the trial.
6. Today i.e. on the date of judgment accused remained
absent, hence issue standing Non-bailable warrant against
the accused for his arrest through concerned police station
for execution of sentence in view of Section 418 (2) of
Cr.P.C.
7. The copy of this Judgment shall be send to the convicted
accused, free of cost, in view of section 363(1) of the Code
of Criminal Procedure, 1973.
8. Dictated and pronounced in open court.
Mumbai (Y. P. Pujari )
Date:-28/08/2026 Judicial Magistrate (First Class)
48th Court, Andheri, Mumbai.
Dictated On : 28/08/2026
Typed On : 28/08/2026
Signed On : 28/08/2026
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