Delhi District Court
Sabeel vs Durga Singh on 12 June, 2026
IN THE COURT OF SH. HARSHAL NEGI, JMFC (MCD), EAST DISTRICT,
KARKARDOOMA COURTS, DELHI
Ct. Case No. 2943/2023
Sabeel Vs. Durga Singh
SABEEL .........Complainant
Through: Sh. Ajay Kumar, Advocate
Versus
DURGA SINGH ..........Accused
Through: Ms. Sunita Singh, Advocate
(1) Name of the complainant Sabeel
(2) Name of the accused Durga Singh
(3) Offence complained of or Section 138 Negotiable Instruments
proved Act, 1881
(4) Plea of accused Pleaded not guilty
(5) Date of institution of case 19.04.2018
(6) Date of conclusion of 15.05.2026
arguments
(7) Date of Final Order 12.06.2026
(8) Final Order CONVICTION
Digitally
signed by
HARSHAL
HARSHAL NEGI
NEGI Date:
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Brief facts
1.
Tersely put, the case of the complainant is that he and the accused were
having friendly relations and on 14.12.2022 at around 8 pm the accused
approached the complainant for a friendly loan of Rs 3 Lakhs for a period
of 3 months. That the complainant gave an amount of Rs 3 Lakhs to the
accused against an agreement dated 14.12.2022. That in furtherance of the
abovesaid loan the accused issued cheque bearing no 581394 of Rs
3,00,000/- dated 21.06.2023, drawn on Punjab National Bank, Acharya
Niketan, Mayur Vihar as payment, which forms the subject matter of the
present case. The complainant deposited the given cheques through its
bankers, however, the same was returned unpaid vide return memo dated
24.07.2023 with remarks “Funds Insufficient”. Mandatory statutory legal
demand notice dated 28.07.2023 was served by the complainant vide
postal receipt and delivery report. The above said factual matrix led to the
filing of the present complaint.
Material on Record
2. The accused entered appearance on 24.05.2024. Notice under Section 251
CRPC dated 24.05.2024 was framed accordingly to which the accused
pleaded not guilty and claimed trial. The accused in his Notice under
Section 251 CRPC stated that the cheque belongs to him pertaining to his
account and having his signature. That the other particulars on the cheque
were not filled by him. He gave the cheque to the complainant for security
purpose against the loan of Rs 3 Lakhs. The accused further denied to have
received legal notice but admitted that the address mentioned in the legal
notice is his correct address. He further stated that he do not have any
HARSHAL
NEGI
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liability and his cheque has been misused. That he had paid the interest
but not the principal amount.
3. The Complainant relied on the following documents:
a. Original Agreement dated 14.12.2022 Ex CW1/1.
b. Original Cheque in question Ex CW ½.
c. Original returning memo Ex CW 1/3.
d. Copy of Legal Notice ¼.
e. Original postal receipts Ex CW 1/5.
f. Tracking/delivery Report AND Section 65B certificate Ex CW 1/6
and Ex CW1/7.
4. Based on the defence and admission taken by the accused in his notice
under Section 251 CRPC that he has taken a loan of Rs 3 Lakhs and have
only paid the interest and not the principal amount, the matter was
thereafter fixed directly for recording of statement of the accused under
Section 313 CRPC and defence evidence.
5. Thereafter, the statement of the accused under Section 313 CRPC was
recorded in writing. In his statement the accused stated that he had taken
the loan of Rs 3 Lakhs from the complainant and gave two cheques as
security. That he signed some black papers at the request of the
complainant which the complainant has converted into a loan agreement.
That he had returned the entire amount along with interest but despite his
request the complainant refused to return his cheques.
6. The accused opted not to lead his defence evidence.
7. Arguments adduced by Ld Counsels of both the parties have been heard.
Evidences and documents on record perused carefully.
HARSHAL
NEGI
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Law Point
8. Before analyzing the material on record, it is imperative to set forth the
legal benchmark which governs the adjudication of cases under Section
138 NI Act. A bare reading of Section 138 NI Act reveals that in addition
to the cheque being issued for the discharge, in whole or in part, of any
debt or other liability; following are the ingredients which constitute an
offence:-
1. that a person drew a cheque on an account maintained by him with the
banker;
2. that such a cheque when presented to the bank is returned by the bank
unpaid;
3. that such a cheque was presented to the bank within a period of six
months from the date it was drawn or within the period of its validity
whichever is earlier;
4. that the payee demanded in writing from the drawer of the cheque the
payment of the amount of money due under the cheque to payee; and
5. such a notice of payment is made within a period of 30 days from the
date of the receipt of the information by the payee from the bank
regarding the return of the cheque as unpaid.
(Para 26, N. Harihara Krishnan vs J. Thomas, (2018) 13 SCC 663, referred
to in Himanshu vs B. Shivamurthy (2019) 3 SCC 797)
9. Section 138 is to be read with the presumption, being a rebuttable
presumption, as contained in Section 139. Section 139 provides that:
“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.”
10. Thus, in cheque bouncing cases, the judicial scrutiny revolves around the
satisfaction of ingredients enumerated under Section 138 NI Act and if so,
whether the accused was able to rebut the statutory presumption
contemplated by Section 139 NI Act. Section 139 is an example of reverse
onus clause which usually imposes an evidentiary burden and not a HARSHAL
NEGI
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persuasive burden. In other words, Evidence of a character, not to prove
a fact affirmatively, but to lead evidence to show non-existence of a
liability. Further the law is well settled that when an accused has to rebut
the presumption under Section 139, the standard of proof of doing so is
that of “preponderance of probability” (Rangappa vs Sri Mohan (2010) 11
SCC 441). Once execution of cheque is admitted, it is a legal presumption
under Section 139 of Negotiable Instrument Act, the cheque was issued
for discharging legally enforceable debt.
11. Attention is also invited to Section 118(a) wherein a presumption of the
cheque having been issued in discharge of a legally sustainable liability
and drawn for good consideration, arises. Section 118 of the N.I Act
provides:-
“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;”
12. Hence, it can be seen that from its very inception a presumption that the
cheque was issued in discharge of a debt or other liability subsists in
favour of the Complainant and onus rests upon the accused to rebut the
existing presumption on the touchstone of preponderance of probability.
13. Further, the accused in a trial under Section 138 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 (Para 20, Kumar Exports vs Sharma HARSHAL
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Carpets (2009) 2 SCC 513). Another defence that can be raised by the
accused is that even if there was a consideration and debt in existence, he
had already made the payment of that consideration and debt.
Analysis & Conclusion
14. Having laid down the factual matrix and the legal position, let us now
advert to whether the ingredients of Section 138 NI Act has been made out
by the Complainant and whether the accused has been able to rebut the
presumption which is existing against him or whether he has made good
any of the two options given in Kumar Exports case as mentioned above.
15. In order to prove the case, the complainant led his evidence by way of
affidavit. The complainant examined himself as CW-1 by way of affidavit.
Complainant in his evidence deposed that he and the accused were having
friendly relations and on 14.12.2022 at around 8 pm the accused
approached the complainant for a friendly loan of Rs 3 Lakhs for a period
of 3 months. That the complainant gave an amount of Rs 3 Lakhs to the
accused against an agreement dated 14.12.2022 Ex CW1/1. That in
furtherance of the abovesaid loan the accused issued cheque bearing no
581394 of Rs 3,00,000/- dated 21.06.2023, drawn on Punjab National
Bank, Acharya Niketan, Mayur Vihar as payment, which forms the subject
matter of the present case. The complainant deposited the given cheques
through its bankers, however, the same was returned unpaid vide return
memo dated 24.07.2023 with remarks “Funds Insufficient”. Mandatory
statutory legal demand notice dated 28.07.2023 was served by the
complainant vide postal receipt and delivery report.
HARSHAL
NEGI
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16. On the close scrutiny and appraisal of the cheque, it clearly transpires that
the same had been issued as per the above details. The cheques in question
got dishonored vide returned unpaid vide return memo dated 24.07.2023
with remarks “Funds Insufficient” marked as Ex CW 1/3. Legal notice
Ex.CW-1/4 further proves that the same was issued and dispatched vide
postal receipt and delivered through delivery report Ex CW 1/5 and Ex
CW 1/6. In fact, the accused affirmed that the address mentioned in the
legal notice is his correct address.
17. As a matter of fact, the address of the accused which finds mention in the
legal notice is the same address which has been disclosed by the accused
in his statement under Section 313 CRPC, Notice under Section 251
CRPC as well as the loan agreement Ex CW1/1.
18. It is apposite at this stage to set forth authoritative pronouncements
regarding deemed service of legal notice to the accused in terms of Section
138 NI Act. The Hon’ble Supreme Court in K Bhaskaran vs Sankaran
Vaidhyan Balan (1999) 7 SCC 510 in Para 18 observed thus:
“……’Giving Notice’ in the context is not the same as ‘receipt of
notice’. Giving is a process of which receipt is the accomplishment. It
is for the payee to perform the former process i.e. Giving, by sending
the notice to the drawer at the correct address…..”
19. Further, in Para 24 of the above said judgment the Hon’ble Supreme Court
held that where the sender has dispatched the notice by post with correct
address written on it, the principle incorporated in Section 27 of General
Clauses Act could profitably be imported in such a case. It was further
held that in this situation service of notice is deemed to have been effected
on the sendee.
20. Law with respect to the delivery of legal notice by post and the presump-
HARSHAL
tion with respect to the same has been succinctly put forth by the Hon’bleNEGI
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by HARSHAL
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Supreme Court in C C Alavi Haji vs Palapetty Muhammed (2007) 6 SCC
555. Para 13 & 14 of the judgment is worth mentioning as under:
“13. According to Section 114 of the Act, read with Illustration (f)
thereunder, when it appears to the Court that the common course of
business renders it probable that a thing would happen, the Court may
draw presumption that the thing would have happened, unless there are
circumstances in a particular case to show that the common course of
business was not followed. Thus, Section 114 enables the Court to
presume the existence of any fact which it thinks likely to have
happened, regard being had to the common course of natural events,
human conduct and public and private business in their relation to the
facts of the particular case. Consequently, the court can presume that
the common course of business has been followed in particular cases.
When applied to communications sent by post, Section 114 enables the
Court to presume that in the common course of natural events, the
communication would have been delivered at the address of the
addressee. But the presumption that is raised under Section 27 of the
G.C. Act is a far stronger presumption. Further, while Section 114 of
Evidence Act refers to a general presumption, Section 27 refers to a
specific presumption.
14. Section 27 gives rise to a presumption that service of notice has
been effected when it is sent to the correct address by registered post.
In view of the said presumption, when stating that a notice has been
sent by registered post to the address of the drawer, it is unnecessary to
further aver in the complaint that in spite of the return of the notice
unserved, it is deemed to have been served or that the addressee is
deemed to have knowledge of the notice. Unless and until the contrary
is proved by the addressee, service of notice is deemed to have been
effected at the time at which the letter would have been delivered in the
ordinary course of business.
21. Thus, in view of the law as above said and the fact that the address of the
accused which finds mention in the legal notice being the same address
which has been disclosed by the accused in his Notice under Section 251
CRPC, statement under Section 313 CRPC and loan agreement Ex
CW1/1, the mandatory statutory legal notice is deemed to have been
served on the accused in the present case. Thus, the factum of issuance HARSHAL
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and receipt of mandatory statutory legal notice also stands proved based
on the documentary evidence of legal notice, postal receipts.
22. It has been proved that despite issuance of legal notice, the accused had
failed to make the payment of the cheque amount. The perusal of these
documents conclusively established that the accused had issued the
cheque which was dishonorued due to “Insufficient Funds”. The evidence
led by way of affidavit by the complainant has been fully substantiated
with the documentary evidence. Ergo, the complainant has proved that
despite the statutory requirement of law as required under the Act the ac-
cused failed to honour the cheque amount within the statutory period.
23. It is not in dispute that the cheque in question was signed by the accused
himself as the reading of Notice under Section 251 Crpc as well as his
statement under Section 313 CRPC establishes that the accused issued the
cheques in question and signed the same. The law is no longer res
integra that even if a signed blank cheque is presented to the payee and
payee fill up the amount and other particulars, this in itself would not
invalidate the cheque and the accused would still have to prove that the
cheque was not in discharge of a debt or liability by adducing evidence
(Bir Singh vs Mukesh Kumar (2019) 4 SCC 197).
24. On the above said, the ingredients of Section 138 NI Act has been made
out by the Complainant. Further, the accused has admitted his signatures
on the cheque and also the account belongs to him.
25. Now, the next scrutiny is with respect to the two options which are
available to the accused as per the dicta of Kusum Exports case. Firstly, to HARSHAL
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show that consideration and debt did not exist and secondly, that under the
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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. It is trite law that bare denial of passing of
the consideration 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. Another
defence that the accused can raise is that though there was an existence of
debt, however, he has already returned the loan amount/debt.
26. A reading of the Notice under Section 251 CRPC and statement under
Section 313 CRPC reflects a categorical admission on part of the accused
with respect to the existence of a legally enforceable debt i.e. an amount
has been taken by him from the complainant. The only defence is that
the cheque was issued as a security and has been misused.
27. The law as to security cheque has been laid down by the Hon’ble Supreme
Court in its latest judgment Sripati Singh (since deceased) through
Gaurav Singh vs State of Jharkhand & Anr, 2021 SCC Online SC 1002
wherein the question was whether an offence under Section 138 NI Act is
not made out where the dishonourment is of the cheque issued by way of
“security” and not towards discharge of any debt or liability. In Para 16 &
17 of the above judgment, the Hon’ble Supreme Court observed thus:
“16. A cheque issued as security pursuant to a financial transaction
cannot be considered as a worthless piece of paper under every
circumstance. ‘Security’ in its true sense is the state of being safe and
the security given for a loan is something given as a pledge of payment.
It is given, deposited or pledged to make certain the fulfilment 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 timeframe and issues a cheque as security to HARSHAL
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secure such repayment; if the loan amount is not repaid in any other
form before the due date or if there is no other understanding or
agreement between the parties to defer the payment of amount, the
cheque which is issued as security would mature for presentation and
the drawee of the cheque would be entitled to present the same. On such
presentation, if the same is dishonoured, the consequences
contemplated under Section 138 and the other provisions of N.I. Act
would flow.
17. When a cheque is issued and is treated as ‘security’ towards
repayment of an amount with a time period being stipulated for
repayment, all that it ensures is that such cheque which is issued as
‘security’ cannot be presented prior to the loan or the instalment
maturing for repayment towards which such cheque is issued as
security. Further, the borrower would have the option of repaying the
loan amount or such financial liability in any other form and in that
manner if the amount of loan due and payable has been discharged
within the agreed period, the cheque issued as security cannot thereafter
be presented. Therefore, the prior discharge of the loan or there being
an altered situation due to which there would be understanding between
the parties is a sine qua non to not present the cheque which was issued
as security. These are only the defences that would be available to the
drawer of the cheque in a proceedings initiated under Section 138 of the
N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque
which is issued as security can never be presented by the drawee of the
cheque. …”.
28. Thus, as noticed above, the only defences with respect to a cheque
deposited as a security which is available with the accused is either the
prior discharge of the loan or there being an altered situation due to which
there would be understanding to defer the payment between the parties.
Further, when a cheque is issued and is treated as ‘security’ towards
repayment of an amount with a time period being stipulated for repayment,
all that it ensures is that such cheque which is issued as ‘security’ cannot
be presented prior to the loan or the instalment maturing for repayment
towards which such cheque is issued as security.
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29. It is not the case of the accused that he has already discharged the loan. It
is also not the case of the complainant that there was an altered situation
due to which there was an understanding between the parties to defer the
payment. Thus, the defence of cheque issued as a security does not come
to the aid of the accused.
30. Accordingly, neither on a reading of the complaint, nor from the evidence
led by the complainant, has the accused been able to create a reasonable
doubt with regard to the quantum of the outstanding debt which can lead
to the fulfillment of both the option viz, the debt did not exists 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. Both the above said tests remained
wanting at the end of the accused.
31. Therefore, in view of the oral and documentary evidence brought on
record the accused has failed to rebut the presumption and it is clear that
the accused had committed an offence under Section 138 of the Negotiable
Instruments Act.
32. On the basis of the above said analysis and conclusions arrived, the
accused namely Durga Singh, S/o Sh. Pritam Singh stands convicted for
the commission of the offence punishable under Section 138 of the Act.
Digitally signed by
HARSHAL HARSHAL NEGI
NEGI Date: 2026.06.12
16:11:58 +0530
(Harshal Negi)
JMFC, MCD (East)
Karkardooma Courts/Delhi 12.06.2026
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