Delhi District Court
Manpreet Singh Randhawa vs Satish Dingra on 18 May, 2026
IN THE COURT OF SHRI TANMAY BATHAM,
JUDICIAL MAGISTRATE FIRST CLASS, NI ACT - 03,
TIS HAZARI COURTS (WEST), DELHI
JUDGMENT
Complaint Case No. 7912/2016
Title of the case Manpreet Singh Randhawa v. Satish
Dhingra
Name of the Complainant Mr. Manpreet Singh Randhawa
Name of the Accused Mr. Satish Dhingra
Date of Institution 01.08.2011
Date of Reserving Judgment 10.04.2026
Date of Pronouncement 18.05.2026
Offence complained of Under Section 138 NI Act
Offence charged with Under Section 138 NI Act
Plea of the accused Pleaded not guilty
Final Order Acquitted
Argued by: Mr. Arbind Garg, Ld. Counsel for the Complainant.
Mr. S. K. Grover, Ld. Counsel for the Accused.
FACTUAL MATRIX
1. The present complaint is filed by the complainant Mr. Manpreet
Singh Randhawa (hereinafter referred to as the “Complainant”) against the
accused Mr. Satish Dhingra (hereinafter referred to as the “Accused”) under
Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as
“NI Act“). The substance of allegations of the complainant is that the accused
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approached the complainant for a loan of Rs. 12,00,000/- and the complainant
gave a loan of Rs. 12,00,000/- at the rate of interest 3% p.m., which the accused
promised to return within six months. That the complainant approached the
accused several times after expiry of six months and the accused in part-
discharge of his liability issued a cheque (hereinafter referred to as the “cheque
in question”) bearing the following particulars:
• Cheque bearing no. 052550 dated 12.06.2011, for an amount of Rs.
50,000/-, drawn on Lord Krishna Bank, Delhi.
That, the above-said cheque was presented in the bank of the complainant and
was returned back unpaid for the reason “Funds Insufficient” vide return
memo dated 17.06.2011. That the accused, despite multiple demands, did not
make the payment. That the complainant then issued legal demand notice dated
29.06.2011, through a registered A.D. upon the address of the accused, and that
notice was received back with remarks that the accused was not available at
the address. That despite due service and the passage of stipulated time period,
the accused did not honour his legal liability and hence, the present complaint
has been filed. During the cross-examination it has come forth that the
complainant has filed total 9 cases against the accused for the other cheques
allegedly issued by him.
NOTICE U/S 251 CRPC
2. On finding a prima facie case against the accused, he was
summoned to face trial and upon his appearance, a notice of accusation under
Section 251, Code of Criminal Procedure, 1973 (hereinafter referred to as
“CrPC“) was served on him on 29.08.2018. It was found out by the court that
the reason for dishonour, as opposed to the averment raised in the para no. 3 of
the complaint, was “no such account”; and accordingly plea of defence of
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accused u/s 251 Cr.P.C. was recorded. In reply to the notice of accusation, the
accused pleaded not guilty and claimed trial. Accused admitted his signatures
on the cheque in question, and also admitted filling the amount only, but not
the other particulars. He stated that the blank cheque in question was issued to
complainant for security purposes and the financial accounts between him and
the complainant were settled much before the presentation of the cheque. He
alleged that the cheque in question has been misused by the complainant after
long time gap. He also added that the complainant has presented the cheque
despite having the knowledge that the bank has already been closed. He denied
receiving the legal demand notice and also denied having any liability towards
the complainant.
COMPLAINANT’S EVIDENCE
3. Thereafter, an application under Section 145 (2) Negotiable
Instruments Act (hereinafter referred to as “NI Act“) was made by the accused
seeking permission to cross-examine the complainant and the same was
allowed. During the trial, in the Complainant’s Evidence (hereinafter referred
to as “CE”), the complainant has led both oral and documentary evidence
against the accused to prove his case beyond reasonable doubt. The
complainant himself stepped in the witness box as CW-1 and tendered his
evidence by way of affidavit Ex. CW1/A and relied on following documents:
No. Title of the Document Exhibited As
1 Evidence Affidavit Ex. CW1/A
2 Cheque in question Ex. CW1/B
3 Cheque return memo Ex. CW1/C
4 Legal Demand Notice Ex. CW1/D
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No. Title of the Document Exhibited As
5 Returned Envelope Cover Ex. CW1/E
6 Postal Receipt Ex. CW1/F
Complainant was duly cross examined by Ld. Counsel for accused and all the
exculpatory suggestions put to complainant were denied by him.
STATEMENT OF ACCUSED
4. Thereafter, before the start of defence evidence, in order to allow
the accused to personally explain the incriminating circumstances appearing in
evidence against him, the statement of the accused was recorded without oath
under Section 313 Cr.P.C. In reply, the accused denied taking a loan of Rs.
12,00,000/- from the complainant and instead said that he used to take smaller
loans of Rs. 50,000/- to Rs. 1,00,000/-, which he used to return in due course.
He stated that he has also paid interest to the complainant on various loans. He
stated that that at the time of such loans, the complainant used to take blank
security cheques from him and the cheque in question is one of them, which
has been misused. He added that the cheque in question was given 3-4 years
prior to filing of the present complaint. The accused admitted receiving legal
demand notice and replying to the same.
DEFENCE EVIDENCE
5. Thereafter, the accused led his defence evidence whereby, he led
oral evidence of himself as DW-1 and brought on record the following
documents:
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No. Title of the Document Exhibited As
1 Counterfoils of cheque book of Accused Ex. DW1/A to Ex. DW1/J
(OSR)
All the incriminating suggestions put to the accused were duly denied by him.
FINAL ARGUMENTS
6. The final arguments were heard in the matter and I have heard the
ld. counsels appearing for the parties and I have given my thoughtful
consideration to the material appearing on record.
7. Following arguments have been advanced by the ld. counsel for the
complainant:
a) That all the ingredients of the offence are fulfilled in the present
case. The accused has admitted his signatures and filing the amount
on the cheque in question and now, when seen in light of Section
118 (a) and Section 139 of the NI Act, it shifts the onus upon the
accused to prove the contrary that the cheque were not given in
discharge of any liability; and that the accused has not been able to
raise any probable defence regarding the same.
b) That the accused has admitted taking loans from the complainant in
his statement u/s 313 Cr.P.C. and has not been able to present any
receipt of repayment of any loan.
c) That the Ex. DW/C1 (OSR) is an acknowledgment by the accused
of receiving Rs. 11,40,000/- from the complainant. As such, it is
prayed that the accused be punished for the said offence.
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8. Per contra, ld. counsel for the accused has argued on the following
grounds:
a) That the complainant has failed to establish his case beyond
reasonable doubt. It is argued that the complainant has failed to give
any proof regarding lending of the alleged loan.
b) That the case of the complainant is riddled with inconsistency; the
reason for dishonour on the cheque in question is “No Such
Account”, however, the complaint says it is “Funds Insufficient”.
The the complainant has himself admitted not having knowledge
about the return memo and not remembering the amount demanded.
c) That the complainant has not been able to affirm his financial
capacity to have the cash in hand to lend the alleged loan.
d) That the complainant admitted having fight with the accused in
2009 and it is implausible that the accused will give cheque to him
in 2011. That the complainant has misused the old cheque of the
accused. As such, it is prayed that the accused be acquitted.
INGREDIENTS OF THE OFFENCE AND DISCUSSION
9. At the very outset, it would be appropriate to examine the legal
requirements that both parties must meet before delving into the peculiar facts
of the present case. The complainant must satisfy the following five essential
components to make out the offence under section 138 NI Act: –
First Ingredient: The cheque was drawn by a person on an account
maintained by him for payment of money and the same is presented for
payment within a period of 3 months from the date on which it is drawn
or within the period of its validity;
Second Ingredient: The cheque was drawn by the drawer for
discharge of any legally enforceable debt or other liability;
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Third Ingredient: The cheque was returned unpaid by the bank due to
either insufficiency of funds in the account to honour the cheque or that
it exceeds the amount arranged to be paid from that account on an
agreement made with that bank;
Fourth Ingredient: A demand of the said amount has been made by the
payee or holder in due course of the cheque by a notice in writing given
to the drawer within thirty days of the receipt of information of the
dishonour of cheque from the bank;
Fifth Ingredient: The drawer fails to make payment of the said amount
of money within fifteen days from the date of receipt of notice.
10. The accused can only be held guilty of the offence under Section
138 NI Act if all of the above-mentioned ingredients are proved by the
complainant co-extensively. Additionally, the conditions stipulated under
Section 142 NI Act have to be fulfilled.
First Ingredient
11. The proof of first essential is disputed by the accused. The
complainant has annexed the original cheque, Ex. CW1/B, which the accused
has not disputed as being drawn on his account, but the accused submits that
the cheque in question is an older cheque, of a now dysfunctional bank account,
which the complainant has deliberately presented after 3-4 years of receiving
the same for a security of some other, now repaid, loan. The ld. counsel for the
accused argues that no cause of action can arise from the dishonour of the
cheque in question as it has not been drawn by the accused on an account
maintained by him with a banker. He argues that the reason for dishonour of
the cheque in question is “no such account”, because when it was presented,
the accused’s bank, namely Lord Krishna Bank Ltd. had been merged with the
HDFC Bank and the account of the accused had been closed. He argues that it
cannot be said that the cheque was presented within its validity period.
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12. It is to be noted that while the cheque in question pertains to the
Lord Krishna Bank Ltd., the return memo mentions that it has been drawn on
HDFC Bank Ltd. During the final arguments it has been brought to attention of
this court that the bank of the accused has later been merged into the HDFC
Bank and that is why the return memo has been issued by the HDFC Bank, J-
Block, Saket, Delhi. The court has also taken a judicial notice of this fact under
Section 51 of the The Bharatiya Sakshya Adhiniyam, 2023, that the bank of the
accused, namely, the Lord Krishna Bank Ltd. has been merged with HDFC
Bank in the year 2008. The said merger also finds its mention in one of the
judicial observation coming from the Income Tax Appellate Tribunal, “H”
Bench, Mumbai in ITA Nos. 476, 581 and 716 of 2007. Relevant paragraphs
have been quoted below:
“1. These three appeals are by the Revenue, two on orders under section 143(3) and
one appeal under section 271(1)(c). The respondent assessee Lord Krishna Bank Ltd.
merged with Centurian Bank of Punjab w.e.f. 29.8.2007. Subsequently Centurian
Bank of Punjab merged with the HDFC Bank Ltd., w.e.f. 23.05.2008. Accordingly the
respondent name has been changed as M/s HDFC Bank Ltd as successor to the
business of Lord Krishna Bank Ltd.”
Hence, it stands established that the bank account from which the cheque in
question has been issued, got merged with HDFC in the year 2008.
13. At this stage, it is apposite to re-visit the position of prevailing law
on the point of merger of banks and the validity of complaint u/s 138 of the NI
Act in such cases. The Hon’ble High Court of Delhi in the judgment of
Premanand Prusty v. Sita Devi [2023 SCC OnLine Del 7745] was dealing with
a quashing petition against the order of summoning by a ld. trial court, arising
out of similar facts where the bank, from which the cheque in question was
issued, got merged with another bank later on. Relevant excerpts from the
judgment are reproduced below:
“11. Now, it is the case of petitioner that Syndicate Bank had merged with Canara
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Bank on 01.04.2020 and therefore, cheques issued by Syndicate Bank had become
invalid with effect from 01.07.2021 as per the notice issued by Canara Bank and hence,
on the alleged date of issuance of cheque in question, i.e. on 28.02.2022, the cheque
was not a valid cheque and its non-encashment could not fall under Section 138 of NI
Act.
12. However, it is important to consider that the petitioner has not denied his signatures
on either the cheque in question or on the promissory notes or undertakings, before the
learned Trial Court. This clearly reflects, prima facie, that the cheque in question was
issued towards discharge of legally enforceable debt.
XXX XXX XXX
15. … The fact remains that the cheque in question, which has been undisputedly
signed by the petitioner, was presented for encashment with the Bank by the
complainant towards discharge of debt, which the complainant claims is reflected from
the promissory notes and undertakings signed by the petitioner …
16. In these circumstances, this Court finds no reason to quash the impugned orders
and the complaint case, pending before the learned Trial Court.
17. However, it is clarified that the petitioner shall be at liberty to raise all these issues
raised before the learned Trial Court at appropriate stage, and the learned Trial Court
shall decide the case pending before it on its own merits, and without being influenced
by any of the observations made hereinabove by this Court since the same are only for
the purpose of deciding the present petition.”
The observation of the Hon’ble High Court of Delhi above makes it clear that
a complaint cannot be junked in totality merely because the bank of the accused
has later been merged with another bank, more so when the signatures on the
cheque in question have been admitted. The Hon’ble High Court of Delhi has
paved a way, as well as, casted a responsibility on the trial courts, to deal with
this issue after taking into account the evidences appearing on record. So has
been the attempt of this court, below.
14. Before proceeding further, it is relevant to discuss certain
observations of the superior courts, to understand the applicable metric of law
in cases where a defence has been taken by the accused that the account was not
being maintained by him. It has been held by the Hon’ble Supreme Court of
India in the Kusum Ingots And Alloys Ltd vs Pennar Peterson Securities Ltd.
And Ors [AIR 2000 SC 954] that:
“In a case in which the BIFR has submitted its report declaring a company as ‘sick’ and
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not to dispose of any of its assets except with consent of the Board then the contention
raised on behalf of the appellants that a criminal case for the alleged offence
under section 138 NI Act cannot be instituted during the period in which the restraint
order passed by the BIFR remains operative cannot be rejected outright […] In such a
case it may reasonably be said that the dishonouring of the cheque by the bank and
failure to make payment of the amount by the company and/or its Directors is for
reasons beyond the control of the accused. […] In such circumstances it would be
unjust and unfair and against the intent and purpose of the statute to hold that the
Directors should be compelled to face trial in a criminal case.”
The above-quoted observation of the Hon’ble Supreme Court of India makes it
clear that if the cheque in question has been dishonoured due to the restrictions
on the bank account, for “reasons beyond the control of the accused”, a
complaint u/s 138 NI Act will not remain maintainable. Further, the Hon’ble
High Court of Delhi in the judgment of Vijay Chaudhary v. Gyan Chand Jain
[2008 SCC OnLine Del 554] has held as under:
“…It also cannot be said that after the attachment of the bank account, the same was
being maintained by the petitioner. For an account to be maintained by an account
holder, it is essential that he is in a position to operate the said account by either
depositing monies therein or by withdrawing money therefrom. He should be in a
position to give effective instructions to his banker with whom the account is
maintained. However, in the present case, once the account has been attached by an
order of the Court, the said account could not be operated by the petitioner. He could
not have issue any binding instructions to his banker, and the banker was not obliged
to honour any of his instructions in relation to the said account, so long as the
attachment under the court orders continued.”
The above-quoted observation of the Hon’ble High Court of Delhi makes it
clear that if the accused is not able to operate the said account for depositing or
withdrawing money and is not able to issue binding instructions to his banker,
then it cannot be said that the account is being maintained by him.
15. The defence of the accused that “no such account” existed at the
time of presentation of the cheque in question can be said to be closest to two
reasons for dishonour, namely “account blocked” and “account closed”, in
which the account of the accused itself is not found accessible for encashment
of the cheque in question. In the considered opinion of the court, the evidences
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can be analysed in the light o the jurisprudence of the above said reasons for
dishonour as all of them are closely aligned in terms of their functioning and,
seemingly, fall in the same genus.
16. The accused has taken a consistent stand throughout the trial that
the financial dealings between him and the complainant had stopped after the
year 2009 and he had cleared all his accounts with the complainant. He has also
stated that he used to take small loans of Rs. 50,000/- to Rs. 1,00,000/- from
the complainant against the pre-filled security cheques, one of which is the
cheque in question. The accused has adduced the copies of the counterfoils of
his chequebook (Ex. DW1/A to Ex. DW1/J) which mentions certain particulars
and name of the complainant, as a proof of repayment. The said proof, being a
photocopy of a personal document of accused, that too in his own handwriting
cannot be relied upon, as it has been created wholly by the accused. However,
the explanation of the accused regarding giving pre-filled security cheques
provides a suitable explanation of his admission regarding his writing on the
particulars of the cheque in question, during his plea of defence taken u/s 251
Cr.P.C.
17. The accused has alleged that the complainant did not return his
cheques despite multiple requests. He has stated in his examination-in-chief
that in the year 2009, he and his family had a fight with the complainant and
matter was also reported to the police. The ld. counsel for the accused has
argued that the cheque in question has been presented much after the alleged
fight, only to even out scores with accused. Notably, the version of the accused
regarding the arguments between the parties in 2009 has not been suggested to
be wrong by the ld. counsel for the complainant, meaning thereby, the same
assertion regarding fight between the parties has been admitted by him as well.
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18. The testimony of the complainant has been perused by the court.
The complainant has stated in his cross-examination dated 27.06.2019 that the
accused had approached him with request for the alleged loan in the year 2009-
10. However, contrary to this statement, the ld. counsel for the complainant has
suggested to the accused in the cross-examination of the accused dated
23.05.2022, that the loan in question was extended in the year 2011. This
discrepancy in the year of giving the loan in question shakes the credibility of
the version of the complainant. Throughout the trial, the complainant has been
found to be grappling for consistency in the facts of his case. The complainant
has also stated that he did not read the complaint before signing it.
19. Additionally, it cannot be forgotten that the reason for dishonour
in the paragraph no. 3 of the complaint has not been mentioned correctly as the
cheque has been dishonoured for the reason “no such account” however the
complaint bears the reason “funds insufficient”. The complainant has not been
able to explain this discrepancy in the complaint satisfactorily. Most
importantly, the complainant has not brought any document or witness on
record, which shows that the cheque in question has been issued by the accused
after the merger and subsequent closing of his account, with a deliberate and
wrongful intention. The complainant has also not brought any evidence on
record which shows the modality of transition between the Lord Krishna Bank
and the HDFC Ltd. Bank. It has not been established by the complainant that
after the merger of the above said two banks, the account of the accused has
survived in continuation and that he has exercised control over it at the time of
presentation of the cheque in question.
20. On one hand, the accused has stood firm and consistent with his
version and on the other hand, the complaint and evidence of the complainant
is full of weak points and inconsistencies. In this scenario, the courts deems it
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fit to extend the benefit of doubt in favour of the accused and believe that the
cheque in question has been given way back in 2008-09. In such scenario, if
the cheque in question has been dishonoured for the reason of bank merger, the
complainant always had an option of approaching the accused for issuance of
a fresh cheque, if any liability was existing. The complainant has not chosen to
do that, instead, the complainant has proceeded with the present complaint,
alongwith other 9 complaints, as appears from the testimonies of the witnesses.
While no comments can be made on the merits of those cases, the multiplicity
of litigation preferred by complainant, without approaching the accused for
issuance of fresh cheques from his current bank, also raises doubts on the
motives of the complainant in the present case.
21. The accused has maintained that he has cleared all his liability
already in 2009; however, even in arguendo, the burden of dishonour of the
cheque in question in the current scenario, where the banks have merged,
cannot be turned into a criminal liability and put solely on the accused, when
he, while issuance of cheques in 2008-09, could not have anticipated that his
bank will be merged with HDFC LTd. in future. The Hon’ble High Court of
Delhi in Best Buildwell Pvt. Ltd. v. R.D. Sales [2025 SCC OnLine Del 4267]
has also emphasised this point that, when at the time of issuance of the cheque
in question, the accused couldn’t have anticipated that the bank account will be
acted upon by an external force, then the dishonour of the cheque due to that
external factor cannot be turned into a criminal liability of the accused u/s 138
NI Act. The judgments of Kusum Ingots And Alloys (supra) and Vijay
Chaudhary (supra) would also come to the aid of the accused in this regard as
he did not have any authority to issue binding instructions to his bank and the
merger was beyond his control. Unless and until it is established that the
account of the accused was still operable and under the instructions of the
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accused after the merger, the liability of the dishonour cannot be labelled on
him. The complainant, however, has not taken any steps in the direction of
proving this, on the contrary, the complainant is found to be completely
unaware regarding this aspect and has even stated the following in his cross-
examination dated 27.06.2019:
“I am not sure whether the cheque return memo filed by me alongwith the complaint
pertains to the cheque in question or not”
It is thereby clear that, far from strengthening his case, the complainant is found
to be lacking the basic knowledge about the present case; and he has not
discharged the burden of making his case stand on its own legs, very diligently.
22. To recapitulate, in the circumstances where the accused is not
exercising the control over his bank account anymore due to the bank having
being merged into another bank, after issuing the cheque in question, it cannot
be said that the cheque has been dishonoured from the account maintained by
by the accused or that it has been presented within its validity. As such, on the
basis of the above, the first ingredient of the offence under Section 138 NI Act
is not proved.
Third Ingredient
23. With regards to the third ingredient, the ld. counsel for the accused
has argued that since the reason for dishonour in the return memo is “no such
account”, the same not being one of the listed reasons for dishonour in the
Section 138 of NI Act, will not make the dishonour as culpable under the
scheme of the NI Act.
24. The validity and consequences of the reason for dishonour being
“no such account”, in reference to the reasons mentioned u/s 138 of the NI Act
has been discussed in the following observation of the Hon’ble High Court of
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Delhi in M/s Ceasefire Industries Ltd. vs State & Ors. [III (2017) DLT (Crl.)
951]:
“6. In the opinion of this court, the view taken by the Metropolitan
Magistrate in the two complaint cases cannot be faulted. The provision
contained in Section 138 of the N.I. Act makes it clear that it is not every
return of a cheque unpaid which leads to prosecution of an offence under
the said provision of law. For such purposes, the cheque must have been
returned “unpaid” either because the amount of money standing to the
credit of that account is insufficient to honour the cheque or that it exceeds
the amount arranged to be paid from that account by an agreement made
with the bank.
7. The bank which returned the cheques unpaid had made it clear that the
accounts had been blocked. It is clear that the complainant itself was
aware that the accounts had been frozen in terms of directions by some
statutory authority. In these circumstances, the reasons for return of the
cheques unpaid being not what is envisaged in Section 138 of the N.I. Act,
these petitions are devoid of merit and, therefore, dismissed.”
The Hon’ble High Court of Delhi has time and again affirmed the position that
a dishonour of cheque, due to intervention of an external factor, beyond the
control of the accused, does not render the dishonour culpable u/s 138 NI Act.
The judgement of M/s Ceasefire (supra), has been further reaffirmed in Mr.
Sachin Jain & Ors. vs Mr. Rajesh Jain [arising from CRL.L.P. 91/2022] by the
Hon’ble High Court of Delhi with following observations:
“14. It is noteworthy that a Co-ordinate Bench of this Court in Ceasefire Industries
Ltd. vs. State & Ors. III (2017) DLT (Crl.) 951 has held that the accused can’t be
faulted, if the account, from which the cheque in issue is drawn, is blocked, for the
reason(s) beyond the control of the drawer. This Court is also in consonance with the
finding of the Co-ordinate Bench of this Court. Therefore, in the opinion of this Court,
offence of Section 138 of NI Act is not made out, in case the account is blocked/
frozen/ attached on the order of some statutory authorities. This is more so because the
blocking/freezing/attaching of the said bank account cannot be said to be a voluntary
act of the drawer.”
Hence, applying the joint reading of M/s Ceasefire (supra) and Mr. Sachin Jain
(supra), the reasoning affirmed by the Hon’ble High Court of Delhi, in the
considered opinion of this court, can also be extended to the reason for
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dishonour of the present cheque i.e., “no such account”, as the disability of
account of the accused has arisen from the merger of bank of the accused, which
is beyond the control of the accused; more specifically when the cheque in
question was handed over 4 years before the date of dishonour of the cheque.
25. Hence, it cannot be said that the cheque in question has been
dishonoured for the reasons mentioned in the provision of Section 138 of the
NI Act and nor do they align with the purported scheme of the Act. As such, on
the basis of the above, the third ingredient of the offence under Section 138 NI
Act is not proved.
Fourth And Fifth Ingredient
26. With regard to the fourth ingredient, the complainant has proved on
record the legal demand notice Ex. CW1/D and effective delivery of same
through postal receipt Ex. CW1/F and returned envelope Ex. CW1/E. The
envelope bears the noting of “no such person was found at the address”. The
accused in his plea of defence taken u/s 251 Cr.P.C. has denied receiving any
legal demand notice, but in his statement u/s 313 Cr.P.C. he has admitted
receiving the legal demand notice and replying to the same. Notwithstanding
the contrary statements of the accused in this regard, the fact remains that at the
throughout the trial the accused has provided the same address as that
mentioned on the legal demand notice. Hence, it could be concluded that the
legal demand notice was sent on the correct address of the accused.
27. It is a settled position that, once it has been established that the
legal demand notice by the complainant was sent on the last known address of
the accused, a presumption in the light of the Section 27 of the General Clauses
Act and Section 114 of the Evidence Act will come into play and it could be
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reasonably presumed that the legal demand notice was served on the accused.
Further, in CC Alavi Haji Vs. Palapetty Muhammed & Anr. (Crl. Appeal No.
767 of 2007), the Hon’ble Apex Court has held that:
“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 General Clauses Act and Section 114 of the Evidence Act”.
Therefore, the argument that the accused did not receive the legal demand
notice will not hold much strength in the light of the admission of the accused
regarding his address. Further, it is to be noted that the accused has not brought
any evidence on record to show that the legal demand notice was, in fact, not
served on him. Hence, the presumption raised regarding the service of legal
demand notice will stand un-rebutted. Accordingly, the argument of accused
that he did not receive the legal demand notice is rejected. Therefore, the fourth
ingredient of the offence also stands proved.
28. The fact that the payment was not made within 15 days of the
receipt of the legal notice is also not disputed. Therefore, the fifth ingredient of
the offence also stands proved.
Second Ingredient
29. Now, it remains to be ascertained if the second ingredient is proved
or not. As far as the proof of second ingredient is concerned, it has to be proved
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that the cheque in question was drawn by the drawer for discharging a legally
enforceable debt. In the present case, the signature of the accused on the
cheques in question has been admitted in the plea of defence u/s 251 Cr.P.C.
Under the NI Act, once the accused admits his signatures on the cheque, certain
presumptions are drawn, which result in shifting of onus. Section 118(a) of the
NI Act lays down the presumption that every negotiable instrument was made
or drawn for consideration. The second presumption is contained under Section
139 of NI Act which casts a reverse onus upon the accused. The provision lays
down the presumption that the holder of the cheque received it for the
discharge, in whole or part, of any debt or other liability.
30. It has been held by a three-judge bench of the Hon’ble Apex Court
in the case of Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption
contemplated under Section 139 of NI Act includes the presumption of
existence of a legally enforceable debt. The principles pertaining to the
presumptions and the onus of proof were recently summarized by the Hon’ble
Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under:
25. We having noticed the ratio laid down by this Court in the above
cases on Section 118(a) and 139, we now summarise the principles
enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the
Act mandates a presumption that the cheque was for the discharge
of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable
presumption and the onus is on the accused to raise probable
defence. The standard of proof for rebutting the presumption is that
of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on
evidence led by him or the accused can also rely on the materials
submitted by the complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be drawn not only
from the materials brought on record by the parties but also by
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reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness
box in support of his defence. Section 139 imposed an evidentiary
burden and not a persuasive burden.
In view of the above principles, a reverse onus is cast on the accused who has
to establish a probable defence on the standard of preponderance of
probabilities to prove that there was no legally enforceable debt or other
liability. The arguments raised by the accused have been considered in totality
and have been contrasted with his plea of defence taken u/s 251 Cr.P.C., his
statement u/s 313 Cr.P.C. and the evidences on record. The contentions raised
by the accused are being discussed below.
CONTENTIONS OF THE ACCUSED TO REBUT THE PRESUMPTION
(A) That the complainant has not been able to produce any proof regarding the
alleged loan amount:
31. The ld. counsel for the accused has argued that the complainant
alleges to have advanced a loan of Rs. 12,00,000/- to the accused, however has
failed to produce any proof of the same. He argues that a loan to the tune of Rs.
12,00,000/- is a substantial amount by all scales, and a reasonable and prudent
man ought to have made out a receipt or acknowledgment of the same loan;
and in the absence of any such proof, it cannot be believed that such a loan
might have been advanced.
32. On this point, the ld. counsel for the accused has drawn the
attention of the court on the Ex. DW1/C1, which is a purported letter of
acknowledgment on the letterhead of the accused’s firm. The content of the
said letter are being reproduced below for purpose of further analysis:
“This is to certify that we have received a deposit of Rs. 1140000 (Eleven Lac Forty
Thousand only) at 24% of interest from Manpreet / Charanjit Kaur Randhawa R/o
Ho # 3260, 1st Floor, Pusa Side, Ranjit Nagar New Delhi – 110008.
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TANMAY BATHAM
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I look forward to many more years of business part ship with them” [sic]The letter Ex. DW/C1 also bears the signature of the accused and the accused
in his cross-examination has admitted his signatures and his letterhead, but
denied the contents of it. The accused has further alleged that his letterhead has
been misused. The accused has stated that if he wanted to give an
acknowledgment of any amount he could’ve done the same in his own
handwriting instead of printing it, as he is literate.
33. The explanation given by the accused regarding the Ex. DW1/C1 is
found to be shallow and disengaging. The accused has failed to explain how his
blank singed letterhead would reach in the possession of the complainant. It is
expected out of a reasonable person to understand, accept and acknowledge the
contents of the paper they are signing. The signature of the accused has not
been not at the bottom of the Ex. DW1/C1, indicating that it might have been
signed in a blank condition, but it is put in the exact place where the printed
text has ended, reflecting thereby that the Ex. DW1/C1 was signed after
printing the contents on it. Hence, the explanation given by the accused is not
found satisfactory or to be inspiring confidence.
34. The complainant, however, has led the trial with even graver
loopholes and inconsistencies, which has exonerated the accused from his
admission regarding his signatures on the letter Ex. DW1/C1. The complainant
has averred in his complainant that the alleged loan was of Rs. 12,00,000/- at
the interest rate of 3% per month, however, his supposedly and rather best
evidence itself shows that the accused was given a loan of Rs. 11,40,000/- at
the 24 % interest rate. This major inconsistency in the loan amount and the
interest rate shakes the whole story of complainant and makes the admission of
the accused regarding his signatures inconsequential. It is a settled position that
the complainant can claim only and only the amount which is a legally
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TANMAY BATHAM
BATHAM Date:
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enforceable lability on the accused and not a Rupee more. No explanation has
come forth from the complainant regarding his inconsistency; rather, the ld.
counsel for the complainant has further concretised this inconsistency by
suggesting to the accused in his cross-examination that the loans taken by him
had accumulated to Rs. 11,40,000/-.
35. Further, the Ex. DW1/C1 mentions that the loan has been given by
Manpreet / Charanjit Kaur. The whole complaint is silent on the participation
of Charanjit Kaur in the loan transaction and she has not been called as the
witness also. This further shakes the credibility of the version of the
complainant as he has shied away from bringing his best witness in the witness
box who could’ve deposed as an eye witness. Additionally, the letter Ex.
DW1/C1 insinuates that a deposit of Rs. 11,40,000/- has been given to the
accused for business purposes, however, in the complaint, no such mention of
business terms or business loans has been made. Lastly, doubts have to be
raised at the stage on which Ex. DW1/C1 has been brought by the complainant.
The said receipt/letter does not finds any mention in the complaint. The
complainant has even stated in his cross-examination dated 27.06.2019 that he
did not get any receipt issued from him at the time of giving the loan. The
receipt is brought by the complainant at the very last stage of trial, despite being
one of the strongest proofs of loan transactions in his hands and this delay raises
doubts on the version of the complainant.
36. The complainant has completely abandoned his complaint mid-
trial and charted the path, which was not averred by him initially. In the
considered opinion of his court the letter Ex. DW1/C1 has done more harm, to
the version of the complainant, than good. Accordingly, the argument of the ld.
counsel for the accused that the complainant has not been able to produce any
proof of the loan of Rs. 12,00,000/- is accepted.
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TANMAY BATHAM
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(B) That the complainant has failed to establish his financial capacity to lend the
loan in question:
37. The ld. counsel for the accused argues that the complainant alleged
to have advanced a loan of Rs. 12,00,000/- and has filed 9 cases against the
accused, but his testimony fails to show that he had the financial capacity to
lend such a loan. The complainant has stated in his cross-examination that the
accused had demanded Rs. 1,00,000/- to Rs. 1,50,000/-, but than later improved
and again said that he demanded Rs. 12,00,000/-. He further stated that he paid
only Rs. 1,00,000/- to Rs. 1,50,000/- to the accused for the first time. The
complainant has referred to the loan of Rs. 1,00,000/- to Rs. 1,50,000/- and has
stated that he used to retain “this much amount” in cash and paid the same in
cash only. Meaning thereby, that it is the own admission of the complainant
that he used to have only Rs. 1,00,000/- to Rs. 1,50,000/- as cash in hand with
him.
38. The testimony of the complainant somewhere reflects the shadow
of the defence taken by the accused, because the accused has also stated that he
use to take smaller loans of Rs. 1,00,000/- to Rs. 1,50,000/- from the
complainant and used to pay them back. No explanation or elaboration has been
given by the complainant about the payment, modality and exact timing of
giving the remaining loan amount. Upon further questions regarding his
financial capacity, the complainant has stated that he was having an annual
income of Rs. 7,00,000/-/ to Rs. 7,50,000/- at the relevant period. Looking from
the perspective of a reasonable and prudent man, it appears unbelievable and
improbable that a person with the income as stated above can make his
household expenses, save for his future and still manage to give a cash loan of
Rs. 12,00,000/- to the accused. In the opinion of the court, the complainant has
not been able to prove sufficient financial capacity to advance the loan in
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question and the argument of the ld. counsel for the accused on this point is
accepted.
(C) That the case of the complainant is riddled with inconsistencies:
39. The ld. counsel for the accused has attempted to dismiss the version
of complainant by arguing that it is full of inconsistencies. It is a settled position
that the case of the complainant must stand firm on its own legs and has to be
tested on the anvil of the cross-examination by the accused. The court has
perused the case records with due consideration to the case of the complainant
and has found that there are many inconsistencies in his version. The same are
listed below:
A) The complainant has alleged the loan to be of Rs. 12,00,000/- in the
complainant but has presented the acknowledgment letter Ex. DW1/C1 for
an amount of Rs. 11,40,000/-.
B) The complainant in his cross-examination has stated that the accused
approached him for loan in 2009-2010, but the ld. counsel for the
complainant has suggested in the cross-examination of accused that the loan
has been given in the year 2011.
C) Surprisingly, the complainant has stated in his cross-examination dated
27.06.2019 that he has given a total amount of Rs. 12,00,000/- to Rs.
12,50,000/- to the accused but he “does not remember the exact figure”.
This inability of the complainant to state the exact figure of the loan amount
on oath in a witness box raises serious doubts on the veracity of his version
of facts.
D) The complainant has gone ahead in his cross-examination and stated that
the loan amount was given in the span of 6-8 months, however, no such
mention regarding loan being given in instalments is given in the complaint.
E) The complaint mentions the reason for dishonour to be “Funds Insufficient”
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however the perusal of return memo (Ex. CW1/C) shows that the cheque
was dishonoured for the reason “no such account”. This grave error in the
complaint has not been amended by the complainant throughout the trial,
which reflects the sincerity and conviction with which the complainant has
led the trial.
F) The complainant has stated in his cross-examination dated 27.06.2019 that
he was not an Income Tax Assessee at the period of transaction in question,
however, changing his stand in his cross-examination dated 21.09.2019, he
stated that he was filing ITRs at that time, but have not shown the loan
advanced to the accused in his ITRs. The non-declaration of the loan in
question also reduces the weight of the version of the complainant and
reference in this regard can be made to the judgment of the Hon’ble High
Court of Delhi in Sheela Sharma v. Mahendra Pal (Crl. L. P. 559/2015).
40. It is clear from the above that the version of the complainant is
riddled with multiple inconsistencies and it cannot be said that his version has
stood on its own legs. Accordingly, the argument of the ld. counsel for the
accused that the version of the complainant is unreliable due to the grave
inconsistencies in it, is accepted.
41. To conclude concisely, the complainant has not been able to
affirm his version by any cogent evidence or witnesses. The version of the
complainant is also found to be not conforming with the prudent conduct
expected out of him, thereby reducing its weight. It is also riddled with many
inconsistencies. On the other hand, the accused has maintained a consistent
stand against the version of the complainant and has not taken any variation in
his version. The accused has denied the alleged loan by the complainant and
has brought forth arguments that raise the balance of probability in his favour
that his older cheque has been misused by the complainant. The accused has
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TANMAY BATHAM
BATHAM Date:
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raised probable defences in his favour that has successfully rebutted the
presumption raised against him with the conjoint reading of Section 118(a) of
the NI Act and Section 139 of NI Act. Therefore, the second ingredient is not
fulfilled in the present case.
CONCLUSION
42. To recapitulate the above discussion, the accused has been
successful in establishing a probable defence on a standard of preponderance
of probabilities to rebut the presumption under Section 118 and Section 139 of
NI Act by punching holes in the case of the complainant and making the version
of the complainant doubtful. Cogent evidence is required to be proved beyond
reasonable doubt to secure conviction in a criminal trial. As such, the
complainant has failed to prove the offence beyond reasonable doubt and the
accused has been able to raise a probable defence. Resultantly, the complaint
of the complainant Mr. Manpreet Singh Randhawa is dismissed and the accused
Mr. Satish Dhingra, is hereby acquitted of the offence of Section 138 of the
Negotiable Instruments Act, 1881. Digitally signed
by TANMAY
BATHAM
TANMAY Date:
ORDER: ACQUITTAL BATHAM 2026.05.18
17:29:46
+0530
Announced in the open court (TANMAY BATHAM)
on 18.05.2026. JMFC (NI ACT-03)
THC (West), Delhi
Certified that this judgment contains 25 pages and each page bears my signature.
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