Delhi District Court
Ms Zed Enterprises Pvt Ltd vs Naveen Kumar Gupta on 19 May, 2026
IN THE COURT OF MS. AAKANKSHA, JMFC-03, NORTH-
WEST DISTRICT, ROHINI COURTS, DELHI
Ct. Cases 14460/2016
M/s Zed Enterprises Pvt Ltd Vs.
Naveen Kumar Gupta
M/s Zed Enterprises Pvt. Ltd. .........Complainant
Through: Ms. Surbhi Chandra, Advocate
Versus
Naveen Kumar Gupta ..........Accused
Through: Sh. Inderpreet Singh, Advocate
(1) Name of the M/s Zed Enterprises Pvt.
complainant Ltd.
(2) Name of the accused Naveen Kumar Gupta
S/o Sh. Murari Lal Gupta
R/o H - 19/52, 3rd Floor,
Sector - 07, Rohini, Delhi
110085.
(3) Offence complained of Section 138 Negotiable
or proved Instruments Act, 1881
(4) Plea of accused Pleaded not guilty
(5) Date of institution of 05.10.2015
case
(6) Date of conclusion of 23.03.2026
Ct. Case No.14460/2016
M/s Zed Enterprises Pvt Ltd Vs. Naveen Kumar Gupta
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Digitally signed
by
AAKANKSHA
AAKANKSHA Date:
2026.05.19
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arguments
(7) Date of Final Order 19.05.2026 [Delay reason:
undersigned was on Child
Care Leave in the interim
period]
(8) Final Order ACQUITTAL
JUDGMENT
1. The complainant M/s Zed Enterprises Pvt. Ltd. has in-
stituted this complaint u/s 138 Negotiable Instruments Act, 1881
(hereinafter referred to as ‘NI Act‘) against accused Naveen Kumar
Gupta on 05.10.2015.
2. The factual matrix as can be culled out from the com-
plaint is that accused borrowed a total sum of Rs. 97,00,000/- from
complainant in April 2012 through various transactions. In dis-
charge of partial liability, accused issued cheque in issue bearing no.
000999 for a sum of Rs. 77,00,000/- drawn on HDFC Bank, Kas-
turba Gandhi Marg, Delhi, to complainant with promise of its en-
cashment on presentment. However, to the complainant’s dismay
the cheque in issue was returned unpaid with remarks “Payment
stopped by drawer” vide return memo dated 25.08.2015. The com-
plainant then issued a legal notice dated 11.09.2015 calling upon the
accused to pay the cheque amount within 15 days from the receipt
thereof, but the accused failed to make the payment thus constrain-
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AAKANKSHA
AAKANKSHA Date:
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ing the complainant to file this complaint u/s 138 Negotiable Instru-
ments Act, 1881 (hereinafter referred to as ‘NI Act‘) seeking redress
against the dishonor of the cheque in question.
3. With a view to establish a prima facie case in order to
enable the court to summon the accused, complainant, through its
Authorised Representative Mr. Kaushal Kumar, led pre-summoning
evidence by way of affidavit Ex. CW-1/A. The complainant relied
upon following documentary evidence:
(a) Copy of board resolution in favour of AR, which is Ex. CW-1/1.
(b) Original cheque bearing no. 000999 dated 22.08.2015 for a sum
of Rs. 77,00,000/- drawn on HDFC Bank, which is Ex. CW1/3.
(c) Return memo dated 25.08.2015, which is Ex. CW-1/4.
(d) Office copy of legal notice, which is Ex. CW-1/5.
(e) Postal receipts, which are Ex. CW-1/6.
(f) Tracking report, which is Ex.CW1/7.
Complainant closed its pre-summoning evidence on 07.10.2015.
4. On the basis of above material and finding a prima
facie case made out against the accused, the accused was summoned
vide order dated 07.10.2015. Accused entered his first appearance
on date fixed i.e. 05.01.2016.
5. Notice u/s 251 Cr.P.C. was framed against accused on
04.03.2016 stating out to him the substance of accusation, to which
he pleaded not guilty and claimed trial. His defence was recorded at
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the stage of framing of notice in compliance of directions passed by
Hon’ble High Court of Delhi in Rajesh Aggarwal v. State 171
(2010) DLT 51. The accused took defence that he did not take any
loan of Rs. 97,00,000/- from complainant, one Naresh Jain and
Anand Jain who are brothers are involved in the business of cash
trading and accommodation entries and they used to use his account,
they also took him forcefully and made him sign on 14 cheques in-
cluding the cheque in question. His complaint in pending before
EOW Cell. He did not fill any particulars in the cheque in question
and complainant company is non-existent company. He received
legal notice but did not send any reply to the same.
6. Accused was granted right to cross-examine the
complainant on an oral prayer made by accused u/s 145(2) NI Act
by accused vide order dated 04.03.2016. The AR of complainant
was examined as CW-1 thereby adopting his pre-summoning
evidence as post-summoning evidence and was duly cross-examined
and discharged. Vide separate statement of AR for the complainant,
complainant’s evidence was closed on 30.01.2017.
7. Statement of accused was recorded u/s 313 Cr.P.C. r/w
section 281 Cr.P.C. on 05.02.2018 wherein all the incriminating
evidence was put to the accused and he was granted an opportunity
to explain the circumstances appearing against him at trial. While
explaining the circumstances appearing in evidence against him, ac-
cused stated without oath that he did not take any loan from com-
plainant, he has taken accommodation entries against cash from CA
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AAKANKSHA Date:
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Naresh Jain and CA Anand Jain, both of whom are real brothers and
in the business of accommodation entries. He knows them since last
7 years and used to take accommodation entries from last 7 years
from their several shell and bogus companies, firms and individuals.
He has no liability as alleged by complainant. He was detained by
Anand Jain, Naresh Jain and some other associate on midnight of
22.03.2015 at the house of Naresh Jain situated at Sector-7 Rohini
and they forcefully took 14 undated cheques out of which some
cheques were partly filled and signed and some cheques were blank
having only his signature, thereafter he made a complaint as to
aforesaid incident. Further investigation was handed over to DIU
West and then to EOW Cell and FIR was registered in May 2016
vide FIR No. 69/2016 PS EOW u/s 342/380/384/385/
420/506/120B/34 IPC and the matter is pending before the Court.
Likewise the cheque in issue was not given by him for any kind of
liability but the cheque was taken forcefully as mentioned above. He
received legal demand notice but did not make payment as he has no
liability. Accused preferred to lead evidence in his defence.
8. At the stage of defence evidence, accused examined
Sethpal Lohat, Tax Assistant as DW-1, Ajay Kumar as DW-2,
Mohd. Nazir as DW-3 and himself as DW-4. Defence evidence
stood closed on 26.11.2022. Subsequently, DW-4 was recalled and
re-examined pursuant to application u/s 311 Cr.P.C. preferred on
behalf of accused. Defence evidence was again closed on
09.11.2023.
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AAKANKSHA Date:
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9. At the stage of final arguments, Ld. counsel for
complainant submitted that presumption u/s 139 NI Act has arisen
since signature on the cheque has been admitted by DW-4/accused
and thus accused has proved the case of complainant in his cross-
examination where he admitted receiving money in his bank
account from complainant but is stated to have repaid in cash to
Naresh and Anand without there being any reason since money was
received from account of complainant, accused also denied taking
any loan from complainant but voluntarily deposed having taken
accommodation entries, if accused approached complainant in 2014
then how can the transactions between the parties occur from 2009
to 2015. Thus, she prayed to convict the accused.
10. Per contra, Ld. counsel for accused filed written
arguments and prayed to acquit the accused on ground that firstly
the board resolution is defective, the complaint has been filed on the
basis of board resolution Ex. CW-1/1 by which Kaushal Kumar was
authorized but the board resolution does not bear any reference
number or date or details of case or proper title of case. The same is
signed by Manoj Kumar Gupta but complainant has failed to prove
how Manoj Kumar Gupta was authorized. The board resolution does
not bear signature of other directors, no DIA number is mentioned.
CW-1 himself admitted that board resolution should be signed by all
the directors. The affidavit of Kaushal Kumar relies upon Board
Resolution dated 10.09.2015 but Ex. CW-1/1 is dated 11.09.2015 so
the entire case of the complainant fails on this point alone. Further,
the defence of accused is that Rs. 97 lacs was accommodation entry.
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AAKANKSHA Date:
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Accused is in business of accommodation entry since 7-8 years with
Naresh and Anand. Complainant is a shell company through which
money was taken in account and then transferred. Complainant is a
bogus company and Manoj Kumar who signed the Board of
Resolution was a security guard which is proved from Ex. DW-4/A.10.1. It has been further contended by defence that the
complaint is vague where complainant alleges itself to be involved
in business of trading but fails to explain what trading was done by
the same. Rs. 97 lacs is a very big amount but complainant has
failed to prove the loan by any document or promissory note or
agreement or letter or message or bank transaction. No purpose has
been shown for which such a huge amount was allegedly taken by
accused, no security was taken, even CW-1 has no personal
knowledge of the transaction as admitted by him. CW-1 deposed
that these facts were narrated to him by Manoj so his evidence is
hearsay, as A C Narayan case is clear on this point that AR should
have complete knowledge of the facts. CW-1 admitted that they did
not bring any statement of account or ledger. Ex. CW-1/2 was the
only ledger relied upon by complainant and the same was also de-
exhibited. The cheque in issue was presented on 25.08.2015 and
complaint was made by accused that these cheques were robbed of
by him in April and June and FIR was registered at EOW.
10.2. Ld. defence counsel further submitted that when CW-1
was cross-examined, he was asked to depose the official address of
complainant which was stated as 312, Sant Nagar and his residence
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AAKANKSHA Date:
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as Sector-20 but from the same address multiple bogus companies
are being operated. CW-1 admitted that Naresh and Anand were
consultants of complainant company. Ex. DW-1/A starts with a
covering letter by which search and seizure under IT Act was
undertaken against Naresh and Anand and material were seized.
They both were in business of accommodation entries and Zed
Enterprises was a dummy company. 49 companies have been
mentioned in the said document and CW-1 named the companies in
his deposition which are part of this list. Even the address of
complainant company as deposed by CW-1 can be seen in this list
as address of few of these companies having common director
Manoj Kumar. This shows how Jain Brothers operates these
companies only on papers. It also mentions that Rs. 105 crore as
commission was earned by them. They did not dispute this fact but
paid the penalty so now they cannot come to this court claiming that
it was a loan. Income Tax Appellate Tribunal has passed an order
against complainant company giving them relief as Naresh and
Anand were penalized. However, the entries are bogus and therefore
not legally enforceable.
10.3. It has been further argued on behalf of defence that
seized ledger Ex. DW-1/C shows against complainant company a
sum of Rs. 15 lacs which credits and then goes back, similarly for a
sum of Rs. 25 Lacs, no RTGS details have been filed by
complainant. DW-3 brought on record account details of
complainant as Ex. DW-3/1 which shows that account was opened
on 09.01.2009 and no transaction ever was done through the same
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AAKANKSHA Date:
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and it was closed on 13.02.2010, then in which account was the
cheque in issue presented? CW-1 deposed that entries were
provided to accused but from which account? If that was true, no
cross-examination was conducted to prove any such entry. Ex.
DW-3/A also contains account opening form of complainant
company which reflects a phone number, which is proved to be that
of Naresh Jain by evidence of DW-2. Meaning thereby that the
account belongs to Naresh Jain. Whereas CW-1 deposed that Naresh
Jain was consultant of complainant company. Why would anyone
give number of consultant in the account opening form of the
company unless that person is operating the account of the
company. This proves that this is a paper company and is actually
operated by Jain brothers.
10.4. It is further argued by Ld. defence counsel that Ex.
DW-4/A is certified copy of charge-sheet in the FIR filed at behest
of accused. It mentions the fact that during course of investigations,
notices were sent and all of them were returned as no such company
was found running at the given addresses. When IO reached the said
address himself, the premises were found closed repeatedly and
director was found residing in servant quarter. Mallika Devi and
Rajeev stated Mallika is housemaid and never has been director of
any company and never signed any document but Anand Jain got
her to sign a document for closure of company. Her husband is
Rajeev who stated that he is chowkidar and other director Manoj
Kumar and Nirmal are stated to be working as guards and not
directors of any company. Even the IP address was matched to that
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of Naresh and Anand Jain. Further, the charge-sheet finds that they
were managing the post master to deliver the letters of these
companies to them. He further stated that his complaint was filed
much prior to the cheque in issue and therefore he instructed the
bank to stop the payment of the cheque. In view of above
arguments, the defence prayed to acquit the accused.
11. In rebuttal, Ld. counsel for complainant stated that in
statement of accused u/s 313 Cr.P.C., accused admitted paying cash
and source of the cash was unaccounted monetary transactions, that
he never returned the cash to complainant but returned the cash to
Naresh and Anand. The transaction occurred from ING Bank as per
the complaint, that DW-3 is irrelevant and there is no connection
with him.
12. After hearing the arguments advanced on behalf of both
the parties and perusing the record carefully, the appreciation of
evidence and findings of the court are as below.
13. It would be apposite to first consider the legal position
serving as base to the offence underlying Section 138 NI Act. The
following legal requirements need to be satisfied in order to consti-
tute an offence u/s 138 NI Act, as held by Hon’ble Supreme Court
in the case titled as Kusum Ingots & Alloys Ltd. v. M/s Pennar
Peterson Securities Ltd.: (2000) 2 SCC 745:
(i) that a person must have drawn a cheque on an account
maintained by him in a bank for payment of a certain amountCt. Case No.14460/2016
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AAKANKSHA Date:
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of money to another person from out of that account for the
discharge of any debt or other liability;
(ii) that the cheque has been presented to the bank within a
period of six months from the date on which it is drawn or
within the period of its validity whichever is earlier;
(iii) that the cheque is returned by the bank unpaid either be-
cause of the amount of money standing to the credit of the ac-
count is insufficient to honour the cheque or that it exceeds
the amount arranged to be paid from that account by an agree-
ment made with the bank;
(iv) that the payee or the holder in due course of the cheque
makes a demand for the payment of the said amount of money
by giving a notice in writing, to the drawer of the cheque,
within thirty days of the receipt of information by him from
the bank regarding the return of the cheque as unpaid;
(v) that the drawer of such cheque fails to make payment of
the said amount of money to the payee or the holder in due
course of the cheque within 15 days of the receipt of the said
notice;
The above legal requirements are cumulative, meaning
thereby that only if all the aforementioned ingredients are satisfied
can the person who had drawn the cheque be held liable for offence
u/s 138 NI Act.
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AAKANKSHA Date:
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14. Burden of proof: The claim based under the provisions
of Negotiable Instruments Act is an exception to the general rule of
law that burden of proof lies on the prosecution. The two specific
provisions viz. Section 118 (a) and 139 of NI Act contemplates that
a presumption is attached in regard to each and every negotiable in-
strument that the same was drawn and issued against due discharge
of the liability and thus, whenever any claim is made on the basis of
a negotiable instrument, the presumption has to be drawn in favour
of the holder of the cheque (drawee) and the law has put the burden
to rebut the presumption on the accused that the cheque was not is-
sued by him against discharge of a debt or a liability. In case, the ac-
cused is not able to rebut the presumption and fails to prove his de-
fence, the presumption becomes absolute and it has to be assumed
that the cheque was issued by the accused in discharge of debt or
liability and consequently, accused is assumed guilty of the offence.
It was held by Hon’ble Supreme Court in the case of Rangappa v.
Mohan: 2010 (11) SCC 441 that presumption of Section 139 of N.I.
Act also includes the existence of legally enforceable debt:
14. In light of these extracts, we are in agreement with the re-
spondent claimant that the presumption mandated by Section 139
of the Act does indeed include the existence of a legally enforce-
able debt or liability.
Hon’ble Supreme Court, in the case of Hiten P. Dalal v.
Bratindranath Banerjee: 2001 (6) SCC 16 held that the presumption
mentioned in the section 139 NI Act is a presumption of law and not
a presumption of fact and thus, this presumption has to be drawn in
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AAKANKSHA Date:
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favour of the drawee and the burden to rebut the presumption with
the probable defence is on the accused.
This is indeed an instance of the rule of ‘reverse onus’,
where it is incumbent on the accused to lead what can be called
‘negative evidence’ i.e. to lead evidence to show non-existence of
liability. Keeping in view that this is a departure from the cardinal
rule of ‘presumption of innocence’ in favour of the accused and that
negative evidence is not easy to be led by its very nature, it is now
settled that the accused can displace this presumption on a scale of
preponderance of probabilities and the lack of consideration or a
legally enforceable debt need not be proved to the hilt or beyond all
reasonable doubts. The accused can either prove that the liability did
not exist or make the non-existence of liability so probable that a
reasonable person, ought under the circumstances of the case, act on
the supposition that it does not exist. He can do so either by leading
own evidence in his defence or even by punching holes in the case
of the complainant in the testing ordeal of cross-examination. This
can be deciphered from relevant para no.21 of Hiten P. Dalal
(supra):
21. In other words, provided the facts required to form the basis
of a presumption of law exist, no discretion is left with the Court
but to draw the statutory conclusion, but this does not preclude
the person against whom the presumption is drawn from rebut-
ting it and proving the contrary. A fact is said to be proved when,
“after considering the matters before it, the Court either believes
it to exist, or considers its existence so probable that a prudent
man ought, under the circumstances of the particular case, to act
upon the supposition that it exists”. Therefore, the rebuttal does
not have to be conclusively established but such evidence must
be adduced before the Court in support of the defence that the
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Court must either believe the defence to exist or consider its ex-
istence to be reasonably probable, the standard of reasonability
being that of the ‘prudent man’.
Further, in Bharat Barrel v. Drum Manufacturing: AIR
1999 SC 1008 Hon’ble Supreme Court held that the accused has to
rebut the presumption and mere denial of passing of consideration is
no defence. It is, thus, clear that in cases of Section 138 NI Act,
upon proof of foundational facts, law presumes in favour of drawee
that the cheque was issued by the accused in discharge, wholly or in
part, of legally enforceable debt or liability and the burden to rebut
the same is upon the accused. The burden does not have to be con-
clusively established but the accused has to prove his defence on
preponderance of probability.
15. Now applying the above law to the facts of the present
case, it has to be adjudged whether the legal requirements laid down
hereinabove have been fulfilled in the instant case.
15.1. The first legal requirement is:
“A person must have drawn a cheque on an account maintained
by him in a bank for payment of a certain amount of money to
another person from out of that account for the discharge of any
debt or other liability.”
At the outset, it has to be proved that the accused had
issued the cheque in question on his account maintained with a bank
for discharge of any debt or other liability. In the instant case, ac-
cused has admitted his signatures on the cheque in question in his
statement recorded u/s 313 Cr.P.C. and in notice framed u/s 251
Cr.P.C. The cheque in question has also been drawn on the account
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maintained by accused with HDFC Bank. The said fact has never
been denied by accused at any stage of the proceeding.
It was held in the case of Kalamani Tex & anr. v. P.
Balasubramanian: 2021 SCC Online SC 75 Hon’ble Supreme Court
held that:
“14. Adverting to the case in hand, we find on a plain reading
of its judgment that the trial court completely overlooked the
provisions and failed to appreciate the statutory presumption
drawn under Section 118 and Section 139 of NI Act. The
statute mandates that once the signature(s) of an accused on
the cheque/negotiable instrument are established, then these
‘reverse onus’ clauses become operative. In such a situation,
the obligation shifts upon the accused to discharge the pre-
sumption imposed upon him.”
The above said principle has also been crystallized by Hon’ble Su-
preme Court in the case of Basalingappa v. Mudibasappa: (2019) 5
SCC 418, by observing that:
“25. We having noticed the ratio laid down by this Court in
above cases on Sections 118(a) and 139, we now summarize
the principles enumerated by this Court in following manner:
(i) 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.
(ii) The presumption under Section 139 is a rebuttable pre-
sumption and the onus is on the accused to raise the probable
defence. The standard of proof for rebutting the presumption
is that of preponderance of probabilities.
(iii) To rebut the presumption, it is open for the accused to
rely on evidence led by him or accused can also rely on the
materials submitted by the complainant in order to raise a
probable defence. Inference of preponderance of probabilit-
ies can be drawn not only from the materials brought on re-
cord by the parties but also by reference to the circumstances
upon which they rely.
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(iv) 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.
(v) It is not necessary for the accused to come in the witness
box to support his defence.”
15.2. In the instant case, the accused having admitted his sig-
nature on the cheque in question and the said cheque being drawn
on his own bank account, a mandatory presumption automatically
arises in favour of complainant by virtue of Section 118(a) r/w 139
NI Act that the cheque in question was issued by him in discharge
of, whole or part of, legally enforceable debt or case liability.
15.3. To prove his case, AR of the complainant examined
himself as CW-1 thereby relying upon the cheque in question claim-
ing it to have been issued by accused in discharge of his legal liabil-
ity, towards complainant qua borrowed sum of Rs. 97,00,000/-. The
crucial extract from his cross-examination is reproduced herein be-
low:
“I used to visit the complainant company at 312, Sant Nagar,
East of Kailash, New Delhi on regular basis since 2012. The dir-
ectors of complainant company are namely Manoj Kumar and
Devi Charan…I used to do accounting work of the complainant
company from the address of the company and since February,
2015 I am doing the accounting work from my home. I stay at
151, 1st floor, pocket 13, Sector-20, Rohini, Delhi. It is correct
that M/s 3rd Generation Traders Pvt. Ltd. has its office at 151, 1 st
floor, pocket 13, Sector 20, Rohini, Delhi. I know Saurabh
Mishra. It is correct that Saurabh Mishra used to work at M/s 3 rd
Generation Traders Pvt. Ltd. as a field worker. It is correct that
rent agreement of M/s 3rd Generation Traders Pvt. Ltd. is in the
name of Saurabh Mishra. There was no income tax raid on com-
plainant company i.e. M/s Zed Enterprises. Vol. The raid was
conducted by the Income Tax Authorities at the premises of
Naresh Jain and Anand Jain who are the consultants of Zed Enter-
prises and it is because of this the Income Tax Authorities alsoCt. Case No.14460/2016
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visited our premises at 151, 1st floor Pocket 13, Sector 20, Rohini,
Delhi in connection to the same. It is wrong to suggest that in the
aforesaid visit of the Income Tax Authorities I told the Income
Tax Authorities that I am the employee of Naresh Jain…It is cor-
rect that I worked with companies i.e. Danodia Impex, Danodia
consultants, Nine corporates, M3M Traders, CVH Sea lives, Zed
Enterprises, Sunshine and Gomti Consultants. In some of the
aforesaid companies, Sh. Manoj Kumar is the Director. It is cor-
rect that some of the companies has its corporate office at 333A,
IInd floor, Sant Nagar, East of Kailash, New Delhi. It is correct
that aforesaid property at 333A, IInd floor, Sant Nagar, East of
Kailash, New Delhi belongs to Naresh Jain…
The accused has taken loan amount of Rs. 97 lakhs from Zed En-
terprises on various dates through RTGS/Cheque. The above
mentioned money was given to the accused person through bank
transaction. I do not remember the details of the transaction on
which the loan amount was given to the accused by the complain-
ant. Vol. The same is available with me in the record. I do not
know as to for what purpose the accused has taken loan from the
complainant. Vol. it is a relation between the director of the com-
plainant company namely Manoj Kumar and the accused. The
accused was not having any business transaction with the com-
plainant. Only loan was granted to the accused by the complain-
ant. No security was taken from the accused against the loan. I
am not aware as to whether the accused has approached the com-
plainant for taking loan or whether the complainant has offered
the loan to the accused. Vol. There was no such meeting in my
presence. I am not having any personal knowledge of the transac-
tions between the complainant and the accused. Vol. I was told
about the same by Manoj Kumar who was the Director of the
complainant company. All the facts mentioned in the complaint
and evidence affidavit has been told to me by the Director of the
complainant namely Manoj Kumar…Business of the company is
trading of Educational books. It is wrong to suggest that the ad-
dress of the company i.e. 312, LGF, Sant Nagar, East of Kailash,
Delhi-110065 is a fake address and both the Directors namely
Manoj Kumar and Devi Charan are fake and are working as peon
in Defence Colony, New Delhi. It is wrong to suggest that all the
transactions and all the bank accounts of the complainant com-
pany is being handled by Sh. Naresh Jain. It is wrong to suggest
that all the addresses in the bank, the e-mail address, mobile num-
bers are of Naresh Jain. The cheque in question was…not given
in my presence. I do not know who has filled the particulars of
the cheque in question…I do not know who handles the online
affairs of the complainant company. I have given account details
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Ex. CW-1/2 to the accused. I have not filed certificate u/s 65B of
the Evidence Act alongwith the document Ex. CW-1/2…
It is wrong to suggest that Naresh Jain has created many dummy
and proxy companies by making various employees and clients as
Directors…It is further wrong to suggest that only on the asking
of Naresh Jain I have filed the present complaint against the ac-
cused as various litigations are pending between the accused
Naveen Gupta and Naresh Jain in different forums.”
15.4. Accused has also examined himself as DW-4 and three
other formal witnesses to prove his defence that no such loan was
ever borrowed by him, complainant company is non-existent com-
pany and his account was used by one Naresh Jain and Anand Jain
for accommodation entries and when he came to know that the Jain
Brothers were involved in illegal cash trading and accommodation
entries using shell companies, they forcefully made him sign 14
cheques including the cheque in question on the pretext of accused
causing them huge loss. Now let us try to examine the defence of
accused one at a time.
15.5. Whether complaint is liable to dismissed on account of
it not being filed by authorized person?
15.5.1. Ld. counsel for accused has challenged the board
resolution Ex. CW-1/1 contending that the complaint has been filed
on the basis of board resolution by which Sh. Kaushal Kumar was
authorized but the board resolution does not bear any reference
number or date or details of case or proper title of the case. The
same is signed by Manoj Kumar Gupta but complainant has failed
to prove how Manoj Kumar Gupta was authorized. The board
resolution does not bear signature of other directors, no DIA number
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is mentioned. CW-1 himself admitted that board resolution should
be signed by all the directors. The affidavit of Kaushal Kumar relies
upon Board Resolution dated 10.09.2015 but Ex. CW-1/1 is dated
11.09.2015 so the entire case of the complainant fails on this point
alone. Even CW-1 has no personal knowledge of the transaction as
admitted by him. CW-1 deposed that these facts were narrated to
him by Manoj so his evidence is hearsay, as A.C. Narayanan v.
State of Maharashtra AIR 2014 SC 630 is clear on this point that
AR should have complete knowledge of the facts. To the contrary,
no rebuttal arguments came forth on the above aspect by
complainant.
15.5.2. Section 142 of the Negotiable Instruments Act provides
that a complaint under Section 138 can be made by the payee or the
holder in due course of the said cheque [M/S M. M. T. C. Ltd. &
anr. v. M/S Medchl Chemicals & Pharma P. Ltd: AIR 2002 SC
182]. Further, in the case of Associated Cement Co. Ltd. v.
Keshvanand: (1998) 1 SCC 687, it has been held by Hon’ble Apex
Court that the complainant has to be a corporeal person who is cap-
able of making a physical appearance in the court. It has been held
that if a complaint is made in the name of a incorporeal person (like
a company or corporation) it is necessary that a natural person rep-
resents such juristic person in the court. It is held that the court
looks upon the natural person to be the complainant for all practical
purposes. When the complainant is a body corporate it is the de jure
complainant, and it must necessarily associate a human being as de
facto complainant to represent the former in court proceedings. It
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has further been held that no Magistrate shall insist that the particu-
lar person, whose statement was taken on oath at the first instance,
alone can continue to represent the company till the end of the pro-
ceedings. It has been held that there may be occasions when differ-
ent persons can represent the company. It is open to the de jure com-
plainant company to seek permission of the court for sending any
other person to represent the company in the court. Thus, even pre-
suming, that initially there was no authority, still the Company can,
at any stage, rectify that defect. At a subsequent stage the Company
can send a person who is competent to represent the company.
15.5.3. Answering the issue ‘Whether specific averments as to
the knowledge of the Power of Attorney holder in the impugned
transaction must be explicitly asserted in the complaint?’ Hon’ble
Apex Court in the case of A.C. Narayanan v. State of Maharasthra:
AIR 2014 SC 630 while discussing the divergent views of different
High Courts on the said aspect, conclusively held as follows:
“23) In the light of the discussion, we are of the view that the
power of attorney holder may be allowed to file, appear and
depose for the purpose of issue of process for the offence
punishable under Section 138 of the N.I. Act. An exception to the
above is when the power of attorney holder of the complainant
does not have a personal knowledge about the transactions then
he cannot be examined. However, where the attorney holder of
the complainant is in charge of the business of the complainant-
payee and the attorney holder alone is personally aware of the
transactions, there is no reason why the attorney holder cannot
depose as a witness. Nevertheless, an explicit assertion as to the
knowledge of the Power of Attorney holder about the transaction
in question must be specified in the complaint. On this count, the
fourth question [If the Power of Attorney holder fails to assert
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explicitly his knowledge in the complaint then can the Power of
Attorney holder verify the complaint on oath on such presumption of
knowledge?] becomes infructuous.”
15.5.4. The present complaint has been filed with title “M/s
ZED Enterprises Pvt. Ltd. v. Sh. Naveen Kumar Gupta”. The
present complaint has not been filed through any natural person.
The same is evident from the memo of parties and from the
verification clause of the complaint. Only an accompanying
affidavit of Mr. Kaushal Kumar being authorized to represent the
complainant, has been filed stating that he is conversant with the
facts and circumstances of the case. It is settled law that if a
complaint is made in the name of a incorporeal person (like a
company or corporation) it is necessary that a natural person
represents such juristic person in the court [Associated Cement Co.
Ltd. (supra)]. Further, it is settled law that when the power of
attorney holder of the complainant does not have a personal
knowledge about the transactions then he cannot be examined and
nevertheless, an explicit assertion as to the knowledge of the Power
of Attorney holder about the transaction in question must be
specified in the complaint [A.C. Narayanan (supra)]. No such
explicit averment finds mention in the entire complaint. Be that as it
may, CW-1 has himself admitted during the course of his cross-
examination that he has no personal knowledge of the facts and all
the facts that he has deposed were narrated to him by Manoj Kumar.
Thus, evidence of CW-1 is merely hearsay. Also, AR without
knowledge cannot prove the transaction his testimony, thus,
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becomes merely formal and lacks evidentiary value and thus
inadmissible.
15.5.5. Further, with respect to the contention put forth by Ld.
Defence counsel as regards the defective board of resolution. In the
opinion of this Court, every power of attorney or authority letter for
an authorised representative to pursue a legal case does not
necessarily need to be signed by all the directors. However, such
authorisation shall be backed by a Board Resolution passed at a
validly held board meeting. Meaning thereby, an authority to file
legal proceedings must stem from a valid Board of Directors
resolution or a formal power of attorney. The letter of authority
itself is usually signed by one or more directors or the company
secretary, specifically authorized by that resolution to do so. A
director cannot unilaterally authorize any person to institute or file a
case on behalf of the company unless explicitly conferred by the
company’s board of directors through a valid resolution or legal
instrument as held in Mangulal Chunilal v. Manilal Maganlal 1967
0 Supreme (SC) 339.
15.5.6. In the case at hand, the AR claims to have derived his
authority to represent the complainant company before the Court,
from board of resolution dated 10.09.2015 in his affidavit, whereas
board of resolution Ex.CW-1/1 is in fact dated 11.09.2015. Further,
when cross-examined, CW-1 admitted the fact that such board of
resolution was not signed by all the board of directors and was only
signed by one director viz. Mr. Manoj Kumar. That Manoj Kumar,Ct. Case No.14460/2016
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has already been interrogated in FIR No.69/2016 PS EOW (Ex.
DW-4/A) with finding that he was merely a security guard and has
never been director of any company, which fact has remained
uncontroverted during the cross-examination. As observed above,
CW-1 failed to place on record any valid resolution by which Manoj
Kumar was competent to unilaterally authorize Kaushal Kumar to
represent complainant company and depose on its behalf before the
Court. Therefore, for this reason also, the testimony of CW-1
becomes inadmissible.
15.6. Whether complainant company is a bogus company and
its director merely a security guard/peon?
15.6.1. Ld. counsel for accused contended that complainant is a
shell company through which money was taken in account and then
transferred. Complainant is a bogus company and Manoj Kumar
who signed the Board of Resolution was a security guard which is
proved from Ex. DW-4/A. The complaint is vague where
complainant alleges itself to be involved in business of trading but
fails to explain what trading was done by the same. When CW-1
was cross-examined, he was asked to depose the official address of
complainant which was stated as 312, Sant Nagar and his residence
as Sector-20 but from the same address multiple bogus companies
are being operated. CW-1 admitted that Naresh and Anand were
consultants of complainant company. Ex. DW-1/A starts with a
covering letter by which search and seizure under IT Act was
undertaken against Naresh and Anand and material were seized.
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They both were in business of accommodation entries and ZED
Enterprises was a dummy company. 49 companies have been
mentioned in the said document and CW-1 named the companies in
his deposition which are part of this list. Even the address of
complainant company as deposed by CW-1 can be seen in this list
as address of few of these companies having common director
Manoj Kumar. This shows how Jain Brothers operates these
companies only on papers.
15.6.2. No rebuttal on the above contention came forth from
the prosecution side. No cross-examination was conducted on this
point by the complainant except the fact that accused is unable to
provide any proof that Naresh Jain and Anand Jain are owners of the
complainant company.
15.6.3. To prove his above contention, accused examined
himself as DW-4 and deposed that :
“I am engaged in the business of trading of share and commodity
market from last 20 years and during course of my business, I
came into contact of Sh. Naresh Jain and Anand Jain both real
brothers and they requested to hire my services as agent for their
share trading and accommodation entries business in
companies/firms/ individuals. I worked for them as agent for 5-6
years. Naresh Jain and Anand Jain approached me in the year
2014 with proposal of partnership with them in trading business
of share and commodities for which trading was to be done by me
from my account in Prrsar and finances were to be provided by
above said Jain Brothers. While working with them, I came to
know that within a short period of time the above mentioned Jain
Brothers have established a vast business empire through illicit
means and they were involved in illegal business of investing
black money into share market to convert the same into white
money. The above said Jain Brothers had also opened several
fictitious companies in the name of their family members andCt. Case No.14460/2016
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employees thereby creating multiple fictitious transactions in the
account of aforesaid companies, all of which was an eye wash to
evade tax liabilities. Both Naresh Jain and Anand Jain were also
involved insider trading and had developed the method of tax
evasion for its clients, thereby clients were made to invest in
certain share/companies which were certain to make losses, so the
financial books of the above said companies would show losses
which would provide their client tax remittance. However, the
entire invested amount was returned to the client by the Jain
Brothers through back channel in cash as entire transactions were
bogus in nature. They used to charge 10% of entire invested
amount as their fees. Initially I was not aware about the
malpractices which were carried out by the Jain Brothers as I was
engaged by them merely to carry out cash transactions for them
with other share traders and was given responsibility of
transferring cash. As most of the transactions carried out by me
were mostly done through cash therefore I requested the above
said Jain Brothers to issue proper receipt in support of the above
said transactions which were duly issued by them to me through
their official mail ID i.e. [email protected] to my
official mail ID…and by hand also…They became apprehensive
of me and planned a deep rooted conspiracy to silence me. They
in pre-planned manner created a circumstance where it was
conveyed to me that because of me they have suffered huge
losses in partnership business upon which they started putting
pressure upon me to pay them Rs. 5 crores which they falsely
claimed to have invested in my partnership business. However,
the said persons had no receipt that the said amount was ever
bestowed upon me nor any such amount was given to me by
them…On 20.03.2015 I was approached by Naresh Jain and
Anand Jain at my house along with 2-3 unknown persons and
they threatened and extorted me that either give Rs. 5 crores
within two days or I have to face serious consequences. They
threatened me that till 22.03.2015 if I had not arranged the
amount and paid it to them, then they would send their goons to
settle the matter once and for all. Further, one of the unknown
person accompanied with Jain Brothers took out the pistol and
threatened me with the same…Naresh Jain further stated that I
have come to their house along with my cheque book on
22.03.2015 and in case I fail I have to face the consequences.
After the above mentioned incident, I was very scared and
keeping in view the safety of myself and my family I went to the
house of Jain Brothers at about 12:00 midnight as per their
instructions and after arriving I called Naresh Jain on his mobile
number 9811150222 and requested them to settle the matter andCt. Case No.14460/2016
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they directed me to come inside. At their house both Jain
Brothers were present along with Rekha Jain and 3-4 unknown
person who were also present along with Naresh Jain and Anand
Jain on 20th March 2015 as well at my house. Anand Jain
demanded my cheque book and I requested him not to destroy my
life, however, at my request both the brothers started abusing me
and threatening me…Anand Jain approached me and snatched
my cheque book from my pocket and asked me to sign the same
when I refused to sign the same Naresh Jain caught hold of my
collar and said “sign to tereko karna padega” and they also
slapped me multiple times. I was held captive by them for hours
during which I was forced to sign on 14 without dated cheques
worth approx.. 5 crores in the name of the different companies
and firm and also in the name of different persons. That only after
I signed the aforesaid cheque under fear of my life the accused
persons allowed me to leave their house….I filed a complaint
against Naresh Jain and Anand Jain through email through ACP
Delhi on 09.04.2015 and thereafter to other police officials on
16.04.2015 but no action was taken upon the said complaints.
Finally upon detailed complaint dated 15.06.2015 given by me at
PS North Rohini, FIR bearing no. 69/16 u/s
342/380/384/385/420/120B/3 IPC was registered at PS Economic
Offence Wing (EOW).”
15.6.4. Accused was not cross-examined with respect to the
entire incident as alleged by him in his examination in chief. Rather,
his cross-examination has been limited only to the extent of
receiving a sum of Rs. 97 lakhs from complainant and DW-4
consistently deposed that he did not borrow any such loan but had
taken accommodation entries from Naresh Jain and Anand Jain
during 2009 to 2015 for different firms/companies/individuals,
money was received in his account from complainant company on
various occasions and he returned the same in cash to Naresh Jain
and Anand Jain, that he does not know anything about complainant
company and has returned the amounts to Naresh Jain and Anand
Jain, that he does not know if Naresh Jain and Anand Jain are
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directors of the complainant company, the source of his cash were
unaccounted monetary transactions, that he used to earn money
through liasoning, share broking and share trading and he has never
returned any money to complainant company but only to Naresh
Jain and Anand Jain.
15.6.5. The main point of contention of Ld. counsel for
complainant has been that since the alleged loan was borrowed by
accused from complainant company and no sum thereof was
returned in the account of complainant company, accused is liable to
be convicted in the present complaint. Whereas accused has pleaded
that he does not know anything about complainant company, he was
engaged by Naresh Jain and Anand Jain for trading from his account
where finance was to be provided by Jain Brothers who were
involved in accommodation entries and share trading through
several bogus companies/firms and individuals and whatever
amount he received in his bank account for trading, was returned in
cash to Naresh Jain and Anand Jain. Accused further alleged that
when Jain Brothers got skeptical of accused knowing their illegal
transactions, they hatched a conspiracy to get rid of him and falsely
accused him of causing them huge loss to the tune of Rs. 5 crore and
extorted cheques worth Rs. 5 crores from him on gun point.
Accused filed a complaint against them thereby accusing them in
FIR No. 69/16 PS EOW Ex. DW-4/A (colly.).
15.6.6. Although accused has admitted receiving of some
money from the account of complainant company, that in itself
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cannot be a ground to confirm the allegations of complainant that
accused borrowed a sum of Rs. 97 lakhs from complainant in
discharge of which he issued the cheque in question. More
particularly, in view of the detailed defence taken by accused
denying having borrowed any loan from complainant company and
as to the manner in which the cheque in question was extorted from
him by Naresh Jain and Anand Jain for the accommodation entries
provided to him. To prove his allegations, accused has also relied
upon testimony of DW-2 Nodal Officer, Bharti Airtel Ltd. who
placed on record change request form of mobile number
9818045781 which is in the name of Naresh Jain (Ex DW-2/1) and
testimony of DW-3 Manager of Kotak Mahindra Bank who placed
on record bank account details of complainant company Ex.
DW-3/1 (colly.). The account opening form forming part of Ex.
DW-3/1(colly.) discloses the phone number of complainant
company as 9818045781 but directors as Sankar Giri and Arvind
Singh. Comparing the said phone number with the phone number
mentioned in Ex. DW-2/1, it is clear that the said phone number
belongs to Naresh Jain. When CW-1 was questioned about the
relation of Naresh Jain with complainant company, he deposed that-
“…The raid was conducted by the Income Tax Authorities at the
premises of Naresh Jain and Anand Jain who are the consultants
of Zed Enterprises… It is wrong to suggest that all the
transactions and all the bank accounts of the complainant
company is being handled by Sh. Naresh Jain. It is wrong to
suggest that all the addresses in the bank, the e-mail address,
mobile numbers are of Naresh Jain…It is wrong to suggest that
Naresh Jain has created many dummy and proxy companies by
making various employees and clients as Directors…It is further
wrong to suggest that only on the asking of Naresh Jain I have
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filed the present complaint against the accused as various
litigations are pending between the accused Naveen Gupta and
Naresh Jain in different forums.”
15.6.7. Thus, according to AR for the complainant company,
Naresh Jain is merely a consultant of complainant company and
does not handle the entire transactions of the complainant company.
DW-2 or DW-3 were not cross-examined by the prosecution
regarding the said documents. In such circumstances, the Court
finds force in the arguments of defence that there is no reasonable
cause as to why the phone number of a consultant (Naresh Jain)
would be registered with the complainant company, unless he
(Naresh Jain) is operating such company or has close nexus to the
operations of such company apart from being merely a consultant. It
is astonishing that despite levelling such allegations, Naresh Jain
was not examined by the complainant.
15.6.8. To further strengthen his defence, accused relied upon
testimony of DW-1 Tax Assistant who placed on record documents
Ex. DW-1/A, Ex. DW-1/B and Ex. DW-1/C. No cross-examination
on the said documents was conducted by the prosecution yet again.
Ex. DW-1/A is covering letter regarding search and seizure
conducted at the premises of Naresh Jain and Anand Jain u/s 132 IT
Act 1961 on 17.12.2015 from which it was found that both of them
were engaged in the business of providing accommodation entries to
various beneficiaries through various dummy/paper companies
including M/s ZED Enterprises Pvt. Ltd controlled and managed by
the said Jain Brothers to provide accommodation entries to various
beneficiaries in lieu of cash received by them and after relating the
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cash money from one company to the other and so on. The bank
accounts of these dummy/paper companies were also managed and
controlled by the Jain Brothers. As per the said letter of Income Tax
Authority, the biggest evidence of the activity of the Jain Brothers
as accommodation entry providers through these bogus
companies/firms was found in the hard disc at the residence of Ms.
Surbhi Chandra (advocate) who is an employee of Jain Brothers. It
would be apposite to note that the same advocate is representing the
complainant company in the present case. Also, as per the said
letter, another biggest evidence of it was found in hard disc of
computer installed at residence of Kaushal Kumar who is employee
of Jain Brothers. It would be again important to note that Kaushal
Kumar claims himself to be the authorized representative of
complainant company in the present case and examined himself as
CW-1 wherein he denied being employed by Jain Brothers. As per
the letter, the data found in the computer of Kaushal Kumar detailed
out the amounts rotated in cash and through banks and was being
used by Jain Brothers to keep track of accommodation entries
rotated by them through various companies and firms controlled by
them.
15.6.9. The letter further spells out names and addresses of the
shell companies. Such list includes the name of complainant
company. It would be further apposite to note that a careful
examination of the list of shell companies of Jain Brothers would
reflect that from one common address, many companies were being
apparently run. This includes the address of 312, Sant Nagar, East of
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Kailash, New Delhi-65 from which complainant company along
with Zen Tradex Pvt. Ltd, Zeus Impex Pvt. Ltd. were being
ostensibly run. When CW-1 was questioned regarding another
address, he deposed that- “It is correct that some of the companies
has its corporate office at 333A, IInd floor, Sant Nagar, East of
Kailash, New Delhi. It is correct that aforesaid property at 333A,
IInd floor, Sant Nagar, East of Kailash, New Delhi belongs to
Naresh Jain.” From the list of shell companies annexed with Ex.
DW-1/A, it can be deciphered that at the same address, Como
Infosolutions P. Ltd, CVH Sea Lifes Ltd., Ganesha Investments,
Gomti Consultants Pvt. Ltd., Keshav Trading Co., Mafle Industries
Pvt. Ltd., Mahadev Investments, Mahalaxmi Trading Co., Nine
Corporate Inceptions Pvt. Ltd., Pragaya Multitraders Pvt. Ltd.,
Jemini Trading Co., Subhlabh Traders and Subhadra Securities were
ostensibly run, which makes it highly suspicious.
15.6.10. The letter Ex. DW-1/A further states that assessment
u/s 153A/143(3) was completed in case of Naresh Jain and total
accommodation provided by him was determined at Rs. 5253 crore
on which he earned commission @ 2% which was determined at Rs.
105 crore. Naresh Jain even appealed before Commissioner of
Income Tax (Appeals) and vide order dated 26.12.2018 substantial
relief was given in respect of gross turnover from Rs. 5253 crore to
Rs. 1988 crore and in respect of charging commission from 2% to
1.04% i.e. Rs. 21 crore. Similarly, assessment was completed with
respect to Anand Kumar Jain and he provided accommodation
entries which were determined at Rs. 1924 crore upon which his
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earned commission was determined at Rs. 38 crore. In his appeal, he
was given substantial relief in respect of gross turnover from Rs.
1924 crore to Rs. 187 crore and in respect of charging commission
from 2% to 1.04% i.e. Rs. 1.95 crore. The letter further states that
since assessment proceedings in case of M/s ZED Enterprises Pvt.
Ltd. which is a shell/paper company of Jain group was completed
the same is being treated as unexplained entries and added to
income of assessee as its income from undisclosed sources u/s 68 IT
Act and information has been sent to AO concerned for taking
appropriate action.
15.6.11. It is equally necessary to point out that the above
proceedings before Income Tax Authority has classified the
complainant company as one of the bogus/paper companies being
run by Jain Brothers who have been found to provide
accommodation entries to several beneficiaries through such shell
companies and their income from such companies have been
classified as income from undisclosed sources, at the same time
prosecution has chosen not to cross-examine the above witness on
the above letter and proceedings held before Income Tax Authority.
Nor did the complainant examine Naresh Jain or Anand Jain despite
accused cross-examining CW-1 extensively on the role played by
the Jain Brothers and relying upon the documents Ex. DW-1/1, Ex.
DW-1/2, Ex. DW-1/3, Ex. DW-2/1, Ex. DW-3/1. In fact, the said
Jain Brothers have also obtained substantial relief with respect to
determination of their commission earned on such accommodation
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entries by preferring appeal before Commissioner of Income Tax
(Appeals).
15.6.12. Further, Ex. DW-4/A is certified copy of charge-sheet
filed in FIR No.69/2016 PS EOW against Naresh Jain and Anand
Jain in the complaint initiated by accused qua the above shell
companies and illegal transactions undertaken by the Jain Brothers.
A perusal of the investigation undertaken in the said FIR would only
strengthen the allegations levelled by the defence in this case. The
investigation spells out how notices sent out to such shell companies
operated by Jain Brothers were returned back unserved with report
that no such company or firm are running from given addresses;
how robbed of cheques were used to initiate separate complaints u/s
138 NI Act through such shell companies; that when the office of
one of such company namely Nine Corporate Inceptions Pvt. Ltd.
was visited as it also filed a case against present accused u/s 138 NI
Act, the premises were closed and its directors Mallika Devi and
Rajeev Singh were found residing in the servant quarters of the said
address of the company. Upon interrogation, they revealed that
Mallika Devi works as a housemaid for last 7-8 years and has never
been director of any company and known persons of her husband
i.e. Sandeep Dhingra, Naresh Jain and Anand Jain formed this
company, she never signed any document for opening of the
company and Anand Jain got her signature for closure of said
company. Her husband Rajeev Singh stated that he is chowkidar and
caretaker for last 30 years and was not director of any company. The
other directors namely Manoj Kumar (stated to be director of
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present complainant company) and Nirmal Singh were also
examined who stated that they were working as security guard and
have never been director of any company. They were unknown
about any money transaction with Naveen Kumar Gupta (present
accused) and filing of complaint u/s 138 NI Act. During
investigation, houses of other directors were also found fake.
15.6.13. Although filing of mere charge-sheet does not prove the
allegations levelled therein, but the detailed investigation
undertaken thereby certainly substantiates the defence raised in this
case, particularly in absence of any proof of loan or otherwise filed
by complainant and more particularly in light of burden of proof
existing on accused to prove his defence which is mere
preponderance of probabilities. Thus, in view of the above
proceedings and appeal by Income Tax authorities, the investigation
undertaken by EOW Cell, the failure of prosecution in cross-
examining the accused on such aspect and its failure to examine
Naresh Jain and Anand Jain and even Manoj Kumar, in turn makes
the defence raised by accused more probable that complainant
company being a shell company was in fact controlled by the Jain
Brothers and provided accommodation entries in lieu of cash
transactions and that Manoj Kumar is not the director of
complainant company but is a security guard.
15.7. Whether complaint is liable to be dismissed for want of
a legally recoverable amount of Rs. 97 lakhs?
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15.7.1. Ld. counsel for accused submitted that complainant is a
shell company through which money was taken in account and then
transferred and Manoj Kumar who signed the Board of Resolution
was a security guard which is proved from Ex. DW-1/A and Ex.
DW-4/A. Rs. 97 lacs is a very big amount but complainant has
failed to prove the loan by any document or promissory note or
agreement or letter or message or bank transaction. No purpose has
been shown for which such a huge amount was allegedly taken by
accused, no security was taken. CW-1 admitted that they did not
bring any statement of account or ledger. Ex. CW-1/2 was the only
ledger relied upon by complainant and the same was also de-
exhibited. Ex. DW-1/A shows how Jain Brothers operated shell
companies. It also mentions that Rs. 105 crore as commission was
earned by them and even in appeal they did not dispute this fact but
paid the penalty so now they cannot come to this court claiming that
it was a loan. The entries are bogus and therefore not legally
enforceable.
15.7.2. As discussed hereinabove in para no. 15.6.13., the
documents relied upon by accused viz. Ex. DW-1/A and
Ex.DW-4/A holds primacy when no proof of alleged loan has been
filed on record by complainant despite such cross-examination. It
makes defence probable that complainant company is only a shell
company controlled by Naresh Jain and Anand Jain who were
engaged in providing accommodation entries and trade entries to
several beneficiaries through several shell/paper companies
including the complainant company. Accused has taken defence that
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he did not borrow any loan from complainant company but obtained
accommodation entry from Naresh Jain and Anand Jain and it was
paid back to Jain Brothers in cash. Upon being cross-examined,
accused/DW-4 deposed that money has been received in his account
from complainant company on various occasions but he does not
remember the exact amount received, whatever amount was
received was paid back in cash to Naresh Jain and Anand Jain, that
he does not know anything about complainant company and had
returned the amount only to Naresh Jain and Anand Jain, he has
verified ledger account sent by Anand Jain and Naresh Jain by hand
and by e-mail. He further deposed in his examination pursuant to
order u/s 311 Cr.P.C. that Naresh Jain used to send day to day cash
settlement entries against the accommodation entries of different
shell companies run by Naresh Jain and his brother Anand Jain from
their email id i.e. [email protected] and
[email protected] to his email id which are Ex.
DW-4/B(colly.).
15.7.3. The accused was merely cross-examined to suggest that
none of these emails were directly sent to him by complainant
company and that he has no proof to show that Jain Brothers were
owners of complainant company. However, the document Ex.
DW-1/1 is sufficient enough, for the purpose of this case, to prove
that complainant company was in fact run by Jain Brothers. The e-
mails Ex. DW-4/B (colly.) contains ledger account, purported to be
sent from [email protected] and
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[email protected]. The prosecution has not even
fleetingly denied the said emails. The ledger accounts contained in
the emails placed on record reflects transactions between accused
and ZE (which accused claims to be ZED Enterprises and the same
was not denied during the course of final arguments). Even the
ledger account placed on record by Tax Assistant vide Ex. DW-1/B
shows that cash entries were also received from Naveen Kumar
Gupta (accused) by ‘Jain’. None of the said entries or email have
been disputed by the prosecution at all during cross-examination of
the defence witnesses. In fact, despite cross-examining CW-1 at
length on this isse, he has failed to place on record any document
whatsoever to prove that loan of Rs. 97 lakhs was in fact extended
to the accused, which only goes to prove the defence raised by
accused.
15.7.4. Now, keeping in view the fact that prosecution has
failed to deny such cash entries and accommodation entries at all,
the Court has no reason not to believe the probability of the defence
that the accused did not borrow loan of Rs. 97 lakhs from
complainant, but acquired accommodation entries from Naresh Jain
and Anand Jain through their bogus company viz. complainant
company and then filed this case on the basis of extorted cheque in
question. Furthermore, despite Naresh Jain and Anand Jain filing an
appeal against the order of Income Tax Authorities qua such
accommodation entries, they were given substantial relief and were
penalized thereby classifying the commission earned by them fromCt. Case No.14460/2016
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such accommodation entries as income from undisclosed sources.
This further strengthens the defence that such accommodation
entries provided to accused cannot be now claimed as money
transacted towards loan. Also, any accommodation entry is a sham
transaction recorded in the books of account to convert unaccounted
black money into legitimate income via shell companies and thus,
cannot be said to be a legally enforceable debt.
15.8. In such a scenario, where accused has been able to raise
a probable defence in his favour, the burden now shifts on the
complainant to prove that the loan as alleged was, in fact extended
to accused and such burden is to be discharged not on
preponderance of probabilities but has to be discharged beyond all
reasonable doubts. However, in the present case, despite cross-
examining CW-1, CW-1 failed to place on record any document,
any account statement whatsoever to prove that a loan of such a
huge sum of Rs. 97 lakhs was extended to accused. CW-1 deposed
that-
“The accused has taken loan amount of Rs. 97 lakhs from Zed
Enterprises on various dates through RTGS/Cheque. The above
mentioned money was given to the accused person through bank
transaction. I do not remember the details of the transaction on which
the loan amount was given to the accused by the complainant. Vol. The
same is available with me in the record. I do not know as to for what
purpose the accused has taken loan from the complainant. Vol. It is a
relation between the director of the complainant company namely
Manoj Kumar and the accused. The accused was not having any
business transaction with the complainant. Only loan was granted to the
accused by the complainant. No security was taken from the accused
against the loan. I am not aware as to whether the accused has
approached the complainant for taking loan or whether the complainant
has offered the loan to the accused. Vol. There was no such meeting inCt. Case No.14460/2016
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my presence. I am not having any personal knowledge of the
transactions between the complainant and the accused. Vol. I was told
about the same by Manoj Kumar who was the Director of the
complainant company. All the facts mentioned in the complaint and
evidence affidavit has been told to me by the Director of the
complainant namely Manoj Kumar…”
15.9. From the above extract of the cross-examination of
CW-1, it is clear that accused did not have any business transaction
with complainant company and only the present loan of a huge sum
of Rs. 97 lakhs was granted to accused from account maintained by
complainant company, that too without any security and without
execution of any loan document, which creates a serious doubt over
the authenticity of the transaction. As per CW-1/AR of complainant
company, such loan transaction was executed in pursuance to
relationship between accused and director of complainant
company/Manoj Kumar. It surprises the Court that complainant
company claims having extended a whooping sum of Rs. 97 lakhs to
accused without any proof of the same in the form of any document
or even security. Despite questioning CW-1, he failed to place on
record any bank account statement proving such advancement of
loan. The argument advanced by Ld. counsel for complainant that
accused has admitted receiving amount from complainant company,
is in itself insufficient to discharge the onus casted upon
complainant to prove the factum of advancement of loan, especially
when accused/DW-4 did not admit the loan or even the exact
amount received from complainant towards cash accommodation
entries. Moreover, the argument of Ld. counsel for complainant
relying upon the testimony of accused in admitting receiving some
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amounts from bank account of complainant towards cash
accommodation entries, would only amount to complainant
admitting the defence of accused that such amounts, if any, were
transferred to accused only towards accommodation of cash. Any
accommodation entry is a sham transaction recorded in the books of
account to convert unaccounted black money into legitimate income
via shell companies and thus, cannot be said to be a legally
enforceable debt. Further, the complainant failed to examine the so
called director of complainant company Mr. Manoj Kumar to prove
any such loan transaction. Thus, complainant has failed to discharge
the onus casted upon it to prove its case beyond reasonable doubt.
15.10. In such circumstances, going by the above
observations, it can be safely held that complainant has failed to
prove his case that the cheque in question was issued under
signatures of accused towards a legally enforceable debt owed by
accused to complainant company.
The first legal requirement is, thus, proved in favour of
accused and against the complainant.
16. The second legal requirement is:
“That cheque has been presented to the bank within a period of
six months from the date on which it is drawn or within the
period of its validity whichever is earlier.”
The cheque in question Ex. CW-1/3 is dated
22.08.2015. The cheque returning memo Ex. CW-1/4 is dated
25.08.2015, which proves that the cheque in question was presented
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within the period of its validity. Further, defence has failed to con-
trovert the said fact.
Thus, the second legal requirement is adjudicated in fa-
vour of complainant.
17. The third legal requirement is:
“That cheque is returned by the bank unpaid, either because of
the amount of money standing to the credit of the account is in-
sufficient to honour the cheque or that it exceeds the amount ar-
ranged to be paid from that account by an agreement made with
the bank.”
Section 146 NI Act presumes the fact of dishonour of
cheque upon production of bank’s slip or memo having the official
mark denoting that the cheque in question has been dishonoured.
This is also a rebuttable presumption and the upon production of
such bank memo, the burden shifts upon accused to disprove the
same.
It was held in Laxmi Dyechem v. State of Gujarat: (2012) 13 SCC
375 that:
“15. … We find ourselves in respectful agreement with the de-
cision in NEPC Micon Ltd. (supra) that the expression “amount
of money ………. is insufficient” appearing in Section 138 of
the Act [NI ACT] is a genus and dishonour for reasons such “as
account closed”, “payment stopped”, “referred to the drawer” are
only species of that genus. Just as dishonour of a cheque on the
ground that the account has been closed is a dishonour falling in
the first contingency referred to in Section 138, so also dishonour
on the ground that the “signatures do not match” or that the “im-
age is not found”, which too implies that the specimen signatures
do not match the signatures on the cheque would constitute a dis-
honour within the meaning of Section 138 of the Act.”
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In the instant case, a presumption has been raised in favour of
complainant by virtue of Section 146 NI Act that the cheque in
question was dishonored for the reason stated therein viz. payment
stopped by drawer. As held in Laxmi Dyechem (supra) dishonour of
cheque with the remarks “payment stopped by drawer” also fall
within the offence u/s 138 NI Act and therefore, the burden now
shifts upon the accused to rebut this presumption by establishing
some reasonable justification for the same. But the accused has
admitted his signature on the cheque in question.
Thus, the third legal requirement is adjudicated in fa-
vour of complainant.
18. The fourth legal requirement is:
“The payee or the holder in due course of the cheque makes a
demand for the payment of the said amount of money by giving
a notice in writing, to the drawer of the cheque, within thirty
days of the receipt of information by him from the bank regard-
ing the return of the cheque as unpaid.”
In the instant case, the cheque in issue was returned dis-
honoured on 25.08.2015. The complainant sent a legal notice dated
11.09.2015 (Ex. CW-1/5) addressed to the accused. Speed post re-
ceipt dated 11.09.2015 (Ex. CW-1/6) proves that the legal notice
was sent within the prescribed period.
Thus, the fourth legal requirement is adjudicated in favour of
complainant.
19. The fifth legal requirement is:
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“The drawer of such cheque fails to make payment of the said
amount of money to the payee or the holder in due course of the
cheque within 15 days of the receipt of the said notice.”
Accused has admitted the factum of receipt of legal
notice in his plea of defence recorded u/s 251 Cr.P.C. However, it is
an undisputed fact and also a matter of record that the accused has
failed to make the payment till date let alone making payment
within 15 days of receipt of notice.
Thus, the fifth legal requirement is adjudicated in fa-
vour of complainant.
20. All the legal requirements constituting an offence u/s
138 NI Act being cumulative in nature, the fact that the first legal
requirement has not been proved in favour of complainant, the in-
gredients necessary to bring home the guilt of accused remain in-
complete. Accordingly, accused Naveen Kumar Gupta S/o Sh. Mur-
ari Lal Gupta is held ‘not guilty’ and is thus acquitted for the alleged
offence u/s 138 NI Act.
Announced in the open Digitally signed
by
court on 19th May 2026. AAKANKSHA
AAKANKSHA
Date:
2026.05.19
04:52:52 +0530
[AAKANKSHA]
Judicial Magistrate First Class-03(North-West)/
Rohini/Delhi
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