Delhi District Court
Mukesh Kumar vs Rajesh Kashyap on 12 June, 2026
IN THE COURT OF SH. HARSHAL NEGI, JMFC (MCD), EAST DISTRICT,
KARKARDOOMA COURTS, DELHI
Ct. Case No. 1635/2018
Mukesh Kumar Vs. Rajesh Kashyap
MUKESH KUMAR .........Complainant
Through: Sh. Abhishek Vashisth , Advocate
Versus
RAJESH KASHYAP ..........Accused
Through: Sh. Dayanand Sharma, Advocate
(1) Name of the complainant Mukesh Kumar
(2) Name of the accused Rajesh Kashyap
(3) Offence complained of or Section 138 Negotiable Instruments
proved Act, 1881
(4) Plea of accused Pleaded not guilty
(5) Date of institution of case 19.04.2018
(6) Date of conclusion of 15.05.2026
arguments
(7) Date of Final Order 12.06.2026
(8) Final Order ACQUITTAL
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HARSHAL
HARSHAL NEGI
NEGI Date:
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Brief Facts
1. The complainant Mukesh Kumar has instituted this complaint u/s 138
Negotiable Instruments Act, 1881 (hereinafter referred to as ‘NI Act‘)
against accused Rajesh Kashyap.
2. The complainant alleges that the accused approached to him in the
second week of November 2016 to arrange Rs 2, 50,000/- as friendly
loan for marriage of his son. The Complainant gave Rs 2, 50,000/- to
the accused on 29.11.2016. It is further the case of the complainant
that in April 2017 he visited the accused and demanded his amount and
accused gave him the assurance that he would return the loan amount
so advanced. That in September 2017 the complainant again visited the
accused for return of his amount to which the accused issued three
cheques bearing no 150534 of Rs. 1, 00,000 dated 05.03.2018, 072240
dated 05.03.2018 of Rs 1,00,000/- and 072241 dated 05.03.2018 of Rs
50,000/-, all drawn on IDBI Bank, Mayur Vihar, Phase I, Delhi. The
complainant presented the all the three cheques which were returned
with the remarks “Insufficient Funds” vide bank return memos dated
08.03.2018. Thereafter, complainant served a legal notice dated
15.03.2018 upon the accused through his counsel demanding the said
amount. Despite service of aforesaid notice, neither any reply was sent
nor was the money repaid by the accused. Thereafter, complainant has
filed the present complaint case.
Material on Record
3. The accused entered appearance on 19.07.2019. Notice under Section
251 CRPC dated 03.12.2019 was framed accordingly to which the
accused pleaded not guilty and claimed trial. In his Notice under
Section 251 CRPC the accused stated that he had not given the cheques
to the complainant. His cheques were lost. That the cheques pertain to
his account. That the particulars of the cheques except the signature are
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not in his handwriting. He further stated that he does not remember
whether he received the legal notice.
4. The Complainant relied on the following documents:
a. Original three Cheque in question Ex CW 1/1, Ex CW1/2, Ex
CW1/3.
b. Original returning memos Ex CW 1/4, Ex CW1/5, Ex CW 1/6.
c. Copy of Legal Notice Ex CW 1/7.
d. Original postal receipts Ex CW 1/8.
e. Delivery Report Ex CW 1/9.
f. ITR of Assessment year 2017-2018 and Tax Audit report, Ex
CW1/10 and Ex CW 1/11, respectively.
Complainant Evidence
5. The complainant adopted his pre-summoning evidence as his post
summoning evidence and was called for cross examination under
Section 145(2) NI Act on 05.11.2022. The complainant in his cross
examination dated 05.11.2022 stated thus: “I resided at R/o Flat No.
707, 6th floor, Plot no. 24, Technology Apartment, I.P. Extention, East
Delhi-92 from 2013 to 2019. My wife is aware of the loan advanced in
the present case. My wife has also advance a loan of Rs. 4.5 lacs to the
accused regarding which other case is pending. I also had another house
at 4/139, Trilokpuri, Delhi-91. The same was sold in 2017. Accused
came at my Trilokpuri house for demand of loan. I do not remember
the exact date when accused came at my home, it was roughly in
November, 2016. vol. He told me that he needed the money for
marriage of his son. Accused alone came at my house at the time of
demanding of loan. At that time my wife was also present at home. I
do not remember the exact date when I gave the accused, the loan
amount. Same was given at house somewhere in December, 2016. Loan
was given in cash. At that time only my wife was present. I do not know
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if I mentioned that loan was given in cash in my complaint and
affidavit. Money was arranged from my own savings. I showed the
advancement of loan in my ITR. I can produce my ITR and bank
passbook for the relevant time.”
6. The complainant was further cross examined on 27.10.2023 wherein
he stated thus: “Today I have brought the copy of ITR for the
assessment year 2017-2018. Same is Mark CW1/10 ( colly 3 pages). I
also brought copy of Tax Audit Report of Sharp Protective Services
Private Limited. Same is Mark CW1/11 ( colly 25 pages) It is correct
that I have not shown the amount of alleged loan given to the accused
in my documents Mark CW1/10 and Mark CW1/11. It is wrong to
suggest that I have not shown the loan amount in my document Mark
CW1/10 and Mark CW1/11 as I never gave any loan amount to
accused. The accused is running a confectionery/sweets shop. I do not
know whether the accused is residing in rented accommodation and
running confectionery shop in rented premises. Vol. The accused has
stated to me that he is residing in his own house. I do not remember
that the date when the accused has stated to me that he was residing in
his own house. It is correct that I used to buy the sweets from the shop
of the accused. I had bought the sweets from the accused shop for about
6-7 years. It is correct that no outsider was present when the alleged
loan was advanced by me to the accused. Vol. My wife was present. I
did not withdraw any amount from the bank or borrowed any amount
from my friend/relatives so as to give the same to the accused. I was
having Rs. 2 lacs to 3 lacs when the alleged loan was given to the
accused. The loan was advanced 15-20 days prior to the marriage of
son of accused. It is correct that I had attended the reception ceremony
of son of the accused. The reception of the son of the accused was
solemnized in the month of December 2016-2017. Again said 2016. I
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do not remember whether the marriage of the son of the accused was
solemnized on 01-02-2017 and reception was solemnized on 07-02-
2017. The loan was advanced in cash two currency notes of Rs. 500/-
and Rs. 1000/-. I do not remember as to how many notes of Rs. 500/-
and how many notes of Rs. 1000/-.”
7. In his further cross examination dated 27.03.2025, the complainant
stated thus: “I had given Rs.2.5 lakhs to the accused as loan. The said
amount was given by me to the accused at my home and my wife Smt.
Sujata Rani was present at that time.
Q. How much amount your wife Smt. Sujata Rani had given to
the accused as loan?
Ans. My wife Smt. Sujata Rani had given a sum of Rs.4.5 Lakhs
to the accused as a loan.
I do not remember the date as to when my wife had given the alleged
loan amount of Rs.4.5 lakhs to the accused, but the said amount was
given in my presence. The accused had given the cheques to me but I
do not remember the date of handing over of the said cheques. The
accused had given one cheque of Rs.2.5 lakhs along with two other
cheques, whose amount I do not know. The said cheques were given in
presence of my wife. Only aforementioned three cheques were given
by the accused to me, which includes the cheques given to my wife. I
do not remember, who had filled the said cheques. I myself had
presented the said cheques to the bank. I do not remember the dates
when I had presented the cheques in question for clearance. It is wrong
to suggest that the cheques were not presented in the bank and the
documents Ex.CW1/4, Ex.CW1/5 and Ex.CW1/6 are forged and
fabricated.
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HARSHAL
HARSHAL NEGI
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I had presented the cheques, given to my wife, for clearance into the
bank. The cheques in question as well as cheques given to my wife by
the accused were presented into bank for clearance on the one and same
day. I had approached the accused after issuance of legal notice, but I
do not remember the date as to when I approached him. There was no
specific reason of getting the three cheques rather than one. It is correct
that I used to buy sweets etc from shop of the accused. The accused had
demanded a sum of Rs.5 lakhs from me somewhere in
November/December, 2016 at my home and I had given a sum of Rs.
4.5 lakhs to him in presence of my wife. The accused had come alone
to receive the amount of Rs.4.5 lakh from me and at that time my wife
was also present. My wife had paid a sum of Rs.1.5 lakhs to the accused
through banking transaction, but I had not made any payment to the
accused through banking transaction. I am not aware whether the
accused is residing in the rented accommodation. I am also not aware
whether the accused is running his sweets shop in rented premises. But
he told me that he owns the shop. It is correct that I have not filed any
bank deposit slip with regard to the cheque in question. It is wrong to
suggest that the accused is not liable to make any payment to me as he
has not taken any loan as alleged in my complaint. It is further wrong
to suggest that I had stolen the cheques from the shop of the accused
while my visitations as I had good relations with him and misused the
same. It is further wrong to suggest that I have filed the present
complaint with a view to extort money from the accused. It is further
wrong to suggest that a sum of Rs.1,50,000/- given to the accused by
my wife through banking transaction through cheque No. 136836 was
against the account of sweets purchased by me and my wife. It is further
wrong to suggest that I had never advanced any loan to the accused at
any point of time. It is wrong to suggest that I had approached the
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accused after issuance of legal notice. It is wrong to suggest that I am
deposing falsely.”
8. The complainant closed his evidence on 21.07.2025.
Statement of Accused/Defence Evidence
9. The statement of the accused under Section 313 Crpc was taken in
writing on 19.01.2026 and all the incriminating evidences were put to
him. In his statement the accused stated that
10. The accused opted not to lead any defence evidence. Thus, defence
evidence was closed on 19.01.2026.
11. Arguments adduced by Ld Counsels of both the parties have been
heard. Evidences and documents on record perused carefully.
Law Point
12. Before analyzing the material on record, it is imperative to set forth the
legal benchmark which governs the adjudication of cases under Section
138 NI Act. A bare reading of Section 138 NI Act reveals that in
addition to the cheque being issued for the discharge, in whole or in
part, of any debt or other liability; following are the ingredients which
constitute an offence:-
1. that a person drew a cheque on an account maintained by him with
the banker;
2. that such a cheque when presented to the bank is returned by the
bank unpaid;
3. that such a cheque was presented to the bank within a period of six
months from the date it was drawn or within the period of its validity
whichever is earlier;
4. that the payee demanded in writing from the drawer of the cheque
the payment of the amount of money due under the cheque to payee;
and
5. such a notice of payment is made within a period of 30 days from
the date of the receipt of the information by the payee from the bank
regarding the return of the cheque as unpaid.
(Para 26, N. Harihara Krishnan vs J. Thomas, (2018) 13 SCC 663,
referred to in Himanshu vs B. Shivamurthy (2019) 3 SCC 797)
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13. Section 138 is to be read with the presumption, being a rebuttable
presumption, as contained in Section 139. Section 139 provides that:
“Presumption in favour of holder – It shall be presumed, unless the
contrary is proved, that the holder of a cheque received the cheque
of the nature referred to in Section 138 for the discharge, in whole or
in part, of any debt or other liability.”
14. Thus, in cheque bouncing cases, the judicial scrutiny revolves around
the satisfaction of ingredients enumerated under Section 138 NI Act
and if so, whether the accused was able to rebut the statutory
presumption contemplated by Section 139 NI Act. Section 139 is an
example of reverse onus clause which usually imposes an evidentiary
burden and not a persuasive burden. In other words, Evidence of a
character, not to prove a fact affirmatively, but to lead evidence to show
non-existence of a liability. Further the law is well settled that when
an accused has to rebut the presumption under Section 139, the
standard of proof of doing so is that of “preponderance of probability”
(Rangappa vs Sri Mohan (2010) 11 SCC 441). Once execution of
cheque is admitted, it is a legal presumption under Section 139 of
Negotiable Instrument Act, the cheque was issued for discharging
legally enforceable debt.
15. Attention is also invited to Section 118(a) wherein a presumption of the
cheque having been issued in discharge of a legally sustainable liability
and drawn for good consideration, arises. Section 118 of the N.I Act
provides:-
“Presumptions as to negotiable instruments: Until the contrary is
proved, the following presumptions shall be made: (a) of
consideration – that every negotiable instrument was made or drawn
for consideration, and that every such instrument, when it has been
accepted, indorsed, negotiated or transferred was accepted,
indorsed, negotiated or transferred for consideration;”
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16. Hence, it can be seen that from its very inception a presumption that
the cheque was issued in discharge of a debt or other liability subsists
in favour of the Complainant and onus rests upon the accused to rebut
the existing presumption on the touchstone of preponderance of
probability.
17. Further, the accused in a trial under Section 138 has two options. He
can either show that consideration and debt did not exist or that under
the particular circumstances of the case the non-existence of
consideration and debt is so probable that a prudent man ought to
suppose that no consideration and debt existed
(Para 20, Kumar Exports vs Sharma Carpets (2009) 2 SCC 513).
Analysis & Conclusion
18. The judicial analysis at this stage is centered on whether the
complainant has been able to make out the ingredients of Section 138
NI Act. For convenience, before satisfying as to whether the
complainant has been able to establish that ” the cheque being issued
for the discharge, in whole or in part, of any debt or other liability”, let
us first examine whether the other ingredients of Section 138 NI Act
stand fulfilled.
First: that a person drew a cheque on an account maintained by him
with the banker; and that such a cheque when presented to the bank is
returned by the bank unpaid;
19. On the close scrutiny and appraisal of the original cheques Ex CW1/1,
Ex CW1/2 and Ex CW1/3, it clearly transpires that the same had been
issued as per the above details. Further, the cheques in question got
dishonored vide returning memos Ex CW1/4, Ex CW1/5 and Ex
CW1/6 with remarks “insufficient funds”. Thus, the ingredient i.e. that
a person drew a cheque on an account maintained by him with the
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banker; and that such a cheque when presented to the bank is returned
by the bank unpaid, stands fulfilled.
Second: that such a cheque was presented to the bank within a period
of six months from the date it was drawn or within the period of its
validity whichever is earlier;
20. On a co-joint reading of the cheques Ex CW 1/1, Ex CW1/2 and Ex
CW1/3 being drawn on 05.03.2018, return memos Ex CW1/4, Ex
CW1/5 and Ex CW1/6, it stands proved that “cheque was presented
to the bank within a period of six months from the date it was drawn”.
Third: that the payee demanded in writing from the drawer of the
cheque the payment of the amount of money due under the cheque to
payee; and such a notice of payment is made within a period of 30 days
from the date of the receipt of the information by the payee from the
bank regarding the return of the cheque as unpaid.
21. The Legal notice dated 15.03.2018 Ex. CW-1/7 further proves that the
same was issued on 15.03.2018 and dispatched vide postal receipt Ex.
CW-1/8. Now, the accused in his notice under Section 251 CRPC stated
that he do not remember whether he received any legal notice. On
perusal of the material on record, it transpires that the legal notice has
been dispatched on the same address which has been disclosed by the
accused himself in his bail bonds. Even otherwise, the Hon’ble
Supreme Court in K Bhaskaran vs Sankaran Vaidhyan Balan (1999) 7
SCC 510 in Para 18 observed thus:
“……’Giving Notice’ in the context is not the same as ‘receipt of
notice’. Giving is a process of which receipt is the
accomplishment. It is for the payee to perform the former process
i.e. Giving, by sending the notice to the drawer at the correct
address…..”
22. Further, in Para 24 of the above said judgment the Hon’ble Supreme
Court held that where the sender has dispatched the notice by post with
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correct address written on it, the principle incorporated in Section 27
of General Clauses Act could profitably be imported in such a case. It
was further held that in this situation service of notice is deemed to
have been effected on the sendee.
23. Law with respect to the delivery of legal notice by post and the
presumption with respect to the same has been succinctly put forth by
the Hon’ble Supreme Court in C C Alavi Haji vs Palapetty Muhammed
(2007) 6 SCC 555. Para 13 & 14 of the judgment is worth mentioning
as under:
“13. According to Section 114 of the Act, read with Illustration (f)
thereunder, when it appears to the Court that the common course of
business renders it probable that a thing would happen, the Court
may draw presumption that the thing would have happened, unless
there are circumstances in a particular case to show that the common
course of business was not followed. Thus, Section 114 enables the
Court to presume the existence of any fact which it thinks likely to
have happened, regard being had to the common course of natural
events, human conduct and public and private business in their
relation to the facts of the particular case. Consequently, the court
can presume that the common course of business has been
followed in particular cases. When applied to communications sent
by post, Section 114 enables the Court to presume that in the
common course of natural events, the communication would have
been delivered at the address of the addressee. But the presumption
that is raised under Section 27 of the G.C. Act is a far stronger
presumption. Further, while Section 114 of Evidence Act refers to
a general presumption, Section 27 refers to a specific presumption
14. Section 27 gives rise to a presumption that service of notice has
been effected when it is sent to the correct address by registered post.
In view of the said presumption, when stating that a notice has
been sent by registered post to the address of the drawer, it is
unnecessary to further aver in the complaint that in spite of the return
of the notice unserved, it is deemed to have been served or that the
addressee is deemed to have knowledge of the notice. Unless and
until the contrary is proved by the addressee, service of notice is
deemed to have been effected at the time at which the letter would
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24. Thus, in view of the law as above said and the fact that the address
mentioned by the accused in his bail bonds being the same address
which finds mention in the legal notice, the mandatory statutory legal
notice marked as Ex CW 1/7 is deemed to have been served on the
accused in the present case. Thus, the factum of issuance and receipt of
mandatory statutory legal notice also stands proved based on the
documentary evidence of legal notice, postal receipts. It has been also
proved that despite issuance of legal notice, the accused had failed to
make the payment of the cheque amount.
25. After analyzing the other ingredients of Section 138 NI Act, judicial
scrutiny now centers on as whether the complainant has to been able to
satisfy that:
“the cheque being issued for the discharge, in whole or in part, of any
debt or other liability”.
26. The matter of controversy in the present matter is that the accused
approached to him in the second week of November 2016 to arrange
Rs 2,50,000/- as friendly loan for marriage of his son. The Complainant
gave Rs 2, 50,000/- to the accused on 29.11.2016. It is further the case
of the complainant that in April 2017 he visited the accused and
demanded his amount and accused gave him the assurance that he
would return the loan amount so advanced. That in September 2017 the
complainant again visited the accused for return of his amount to which
the accused issued three cheques bearing no 150534 of Rs. 1, 00,000
dated 05.03.2018, 072240 dated 05.03.2018 of Rs 1,00,000/- and
072241 dated 05.03.2018 of Rs 50,000/-, all drawn on IDBI Bank,
Mayur Vihar, Phase I, Delhi. The complainant presented the all the
three cheques which were returned with the remarks “Insufficient
Funds” vide bank return memos dated 08.03.2018.
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27. The sum and substance of the defence raised by the accused is as
follows:
i. That he has not given the cheques in question to the
complainant
ii. That his cheques were lost.
iii. That he had not taken any loan from the complainant.
28. Now, during the final arguments the counsel for the accused centered
his arguments on a single contention. He stated that there never was
any debt or other liability including a legally enforceable debt in terms
of Section 138 NI Act. He stated, firstly, the complainant’s case is that
he advanced the loan in cash on 29.11.2016, and secondly, as per his
cross examination dated 27.10.2023 the complainant had stated that he
had given the loan amount in cash in two currency notes of Rs 500/-
and Rs 1,000/-. The counsel of the accused then argues that as per
Government of India, the Rs 500/- and Rs 1000/- denominations bank
notes issued by Reserve Bank of India had ceased to be a legal tender
with effect from November 09, 2016. He finally submitted that at the
time when the alleged loan was advanced by the accused
i.e.29.11.2016, the denominations of Rs 500/- and Rs 1000/- were not
legal tender and thereby there is no legally enforceable debt and even
if one presumes that an agreement of loan given in cash was in
existence between the parties, the same is void since the consideration
of the agreement was unlawful.
29. It is apposite at this juncture to note that the Central Government
through Ministry of Finance, on the recommendations of the Central
Board of the Reserve Bank, vide notification No. S.O. 3407 (E) dated
8th November,2016, which was exercised in furtherance of powers
conferred by sub-section (2) of Section 26 of the Reserve Bank of India
Act, 1934, declared the then existing series of the bank notes of the
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denominational value of Rs 500 and Rs 1000 to cease to be legal tender
with effect from 9th November 2016. The same was later introduced
through The Specified Bank Notes (Cessation of Liabilities) Ordinance
2016 dated 30.12.2016, which was later enacted as The Specified Bank
Notes (Cessation of Liabilities) Act 2017.
30. Now, Section 57 (1) of the Indian Evidence Act mandates that the Court
must take judicial notice of all laws in force in the territory of India.
The Supreme Court in Union of India vs Nihar Kanta AIR 1987 SC
1713 has also observed that judicial notice is to be taken by the Court
of Gazette Notifications issued by the Government.
31. The Madhya Bharat High Court in State vs Gopal Singh 1955 SCC
OnLine MP 140: AIR 1956 MB 138: 1956 Cri LJ 621 (FB) dealt in
detail with the question: “whether judicial notice of Government
notifications can be taken under Section 57 of the Evidence Act, and,
if so, of what notifications”. It was observed:
“5. Under Section 57 of the Evidence Act, the Court is required to
take judicial notice of the facts specified in cls. (1) to (13). Clause
(1) of S. 57, reads as follows:
“All laws in force in the territory of India”
7. The expression “all laws in force in the territory of India” has
not been defined in the Evidence Act or in the General Clauses
Act, 1897.
8. …But the following definitions of the terms, “law” and “existing
laws” given in the Constitution, though for the purposes of the
Constitution, have great relevancy here.
9. The term ‘existing law’ has been defined in Article 366(10) of the
Constitution thus: “‘Existing law’ means any Law, Ordinance,
Order, Bye-law, Rule or Regulation passed or made before the
commencement of this Constitution by any Legislature, Authority or
person having power to make such Law, Ordinance, Order, Bye-law,
Rule or Regulation.” It is pertinent to note that Article 372 of the
Constitution speaks of the continuance of “all the laws in force in the
territory of India”.
10. The Supreme Court has pointed out in ‘Edward Mills Co.
Ltd. v. State of Ajmer’, (S) AIR 1955 SC 25, that there is no material
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and “a law in force”; that the words “law in force” as used in Article
372 are wide enough to include not merely a legislative enactment
but also any regulation or order which has the force of law; that an
order must be a legislative and not an executive order before it can
come within the definition of law.
11. The question is whether a notification issued by Government or
by other competent authority is within the definition of law. Article
366(10) of the Constitution makes no mention of a notification.
12. But there can be no doubt that if a notification is a part of any
Act, Ordinance, or Order, it would be within the definition of law or
“existing law”. In his arguments, the learned Advocate-General
drew a distinction between notification issued by Government or by
competent authority in the exercise of the powers delegated by the
Legislature under an Act or Ordinance, and notifications issued by
such authority in the exercise of its executive functions and powers.
13. It was said that whereas the former class of notifications could
be regarded as part “of the law” and as such could be judicially
noticed under Section 57 of the Evidence Act, the latter category of
notifications was not a part of the law and required to be tendered in
evidence and proved according to the provisions of the Evidence
Act.
32. The High Court then went on to state that:
16 In my judgment, the contentions of the learned Advocate-General
are sound and must be accepted. This distinction for the purposes of
Section 57 of the Evidence Act, between an executive order and an
order made in the exercise of the power of legislation was
recognized in the case of ‘Pannalal v. The State‘, AIR 1953 Madh-
B 84, where adopting the reasoning of Bhagwati J. in
‘Shripad v. Hariddhbhai Divatia‘, AIR 1948 Bom 20 (J), the
following observations was made:
“Laws, Ordinance, Order, Bye-law, Rule, or Regulation, passed or
made at any time by any competent legislature, authority, or person
in India” mean legislative provision. The difference between Law,
Ordinance, Order, Bye-law, Rule or Regulation is based on the
difference between the authorities passing or making them.
In the strict sense of the word a law is made by the legislature; an
Ordinance is issued by the President, the Governor or the Raj
Pramukh as the case may be, an order is made by the competent
authority; a bye-law is passed by a statutory authority competent in
that behalf.
Again, rules and regulations have been defined in clauses 46 and
47 of Section 3 of the General Clauses Act. It is thus clear that the
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word ‘order’ is used Section 3 Clause (27A) of the General Clauses
Act, in the sense of a Legislative Order and not an executive order.”
33. The High Court after discussing relevant case laws answered the
question as under:
“That judicial notice can be taken of a notification issued by the
Government or any competent authority in the exercise of delegated
power of legislation; that judicial notice cannot be taken of a
notification issued by any authority in the exercise of its executive
functions….”
34. Reliance can also be placed on the authoritative pronouncement of the
Supreme Court in State of Bombay v. F.N. Balsara‘, AIR 1951 SC 318,
after which the question whether a notification issued by the
Government or any competent authority in the exercise of delegated
power of legislation can be judicially noticed, can admit of no argument
and it must be held that a notification is a part of the law itself and,
therefore, judicial notice of the notification can be taken under Section
57 of the Evidence Act.
35. Thus, in view of the above discussion, judicial notice is taken of the
fact that the Central Government, on the recommendations of the
Central Board of the Reserve Bank, vide notification No. S.O. 3407 (E)
dated 8th November,2016, which was exercised in furtherance of
powers conferred by sub-section (2) of Section 26 of the Reserve Bank
of India Act, 1934, declared the then existing series of the bank notes
of the denominational value of Rs500 and Rs 1000 to cease to be
legal tender with effect from 9th November 2016. Thus, the necessary
corollary is that from 9th November 2016, any transaction or a contract,
the consideration of which is carried out in cash with Rs 500/- and Rs
1000/- denomination notes, unless exempted, would be unlawful. It is
not the case of the complainant that the transaction in question falls
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within any exemption. signed by
HARSHAL
HARSHAL NEGI
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36. The question which then begs consideration is whether such an
agreement, oral or otherwise, between the parties, the consideration of
which is of such a nature that, if permitted, it would defeat the
provisions of any law, can give rise to legally enforceable contractual
obligations.
37. As discussed above, to sustain a prosecution u/s 138 of the Act, the
debt or liability should be legally enforceable. In other words, there
should be a lawful contract between the parties. A contract, is an
agreement that is enforceable by law (Section 2(h) of the Indian
Contract Act, 1872). As per Section 10 of the Indian Contract Act,
1872:
“10. What agreements are contracts.–All agreements are contracts if
they are made by the free consent of parties competent to contract,
for a lawful consideration and with a lawful object, and are not
hereby expressly declared to be void”
38. As to what objects are lawful, Section 23 of the Indian Contract Act,
reads as:-
“23. The consideration or object of an agreement is lawful, unless –
it is forbidden by law; or is of such a nature that, if permitted, it
would defeat the provisions of any law; or is fraudulent; or involves
or implies injury to the person or property of another; or the court
regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is
said to be unlawful. Every agreement of which the object or
consideration is unlawful is void.”
39. The words “defeat the provisions of any law” must be taken as limited
to defeating the intention which the legislature has expressed, or which
is necessarily implied from the express terms of the Act. It is unlawful
to contract to do that which it is unlawful to do. (Pollock & Mulla, The
Indian Contract Act 1872, 14th Edition). Now, Section 3 of The
Specified Bank Notes (Cessation of Liabilities) Act 2017 expressly
states that:
Digitally
signed by
HARSHAL
HARSHAL NEGI
NEGI Date:
2026.06.12
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“The specified bank notes which have ceased to be legal tender, in
view of the notification of the Government of India in the Ministry
of Finance, number S.O. 3407(E), dated the 8th November, 2016,
issued under sub-section (2) of section 26 of the Reserve Bank of
India Act, 1934, shall cease to be liabilities of the Reserve Bank
under section 34 and shall cease to have the guarantee of the Central
Government under sub-section (1) of section 26 of the said Act.”
40. Section 5 of The Specified Bank Notes (Cessation of Liabilities) Act
2017 stated that “On and from the appointed day, no person shall,
knowingly or voluntarily, hold, transfer or receive any specified bank
note”
41. If the amount advanced by the complainant on 12.11.2016 in cash in
the denomination of Rs 500/- and Rs 1000/- is to be taken to be a valid
consideration it would “defeat the provisions of law” i.e. notification
No. S.O. 3407 (E) dated 8th November, 2016 read in conjunction with
The Specified Bank Notes (Cessation of Liabilities) Ordinance 2016
dated 30.12.2016 and The Specified Bank Notes (Cessation of
Liabilities) Act 2017.
42. It is thus clear that at the given time i.e. 29.11.2016, entering into an
agreement with consideration in cash having denomination of Rs 500/-
and Rs 1000/- notes were clearly defeating the provisions of law. In
such circumstances, the consideration of the agreement cannot be said
to be lawful, as a result of which the agreement of which the
consideration is unlawful is therefore void ab initio. Since the
agreement is void ab initio, the benefit of Section 65 of Indian Contract
Act, 1872, also does not accrue to the complainant. Section 65 of the
Indian Contract Act, 1872, reads as follows: –
65. When an agreement is discovered be void or when a contract
becomes void, any person who has received any advantage under
such agreement or contract is bound to restore it, or to make
compensation for it, to the person from whom he received it.”
43. Thus, it is clear that Section 65 above is applicable only when
agreement is ‘discovered to be void’ or contract ‘becomes void’. The
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HARSHAL NEGI
NEGI Date:
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expressions “agreement” and “contract” have distinct meanings under
the Contract Act. An “agreement” becomes a “contract” only if it is
enforceable in law. Thus, the phrase “a contract becomes void”
appearing in the said Section 65 would not have any application in the
case where an agreement is void ab initio. It applies to cases, such as
of supervening impossibility due to which a contract becomes void or
a case where time is of the essence of the contract and one party fails
to keep up to the time obligation and the other party exercises the option
to rescind the contract. As regards the agreements which are
“discovered to be void”. This refers to those agreements which, the
contracting parties or one of them did not know, at the time of entering
into the agreement, to be not enforceable in law but, it was later
“discovered” by them or one of them as being void. However, in facts
and circumstances of present case the currency notes of Rs 500/- and
Rs 1000/- as on 29.11.2016, when the said amount was advanced in
cash, were not legal tender due to demonetization on 08.11.2016. Thus,
no recourse can be taken to the provisions of the said Section 65.
44. In light of above facts and circumstances, it is clear that the inherent
infirmities in the case of the complainant are sufficient to rebut the
presumption of legal liability. The accused also through the cross
examination of the complainant has been able to rebut the presumption
which existed in favour of the complainant on the touchstone of
preponderance of probabilities. As discussed above, the agreement,
oral or otherwise, between the complainant and the accused ran in
complete violation of notification No. S.O. 3407 (E) dated 8th
November, 2016 read in conjunction with The Specified Bank Notes
(Cessation of Liabilities) Ordinance 2016 dated 30.12.2016 and The
Specified Bank Notes (Cessation of Liabilities) Act 2017 and is legally
unenforceable. Thus, the complainant has failed to establish one of the
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by HARSHAL
NEGI
HARSHAL Date:
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fundamental ingredients of Section 138 of the Act, i.e. that the
dishonored cheques were issued in discharge of a legally recoverable
debt or liability.
45. In present matter, from the case of the complainant itself and also
through his cross examination, the presumptions under sections 118
and 139 of the Act stand rebutted and the reverse onus cast upon
accused has been discharged.
46. Accordingly, the accused Rajesh Kashyap S/o Sh. Badriprasad
Kashyap is acquitted of the offence under section 138 of the Act.
(Harshal Negi)
JMFC, MCD (East)
Karkardooma Courts/Delhi 12.06.2026
Digitally signed
by HARSHAL
NEGI
HARSHAL Date:
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