Satish Kumar v. State (Govt. NCT Delhi) & Anr.

12. There is no dispute that, to constitute an offence under Section 138 of the NI Act, the cheque in question must have been issued in discharge of a legally enforceable debt or liability. However, Section 139 of the NI Act provides that once the drawer admits his signature on the cheque, a statutory presumption arises that the cheque was issued for the discharge, in whole or in part, of a debt or other liability. Section 118 of the NI Act further lays down a presumption that every negotiable instrument, when held by a holder in due course, has been made or drawn for consideration. In addition, Section 20 of the NI Act stipulates that when a person signs and delivers a stamped but otherwise incomplete negotiable instrument, he thereby authorizes the holder to complete it for any amount not exceeding the value covered by the stamp. The scope and effect of these presumptions have been comprehensively explained by the Hon‟ble Supreme Court in Bir Singh v. Mukesh Kumar: (2019) 4 SCC 197, wherein it was observed: “33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.

34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.”

13. In the present case, the petitioner does not dispute his signatures on the cheques in question. The sole defence taken is that the cheques were not issued in discharge of any liability but were handed over for a different purpose. Consequently, the statutory presumptions under Sections 118 and 139 of the NI Act stand attracted against the petitioner. However, it is equally well settled that these presumptions are rebuttable. The accused may rebut them either by leading cogent evidence in support of his defence or by establishing such material inconsistencies or improbabilities in the complainant‟s version as to create a reasonable doubt regarding the existence of a legally enforceable debt or liability. The Hon‟ble Supreme Court in Oriental Bank of Commerce v. Prabodh Kumar Tewari: 2022 SCC OnLine SC 1089, has reiterated that once the drawer admits his signature on the cheque and the fact that it was handed over to the payee, a presumption arises that it was issued in discharge of a debt or liability. The burden then shifts to the drawer to rebut this presumption by adducing credible evidence. The relevant observation is as follows:

14. To appreciate the arguments raised before this Court, it shall be apposite to first examine the testimonies of the witnesses. From the testimony of CW-1, it emerges that she reiterated the version set out in her complaint and deposed regarding her long-standing acquaintance with the accused/petitioner and his family. She adopted her pre-summoning evidence as post-summoning evidence and maintained that the cheques in question were issued by the petitioner towards repayment of the friendly loan advanced to him. The key aspects of her deposition are as follows: (a) CW-1 stated that her current income was around ₹50,000– ₹60,000/- per month, and in 2015 she used to earn about ₹30,000/- per month. (b) She denied having received any legal notice dated 20.05.2016 from the accused or any reply to her statutory notice dated 29.11.2019.

(c) She deposed that she had known the accused for 10–12 years and was also acquainted with his second wife, Mrs. Gehna Gehlot, and their children, who often visited her house.

(d) CW-1 categorically denied that the details on the cheques or the signatures on the promissory notes were filled in or forged by her or her husband. (e) She stated that her husband is both a practising advocate and a property consultant, and denied that in 2015 he was engaged only in property dealings. (f) CW-1 further deposed that the cheques were not issued as security but were given towards repayment of the friendly loan. (g) She clarified that when the alleged notice dated 20.05.2016 (Mark A/DX-1) was sent to her husband, they were residing at Flat No. 1002, Gulmohar Apartments, Sector 11, Dwarka, and not at Flat No. 701, as mentioned in the notice. (h) She denied all suggestions put to her regarding misuse of the cheques or fabrication of documents.

15. As noted above, once the petitioner admitted his signatures on the cheques in question, the statutory presumptions under Sections 118 and 139 of the NI Act stood attracted against him. It was, therefore, incumbent upon the petitioner to rebut these presumptions by leading cogent and credible evidence to show that the cheques were not issued in discharge of any legally enforceable debt or liability. In his examination-in-chief, DW-1 (petitioner) reiterated his defence that the cheques in question were not issued towards repayment of any loan but were handed over blank to the complainant‟s husband for a property transaction. The essential portions of his testimony are as under: (a) DW-1 stated that he had known the complainant‟s husband, Rajan Mahajan, since around 2010–11, and that he worked as a property dealer through whom he had purchased properties earlier. (b) He deposed that he wished to buy an office space in Dwarka, and since he often travelled for work, he handed over six signed blank cheques, including the three cheques in question, to Rajan Mahajan to be used for payment of token money for the property.

(c) He claimed to have also handed over documents relating to his

(d) DW-1 stated that when informed that the desired office space had been sold to someone else, he sought return of his cheques, but Mahajan failed to do so. Consequently, he allegedly sent a legal notice dated 20.05.2016 (Mark A/DX-1) seeking their return. (e) He deposed that the cheques were later misused by the complainant, and that he had duly replied to the statutory legal demand notice issued under Section 138 of NI Act. (f) During cross-examination, DW-1 initially stated that he had never taken any money from the complainant or her husband but, upon being confronted with bank entries (Ex. CW-1/9), admitted having received ₹4,00,000/-, i.e. ₹2,00,000/- each from the accounts of the complainant and her daughter. (g) He conceded that all six cheques contained his signatures and reiterated that they had been given in blank signed condition. (h) He also stated that two persons, namely Mohammad Alvi and Ravi Singh, were present when the cheques were handed over, though the said Ravi Singh was never examined in his defence.

16. DW-2, Mohammed Ahmad Alvi, who was examined as a defence witness, deposed that he was a neighbour of the accused and had accompanied him in May 2015 when the alleged transaction with the complainant‟s husband, Rajan Mahajan, took place. He stated that six cheques, in blank signed condition, were handed over by the accused to Rajan Mahajan in his presence. However, during crossexamination, DW-2 admitted that the cheques were not given for purchase of any specific property, and that he was unaware of the details such as the location, dimensions, or value of the proposed office space. He further stated that no fixed amount was decided between the parties before the cheques were given, and that he had not accompanied the accused at any time thereafter to demand their return. He also acknowledged that he did not know the complainant personally and had never met her outside of court.

17. In the opinion of this Court, the learned Trial Court has rightly observed that the petitioner, while asserting that the cheques were given for purchase of a property, did not furnish even the most basic particulars of such a transaction. Neither the name of the alleged seller, nor the address, location, or indicative price of the purported property was ever disclosed. The petitioner did not specify the financial limit within which he had authorised the complainant‟s husband to negotiate, nor did he produce any document or correspondence to show that any such property transaction was ever contemplated. Moreover, the testimony of DW-2, far from supporting the petitioner, further weakened his case, as he admitted that no specific property, amount, or term had been agreed upon and that he was unaware of any actual negotiation taking place.

18. The reliance placed by the petitioner on the alleged legal notice dated 20.05.2016 (Mark A/DX-1) has also been rightly disbelieved by the Courts below. The said document, being only a photocopy, was neither proved in accordance with law nor supported by any postal receipt or testimony from the postal department. More significantly, it was addressed to an incorrect flat number, and the complainant has consistently deposed that she began residing at that address only in 2018, much after the purported date of the notice. These circumstances lend strong support to the inference drawn by the learned Trial Court that the said document was subsequently fabricated to bolster a false defence. The petitioner‟s conduct in allegedly issuing such a notice seeking return of his cheques, yet taking no steps to issue stop-payment instructions or otherwise prevent their misuse, also belies his defence. Taken cumulatively, these inconsistencies and improbabilities render the petitioner‟s version unconvincing and implausible.

19. As regards the argument of the petitioner that the suggestion put to him in cross-examination – wherein he stated, “It is correct that I have never taken any amount of money from the complainant or her husband” – demonstrates that no legally enforceable debt existed, this contention is unmerited. The learned Trial Court has rightly observed that this very portion of the petitioner‟s testimony proved detrimental to his own case. When confronted with the bank records (Ex. CW-1/9 colly) reflecting transfer of ₹2,00,000/- each from the accounts of the complainant and her daughter to his own account, the petitioner admitted having received a total of ₹4,00,000/-. Thus, having first denied any financial transaction and then conceding receipt of the said amount, the petitioner not only contradicted himself but also failed to offer any plausible explanation for such receipt. His subsequent assertion that the transfer pertained to an unrelated prior transaction was unsupported by any material on record. The learned Trial Court has, therefore, rightly held that this contradiction destroyed the petitioner‟s credibility and, instead of supporting his defence, fortified the complainant‟s case that the cheques were issued in discharge of an existing liability.

20. Further, the contention of the learned counsel for the petitioner that the two promissory notes relied upon by the complainant are forged and fabricated documents also deserves rejection. Both the learned Trial Court and the learned Appellate Court have rightly held that the petitioner did not take any steps to substantiate this allegation. Apart from a bare suggestion put to the complainant in cross-examination – which was specifically denied by her – no effort was made by the petitioner to seek forensic examination of the disputed signatures or to summon the attesting witnesses of the said promissory notes to establish his defence of forgery. Suggestions, by themselves, have no evidentiary value, and in the absence of any corroborative proof, such a plea cannot stand. On the contrary, the complainant‟s testimony regarding execution of the promissory notes remained unshaken in cross-examination. Accordingly, this Court finds no error in the concurrent finding that the petitioner failed to prove that the promissory notes were fabricated, and the same were rightly relied upon as evidence of acknowledgment of liability.

21. As regards the contention of the petitioner that respondent NO. 2 lacked the financial capacity to advance a loan of ₹24,00,000/-, this Court finds no merit in the said submission also. The learned Trial Court has rightly observed that the challenge to the complainant‟s financial capacity was unsupported by any substantive crossexamination or evidence. Beyond eliciting a statement that the complainant‟s monthly income in 2015 was around ₹30,000/-, the petitioner did not question her as to the source of funds, savings, or financial arrangements through which the loan was advanced. No material was brought on record to create even a reasonable doubt regarding her ability to lend the said amount. The learned Appellate Court has also correctly noted that even if part of the transaction was made in cash, such payment would not render the loan invalid or unenforceable under the law. A mere violation of Section 269SS of the Income Tax Act, 1961, if any, attracts at best a penal consequence under Section 271D of the said Act, but does not make the underlying transaction void, illegal, or non-existent.

22. The recent decision of the Hon‟ble Supreme Court in Sanjabij Tari v. Kishore S. Borcar: 2025 INSC 1158, has put the controversy to rest by holding as under:

Through LRs. vs. Maruthachalam (Since Deceased) Through LRs., (2023) 16 SCC 125 has held that presumptions under Sections 118 and 139 of the NI Act can be rebutted by the accused examining the Income Tax Officer and bank officials of the complainant/drawee.”

23. Thus, any breach of Section 269SS of the Income Tax Act does not invalidate the transaction or render the debt unenforceable for the purposes of Section 138 of the NI Act. The Supreme Court has clarified that such violation merely invites penalty, and the presumption under Sections 118 and 139 of the NI Act continues to operate unless successfully rebutted by credible evidence. In the present case, the petitioner has neither examined any independent witness nor produced any document to substantiate the alleged financial incapacity of the complainant. Accordingly, this Court finds that the concurrent findings of the Courts below on this aspect are based on sound reasoning and in conformity with the settled legal position.

24. In view of the foregoing discussion, this Court is of the considered opinion that the petitioner has failed to discharge the burden of rebutting the statutory presumptions arising under Sections 118 and 139 of the NI Act. Both the learned Trial Court and the learned Appellate Court have correctly appreciated the evidence and recorded well-reasoned findings, which suffer from no perversity, illegality, or material irregularity warranting interference in revisional jurisdiction.

25. Accordingly, the conviction and sentence of the petitioner are upheld, and the present petition is dismissed.

26. The petitioner is directed to surrender and serve the sentence awarded to him, within a period of three weeks from date.

27. The judgment be uploaded on the website forthwith. DR.

SWARANA KANTA SHARMA, J