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IN
THE COURT OF MS. ADITI RAO METROPOLITAN
MAGISTRATE (NI ACT)03 SOUTH EAST, SAKET: NEW DELHI
CC No.632867/16
1 Complainant case number : 632867/16
2 Name of the complainant : Cardio Fitness India Pvt. Ltd.
B23, Okhla Industrial Area,
Phase2, New Delhi110020.
3 Name and address of the : Alivez Gym Fitness Centre, 3rd
accused. &4th Floor Monalisa Centrum
North Wing, Near INOX
Multiplex Race Course Road,
Vadodara390007.

Kailash Jadhav Proprietor,
Alivez Gym and Fitness
Centre, 3rd &4th Floor
Monalisa Centrum North
Wing, Near INOX Multiplex
Race Course Road,
Vadodara390007.
4 Offence complained of : Section 138 of the Negotiable
Instruments Act, 1881
5 Plea of the accused : Pleaded not guilty and
claimed trial
6 Final order : Conviction
7 Date of institution : 23.05.2016
8 Date of reserving the judgment : 03.06.2022
9 Date of pronouncement : 25.06.2022
:JUDGEMENT:
1. The present complaint under section 138 Negotiable Instrument Act,
1881 (herein referred to as NI Act) has been filed by Cardio Fitness India Pvt.
Ltd. (herein referred to as the ‘complainant’) against Alivez Gym Fitness
CC No.632867/16
Cardio Fitness India Pvt Ltd. vs Alivez Gym Fitness Centre & Ors. Page No. 1 of 13
Centre & Anr. (herein referred to as the ‘accused’).
2. Briefly stated, case of the complainant is that accused no. 2

approached the complainant in the year 2015-16 to place orders for GYM
equipments including accessories, free weight and cross trainers for his
fitness centre. Thereafter, the complainant delivered all GYM equipments to
accused no. 2. During the period from September 2015 to October 2015, the
complainant raised invoices towards the equipments sold to the accused for a
total amount of Rs.97,44,390/- out of which the complainant received a sum
of Rs. 62,96,636.50/- from the accused as advance payment excluding
custom duty and clearance charges which were paid directly to the clearing
agent. The outstanding amount of Rs.39,70,106.5/- was due to be paid to the
complainant by the accused. Accused no. 2 on behalf of accused no.1 issued
six post dated cheques i.e. cheque bearing no. 318722 dated 21.11.2015 in the
sum of Rs.6,61,684/-, no. 318723 dated 12.12.2015 in the sum of Rs.
61,61,684/-, no.318724 dated 15.01.2016 in the sum of Rs.6,61,684/-, no.
318725 dated 15.02.2016 in the sum of Rs.6,61,685/-, no. 318726 dated
15.03.2016 in the sum of Rs.6,61,685/- and no. 318727 dated 15.04.2016 in
the sum of Rs.6,61,685/- all drawn on Canara Bank Vadodara Raopura
Branch, Gujarat to the complainant towards discharge their liability of
Rs.39,70,106.5/-. Out of these six cheques, the cheque bearing no. 318726 in
the sum of Rs. 6,61,685/- was presented, however, the same was returned
unpaid vide return memo dated 21.03.2016 with the remarks “PAYMENT
STOPPED BY DRAWER”. Thereafter, the legal demand notice dated
04.04.2016 was duly sent by the complainant to the accused by registered AD
dated 05.04.2016 and also by courier. The accused failed to pay the cheque
amount within the statutory period. Hence, the present complaint under
Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as
'NI Act') was filed.
CC No.632867/16
3. On issuance of summons, the accused entered appearance in the
present matter for the first time on 27.01.2017 and was admitted to bail.
Notice under Section 251 Cr.P.C. was served upon accused on 04.05.2017 to
which he pleaded not guilty and claimed trial. Vide order dated 01.07.2017
application u/s 145 (2) NI Act stood allowed and accused was allowed to
cross examine the complainant. After examining the complainant as CW2,
complainant evidence was closed vide order dated 13.11.2018. Thereafter,
the matter was fixed for recording of statement of the accused u/s 313 Cr.P.C
and the same was recorded on 16.01.2019 to which the accused wished to
lead defence evidence. After examination and crossexamination of DW1,
no further defence evidence was led on behalf of the accused. Thereafter,
vide separate statement, defence evidence was closed on 04.04.2022.
EVIDENCE:-
4. In order to support his case, the complainant had tendered his affidavit
Ex. CW-1/A into evidence wherein averments made in the complaint were
reiterated. He also relied upon various documents such as Ex.CW1/1 i.e.
resolution passed by the board of Directors of the company dated 14.03.2016,
Ex. CW-1/2 (Colly) i.e. retail invoices, Ex. CW-1/3 (Colly) i.e. ledger
account, Ex. CW-1/4 i.e. original cheque bearing no.318726, Ex. CW-1/5
i.e. return memo dated 21.03.2016, Ex.CW1/6 i.e. legal notice dated
04.04.2016, Ex. CW1/7 (colly) i.e. the postal receipts and courier, Ex. CW-
1/8 (colly) i.e. delivery report, Ex. CW-1/9 i.e. copy of emails, Ex. CW-1/10
(colly) i.e. email correspondence between the accused no. 2 and the
complainant and Ex. CW-1/11 i.e. A certificate Under Section 65 B Indian
Evidence Act.
CC No.632867/16
5. In his defence, the accused has placed on record documents i.e. Ex.
DW1/1 i.e. proforma invoice, Ex. DW1/2 i.e. email dated 25.08.2015, Ex.
DW1/3 i.e. email dated 06.10.2015, Ex. DW1/4 i.e. email dated
08.11.2015, Ex. DW1/5 i.e. letter dated 17.12.2015, Ex. DW1/6 i.e. copy
of debit note, Ex. DW1/7 i.e. reply to legal notice, Mark DW1/1 i.e. copy
demand draft, Mark DW1/2 i.e. copy of demand draft and Mark DW1/3
i.e. copy of demand draft. After examination and crossexamination of DW
1, the matter was fixed for final arguments.
6. Final arguments have been heard at length on behalf of both the
parties.
APPLICABLE LAW:-
7. Before appreciating the facts of the case in detail for the purpose of
decision, let relevant position of law be discussed. Now, Section 138
Negotiable Instrument Act provides as under:
Section 138. Dishonour of cheque for insufficiency, etc., of funds in
the account. Where any cheque drawn by a person on an account
maintained by him with a banker for payment of any amount of money
to another person from out of that account for the discharge, in whole
or in part, of any debt or other liability, is returned by the bank unpaid,
either because of the amount of money standing to the credit of that
account is insufficient to honour the cheque or that it exceeds the
amount arranged to be paid from that account by an agreement made
with that bank, such person shall be deemed to have committed an
offence and shall, without prejudice to any other provisions of this Act,
be punished with imprisonment for a term which may be extended to
two years, or with fine which may extend to twice the amount of the
cheque, or with both:
Provided that nothing contained in this section shall apply unless (a)
the cheque has been presented to the bank within a period of six
months (reduced to three months vide notification no. RBI/2011-
12/251, DBOD AMLBCNo. 47/19.01.0062011/12,dated 04.11.2011)
from the date on which it is drawn or within the period of its validity,
CC No.632867/16
whichever is earlier; (b) the payee or the holder in due course of the
cheque, as the case may be, 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; and (c) the
drawer of such cheque fails to make the payment of the said amount of
money to the payee or, as the case may be, to the holder in due course
of the cheque, within fifteen days of the receipt of the said notice.
Explanation — for the purposes of this section, “debt or other
liability” means a legally enforceable debt or other liability.
It is well settled position of law that to constitute an offence under
S.138 N.I. Act, the following ingredients are required to be fulfilled:
(1) drawing of the cheque by a person on an account maintained by
him with a banker, for payment to another person from out of that
account for discharge in whole/part any debt or liability; (2) cheque
has been presented to the bank within a period of six months (now
three months) from the date on which it is drawn or within the period
of its validity whichever is earlier; (3) returning the cheque unpaid by
the drawee bank for want of sufficient funds to the credit of the drawer
or any arrangement with the banker to pay the sum covered by the
cheque, (4) giving notice in writing to the drawer of the cheque within
30 days of the receipt of information by the payee from the bank
regarding the return of the cheque as unpaid demanding payment of
the cheque amount, (5) failure of the drawer to make payment to the
payee or the holder in due course of the cheque, of the amount covered
by the cheque within 15 days of the receipt of the notice.
Being cumulative, it is only when all the aforementioned ingredients
are satisfied that the person who had drawn the cheque can be deemed
to have committed an offence under Section 138 of the N I Act.
The Act raises two presumptions in favour of the holder of the cheque
i.e. Complainant in the present case; firstly, in regard to the passing of
consideration as contained in Section 118 (a) therein and, secondly, a
presumption under Section 139, that the holder of cheque receiving the
same of the nature referred to in Section 138 for discharge, in whole or
in part, of any debt or other liability.
Analysing all the concerned provisions of law and various
pronouncements in this regard, the Hon’ble Apex Court in
Basalingappa v. Mudibasappa, AIR 2019 SC 1983, noted at para 23 as
follows [Bharat Barrel and Drum Manufacturing Company v. Amin
Chand Pyarelal, (1999) 3 SCC 35; M.S. Narayana Menon alias Mani v.
State of Kerala and another, (2006) 6 SCC 39; Krishna Janardhan Bhat
v. Dattatraya G. Hegde, (2008) 4 SCC 54; Kumar Exports v. Sharma
Carpets, (2009) 2 SCC 513; Rangappa v. Sri Mohan, (2010) 11 SCC
441 referred]:
(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.
CC No.632867/16
(ii) The presumption under Section 139 is a rebuttable presumption
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 probabilities can be drawn not only
from the materials brought on record by the parties but also by
reference to the circumstances upon which they rely.
(iv) That it is not necessary for the accused to come in the witness box
in support of his defence, Section 139 imposes 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.
To put in nutshell, the law regarding the presumption for the offence
under Section 138 N.I. Act,is that the presumptions under Sections
118(a) and 139 have to be compulsorily raised as soon as execution of
cheque by the accused is admitted or proved by the complainant and
thereafter burden is shifted upon the accused to prove otherwise. These
presumptions shall end only when the contrary is proved by the
accused, that is, the cheque was not issued for consideration and in
discharge of any debt or liability etc. The onus to prove the issuance of
the cheque lies upon the complainant, and the same has to be proved
beyond reasonable doubt, unless the accused admits the same. Once
the issuance of cheque is established, either by admission or by
positive evidence, the presumption under Section 139 of the
Negotiable Instruments Act, 1881 arises. We can summarize the
general principles in the following way:
Onus of proof: Section 139 of the Negotiable Instruments Act, 1881
states that 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. Therefore, here the onus shifts upon the accused to prove the
nonexistence of debt or other liability. Section 139 of the N.I. Act uses
the word “shall presume”, which means that the presumption under
Section 139 is rebuttable.
Standard of proof: The standard of proof required to rebut the
presumption under Section 139 is that of “preponderance of
probabilities”. Therefore, if the accused is able to raise a probable
defence which creates doubts about the existence of a legally
enforceable debt or other liability, the onus shifts back to the
complainant to prove by way of evidence, beyond reasonable doubt,
that the cheque in question was issued by the accused in discharge,
whole or in part, of any debt or other liability, and now the
presumptions under Section 118 (a) and Section 139 will not come to
the aid of the complainant.
CC No.632867/16
Mode of Proof: The accused may adduce direct evidence to prove that
the cheque in question was not supported by consideration, and that
there was no debt or liability to be discharged by him. However, the
Court need not insist in every case that the accused should prove the
nonexistence of the consideration and debt by leading direct evidence
because the existence of negative evidence is neither possible nor
contemplated. At the same time, it is clear that a bare denial of
passing of consideration and existence of debt, apparently would not
serve the purpose of the accused. Something which is probable has to
be brought on record for getting the burden of proof shifted to the
complainant. To disprove the presumptions, the accused should bring
on record such facts and circumstances upon the consideration of
which, the Court may either believe that the consideration and debt did
not exist, or their nonexistence was so probable that a prudent man
would, under circumstances of the case, act upon the plea that they did
not exist.
As discussed above, from the legal provisions and the law laid down in
various judgments, it can be safely gathered that it is for the accused to
rebut the presumptions. He can do so by cross examining the
complainant, leading defence evidence, thereby demolishing the case
of the complainant. It is amply clear that the accused does not need to
discharge his or her liability beyond the shadow of reasonable doubt.
He just needs to create holes in the case set out by the complainant.
Accused can say that the version brought forth by the complainant is
inherently unbelievable and therefore the prosecution cannot stand. In
this situation the accused has nothing to do except to point inherent
inconsistency in the version of the complainant or the accused can give
his version of the story and say that on the basis of his version the
story of the complainant cannot be believed.
ARGUMENTS AND APPRECIATION OF EVIDENCE:-
8. Ld. Counsel for the complainant has argued that all the requirements
of Section 138 NI Act have been met with in the present case and hence, the
accused be convicted. I have heard the arguments and also gone through the
record with due circumspection.
9. In the case at hand, Ld. Counsel for the complainant has submitted
that the accused has not disputed the issuance of cheque or the signatures on
the cheque in the present case, thus, the presumptions under Section 118 (a)
read with Section 139 of NI Act about the cheque in question having been
issued for consideration and in discharge of legal liability should arise in
CC No.632867/16
favour of the complainant. On the other hand, Ld. Counsel for the accused
submitted that as accused does not owe any legal liability in favour of the
complainant, presumption u/s 139 of NI Act should not arise.
10. The three-Judge Bench of hon'ble Supreme Court in Rangappa Vs.

Sri Mohan, (2010) 11 SCC 441 has held that where the fact of signature on
the cheque is acknowledged, a presumption has to be raised that the cheque
pertained to a legally enforceable debt or liability, however, this presumption
is of a rebuttal nature and the onus is then on the accused to raise a probable
defence.
11. In the present case, the accused has not denied his signatures on the
cheque Ex. CW1/4. Thus, the factum of signatures on the cheque is not
disputed and has been acknowledged.
12. It is pertinent to mention here that S. 139 only raises the presumption
on fulfillment of its conditions that the cheque was issued for discharge of in
whole or in part any debt or other liability but there is no presumption as to
the existence of the debt or liabilty as such.
In Rangappa (supra) it has been held that:-
Existence of legally recoverable debt is not a matter of presumption under
Section 139 of the Act. It merely raises a presumption in favour of a holder
of the cheque that the same has been issued for discharge of any debt or other
liability.
13. As regards legal notice, the receipt of the same has not been denied by
the accused. As per postal receipts, legal demand notice Ex.CW1/6 was duly
sent to the accused at his correct address. The accused in his statement u/s
313 Cr.P.C dated 16.01.2019 has stated that “ I had also replied to the legal
notice which is also on record”. The statement implies that accused had
received the legal notice. Hence, legal notice Ex. CW-1/6 was duly served
CC No.632867/16
upon the accused.
14. As regards to the fact of dishonour of the cheque in question, the

original return memo filed by the complainant Ex.CW1/5 clearly shows that
the cheque in question was dishonoured for the reason ‘PAYMENT
STOPPED BY DRAWER’. Thus, taking into account that dishonour of the
cheque in question is not disputed, this fact also stands proved.
15. Thus, the presentation of the cheque in question, its dishonour and
service of legal notice is not under question. Consequently, the complainant
has successfully raised a presumption under Section 139 NI Act.
16. Accordingly, it is required to be presumed that the cheque in question
was drawn for consideration and the holder of the cheque i.e., the
Complainant received the same in discharge of an existing debt. The onus,
therefore, shifts on the Accused to establish a probable defence so as to rebut
such a presumption.
17. In the segment on legal framework, set out above, the legal
proposition with respect to the burden of proof upon the Accused has already
been discussed. Hence, it is now to be examined as to whether the Accused
brought any material on record or pointed out glaring discrepancies in the
material produced by the Complainant for dislodging the presumption
which meets the standard of preponderance of probabilities.
18. The Accused in the present case, has taken the following line of
defence with a view to rebut the presumption:
That the Liability of the Accused was not crystallized:
By way of suggestions put to the complainant in his crossexamination and
CC No.632867/16
by way of his evidence as DW1, the accused has argued that his liability
towards the complainant had not been crystallized as:
(i) there was a delay in delivery of goods;
(ii) goods supplied were that of inferior quality; and
(iii) goods received were of quantity lesser than the quantity mentioned in the
Purchase Order.
19. At the outset it is noted that it is not the case of the accused that he had
returned or rejected the goods supplied late by the Complainant. The accused
has relied upon his letter sent to the complainant in this regard. Perusal of
Mark DW1/5 shows that the accused vide a letter dated 23.03.2016 has
shown his concerns in relation to the quality and the delay in relation to
the goods received. However, the accused has not placed on record any
document or proof which could show that the purchase order/agreement
between the parties has sufficed 'the mentioning of the problems' in a letter as
a clear rejection of the goods. Thus, the accused has neither rejected the
goods nor returned them.
20. In addition, as admitted by the accused in letter Ex. DW1/5, the goods
were received by them by 12.10.2015. Vide an email dated 06.10.2015
Ex.DW1/3, the accused mentions sending of 06 PDC's of which the cheque
in question forms a part. Further, the accused vide an email dated 08.11.2015
Ex. DW1/4 has thanked the complainant for making their project successful.
In paragraph 3rd of the same letter the accused has requested the complainant
to postpone the presentation of the 06 Post dated cheques on the ground that
some more time be given to honour them. In that letter/email the accused has
also in the end apologized for the same i.e. the delay in payment. This email
at the outset was sent after almost a month of receiving of the goods.
However, this document does not express any disappointment on behalf of
CC No.632867/16
the accused for the delayed delivery or with respect to goods received of
inferior quality.
21. The accused could have returned the goods that were not supplied as
per the purchase order. However, the same has admittedly not been done.
Even Section 24(b) of Sale of Goods Act, 1936 states that:
“If he does not signify his approval or acceptance to the seller but retains the
goods without giving notice of rejection, then, if a time has been fixed for the
return of the goods, on the expiration of such time, and, if no time has been
fixed, on the expiration of a reasonable time.”
22. Thus, where the seller retains the goods and does not send a notice of
rejection within a reasonable time, the acceptance of the goods is deemed.
Further, apart from sending a letter (Ex.DW1/5) of disappointment after
approximately 5 months of receiving of the goods, the Accused has not
placed on record any communication with the Complainant where he has
requested for the return of the goods. Hence, upon accepting the goods the
liability of the Accused exists.
23. With regard to the contention of the accused that the complainant had
supplied the goods after a considerable delay and hence, a loss was caused
to him; it is noted that this loss has not been proved by the Accused
throughout the trial, whether by way of leading defence evidence or by way
of questions/documents put in crossexamination. Be that as it may.
In this regard, Section 55 of Indian Contract Act provides that:
if the time of the performance of the contract is the essence of the contract
and the promiser makes a delay in the performance of the contract, the
contract is voidable at the occasion of the promiser”.
While statutorily, time is not the essence of the contract and the same
CC No.632867/16
depends upon the terms of each contract even if it is assumed that time was
of essence in this case, then by virtue of Section 55 of the Indian Contract
Act, 1872, the Accused had the right to return the goods supplied late and
avoid the contract. This has admittedly not been done. Hence, the liability of
the Accused towards the Complainant exists.
24. In relation to contention of the accused that the goods that were
supplied were short, Ld. Counsel for the accused has brought notice of the
court towards cross examination of the CW2 dated 04.10.2018 wherein CW2
has admitted that "the goods worth approximately Rs. 5 lacs remained to be
supplied to the accused and the supply was not done as the accused was not
making the payment for goods already supplied".
This fact has also not been disputed by the complainant and is an admitted
fact.
25. The accused in his statement U/s 313 CrPC dated 04.04.2022 had
stated that Rs. 34 lacs i.e the amount in relation to the goods supplied was
payable to the complainant. However, the payment has been made good.
However, It is to be noted that the accused, throughout the trial has not
placed on record any document or proof which could show/ prove that he has
paid all his dues towards the Complainant.
26. Accordingly, the defences of the accused in light of admitted delivery
of goods do not inspire confidence from the stand point of a reasonable man,
when weighed against the standard of preponderance of probabilities.
27. It is further trite law that a proprietorship firm does not have any
separate legal identity from its proprietor, (reliance placed on the judgment of
CC No.632867/16
Hon’ble Delhi High Court in M M Lal v. State NCT of Delhi & Anr.)
(CRL.L.P. 290/2010).
It is well settled that a sole proprietorship firm has no separate legal identity
and in fact is a business name of the sole proprietor. Thus, any reference to
sole proprietorship firm means and includes sole proprietor thereof and vice
versa. Sole proprietorship firm would not fall within the ambit and scope of
Section 141 of the Act.”
28. Hence, since the drawer of the cheque, namely, Alivez GYM and
fitness centres is a proprietorship concern, there is no requirement to
deliberate on/discuss the ingredients of Section 141 NI Act.
29. In these circumstances and in view of the above detailed discussion,
this court is of the considered opinion that the Accused has failed to rebut the
presumption under Section 139 of Negotiable Instruments Act, 1881 in
favour of the Complainant and ingredients of Section 138 of Negotiable
Instruments Act, 1881 are fully proved. Therefore, the accused (Mr.
Kailash Jadhav) is held guilty in the present matter.
DECISION:-
30. Resultantly, the accused Mr. Kailash Jadhav is convicted for the
alleged offence under section 138 of NI act.
Announced in the open court today on 25.06.2022. This judgment contains
thirteen pages all are signed by me. A copy of this judgment be placed on the
official website of the District Court.
(ADITI RAO)
Metropolitan Magistrate03 (NI Act)
SouthEast, Saket Courts, New Delhi
CC No.632867/16

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IN

2. Briefly stated, case of the complainant is that accused no. 2

10. The three-Judge Bench of hon'ble Supreme Court in Rangappa Vs.

14. As regards to the fact of dishonour of the cheque in question, the

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