[Cites 14, Cited by 0]
Delhi High Court
Surinder Kumar Mahajan vs Sardar Baljit Singh & Anr on 18 February, 2026
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: 10.02.2026
Judgment pronounced on: 18.02.2026
+ CRL.A. 645/2003
SURINDER KUMAR MAHAJAN .....Appellant
Through: Mr. Uttam Datt, Sr. Advocate with
Ms. Sonakshi Singh, Mr. Kumar
Bhaskar and Mr. Naman Kumar,
Advocates
Versus
SARDAR BALJIT SINGH & ANR. .....Respondents
Through: None.
CORAM:
HON'BLE MS. JUSTICE CHANDRASEKHARAN SUDHA
JUDGMENT
CHANDRASEKHARAN SUDHA, J.
1. This appeal under Section 374 read with 482 of the Code of
Criminal Procedure, 1973 (the Cr.P.C.) has been filed by the
accused in Complaint Case No.317/2002 on the file of the
Additional Sessions Judge, Delhi, assailing the judgment dated
18.07.2003 as per which he has been convicted and sentenced for
the offence punishable under Section 138 of the Negotiable
Instruments Act, 1881(the N.I Act).
2. The respondent herein filed a complaint alleging the
commission of the offences punishable under Section 138 of the
NI Act before the Chief Metropolitan Magistrate, Delhi. On going
through the trial records, I find order dated 11.04.2002 of the
learned Magistrate which reads thus:-
"Vide order/letter/reference F.3(4)/ADJ/19884-19884/1173 dt.
21.3.2002of Office of Ld. Distt. And Sessions Judge, Delhi, in
pursuance to Delhi High Court letter No. 336/Gaz/VI.E.2(a)/Misc.
dated 15.03.2002, the complaint is transferred to the Court of Ms.
Deeps Sharma, Ld. Addl. Sessions Judge, Delhi. Party(ies) are
directed to appear before the Court of Ms. Deepa Sharma, Addl
Sessions Judge, Delhi, today.
Sd.
Metropolitan Magistrate, Delhi"
3. Letter no. 336/Gaz./VI.E.2(a)/Misc referred to reads:
"MOST IMMEDIATE AT ONCE
CONFIDENTIAL
No._ 336 /Gaz./VI.E.Z(a)/Misc.
From:
The Registrar (Vigilance)
High Court of Delhi
New Delhi.
To
The District & Sessions Judge
Delhi.
New Delhi, dated, the 15 March, 2002
Sub:
Regarding expeditious Section disposal of cases under 138
Negotiable Instruments Act
Sir,
I am directed to refer to your letter No.141/Stt./Crl. dated
8.1.2002 on the above subject, and to say that Hon'ble the Chief
Justice and Hon'ble Judges of this Court have been pleased to
decide that all the cases triable under Section 138 of the
Negotiable Instruments Act, pending as on 31.12.2001 in the
Courts of various Metropolitan Magistrates in Tis Hazari Court,
Patiala House Court andKarkardooma Court, bewithdrawn Court
and transferred to the Courts of Additional District andand
Sessions Judges as follows: -
TIS HAZARI:
Mr. Rakesh Kapoor
Mr. R.S. Arya
Mr. S.N. Gupta
Mr. Satnam Singh
Mr. T.D. Keshav
Mr. S.L. Bhayana
Mr. P.C. Ranga
Mr. R.K. Sharma
Mr. Gurdeep Kumr
Ms. Deepa Sharma
Mr. Mahavir Singhal
MR. I.S. Mehta
Mr. M. S. Sabharwal
Mr. M.L. Mehta
PATIALA HOUSE:
Mr. Ina Malhotra
Mr. Yogesh Khanna
Mr. Rakesh Kumar
Mr. N.K. Kaushik
Mr. S.N. Dhingra
Mr. P.K. Bhasin
Mr. Babu Lal
Ms. Mamta Sehgal
Mr. H.S. Sharma
Mr. J.R. Aryan
Mr. C.K.Chaturvedi
KARKARDOOMA:
Mr. J.P. Singh
Mr. S.C. Mittal
Mr. S.C. Mittal
Mr. D.C. Anand
Mr. O.P. Gupta
Mr. G.D. Dhanuka
Mr. J.M. Malik
Their Lordships have further been pleased to order that you may
distribute such cases amongst the Additional District and Sessions
Judges in equal number as practicable. However,
Mr.C.K.Chaturvedi will be given lesser number of cases."
I am, therefore, to request you to kindly take necessary action in
the matter under intimation to this Court."
(Emphasis Supplied)
4. In compliance with the aforesaid order, the case was transferred
to the court of the Additional Sessions Judge, who conducted the
trial of the case and passed the impugned judgment. The parties in
this appeal will be referred to as described in the complaint.
5. In the complaint filed alleging the commission of the offence
under Section 138 of the NI Act, it is alleged thus:- The
complainant and the accused entered into an agreement dated
14.01.2000 for the purchase of the property of the latter. On
12.01.2000, an amount of ₹51,000/- was paid as earnest money,
for which the accused issued a receipt. When the agreement was
executed, the complainant paid an amount of ₹4,50,000/-to the
accused towards sale consideration. Thus, the accused received a
total amount of ₹5,01,000/- from the complainant. However, the
accused failed to transfer possession or execute the sale deed in
favour of the complainant. When the amount that was paid by the
complainant was demanded, the accused issued a cheque bearing
no. 19142 dated 27.07.2000 drawn on the Bharat Overseas Bank
Limited, Rajouri Garden, New Delhi. However, the cheque on
presentation was dishonored as the account of the accused was
closed. The complainant was informed of the dishonor by way of
memo dated 14.08.2000.The complainant thereafter came to know
that the accused had sold the property to somebody else. Hence,
the complainant issued a demand notice dated 22.08.2000 through
his counsel by registered post, which was sent on 26.08.2000.
Though the notice was served on the accused ,he refused to accept
the same and hence the notice was returned to the complainant.
The accused has so far not repaid the cheque amount and hence the
complaint.
6. On appearance of the accused before the trial court, the
substance of the accusation as contemplated under Section 251
Cr.PC was read over and explained to the accused, to which he
pleaded not guilty.
7. On behalf of the complainant, PWs. 1 to 3 were examined and
Exts. CW1/A-L, PW1/A-H, PW2/A-B, PW3/A and Mark A - E
were marked in support of the case of the complainant.
8. After the close of the prosecution evidence, the accused was
questioned under Section 313(1)(b) Cr.P.C. regarding the
incriminating circumstances appearing against him in the evidence
of the prosecution. The accused admitted taking a sum of
₹5,01,000/- from the complainant and entering into an agreement
for purchase of the property. Although he admitted the issuance of
the cheque to the complainant, he also stated that the same was
obtained under pressure and coercion. The accused denied
receiving any demand notice from the complainant and prayed for
mercy.
9. The accused did not adduce any oral or documentary evidence.
10. On consideration of the oral and documentary evidence and
after hearing both sides, the trial court, vide the impugned
judgment and order on sentence, found the accused guilty of the
offence punishable under Section 138 of the N.I Act and hence,
sentenced him to undergo rigorous imprisonment for a period of 2
years along with fine of ₹10,00,000/-(ten Lakhs) and in default of
payment of fine, to undergo simple imprisonment for one year. Out
of the fine amount, an amount of ₹7,00,000/- was directed to be
paid to the complainant as compensation.
11. The only point that arises for consideration in this appeal is
whether the conviction entered and sentence passed against the
appellant/accused by the trial court are sustainable or not.
12. At this stage it is important to note that there was no
representation on behalf of the Complainant, the respondent
herein. The case is of the year 2003. Hence this Court was not
inclined to adjourn the case. As held by the Hon'ble Supreme
Court in Bani Singh & Ors. v. State of U.P., (1996) 4 SCC 720,
this Court is not precluded from deciding the appeal on merits
despite such non-appearance, as an appeal cannot be kept pending
indefinitely. Accordingly, this Court proceeds to consider the
appeal on merits after going through the entire records in the case.
13. It was submitted by the learned senior counsel/amicus curiae
for the accused/appellant that the impugned judgment and order on
sentence is liable to be set aside as the conviction entered into, by
the trial court is not sustainable in the eyes of law. Firstly, the trial
court has erred in not appreciating the fact that for mounting
liability under the provisions of N.I Act, one of the essential
requirements that is to be met is that it should be of a "legally
enforceable debt". However, in the instant case the cheque amount
was an amount which is stipulated as a penalty in terms of the
agreement entered between the parties and since the amount as
mentioned in the cheque is in the nature of a penalty, it cannot fall
under the category of a debt, which is required as per the rigors of
the N.I Act. It was further contended that since penalty is not
enforceable under law, it can be a case of liquidated damages and
not debt as provided under the explanation to Section 138. Learned
senior counsel in support of this contention relied on the judgment
of the Hon'ble Supreme Court in Maya Devi v. Lalta Prasad
(2015) 5 SCC 588. It was also submitted that the order on sentence
is not sustainable as the punishment awarded to the accused is for a
period of two years, however, at the relevant point in time when
the offence had taken place, Section 138 as it stood unamended
provided for a punishment for a maximum period of 1 year. The
said amendment whereby the punishment has been enhanced to a
maximum period of 2 years as it stands today, came into effect
from 06.02.2003,whereas the date of offence is 14.08.2000. It was
also pointed out that in the present case the notice sent to the
accused was deemed to be served in terms of Section 27 of the
General Clauses Act, but, the address on which the same was
served was not the correct address of the accused and hence, the
service could not be deemed to have been effected. Lastly it was
submitted that the account on which the cheque was drawn was
closed prior to the issuance of the cheque and given the facts and
circumstances of the case at best it could have been a case of
cheating and not a case under Section 138 of the NI Act.
14. Heard both sides.
15. The only point that arises for consideration is whether the
impugned judgement suffers from any infirmity calling for an
interference by this court.
16. The complainant when examined as PW1, deposed that he was
in need of a property. He met the accused through a property
dealer. The accused told him that the former was the owner of
property No. VB 103, Virender Nagar, Jail Road, New Delhi. The
accused showed him a copy of the sale deed in his name, which is
Ext. Mark A. He paid a sum of ₹51,000/- as earnest money in
respect of the property to the accused on 12.01.2000, for which the
accused executed a receipt i.e. Ex PW1/A which bears his
signature and that of the accused. On 14.01.2000 the agreement to
sell was executed, where upon he gave a sum of ₹4,50,000/- to the
accused vide receipt Ex PW1/B. A copy of the agreement to sell
has been marked as Ex PW1/C. On 11.02.2000, the accused
executed PW1/D deferring the payment of the money. Later, on
23.03.2000, he was informed by the accused that the latter would
not be able to handover the possession of the property. Time was
sought to hand over possession of the property relating to which
Ex PW1/E agreement was entered into and the period was
extended by another 04 months. Thereafter, he came to know that
the accused had already sold the said property to somebody else
even before the agreement was entered into. The accused agreed to
return the money and issued Ext. CW1/F cheque in discharge of
the amount paid by the complainant. The cheque on being
presented was dishonored as the account of the accused was
closed. Thereafter, he sent Ext. PW1/4 notice by registered post.
The notice was refused to be accepted by the accused. The accused
has not repaid the cheque amount till date.
17. On the day, when PW1 was examined in chief, the cross
examination was adjourned as the defence counsel was not
available. However, on 11.03.2003 also the accused did not avail
his right to cross-examine PW1. Therefore, the testimony of PW1
stands unchallenged.
18. PW2, Clerk cum Cashier, Bharat Overseas Bank, Rajouri
Garden New Delhi, produced the records pertaining to dishonor of
cheque bearing no. 191420 dated 27.07.2000, that is, Ext. PW1/F.
The certified copy of the account of the accused has been marked
as Ext. PW2/A. PW2 deposed that the records reveal that the
account of the accused was closed on 25.07.2000.
19. When the accused was questioned under Section 313(1)(b)
Cr.P.C., he admitted the there was an agreement to sell his
property to the complainant; that he had received an amount of
₹5,01,000/- from the complainant and that he had issued a cheque
in discharge of the amount he owed to the complainant. However,
his case was that the cheque was issued under pressure.
20. As noticed earlier, PW1 was never cross-examined by the
accused, though ample opportunity was given. Therefore the case
of the complainant relating to the payment of the amount and
execution of the cheque by the accused stands proved. The burden
then shifts to the accused to rebut the presumption contained under
Section 139 of the NI Act. However, the accused has not
discharged the presumption. The defence version that the cheque
was issued under pressure has not been substantiated by any
materials on record.
21. The argument advanced by the learned senior counsel/amicus
curiae for the accused/appellant that the trial court erred in treating
service of notice on the accused as deemed service under Section
27 of the General Clauses Act, cannot be accepted. It was
submitted by the learned senior counsel that the address of the
accused shown in the notice is incorrect and therefore, the
presumption contained under Section 27 of the General Clauses
Act could not have come into play in the case. It was submitted
that only when a registered notice in the correct address of the
accused is sent, the presumption under Section 27 of the General
Clauses Act would be attracted. This argument cannot be accepted
for a moment because as noticed earlier the testimony of PW1 has
not been challenged or discredited. PW1 in his testimony deposed
that when the notice was sent, the same was refused to be accepted
by the accused. There is nothing on record to show that the address
ofthe appellant/accused in the notice is incorrect. On the other
hand, the materials on record, namely, Ext. CW1/C shows that
intimation was given to the appellant/accused. Therefore, the
argument that no demand notice was served on the
appellant/accused is liable to be rejected.
22. It was further argued that no offence under Section 138 of the
NI Act is made out as admittedly at the time when the cheque was
presented, the accused was not maintaining any account in the
bank.The account was closed on 25.07.2000, that is, before the
issuance of the cheque on 27.07.2000.Therefore the trial court
again went wrong in concluding that the offence under Section 138
of the NI Act is made out when there was no valid account in the
name of the accused. This argument also cannot be accepted,
because time and again it has been held that disorder of cheque for
the reason that the account has been closed would also come
within the ambit of Section 138 of the NI Act. (See NEPC Micon
ltd and Ors. v. Magma Leasing Ltd. (1999) 4 SCC 253; Laxmi
Dychem v State of Gujarat and Ors. 2012 (13) SCC 375)
23. Another argument advanced is that the cheque was not issued
for the discharge of any legally enforceable debt. The cheque
amount refers to the penalty which is referred to in the agreement
executed between the parties. Penalty does not come within the
term debt as contemplated under Section 138 of the NI Act and
therefore, the conviction is liable to be set aside on the said count
also. This argument also cannot be accepted because the
accused/appellant has never a case that the cheque was not issued
in discharge of the amount that he owed to the complainant. He
admits the execution of the agreement and also the receipt of the
money. He has no case that the amount has been repaid to the
complainant. Therefore, he is certainly liable to repay the amount
received from the complainant and hence, the argument that there
is no enforceable debt is also liable to be rejected.
24. Lastly, the learned senior counsel also submitted that the
sentence of 2 years that has been imposed by the trial court is
incorrect because the transaction is of the year 2000.TheNI Act as
it stood prior to the amendment in the year 2002, which came into
effect from 06.02.2003, provided for a maximum period of
imprisonment for a period of 1 year. In such circumstances,
imprisonment for 2 years could not have been imposed on the
accused. Referring to Section 65 IPC, the learned senior counsel
pointed out that the default sentence imposed by the trial court also
exceeds the limit provided under Section65. As per Section 65
IPC, the default sentence cannot exceed one-fourth of the
maximum term of imprisonment fixed for the offence. Therefore,
the period of 01 year that has been imposed as default sentence is
an infirmity and illegality, which also needs to be set aside.
25. The learned senior counsel is certainly right in the argument
relating to the sentence. The transaction in this case took place in
the year 2000. The amendment to Section 138came into effect
from 06.02.2003.As per the unamended section, the imprisonment
that could be awarded was for a period which could extend up to
one year. Therefore, the sentence of 02 years that has been
imposed by the trial court is apparently wrong and hence, an
interference into the said aspect is certainly called for.
26. As the evidence on record clearly proves the case of the
complainant, I find that the trial court was right in concluding that
an offence under section 138 of the NI Act has been committed by
the accused. Therefore, the conviction of the accused for the
offence punishable under Section 138 of the NI Act is confirmed.
However, the sentence that has been imposed by the trial court is
modified thus - The appellant/accused is sentenced to simple
imprisonment for a period of 6 months. The sentence regarding the
fine amount and compensation shall stand confirmed. However,
the default sentence of 01 year imposed shall stand modified to 01
month.
27. The appeal is allowed to the aforesaid extent.
28. Applications(s), if any, pending stand closed.
CHANDRASEKHARAN SUDHA
(JUDGE)
FEBRUARY 18, 2026/RS/ER
