IN THE COURT OF SHRI S.H. ATAKARE, JT.

JUDICIAL
MAGISTRATE FIRST CLASS, CANTOMENT COURT, PUNE
S.C.C. No. 4787 of 2017

IN THE MATTER OF 138 OF

NEGOTIABLE INSTRUMENTS ACT,
1881
IN THE MATTER:

SHRI HOSHANG NOSHIR DORABJEE …COMPLAINANT

VERSUS
SUPERNOVA DISTRIBUTORS & ANR …ACCUSED

WRITTEN ARGUMENTS ON BEHALF OF THE COMPLAINANT,

SHRI HOSHAND NOSHIR DORABJEE

MOST RESPECTFULLY SHOWETH:

1. This complaint under Section 138 of the Negotiable

Instruments Act, 1881, has been filed by the complainant,
Shri Hoshang Noshir Dorabjee, against the respondent,
Supernova Distributors, a firm owned and operated by its
proprietor, Shri Abhijit Lunkad. The complaint pertains to
the dishonor of cheque No. 947836, dated 03.07.2017,
drawn on the Vishweshwar Co-operative Bank Ltd.,
Marketyard Branch, Gultekdi, Pune – 411037.

2. The complainant presented the cheque for encashment on

04.08.2017 in his account No. 0001412010010680 with
Oriental Bank of Commerce (OBC), Pune Main Branch.

3. The cheque was returned dishonored on 05.08.2017 with the

bank intimation dt. 05.08.2017, received back by the
complainant.

4. Subsequently, on 04.09.2017, the complainant sent a notice

to the accused under Section 138 of the Negotiable
 Instruments Act, 1881, informing them of the dishonor of the
cheque and demanding payment of the cheque amount
within 15 days of receiving the notice. The notice was sent
within the stipulated period of 30 days, as the limitation
period begins from the day following the bank's intimation.
Therefore, the 30th day fell on 04.09.2017, the date on which
the notice was sent, thereby complying with the statutory
requirement of the 30-day limitation.

5. The accused, through his advocate, sent a reply to the notice

on 14.09.2017, acknowledging receipt of the notice dated
04.09.2017. However, the accused denied any liability for
payment to the complainant.

6. The complainant then filed a complaint under Section 138 of

the Negotiable Instruments Act, 1881, read with Section 200
of the Code of Criminal Procedure, 1973, on 13.10.2017. The
complaint was filed well within the limitation period
prescribed under the Act.

7. Thus, the requirement of the limitation period for filing the

complaint has been duly satisfied by the complainant, as all
necessary actions were taken and the complaint was filed
within the stipulated period prescribed under the Negotiable
Instruments Act, 1881.

8. In respect to the other contentions raised by the respondent

accused as part of his defense, the complainant now submits
the following arguments in rebuttal. These submissions are
supported by authoritative judgments, which are relied upon
in favor of the complainant's case.

9. The respondent accused, in his reply to the legal notice and

his statement before this Hon'ble Court, has contended that
the amount provided by the complainant was an investment,
for which he received interest from the respondent.
Furthermore, the accused has alleged that the complainant
 is engaged in the business of lending money and that the
transaction in question is a legally enforceable one.

10. The respondent accused further asserted that the cheque in

question was issued as security and that there was no explicit
instruction to the complainant to deposit the same. According
to the accused, the cheque was only to be ENCASHED after
the outstanding amount was duly settled.

11. The contentions raised by the respondent regarding the

nature of the transaction being an investment are without
any legal foundation and unsupported by evidence. It is
submitted that the transaction between the parties was one
of a clear financial obligation arising out of a legally
enforceable debt or liability. The cheque in question was
issued by the respondent towards the discharge of this
liability, as contemplated under Section 138 of the Negotiable
Instruments Act, 1881. The receipt of interest, if any, by the
complainant does not negate the validity of the underlying
debt, nor does it alter the nature of the liability represented
by the dishonored cheque. It is further submitted that the
respondent's allegations regarding the complainant being
involved in the lending business are baseless and irrelevant
to the present proceedings.

12. The respondent’s contention that the cheque was issued

merely as a security is an afterthought and an attempt to
evade liability. It is well-settled law that even a cheque issued
as security can attract the provisions of Section 138 of the
Negotiable Instruments Act if the cheque is dishonored upon
presentation, and it is for the discharge of any debt or
liability. In the present case, the respondent did not dispute
the issuance of the cheque nor its dishonor. Further, the
respondent's claim that the cheque was not to be deposited
until after the amount was settled lacks any corroboration or
documentary evidence. Therefore, this contention should be
 rejected outright as it fails to meet the requirements of a valid
defense under the provisions of the law.

13. It is a well-settled principle that even a cheque issued as

security can attract the provisions of Section 138 of the
Negotiable Instruments Act, if the cheque is dishonored for
reasons such as insufficient funds or a stop payment.

i. ICDS Ltd. v. Beena Shabeer & Anr. (2002) 6 SCC 426

The Supreme Court held that even if a cheque is issued
as a security, it will still be covered under Section 138
of the Negotiable Instruments Act if the cheque was
dishonored upon presentation for the discharge of a
debt or liability. The court clarified that the issuance of
a cheque carries with it a presumption of a legally
enforceable debt unless rebutted by the accused.

ii. Sripati Singh (since deceased) through his son Gaurav

Singh v. The State of Jharkhand & Anr. (2021) SCC
OnLine SC 1002
The Supreme Court reiterated that once the cheque is
issued, the burden is on the drawer to prove that it was
not issued for any legally enforceable debt. A cheque
given as security can still be used for a complaint under
Section 138 if it is dishonored for non-payment.

14. Nature of Transaction and Legally Enforceable Debt: The

presumption under Section 139 of the Negotiable
Instruments Act is that the cheque was issued in discharge
of a legally enforceable debt or liability, and it is for the
accused to rebut this presumption.
i. Rangappa v. Sri Mohan (2010) 11 SCC 44
The Supreme Court held that there is a statutory
presumption under Sections 118 and 139 of the Negotiable
Instruments Act that a cheque is issued for a legally
enforceable debt or liability. The burden of proof is on the
accused to rebut this presumption with substantial
 evidence. Mere denial by the accused is insufficient to
rebut this presumption.

ii. Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16

The court clarified that the statutory presumption under
Section 139 regarding a cheque being issued in respect of
a debt or liability shifts the burden of proof on the
accused. The accused must bring clear evidence to
disprove the presumption.

iii. Kumar Exports v. Sharma Carpets (2009) 2 SCC 513 The

Supreme Court emphasized that the presumption of the
existence of a legally enforceable debt or liability is
mandatory under Section 139 unless the accused can
provide sufficient evidence to the contrary.

iv. MMTC Ltd. and Anr. v. Medchl Chemicals and Pharma (P)
Ltd. (2002) 1 SCC 234
The Supreme Court held that mere disputes regarding the
complainant's business dealings do not impact the validity
of a cheque issued towards the discharge of a debt. The
accused must prove that the complainant is not entitled
to the claimed amount under law, which is difficult unless
supported by clear evidence.

15. The complainant further submits certain points in his favor:

i. Admittance of Key Facts by the Accused:

During the cross-examination, the accused has not
disputed the receipt of the amount from the complainant.
The accused admitted to the existence of a promissory
note, which further supports the complainant's contention
that a financial transaction took place. The issuance of the
promissory note indicates a clear acknowledgment of the
debt by the accused, further reinforcing the complainant's
claim that the cheque was issued in discharge of this
liability.
 ii. Promissory Note as Evidence of Debt:
The existence of a promissory note, as admitted by the
complainant and acknowledged during the cross-
examination, serves as a crucial piece of evidence that
establishes the fact of the legally enforceable debt. A
promissory note is a formal, written promise by the
accused to pay the complainant, which further
substantiates that the transaction was not merely an
investment or an informal arrangement but a formal
financial obligation. The issuance of this promissory note
corroborates the complainant’s claim that the cheque was
given as part of the process to settle the outstanding debt.

iii. Cheque Issued in Discharge of Liability:

Even though the accused contended that the cheque was
issued as security, the existence of a promissory note
reflects that the accused had already acknowledged the
debt. Therefore, the issuance of the cheque was an integral
part of discharging the financial obligation. As held in
ICDS Ltd. v. Beena Shabeer & Anr., a cheque issued as
security can still attract liability under Section 138 if
dishonored, as long as it is used to discharge a legally
enforceable debt or liability.

iv. Failure of the Accused to Repay the Amount:

The promissory note, combined with the dishonored
cheque, creates a chain of evidence that points to the
accused’s failure to fulfill his financial obligation. The
cheque issued by the accused was dishonored, and despite
the issuance of the promissory note, the accused did not
make any effort to settle the debt. This establishes clear
non-compliance on the part of the accused with the terms
of the transaction.

v. Presumption of Legally Enforceable Debt:

 The issuance of both the promissory note and the cheque
further strengthens the statutory presumption under
Section 139 of the Negotiable Instruments Act. The
accused’s failure to rebut this presumption, coupled with
the existence of the promissory note, provides solid
evidence in favor of the complainant. The complainant has
rightfully presented the cheque for payment in the
discharge of a legally enforceable debt.

vi. Legal Validity of the Transaction:

The promissory note, being a legally valid instrument,
corroborates the complainant's case that the transaction
was legitimate, and the accused was under a legal
obligation to pay. The accused’s arguments that the
cheque was only issued as security without any immediate
intent for encashment hold no merit in light of the fact that
the promissory note explicitly reflects the accused’s
acknowledgment of his financial liability.

vii. No Evidence to Support Accused's Allegations:

The accused’s defense that the cheque was issued as
security without the intent of encashment falls flat,
especially in the face of the promissory note. There is no
documentary evidence to support the accused’s claim that
the cheque was conditional or that the complainant was
instructed not to present it. On the contrary, the
promissory note and the cheque together reflect the
accused’s clear intent to settle the outstanding debt.

16. It is therefore respectfully submitted that the complainant

has established a clear and legally enforceable debt through
the issuance of both the cheque and the promissory note by
the accused. The dishonor of the cheque, coupled with the
accused's failure to rebut the statutory presumption under
Section 139 of the Negotiable Instruments Act, leaves no
doubt about the accused’s liability. The complainant has
adhered to all statutory requirements, and the defenses
 raised by the accused lack merit and are unsupported by
credible evidence. In light of the foregoing, it is prayed that
this Hon’ble Court be pleased to render a judgment in favor
of the complainant and hold the accused liable under Section
138 of the Negotiable Instruments Act, granting the
appropriate relief as deemed fit by this Hon’ble Court.

Dated – 03.10.2024
Pune
MOHD FARHAN KHAN
ADVOCATE FOR THE COMPLAINANT