Aniruddh Bhatia & Dr. Victor Vaibhav Tandon
In a recent judgment dated 29th May 2026, the Patiala House District Court convicted the Accused (Company and Director), for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”).
The decision reaffirms the statutory presumptions under Sections 118 and 139 of the NI Act and highlights how contradictory defences at the time of pleadings versus at the time of trial may themselves become a circumstance reinforcing the complainant’s case.
Factual Background
The dispute arose out of an agreement between Complainant (ESPN Software India Pvt. Ltd. (now JioStar India Pvt. Ltd.)) and the Accused for sale of advertisement spots on the channels distributed by the Complainant.
The Accused issued two cheques aggregating ₹82.41 lakhs (Rs. 57,41,826/- and Rs. 25,00,000/-) towards discharge of its liability. Upon presentation, both cheques were dishonoured on account of insufficiency of funds.
Key findings
Once Signatures are admitted, the Burden Shifts
The judgment reiterates the settled position that admission of execution of the cheque immediately attracts the presumptions under Sections 118(a) and 139 of the NI Act. Once these presumptions arise, the burden shifts to the Accused to raise a probable defence. Mere assertions unsupported by evidence are insufficient. The same is a settled position of law by the Hon’ble Supreme Court in M/S Kumar Exports v. M/S Sharma Carpets, 2009 (2) SCC 513, wherein it was held that in such cases the Accused, to disprove the presumptions, should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist.
The Court held that although the Accused repeatedly contended that the complainant had failed to produce invoices, telecast schedules and transmission records; such deficiencies could not come to the aid of the Accused when no material whatsoever was produced to rebut the presumptions. The Court observed that no account statements, correspondence, settlement documents or other records were placed on record by the Accused to demonstrate the absence of liability.
Party cannot approbate and reprobate
At the stage of framing of notice under Section 251 Cr.P.C., the Accused admitted the signatures on the cheques and acknowledged that they had been issued as blank signed security cheques in the course of business dealings. The Accused also admitted having placed a purchase order worth approximately ₹1.4 crore upon the Complainant.
However, at the stage of recording of statements under Section 313 Cr.P.C, the Accused contradicted his own stand by not only denying the existence of the agreement and ignorance regarding the issuance of the cheques themselves but also asserted that no services had ever been rendered by the Complainant.
The Court found these shifting stands and inconsistent positions to be mutually destructive and observed that a party cannot be permitted to “approbate and reprobate”.
Security Cheques and Existing Liability
The Court further rejected the Accused’s contentions that the cheques in dispute were security cheques. It was held that mere assertion that the cheques were issued as security does not by itself rebut the statutory presumption. The Court was of the view that even a security cheque, when presented towards an existing liability, attracts the provisions of Section 138 of the NI Act.
Lack of knowledge on the part of the Authorised Representative
The Accused had also attacked the competence of the authorised representative on the ground that he lacked personal knowledge of the transaction. The Court rejected the contention of the Accused on the competence of the Authorised Representative to be aware of the facts of the case including the personal knowledge of the transaction.
The Court was of the view that an authorised representative of a company may depose on the basis of records maintained in the ordinary course of business. Consequently, the evidence of the witness could not be discarded merely because he had not personally participated in the original transaction.
Legal notice issued by the Complainant remained silent on the particulars of the cheque
The Court rejected the Accused’s contention that the legal notice issued by the Complainant did not mention the cheque numbers and demanded an amount different from the aggregate cheque amount.
The Court was of the view that the object of a statutory notice is to inform the drawer regarding dishonour of the cheque and afford an opportunity to make payment. The Court observed that the notice is to be construed in a practical and not a hyper-technical manner.
Key takeaways
The decision is another reminder that prosecutions under Section 138 of the NI Act continue to be driven by the statutory presumptions as mandated under the statute. The same are fundamentally anchored in the statutory presumptions embodied in Sections 118 and 139 of the NI Act.
A notable feature of the case is the manner in which the defence evolved during the course of the proceedings. While the Accused initially acknowledged the underlying business relationship and issuance of the cheques, a subsequent attempt was made to deny the very existence of the transaction; thereby such inconsistent defences impacting the case per se.
The decision reiterates a settled principle of cheque dishonour jurisprudence vis-à-vis that though the presumptions under the NI Act are rebuttable, they cannot be rebutted by inconsistent assertions unsupported by evidence.
