2nd National ADR Competition

In the Delhi High Court Mediation and Conciliation center

Measures taken for amicable settlement for liability arising out of dishonouring of
cheque

In the matter of

Ms Raji --------------- Appellant

V.

Mr Arjun Nair------------------Respondent

CREF no :----------/ 2021

Table of Contents
1. List of Abbreviations ------------------------------------------- Pg 3

2. Index of Authorities ---------------------------------------------- Pg 4

3. General introduction and briefing of ADR --------------------- Pg 5

4. Summary of facts --------------------------------------------------- Pg 14

5. Measure of Issues ---------------------------------------------------Pg 15

6. Arguments Advanced ----------------------------------------------- Pg16

7. Conclusion ------------------------------------------------------------ Pg 19

List of Abbreviations
ADR Alternate Dispute Resolution
OP Original Petition
IA Interlocutory Appeal
CRR Criminal Reference
SLP Special Leave Petition
NI Negotiable Instrument
WP Writ Petition
SC Supreme Court
Ors Others
UOI Union of India

Index of Authorities
Supreme Court Cases

1. :Securities and Exchange Board of India vs. Classic Credit Ltd. (21.08.2017 - SC)
Criminal Appeal No. 1450 of 2017 (Arising out of SLP (Crl.) No. 3593 of 2011)
2. All India Judges Asson. and Ors. vs. Union of India (UOI) and Ors. (12.07.2010 -
SC) Interlocutory Application No. 279 of 2010 in Writ Petition (C) No. 1022 of
1989
3. Internet and Mobile Association of India vs. Reserve Bank of India (04.03.2020 -
SC) : Writ Petition (Civil) Nos. 528 and 373 of 2018
4. Google India Private Limited vs. Visakha Industries and Ors. (10.12.2019 - SC) :
Criminal Appeal No. 1987 of 2014
5. Northern India Caterers Private Ltd. and Ors. vs. State of Punjab and Ors.
(04.04.1967 - SC) Civil Appeal No. 1101 of 1965

High Court Cases

1. Pamvi Consultancy Services Ltd. vs. Global Syntex (Bhilwara) Ltd. Summons For Judgment No.
249 of 2000 and in Summary Suit No. 5907 of 1999 ( Bombay High Court)
2. Union of India (UOI) vs. M.L. Dalmiya and Co. Ltd. A.F.O.D. No. 249 of 1973 (Calcutta HIgh
Court)
3. Narayana Farm Produce Pvt. Ltd. and Ors. vs. Jalaram Feeds Civil Rivision Application No.
58/2017 (IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)
4. Ispat Industries Ltd. vs. Baby Samuel and Co. Arbitration Petition No. 407 of 2006(21.10.2008 -
BOMHC)
5. Board of Control for Cricket in India vs. Deccan Chronicle Holdings Ltd. (16.06.2021 -
BOMHC) : Comm. Arbitration Petition (L) No. 4466 of 2020

GENERAL INTRODUCTION TO
“ALTERNATIVE DISPUTE RESOLUTION”
Definition
Alternative Dispute Resolution abbreviated as ADR, is a method or an instrument of resolving
disputes without litigation. Public courts may be asked to review the validity of ADR methods,
but they will rarely overturn ADR decisions and awards if the disputing parties formed a valid
contract to abide by them.

Overview
Alternative Dispute Resolution ("ADR") refers to any means of settling disputes outside of the
courtroom. ADR typically includes early neutral evaluation, negotiation, conciliation, mediation,
and arbitration. As burgeoning court queues, rising costs of litigation, and time delays continue
to plague litigants, more states have begun experimenting with ADR programs. Some of these
programs are voluntary; others are mandatory.
While the two most common forms of ADR are arbitration and mediation, negotiation is almost
always attempted first to resolve a dispute. It is the preeminent mode of dispute resolution.
Negotiation allows the parties to meet in order to settle a dispute. The main advantage of this
form of dispute settlement is that it allows the parties themselves to control the process and the
solution.
Mediation is also an informal alternative to litigation. Mediators are individuals trained in
negotiations, who bring opposing parties together and attempt to work out a settlement or
agreement that both parties accept or reject. Mediation is not binding.
▪ Arbitration is more formal than Mediation and resembles a simplified version of a trial
involving limited discovery and simplified rules of evidence (ex.hearsay is usually
admissible in arbitration). Prior to the dispute occurring, parties usually enter into a binding
arbitration agreement or any other form of agreement with an arbitration clause, that allows
them to lay out major terms for the arbitration process (number of arbitrators, arbitration
forum; arbitration rules; fees etc.). If parties still have disputes about certain terms before
entering into an arbitration they can petition to a court to resolve a dispute. The arbitration
is headed and decided by an arbitral panel or a single arbitrator, depending on the
agreement of the parties. Arbitrators do not have to be lawyers, parties can select arbitrators
from other fields that they consider more suitable for the resolution of the dispute. For
example, parties can choose an arbitrator with an engineering background to arbitrate a
construction dispute. Arbitration hearings usually last between a few days to a week, and
the panel only meets for a few hours per day. The panel or a single arbitrator then
deliberates and issues a written binding decision or arbitral award. Opinions are not public
record. Arbitration has long been used in labor, construction, and securities regulation, but
is now gaining popularity in other business disputes.
The concept of Alternative Dispute Resolution (ADR) mechanism is capable of providing
a substitute to the conventional methods of resolving disputes. ADR offers to resolve all
type of matters including civil, commercial, industrial and family etc., where people are not
being able to start any type of negotiation and reach the settlement. Generally, ADR uses
neutral third party who helps the parties to communicate, discuss the differences and
resolve the dispute. It is a method which enables individuals and group to maintain
co-operation, social order and provides opportunity to reduce hostility. 
 ▪ BRIEFING ON - ALTERNATIVE DISPUTE RESOLUTION (ADR)

▪ Introduction:

▪ ADR is a mechanism of dispute resolution that is non adversarial, i.e. working together
co-operatively to reach the best resolution for everyone. ADR can be instrumental in
reducing the burden of litigation on courts, while delivering a well-rounded and
satisfying experience for the parties involved. It provides the opportunity to "expand the
pie" through creative, collaborative bargaining, and fulfill the interests driving their
demands.
▪ Arbitration and Conciliation Act, 1996-
Part I of this act formalizes the process of Arbitration and Part III formalizes the process
of Conciliation. (Part II is about Enforcement of Foreign Awards under New York and
Geneva Conventions.)
▪ The Concept & its efficacy:
▪
“It is the spirit and not the form of law that keeps the justice alive.” LJ Earl Warren

The concept of Conflict Management through Alternative Dispute Resolution (ADR)

has introduced a new mechanism of dispute resolution that is non adversarial. A dispute
is basically ‘lis inter partes’ and the justice dispensation system in India has found an
alternative to Adversarial litigation in the form of ADR Mechanism.

New methods of dispute resolution such as ADR facilitate parties to deal with the
underlying issues in dispute in a more cost-effective manner and with increased
efficacy. In addition, these processes have the advantage of providing parties with the
opportunity to reduce hostility, regain a sense of control, gain acceptance of the
outcome, resolve conflict in a peaceful manner, and achieve a greater sense of justice in
each individual case. The resolution of disputes takes place usually in private and is
more viable, economic, and efficient. ADR is generally classified into at least four
types: negotiation, mediation, collaborative law, and arbitration. (Sometimes a fifth
type, conciliation, is included as well, but for present purposes it can be regarded as a
form of mediation

Importance of ADR in India

To deal with the situation of pendency of cases in courts of India, ADR plays a significant role in
India by its diverse techniques. Alternative Dispute Resolution mechanism provides scientifically
developed techniques to Indian judiciary which helps in reducing the burden on the courts. ADR
provides various modes of settlement including, arbitration, conciliation, mediation,
negotiation and lok Adalat. Here, negotiation means self-counseling between the parties to resolve
their dispute but it doesn’t have any statutory recognition in India.
ADR is also founded on such fundamental rights, article 14 and 21 which deals with equality before
law and right to life and personal liberty respectively. ADR’s motive is to provide social-economic
and political justice and maintain integrity in the society enshrined in the preamble. ADR also strive
to achieve equal justice and free legal aid provided under article 39-A relating to Directive Principle
of State Policy(DPSP).

Few important provisions related to ADR

● Section 89 of the Civil Procedure Code, 1908 provides that opportunity

to the people, if it appears to court there exist elements of settlement
outside the court then court formulate the terms of the possible
settlement and refer the same for: Arbitration, Conciliation, Mediation
or Lok Adalat.
● The Acts which deals with Alternative Dispute Resolution are Arbitration
and Conciliation Act, 1996 and,
● The Legal Services Authority Act, 1987

Advantages of Alternative Dispute Resolution

● Less time consuming: people resolve their dispute in short period as

compared to courts
● Cost effective method: it saves lot of money if one undergoes in
litigation process.
● It is free from technicalities of courts, here informal ways are applied in
resolving dispute.
● People are free to express themselves without any fear of court of law.
They can reveal the true facts without disclosing it to any court.
● Efficient way: there are always chances of restoring relationship back
as parties discuss their issues together on the same platform.
● It prevents further conflict and maintains good relationship between
the parties.
● It preserves the best interest of the parties.

Various modes of Alternative Dispute Resolution

Arbitration

The process of Arbitration cannot exist without valid arbitration agreement prior to the emergence of
dispute. In this technique of resolution parties refer their dispute to one or more persons called
arbitrators. Decision of arbitrator is bound on parties and their decision is called ‘Award’. The object
of Arbitration is to obtain fair settlement of dispute outside of court without necessary delay and
expense.

Any party to a contract where arbitration clause is there, can invoke arbitration clause either himself
or through their authorized agent which refer the dispute directly to the arbitration as per the
Arbitration clause. Here, arbitration clause means a clause that mention the course of actions,
language, number of arbitrators, seat or legal place of the arbitration to be taken place in the event of
dispute arising out between the parties.

Again Section 8 of Arbitration and Conciliation Act, 1996 provides if any party disrespects the
arbitral agreement and instead of moving to arbitration, moves that suit to civil court, other party can
apply the court for referring the matter to arbitration tribunal as per the agreement but not later the
submission of the first statement. The application must include a certified copy of arbitration
agreement and if courts satisfy with it, the matter will be referred to arbitration.

Mediation

Mediation is an Alternative Dispute resolution where a third neutral party aims to assist two or more
disputants in reaching agreement. It is an easy and uncomplicated party centered negotiation process
where third party acts as a mediator to resolve dispute amicably by using appropriate communication
and negotiation techniques.  This process is totally controlled by the parties. Mediator’s work is just
to facilitate the parties to reach settlement of their dispute. Mediator doesn’t impose his views and
make no decision about what a fair settlement should be. It is the best possible outcome both the
party come up with or has in mind. Its suitable situation as each party thinks about their most
favorable scenario looks like.

For a successful negotiation the result always lies in the middle, mediator after considering both the
parties comes up with most likely outcome. Here result is not always in the middle but little left or
right of the center depending on negotiation situation. Mediator discusses the perspective of the
parties about the possible outcome at litigation. It is also helpful for the mediator to work with parties
and their advocates to come to a proper understanding of the best, worst and most probable outcome
to the dispute through litigation as that would help the parties to acknowledge the reality
and prepare realistic, logical and workable proposals.

Conciliation

Conciliation is a form of arbitration but it is less formal in nature. It is the

process of facilitating an amicable resolution between the parties, whereby the
parties to the dispute use conciliator who meets with the parties separately to
settle their dispute. Conciliator meet separately to lower the tension between
parties, improving communication, interpreting issue to bring about a
negotiated settlement  There is no need of prior agreement and cannot be
forced on party who is not intending for conciliation. It is different from
arbitration in that way.

Actually, it is not possible for the parties to enter into conciliation agreement before the dispute
has arisen. It is clear in Section 62 of The Arbitration and Conciliation Act, 1996 which provides-

● The party initiating conciliation shall send to the other party a written
invitation to conciliate under this part, briefly identifying the subject of
the dispute.
● Conciliation proceedings shall commence when the other party accepts
in writing the invitation to conciliate.
● If the other rejects the invitation, there will be no conciliation
proceedings.
Above provision clearly states conciliation agreement should be an extemporary
agreement entered into after the dispute has but not before. Parties are also
permitted to engage in conciliation process even while the arbitral proceedings
are on(section 30).

Negotiation

Negotiation is a dialogue intended to resolve disputes, to produce an agreement upon courses

of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various
interests. It is the primary method of alternative dispute resolution.

Negotiation occurs in business, non-profit organizations, government branches, legal

proceedings, among nations and in personal situations such as marriage, divorce, parenting,
and everyday life. The study of the subject is called negotiation theory. Those who work in
negotiation professionally are called negotiators. Professional negotiators are often specialized,
such as union negotiators, leverage buyout negotiators, peace negotiators, hostage negotiators,
or may work under other titles, such as diplomats, legislators or brokers

Lok Adalat

“While Arbitration and Conciliation Act, 1996 is a fairly standard western approach towards ADR, the
Lok Adalat system constituted under National Legal Services Authority Act, 1987 is a uniquely Indian
approach”.

Lok Adalat is called ‘People’s Court’ presided over by a sitting or retired judicial
officer, social activists or members of Legal profession as the chairman. National
Legal Service Authority(NALSA) along with other Legal Services Institutions
conducts Lok Adalats on regular intervals for exercising such jurisdiction.  Any
case pending in regular court or any dispute which has not been brought before
any court of law can be referred to Lok Adalat. There is no court fees and rigid
procedure followed, which makes the process fast. If any matter pending in
court of referred to the Lok Adalat and is settled subsequently, the court fee
originally paid in the court when the petition filed is also refunded back to the
parties.   

Parties are in direct interaction with the judge, which is not possible in regular
courts. It depends on the parties if both the parties agree on case long pending
in regular court can be transferred to Lok Adalat. The persons deciding the
cases have the role of statutory conciliators only, they can only persuade the
parties to come to a conclusion for settling the dispute outside the regular court
in the Lok Adalat. Legal Services Authorities (State or District) as the case may
be on receipt of an application from one of the parties at a pre-litigation stage
may refer such matter to the Lok Adalat for which notice would then be issued
to the other party. Lok Adalats do not have any jurisdiction to deal with cases of
non-compoundable offenses.

▪ ADR has proven successful in clearing the backlog of cases in various levels of the
judiciary – Lok Adalats alone have disposed more than 50 lakh cases every year
on average in the last three years. But there seems to be a lack of awareness
about the availability of these mechanisms. The National and State Legal Services
Authorities should disseminate more information regarding these, so they become
the first option explored by potential litigants.

EXPLANATION ON THE METHOD OF APPLICATION OF

NEGOTIABLE INSTRUMENT

DEFINITION:
As per section 13 of the Negotiable Instruments Act, “A negotiable instrument means a
promissory note, bill of exchange or check payable either to the order or to the bearer.”
Negotiable Instruments Act, 1881 consists of 17 chapters and 142 Sections.
A negotiable instrument is a signed document that promises a sum of payment to
a specified person or the assignee. In other words, it is a formalized type of IOU:
An IOU, a phonetic acronym of the words "I owe you," is a document that
acknowledges the existence of a debt. A transferable, signed document that
promises to pay the bearer a sum of money at a future date or on-demand. The
payee, who is the person receiving the payment, must be named or otherwise
indicated on the instrument. Common examples of negotiable instruments
include checks, money orders, and promissory notes.

Understanding Negotiable Instruments

Negotiable instruments are transferable in nature, allowing the holder to take

the funds as cash or use them in a manner appropriate for the transaction or
according to their preference. The fund amount listed on the document includes a
notation as to the specific amount promised and must be paid in full either
on-demand or at a specified time. A negotiable instrument can be transferred
from one person to another. Once the instrument is transferred, the holder
obtains a full legal title to the instrument.  Additionally, no other instructions or
conditions can be set upon the bearer to receive the monetary amount listed on
the negotiable instrument. For an instrument to be negotiable, it must be signed,
with a mark or signature, by the maker of the instrument—the one issuing the
draft. This entity or person is known as the drawer of funds.

Jurisdiction
Considering the ingredients of sec.138 referred above, the Hon'ble Supreme
Court in case of K. Bhaskaran vs. Shankaran, had held that any of the following
places have the jurisdiction to initiate the prosecution -
1. Where cheque is drawn.
2. Where payment had to be made.
3. Where cheque is presented for payment
4. Where cheque is dishonored.
5. Where notice is served up to drawer.
However, in case of Dashrath Rupsingh Rathod vs. State of Maharashtra1, the 3
judge bench of the Supreme Court took a strict approach and held that the
1
1 August, 2014
territorial jurisdiction under section 138 should be exclusively be determined and
considered by place of the offence. The return of the cheque by the drawer bank
only constitutes the commission of offence under section 138.
The legal position regarding territorial jurisdiction of the courts in cases of
dishonor of the cheque has completely changed with the new amendments i.e.
the Negotiable Instrument (Amendment) Act, 2015 which has retrospectively
came into force from 15th July, 2015. New Clause i.e. section 142 (2) has been
added in section 142 which stipulates provisions for the local jurisdiction of the
court where the offence under Section 138 shall be inquired into and tried and
new sub section 142A in inserted in the Act which stipulates provisions for
validation for transfer of pending cases.

Statement of facts

The appellant would state that Smt. Raji is in the business of supplying Fire fighting
equipment. As a practice of business Smt Raji holds the inventory of fire fighting goods
and delivers to different buyers as per requirement. The appellent Smt. Raji manages a
ledger account to keep a track of her inventory , the sale of goods and the amounts due
or paid by the customers. The appellent managed the ledger account regularly to keep
a track of the goods sold. The appellant sold fire fighting goods to Mr Arjun Nair at
different dates and at different quantities which were recorded in the ledger account.

As on on 7th April, 2018, the total value of the goods were calculated to Rs 55,99,600
(Fifty five lakh , ninety nine thousand and six hundred rupees). Mr Arjun Nair nair to
dispose of the liability issued two account payee checks of the amount of Rs
11,00,000(Eleven lakhs ) bearing the cheque no 365406 dated 1st December 2019 and
a sum of Rs 16,00,000 (Sixteen Lakhs) bearing the Cheque no 563707 dated 28th
November ,2020. The two cheques were dishonored by the respondent’s bank on
presentation on account of insufficiency of funds. The appellant Smt Raji served a legal
notice of demand to Mr Arjun Nair, which went unresponded.

The appellant filed two Complaint cases under section 138 of the NI Act at the Patiala
House Court bearing the no. CC 89/1/21 and 226 /1/21. During the pendency of the
case, the parties to the case Ms Raji and Arjun Nair decided to amicably settle their
dispute. A common order dated 1st April , 2021 recorded in both the complaint cases,
the matter was referred to Delhi High Court Mediation and Conciliation center.
As Per Section 89 of the Civil Procedure Code, 1870, (1) Where it appears that there
exists an element of settlement, which may be acceptable to both the parties, the Court
shall formulate the terms of the settlement and give them to the parties for observation,
and after receiving the observation of the parties, the Court may reformulate the terms
for settlement and refer the same for -

a) Arbitration
b) Conciliation
c) Judicial settlement including settlement through Lok Adalat
d) Mediation

(2) Were a dispute has been referred—

(a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act,
1996 (26 of 1996) shall apply as if the proceedings for arbitration or conciliation were
referred for settlement under the provisions of that Act;

(b) to Lok Adalat, the Court shall refer the same to the Lok Adalat in accordance with
the provisions of sub-section (1) of section 20 of the Legal Services Authority Act, 1987
(39 of 1987) and all other provisions of that Act shall . apply in respect of the dispute so
referred to the Lok Adalat;

(c) for judicial settlement, the Court shall refer the same to a suitable institution or
person and such institution or person shall be deemed to be a Lok Adalat and all the
provisions of the Legal Services Authority Act, 1987 (39 of 1987) shall apply as if the
dispute were referred to a Lok Adalat
under the provisions of that Act;

(d) for mediation, the Court shall effect a compromise between the parties and shall
follow such procedure as may be prescribed.
 Summary of issues

1. Does the defendant have a reasonable arguable cause for trial.

2. Does the dishonouring of the cheque and not responding to the legal notice
sufficient enough cause for awarding a decree for the offence under section 138
of the Negotiable Instruments Act.

3. Does a lenient settlement to the defendant would not highlight the courage of
those who are in the process of such felonies

4. Does issuing two checks which were dishonored for insufficient funds not make
the respondent a party to a fraud in its own submission.

5. Does the provision of section 118 of the Negotiable instruments act that Until the
contrary is proved, the following presumptions shall be made:—
(a) of consideration:—that every negotiable instrument was made or drawn for
consideration,and that every such instrument, when it has been accepted,
endorsed, negotiated or transferred, was accepted, indorsed, negotiated or
transferred for consideration , not provide a ground for conviction.

6. Does the burden of proof not lie on the defendant to prove that he is not guilty of
the accusations.
 Arguments Advanced

1. Respondent is liable for damages

The accused in a trial under Section 138 of the Act has two options. He can either show
that consideration and debt did not exist or that under the particular circumstances of the
case the non-existence of consideration and debt is so probable that a prudent man
ought to suppose that no consideration and debt existed. To rebut the statutory
presumptions an accused is not expected to prove his defence beyond reasonable doubt
as is expected of the complainant in a criminal trial. The accused may adduce direct
evidence to prove that the note in question was not supported by consideration and that
there was no debt or liability to be discharged by him. However, it need not insist in every
case that the accused should disprove the non-existence of 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 bare denial of the passing of the
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 consideration of which, 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. Apart from adducing direct evidence to prove that the note in
question was not supported by consideration or that he had not incurred any debt or
liability, the accused may also rely upon circumstantial evidence and if the circumstances
so relied upon are compelling, the burden may likewise shift again on to the
complainant. The accused may also rely upon presumptions of fact, for instance, those
mentioned in Section 114 of the Evidence Act to rebut the presumption arising under
Sections 118 and 139 of the Act.

2. Respondent failed to perform obligation on good fair dealing

As the signature in the cheque is admitted to be that of the Accused, the presumption
envisaged in Section 118 of the Act can legally be inferred that the cheque was made or
drawn for consideration on the date which the cheque bears. Section 139 of the Act
enjoins to presume that the holder of the cheque received it for the discharge of any
debt or liability. The burden was on the Accused to rebut the aforesaid presumption.
 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.
The presumption Under Section 139 is a rebuttable presumption and the onus is on the
Accused to raise the probable defence.

3. Does the respondent deserve leniency

While Section 138 of the Act specifies the strong criminal remedy in relation to the
dishonour of the cheques, the rebuttable presumption under Section 139 is a device to
prevent undue delay in the course of litigation. The Courts have however, observed that
it must be remembered that the offence made punishable by Section 138 can be better
described as a regulatory offence since the bouncing of a cheque is largely in the nature
of a civil wrong whose money is usually confined to the private parties involved in
commercial transactions. In such a scenario, the test of proportionality should guide the
construction and interpretation of reverse onus clauses and the defendant accused
cannot be expected to discharge an unduly high standard of proof". Further it is a settled
position that when an accused has to rebut the presumption under Section 139, the
standard of proof for doing so is all preponderance of probabilities.

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.

4. Does the dishonouring of two cheques itself not a valid ground for conviction

Section 138, NI Act requires proof of the essential ingredients viz., (i) there is a legally
enforceable debt; (ii) a cheque is drawn on an account maintained by the accused with his
Banker for payment of any amount to another person from his account in discharge in whole or
in part of the debt or liability; and (iii) the cheque is returned by the Bank unpaid, either because
of insufficient fund in the account of the accused to honour the cheque or that the cheque
amount exceeds the amount arranged to be paid from that account by an agreement made with
the Bank.

It is not the case of the respondent-accused that he either signed the cheque or parted
with it under any threat or coercion. Nor is it the case of the respondent-accused that the
unfilled signed cheque had been stolen. Even the existence of a fiduciary relationship
 between the payee of a cheque and its drawer, would not disentitle the payee to the
benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the
absence of evidence of exercise of undue influence or coercion. The second question is
also answered in the negative.
Therefore, if the accused is able to establish a probable defence which creates doubt
about the existence of a legally enforceable debt or liability, the prosecution can fail. The
accused can rely on the materials submitted by the complainant in order to raise such a
defence and it is inconceivable that in some cases the accused may not need to adduce
the evidence of his/her own. If however, the accused/drawer of a cheque in question
neither raises a probable defence nor able to contest existence of a legally enforceable
debt or liability, obviously statutory presumption under Section 139 of the NI Act
regarding commission of the offence comes into play if the same is not rebutted with
regard to the materials submitted by the complainant.

5. Does the respondent have a reasonable explanation for his non response to the legal
notice

It is no doubt true that the dishonour of cheques in order to qualify for prosecution under
Section 138 of the NI Act precedes a statutory notice where the drawer is called upon by
allowing him to avail the opportunity to arrange the payment of the amount covered by
the cheque and it is only when the drawer despite the receipt of such a notice and
despite the opportunity to make the payment within the time stipulated under the statute
does not pay the amount, that the said default would be considered a dishonour
constituting an offence, hence punishable. But even in such cases, the question whether
or not there was lawfully recoverable debt or liability for discharge whereof the cheque
was issued, would be a matter that the trial court will have to examine having regard to
the evidence adduced before it keeping in view the statutory presumption that unless
rebutted, the cheque is presumed to have been issued for a valid consideration. In view
of this the responsibility of the trial judge while issuing summons to conduct the trial in
matters where there has been instruction to stop payment despite sufficiency of funds
and whether the same would be a sufficient ground to proceed in the matter, would be
extremely heavy."

Whether the accused deliberately with a view did not receive the demand notice?"

Under Section 118 (a) of the Negotiable Instruments Act, the Court is obliged to
presume, until the contrary is proved, that the promissory note was made for
consideration. It is also a settled position that the initial burden in this regard lies on the
defendant to prove the non-existence of consideration by bringing on record such facts
and circumstances which would lead the Court to believe the non-existence of the
consideration either by direct evidence or by preponderance of probabilities showing that
the existence of consideration was improbable, doubtful or illegal..."

It is clear that signature on the cheque having been admitted, a presumption shall be
raised Under Section 139 that the cheque was issued in discharge of debt or liability.
The question to be looked into is as to whether any probable defence was raised by the
Accused. During his cross-examination, the Accused was questioned, there was no
satisfactory reply given by the complainant.

Conclusion
In light of the facts stated, question raised, arguments advanced and
authorities cited, the claimant prays before this Mediation and Conciliation
centre that the appellant be awarded the appropriate relief.