Delhi District Court
Cis No. 4389/18, Arun Kumar Mittal vs . Devki Gupta on 15 October, 2022
IN THE COURT OF SH. ABHINAV PANDEY:
METROPOLITAN MAGISTRATE- 04,
SHAHDARA DISTRICT, KARKARDOOMA COURTS :
DELHI
CIS no. 4389/18
1. Complaint Case number :
CIS No. 4389/18
2 Name of the complainant : Arun Kumar Mittal
s/o Sh Jaynati Mittal
R/o A-54, Gali no. 4, Railway
Parcel Road, Bihari Colony,
Delhi-110032.
3. Name and address of the : Devki Gupta w/o Late Sh
accused Nanak Chand Gupta, R/o 404,
Chota Thakurdwara,
Pathanpura, Shahdara, Delhi-
110032.
4. Offence complained of or : Under Section 138 of the
proved Negotiable Instruments Act,
1881.
5. Plea of the accused : Pleaded not guilty and
claimed trial.
6. Final Order : Acquitted
7. Date of Institution : 20.09.2018
8. Date of Reserving the : 26.09.2022
Judgment
CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta
Page 1 to 18
9. Date of pronouncement : 15.10.2022.
JUDGMENT
I. Brief factual background 1.1 It is the case of the complainant that the complainant and the accused have been living in the same locality/street, and have family relations with each other for the last 10 years. It is stated that in the month of April 2018, the accused had approached the complainant for financial help/friendly loan for purpose of repayment of the debts of other people and had assured to pay the same within two months to the complainant. Considering the family relations, complainant allegedly agreed to advance a friendly loan of Rs. 2,95,000/- without interest for a period of two months. In discharge of his liability, the accused is alleged to have issued cheque bearing no. 051017 dated 02.08.2018 for Rs. 1,00,000/-, Cheque no. 128631 dated 13.08.2018 for Rs. 1,20,000/- and cheque no. 051018 dated 13.08.2018 for Rs 75,000/- all drawn on Central Bank of India, S.D. Senior Secondary school, Shahdara Branch, Delhi, to the complainant. (hereinafter referred to as the 'cheques in question') These cheques in question were returned unpaid upon presentation on account of reason "funds insufficient/ payment stopped/ drawer signatures differ", vide return memos dated 02.08.2017, and 14.08.2018. Thereafter, the complainant contacted the accused and apprised the fact of dishonour of the cheque, but the accused CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 2 to 18 did not pay the amount. The complainant then allegedly sent a legal notice dated 29.08.2018 to the accused, but to no avail. It is further alleged that the accused failed to pay the cheque amount within the statutory period and hence, the present complaint under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act') was filed by the complainant against the accused.
1.2 Upon service of summons, the accused entered an appearance in the present matter on 19.02.2019, and was admitted to bail. Notice under Section 251 Cr.P.C. was served upon the accused on 31.05.2019, to which the accused pleaded not guilty and claimed trial. Thereafter, the accused was allowed to cross-examine the complainant u/s 145 (2) of NI Act. After cross examination of the complainant, the matter was fixed for recording statement of the accused under Section 313 Cr.P.C. In the said statement recorded on 16.08.2022, the accused has stated that the cheques in question had been given by him to the complainant as he had insisted on these cheques to make him a member of the committee which he was running and the cheques in question had been given as security but were not returned to him by the complainant. He has no legal liability towards the complainant. He stated to have received the legal demand notice. Accused opted not to lead defence evidence.
2. Evidence 2.1 In order to support his case, complainant had stepped into CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 3 to 18 the witness box as CW-1, and tendered his affidavit Ex. CW1/A into evidence, wherein averments made in the complaint were reiterated. He also relied upon various documents such as Ex.CW1/1 to Ex. CW1/3 which are the cheques in question, Ex. CW1/4 to Ex CW1/6 which are the cheque return memos, Ex. CW1/7 which is legal notice, Ex CW1/8 and Ex CW1/9 which are the regd. AD Receipt, Ex. CW1/10 and Ex. CW1/11 which are the speed post receipts, Ex. CW1/12 and Ex. CW1/13 which are the delivery reports. He was cross examined by the defence.
3. Arguments:
3.1 Ld. counsel for the complainant has argued that all the requirements of Section 138 of NI Act have been met with in the present case and, hence, the accused be convicted. On the other hand, it has been argued on behalf of accused that complainant has failed to prove his case beyond reasonable doubt and, hence, the accused is entitled to be acquitted. Written arguments were also submitted on behalf of accused. I have heard the arguments, and also gone through the record carefully.
4. Points for determination:
It has been held in K. Bhaskaran vs Sankaran Vaidhyan Balan (1999) 7 SCC 510 that the offence under section 138 of the NI Act can only be completed with the concatenation of a number of acts, required for completing the offence, and accordingly, the following issues need to be determined by this CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 4 to 18 court.
(i) Whether the accused issued the cheque in question to the complainant?
(ii) Whether, the cheque in question was issued by the accused for discharge, in whole or in part, of any debt or other liability?
(iii) Whether the cheque was, on presentation, dishonoured due to reasons specified in Section 138 of Negotiable Instruments Act, 1881 ?
(iv) Whether the complainant has made a demand for payment of the amount of money in the cheque, by giving to the drawer, a notice in writing, within 30 days of the receipt of information by him, from the bank, regarding the return of the cheque as unpaid and the accused has failed to make the payment of the said amount of money to the complainant, within 15 days of the receipt of said notice?
(v) Whether the cheque was presented within the period of its validity, or within 3 months from the date on which it was drawn, and the complaint has been made, within a period of one month from the date when the cause of action has arisen under clause
(c) of the proviso to Section 138 of Negotiable Instruments Act, 1881?
5. BRIEF STATEMENT OF REASONS FOR DECISION:
On the basis of the evidence adduced, this court now CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 5 to 18 proceeds to determine whether all the ingredients of the offence under section 138 NI Act have been satisfied in the present complaint. For the sake of convenience, issues no. 1 and 2 are being decided together.
5.1 Whether the accused issued the cheque in question, and the same was issued by the accused for discharge, in whole or in part, of any debt or other liability?
5.1.1 Onus of proof: Once the issuance of the cheque is established, either by admission or by positive evidence, the presumption under Section 139 of the Negotiable Instruments Act, 1881 arises. 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 non-existence of debt or other liability. Section 139 of the Negotiable Instruments Act, 1881 uses the word "shall presume", and the meaning of the word "shall presume" in Section 4 of the Evidence Act, shows that the presumption under Section 139 is rebuttable. 5.1.2 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 CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 6 to 18 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 debut or other liability, and now the presumptions under Section 118 (a) and Section 139 will not come to the rescue of the complainant. [Bharat Barrel & Drum Manufacture Co. Vs. Amin Chand Pyarelal (1999) 3 SCC 3S and M.S. Narayan Menon Vs. State of Kerala (2006) 6 SCC 39 relied upon].
5.1.3 Mode of Proof: 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, the Court need not insist in every case that the accused should prove the non-existence 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 (including presumption under Section 114 Evidence Act), upon the consideration of which, the Court may either believe that the consideration and debut did not exist, or their non-existence was so probable that a prudent man would, under circumstances of CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 7 to 18 the case, act upon the plea that they did not exist. [Kishan Rao Vs. Shankaguda, 2018 (8) SCC 165, Mosaraf Hossain Khan Vs. Bhageeratha Engg. Ltd. & Ors (2006) 3 SCC 658, Goa Plast (P) Ltd. Vs. Chico Ursula D Souza (2004) 2 SCC 235, Monaben Ketanbhai Shah Vs. State of Gujarat (2004) 7 SCC 15, Prem Chand Vijay Kumar Vs. Yashpal Singh (2005) 4 SCC 417, DCM Financial Services Vs. J N Sareen (AIR 2008 SC 2255), K. Bhaskaran Vs. Shankaran Vaidhyan Balan (1999) 7 SCC 510 relied upon].
6 About security cheques:
6.1 In ICD vs. Beena Shabir and Anrs.: 2002(6) SCC 426, the Supreme Court has held that the security cheques also would fall within the purview of the Section 138of the NI Act and a person could not escape his liability merely by stating that the cheque had been given as security. As such, when there is existence of debt on the date of presentation of the cheque and the security cheques issued are dishonoured, the accused would be liable under Section 138 of the NI Act. Similar has been the law laid down by Hon'ble High court of Delhi in Wilson Mathew versus State of NCT of Delhi (Crl.Rev Pet. 188/2015).
6.2 In Collage Culture and Ors. vs. Apparel Export Promotion Council: 2007 (99) DRJ 251, a distinction has been drawn between two kinds of cheques, namely, one issued in CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 8 to 18 discharge in presenti but payable in future and the other issued in respect of a debt which comes into existence on the occurrence of a contingent event, and is not in existence on the date of issue of a cheque. The latter cheque, being by way of security cheque, will not be covered under Section 138 of NI Act. In the aforesaid decision, definition of the word 'due' has been given as 'outstanding on the relevant date'.The Court,therefore, held that the debt has to be in existence as a crystallized demand akin to liquidated damages and not a demand which may or may not come into existence. Also, in Suresh Chand Goyal vs. Amit Singhal (Crl.A. 601/2015decided on 14.05.2015) the concept of security cheques were discussed. It was held as follows in the aforesaid case:
"There is no magic in the word "security cheque", such that, the moment the accused claims that the dishonoured cheque (in respect whereof a complaint under Section 138 of the Act is preferred) was given as a "security cheque", the Magistrate would acquit the accused. The expression "security cheque" is not a statutorily defined expression in the NI Act. The NI Act does not per se carve out an exception in respect of a "security cheque" to say that a complaint in respect of such a cheque would not be maintainable. There can be myriad situations in which the cheque issued by the accused may be called as security cheque, or may have been issued byway of a security, i.e. to provide an assurance or comfort to the drawee, that in case of failure of the primary consideration on the due date, or on the CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 9 to 18 happening (or not happening) of a contingency,the security may be enforced. While in some situations, the dishonor of such a cheque may attract the penal provisions contained in Section 138 of the Act, in others it may not."
6.3 Relying on the aforesaid dicta, a bench of Hon'ble High Court of Delhi in Credential Leasing & Credits Ltd. vs. Shruti Investments and Anrs.: 2015 (151)DRJ147 held as under:
"Thus, I am of the considered view that there is no merit in the legal submission of the respondent accused that only on account of the fact that the cheque in question was issued as security in respect of a contingent liability, the complaint under Section 138 of the NI Act would not be maintainable. At the same time, I may add that it would need examination on a case to case basis as to whether, on the date of presentation of the dishonoured cheque, the ascertained and crystallized debt or other liability did not exist. The onus to raise a probable defence would lie on the accused, as the law raises a presumption in favour of the holder of the cheque that the dishonoured cheque was issued in respect of a debt or other liability."
7 About Loan Agreements and Income Tax Returns in the light of Section 138 of Negotiable Instruments Act.
In Krishan Janardan Bhutt vs. Duttatreya G. Hegde (2008 4 SCC54), Hon'ble Supreme Court held that one of the considerations to be taken into account while examining whether CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 10 to 18 there has been a successful rebuttal of the presumption U/s 139 of the Negotiable Instruments Act is whether an amount of loan/advance alleged to be given by the complainant to the accused, towards discharge of which the dishonored cheque was issued, was given by way of a payee cheque, or by way of cash, in case of an amount being more than Rs. 20,000/-. Section 269 (SS) of the Income Tax Act 1961 states that any advance taken by way of loan of more than Rs. 20,000/- has to be made by way of an account payee cheque only, and Section 271 (D) of the Act states that if a person takes or accepts any loan or deposit in contravention of the provisions of Section 269 (SS), he shall be liable to pay way of penalty, a sum equal to the amount of loan deposit, taken or accepted. It was further held in Para No. 29 that Section 138 has three ingredients;
Firstly, there is a legally enforceable debt, Secondly, that cheque was drawn from the account of the bank for discharge, in whole or in part, of any debt or other liability, which pre-supposes a legally enforceable debt, Thirdly, that the cheque so issued had been returned due to insufficiency of funds, and it was observed that the proviso appended to the said section provides for compliance of legal requirements, before a complaint can be acted upon by a court of law.
8 In his complaint and affidavit in evidence Ex. CW1/A, the CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 11 to 18 complainant has stated that he and the accused had been residing in the same street since the last 10 years, and relations between them and their family members were cordial and family-like. It is further stated in affidavit Ex. CW1/A that in April 2018, the ac- cused approached the complainant for a financial help/friendly loan "for the purpose of repaying the debt of other persons" and that he assured the complainant to repay the loan amount in two months. However, in his cross-examination, the complainant has given a different version of events regarding the purpose for which the loan had been given to the accused, and has stated that the accused had asked for such loan from the complainant for the marriage of the daughter of the accused. This is a material contra- diction between the contents of affidavit Ex. CW1/A and the cross-examination of the complainant. It needs to be noted that in the complaint and affidavit in evidence Ex. CW1/A, the com- plainant has not mentioned the actual amount which was sought by the accused from the complainant and has merely stated that he approached the complainant in April 2018 for a loan, and that complainant gave a loan of Rs. 2,95,000/- to the accused. More- over, no particular date, time and place and witnesses regarding payment of such amount by the complainant to the accused has been mentioned. The purpose of loan as mentioned in the affi- davit is that the accused required the said amount for repayment of the debts of other people and it shall not be prudent on the part of a reasonable man to advance loan to a person who has explic- CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 12 to 18 itly shown such unworthyness of credit at the time of seeking the loan itself, and no reasonable person can hope that the promise of repayment by such a person who is unable to repay the debts of many other people, can be an honest promise. In these circum- stances, adverse inference is required to be drawn against the complainant u/s 114 of the Indian Evidence Act, 1872. In his cross-examination, the complainant has stated that the accused had required the loan for the purpose of marriage of his daughter but the complainant stated to be unaware of the marriage date of the daughter of the accused and also admitted to having not seen the marriage card of the daughter of the accused. In these circum- stances, it seems that the complainant has attempted to tell this court that he gave a substantial amount of Rs. 2,95,000/- to the accused as loan, without properly enquiring into the bonafides of requirement of the accused. Whether the complainant has proved himself to be a man of such means as to casually give away Rs. 2,95,000/- to someone without conducting a proper enquiry, shall be dealt with in the later part of this judgment. However, the fact of being unaware about the date of marriage of daughter of the accused and not being invited thereto, strongly contradicts his statement in affidavit Ex. CW1/A that the complainant and the accused were having family relations with each other. Moreover, in his cross-examination, the complainant has stated that the cheque in question had been handed over by the accused to the complainant at the time of tendering the loan, but no such men- CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 13 to 18 tion has been made by the complainant in his complaint or affi- davit Ex. CW1/A, wherein it has been mentioned that the ac- cused gave the cheques in question to the complainant towards the discharge of his liability towards repayment of the friendly loan amount to the complainant.
8.1 In view of this discussion, it can safely be said that the ac- cused has successfully rebutted the presumption arising against him u/s 139 of the NI Act on a scale of preponderance of proba- bilities. This court now has to see whether the complainant has been able to prove the existence of a legal liability beyond rea- sonable doubt, without the aid of presumption u/s 139 of the NI Act.
8.2 In his cross-examination, the complainant has admitted that no agreement was executed with the accused by the com- plainant regarding the aforesaid loan amount and that no receipt was prepared. The complainant has admitted to not filing any in- come tax return, which only gives rise to two possibilities, which are either that the complainant was not having sufficient earnings so as to file income tax return, or that he was engaged in tax eva- sion. The complainant has admitted to not having any license for tendering the loan. The complainant has stated that he has ar- ranged the alleged loan amount to be paid to the accused as he was having an amount of Rs. 1,50,000/- lying with him, and that he he had taken the balance amount from his father. The com- plainant has throughout stated that he gave the amount of loan to CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 14 to 18 the accused in April 2018, the exact date of which he does not re- member, however, at the same time, he has admitted during his cross-examination that in April 2018, there was no credit balance lying in his bank account. He has further admitted that even to- day there is no balance in his bank account, at the same time, the complainant has admitted that the accused had been earning around Rs. 40,000/- to 45,000/- per month at the relevant point of time. The complainant has throughout failed to disclose his source of earnings and the quantum of earnings. CW2, who is fa- ther of the complainant, has been produced by the complainant as a witness and has stated that he gave an amount of Rs. 1,40,000/- to the complainant on his demand, and that accused had issued the cheque to the complainant and had promised to return the amount within 2 months. He has also admitted to knowing the fact the accused had been working as a peon in Gowshala School, but it is clear from the cross-examination of CW2 that he has failed to disclose the exact date, time and particulars of giv- ing of loan by the complainant to the accused, and has failed to produce any ledger or any income tax return showing the pay- ment of such amount by him to the complainant. CW2 has also admitted to having never visited the house of the accused and has admitted to not knowing the present address of the accused, con- trary to the claim of family relations between the accused and the complainant. CW2 has further admitted that his son, who is the complainant used to take money from him for fulfilling his daily CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 15 to 18 needs. He has further stated that he is not aware as to what work is the complainant engaged in, but has stated that he knows that the complainant is doing some 'petty work'. He has also stated that he pays Rs. 6,000/ to 10,000/- sometimes to his son for ful- filling his daily needs. Apart from the aforesaid demands, it also needs to be taken into account that the presence of father of the complainant at the time of granting of loan by the complainant to the accused has nowhere been mentioned in the complaint or in affidavit in evidence by the complainant and therefore, CW2 also comes across as an interested witness, planted by the com- plainant, being a family member.
8.3 Leaving aside the fact that payment of Rs. 2,95,000/- in cash as alleged is in the teeth of taxation laws, this court is not convinced at all as to how a man of such means as the com- plainant could afford to pay Rs. 2,95,000/- to the accused without any documentation whatsoever, more so, when the accused is ad- mitted to being a salaried employee, whereas the complainant comes across as an unemployed person, dependent on his father for fulfilling his daily needs. The legal notice Ex. CW1/7 also does not mention the correct amount of loan as stated in the com- plaint and in the affidavit in evidence. The case of the accused throughout, be it in his substance of accusation u/s 251 Cr.P.C., or during cross-examination of CW1 and CW2 or in his examina- tion u/s 313 Cr.P.C., has been the same, to the effect that the com- plainant used to run a committee in which the accused was a par- CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 16 to 18 ticipant, and that the cheques in question had been given to the complainant for the purpose of security, when the accused started participating in the committee. Accused has throughout denied taking any such loan from the complainant or having any liability towards the complainant, and has alleged misuse of his cheques by the complainant. More importantly, during his cross-examina- tion, the complainant has admitted that the accused had filed a complaint against him regarding the misuse of the cheques in question and that the complainant was called by the police in the police station in pursuance of the said complaint. 8.4 In these circumstances, this court is of the opinion that the complainant has completely and miserably failed to prove his case against the accused beyond reasonable doubt, without the aid of presumption u/s 139 of the NI Act. In these circumstances, this court is of the opinion that the cheque in question must not have been given by the accused to the complainant towards dis- charge of a legally unforceable debt or other liability.
9 As held in the case of K. Bhaskaran Vs. Sankaran Vaidhyan Balan [(1999) 7 SCC 510], the offence under Section 138 of NI Act is completed by a concatenation of all the essential ingredients of the offence, and since in the present case, there is found to be an absence of a legally enforceable debt or other liability, meaning thereby that one of the essential ingredients of CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 17 to 18 the offence under Section 138 is not made out, therefore, there is no requirement to dwell upon the existence of other ingredients, i.e., the reason for return of the cheque as unpaid, and the delivery of the mandatory legal notice.
10. Conclusion In view of the above discussion, I am of the considered opinion that the accused has rebutted the statutory presumption u/s 139 of the Negotiable Instruments Act, and the complainant has failed to establish her case beyond reasonable doubt against the accused. Accordingly, accused Devki Gupta w/o Late Sh Nanak Chand Gupta, R/o 404, Chota Thakurdwara, Pathanpura, Shahdara, Delhi-110032 is hereby acquitted of the offence pun- ishable under Section 138 NI Act. Copy of this judgment be given free of cost to both the sides.
Announced in the open Court on 15.10.2022.
(Abhinav Pandey) Metropolitan Magistrate-04 (Shahdara) KKD/Delhi The judgment contains 18 pages, all pages signed by the presiding officer (Abhinav Pandey) Metropolitan Magistrate-04 (Shahdara) KKD/Delhi CIS No. 4389/18, Arun Kumar Mittal Vs. Devki Gupta Page 18 to 18