Delhi District Court
Cc No.: 4526/12 Gambit Leasing vs Baldev Singh 1/16 on 9 July, 2012
IN THE COURT OF MS MANISHA TRIPATHY: MM (09): SPECIAL
COURT NO.9: DWARKA COURT: NEW DELHI
In the matter of: -
CC NO.: 4526/12
CRID NO. 02405RO156602011
M/S GAMBIT LEASING & FINANCE (P) LTD.
RR-2, MIANWALI NAGAR, ROHTAK ROAD,
DELHI-110087. A PRIVATE LIMITED COMPANY
THROUGH ONE OF ITS OFFICER MR. RAM NIWAS
... Complainant
VERSUS
SHRI BALDEV SINGH
S/O SH. SAHIB SINGH
44/1, SANT GARH, GALI NO. 23,
TILAK NAGAR, NEW DELHI-110018.
ALSO AT:
B-127, FATEH NAGAR, TILAK NAGAR,
NEW DELHI-10018.
...Accused
Date of Institution of Complaint : 18/04/2011
Offence Complained of : punishable u/s 138 N.I. Act
Plea of Accused : Not Guilty
Date of Final Arguments Heard : 25/06/2012
Decision : Convicted
Date of Decision : 09/07/2012
CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 1/16
-:JUDGMENT:-
1.Present case was instituted on a complaint filed by M/s Gambit Leasing & Finance Pvt. Ltd. (hereinafter referred to as 'the complainant) against Sh. Baldev Singh (hereinafter referred to as 'the accused') u/s 138 of Negotiable Instrument Act 1881 (hereinafter referred to as 'the act').
2. Brief facts of the case as alleged by complainant are that the complainant is a private limited company duly incorporated under companies Act 1956 and is engaged in a business of financing. The accused availed loan of Rs.85000/- from the complainant company against vehicle No.DL3CAC 3807 vide loan agreement dated 05/03/2010. As per agreement, total sum of Rs.1,13,900/- with interest @ 17% per annum was repayable by the accused in 24 EMIs.
3. It is alleged that for repayment of the said loan, accused issued a number of cheques including cheques bearing no. '065250' dated 11/11/2010 and cheque bearing no. '065251' dated 11/12/2010, both for a sum of Rs. 4700/- drawn on State Bank of India, 5-B/4, Main Najafgarh Road, Tilak Nagar, New Delhi-110018 (hereinafter referred to as 'the said cheques'). On presentation for encashment the said cheques were returned unpaid vide return memos dated 05/03/2011 with remarks 'Funds Insufficient'. Thereafter, the complainant sent legal demand notice dated 15/03/2011 demanding the cheques' amount through Speed Post AD, which was duly served upon the accused. The accused neither replied to the said notice nor paid the amount demanded in legal demand notice. Therefore, the present complaint was filed by Sh. Ram Niwas, authorized representative of the complainant, on 18/04/2011.
CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 2/16
4. As a prima facie case was made out on the basis of material on record, the accused was summoned on 27/04/2011. The accused made first appearance on 12/09/2011. Notice u/s 251 CrPC was served upon him on 10/02/2012 to which he pleaded not guilty and claimed trial.
5. Along with complaint, AR of the complainant had filed pre summoning evidence by way of affidavit wherein he reiterated the allegations made in the complaint. He relied on following documents :
i Evidence by way of affidavit Ex.CW1/A ii Power of attorney Ex.CW1/1 iii Cheque bearing no. '065250' dated 11/11/2010 Ex.CW1/2 iv Cheque bearing no. '065251' dated 11/12/2010 Ex.CW1/3 v Cheque return memo for cheque bearing no.'065250', Ex.CW1/4 dated 05/03/2011 vi Cheque return memo for cheque bearing no.'065251', Ex.CW1/5 dated 05/03/2011 vii Notice dated 15/03/2011 Ex.CW1/6 viii Postal receipts dated 16/03/2011 Ex.CW1/7 & Ex.CW1/8 ix AD Card Ex.CW1/9
6. Accused was granted opportunity to cross examine complainant witness. Thereafter, complainant evidence was closed.
7. Thereafter, all the incriminating evidence against the accused was put to him and his statement was recorded on 25/04/2012 u/s 313 CrPC. Signature on the said cheques were admitted by the accused. He stated that he had handed over signed blank cheques to the complainant as security. He denied receipt of legal demand notice.
CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 3/16
8. No evidence was led by the accused in his defence.
9. Thereafter, final arguments were advanced by both the parties. I have given my thoughtful consideration to the arguments advanced by both the ld. Counsels.
10. Before proceeding further it will be useful to have a look at relevant provision of the Act. Section 138 of the Act is being reproduced herein for ease of reference-
"138. Dishonour of cheque for insufficiency, etc., of funds in the accounts -
Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for "a term which may extend to two year", or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless
(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
(b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque, "within thirty days" of the receipt of information by him from the bank regarding the return of the cheques as unpaid, CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 4/16 and
(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability."
11. Thus, for an offence under s. 138 NI Act essential ingredients that must be established are as follows-
• Issuance of cheque by the accused on an account maintained by him with a bank;
• The cheque must have been presented to the bank within the period of six months from the date of the cheque or within the period of its validity;
• Upon presentation for encashment, the cheque must have been returned unpaid;
• The payee of the cheque must have issued legal notice of demand within 30 days from the receipt of the information by him from the bank regarding the return of the cheque;
• The drawer of the cheque failed to make the payment within 15 days of the receipt of the aforesaid legal demand notice. • The cheque must have been issued in discharge of legal debt or liability;
12. Accused has admitted his signatures on the said cheques Ex.CW1/2 & Ex.CW1/3. The said cheques were presented to the bank within validity period and were returned unpaid due to 'Insufficient funds' is established by cheque return memos Ex.CW1/4 & Ex.CW1/5. Payment CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 5/16 towards said cheques have not been made till date is undisputed.
13. On the basis of evidence adduced and arguments advanced by the parties following points arise for determination by this court-
1. Whether the said cheques were 'issued' by the accused
2. Whether the said cheques were issued in discharge of legal liability or whether the said cheques were issued as security
3. Whether legal demand notice as envisaged under s.138 of the act was served upon the accused
4. Whether the complaint has been instituted by authorized person
14. Now I shall proceed to decide the points raised for determination.
Whether the said cheques were issued by the accused
15. It was argued by Ld. Counsel for the accused that accused had handed over blank signed cheques to the complainant. It was further argued by Ld. Counsel that merely handing over of cheque leaves with signatures does not amount to issuance of the cheque. It was further argued that a cheque can not be said to have been issued until it is shown that the cheque was executed by duly filling the details and affixing signatures / thumb impression by the drawer.
16. Even though it was contended that 24 signed blank cheques were handed over to the complainant, no evidence has come on record to prove this fact. Even if for the sake of argument it is assumed that the said cheques were handed over by the accused bearing only his signature, that in itself will not invalidate the said cheques. It was held by The Hon'ble High Court of CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 6/16 Delhi in Ravi Chopra v. State & Anr.[2008 (2) JCC (NI) 169] that under the scheme of the NI Act it is possible for the drawer of a cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up at a subsequent point in time and presented for payment by the drawee. The Hon'ble court observed-
"Section 20 N.I. Act talks of "inchoate stamped instruments"
and states that if a person signs and delivers a paper stamped in accordance with the law and "either wholly blank or have written thereon an incomplete negotiable instrument"
such person thereby gives prima facie authority to the holder thereof " to make or complete as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp." Section 49 permits the holder of a negotiable instrument endorsed in blank to fill up the said instrument "by writing upon the endorsement, a direction to pay any other person as endorsee and to complete the endorsement into a blank cheque. It makes it clear that the holder does not thereby incurred the responsibility of an endorser." Likewise, Section 86 states that where the holder acquiesces in a qualified acceptance, or one limited to part of the sum mentioned in the bill, or which substitutes a different place or time for payment, or which, where the drawees are not partners, is not signed by all the drawees, all previous parties whose consent has not been obtained to such acceptance would stand discharged as against the holder and those claiming under him, unless on notice given by the holder they assent to such acceptance. Section 125 NI Act permits the holder of an uncrossed cheque to cross it and that would not render the cheque invalid for the purposes of presentation for payment. These provisions indicate that under the scheme of the NI Act an incomplete cheque which is subsequently filled up as to the name, date and amount is not rendered void only because it was so done after the cheque was signed and delivered to the holder in due course."
17. Thus, any drawee who hands over a partially filled negotiable CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 7/16 instrument to another person, does so, with implied authority to that person to complete the details that are left blank by the drawee. If such drawee claims that such person had no authority to complete the instrument or that instrument was completed contrary to his instructions or without his consent, the burden is upon such drawee to prove lack of consent. On this aspect It was observed by The Hon'ble High Court of Kerala in LillyKutty v. Lawrance 2003 (2) DCR 610 "The mere fact that the payee's name and the amount shown are not in the handwriting of the drawer does not invalidate the cheque. No law provides in the case of cheques the entire body has to be written by the drawer only. What is material is the signature of the drawer and not the body of the instrument. Therefore when the drawer has issued the cheque whether the entire body was written by the drawer written beyond the instructions of the drawer, whether the amount is due or not, those and such matters are defenses which drawer has to raise and prove it. Therefore the mere fact that the payee's name and the amount shown in the cheque are in different handwriting is not a reason for not honouring the cheque by the Bank. Banks would normally see whether the instrument is that of the drawer and the cheque has been signed by the drawer himself. The burden is therefore entirely on the drawer of the cheque to establish that the date, amount and the payee's name are written by somebody else without the knowledge and consent of the drawer."
18. In the instant case, assuming that the said cheques were blank bearing only signatures of the accused at the time of handing over, no evidence has been led by accused to prove that the said cheques were filled by the complainant without his consent. Accordingly, plea of the accused that the said cheques have been filled up by complainant without his consent is not proved. Consequently accused has also failed to prove that he had not CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 8/16 issued the said cheques.
Whether the said cheques were issued in discharge of legal liability or whether the said cheques were issued as security
19. It was argued by Ld. counsel for the complainant that signatures on the said cheques are admitted by the accused and therefore, complainant is entitled to presumption U/s 139 of the Act. Section 139 of the Act lays down as under:-
139. Presumption in favour of holder-
"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, or any debt or other liability."
20. It is well settled now that the aforesaid presumption is rebuttable. The accused can rebut the aforesaid presumption either directly or by bringing on record a preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the accused is entitled under law to rely upon all the evidence lead in the case including that of the complainant as well. Now the question is whether on the basis of complainant evidence the accused has been able to rebut the said presumption.
21. CW1 categorically denied issuance of any security cheque by the accused and deposed that accused had handed over 23 duly filled cheques for payment of EMIs to the complainant. The said cheques are indeed filled to the tune of monthly EMIs i.e. Rs.4700/- each. Fact that loan was repayable in 24 EMIs of which first EMI was of Rs. 5800/- and remaining 23 EMIs were of Rs.4700/- each is not disputed by the accused. It is also not the case of the CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 9/16 accused that loan was not payable through cheques and that some other mode of payment was agreed between the parties. In such circumstances, the deposition of CW1 that 23 cheques were handed over by the accused for payment of EMIs is reliable.
22. On the other hand, no evidence was led on behalf of the accused to show that the said cheques were not handed over for payment of EMIs. No explanation has come on record as to why accused would issue 24 cheques to the complainant as security. Further, when the fact that loan was repayable in 24 EMIs is seen in light of the fact that accused had issued 24 cheques to the complainant, it leaves little doubt that the cheques must have been issued for payment of EMIs.
23. Another contention that was raised by Ld. counsel for the accused is that statement of account of the accused was not produced by complainant as accused was not liable to pay the said cheques. However, Ld. counsel for the complainant did not explain how accused was not liable to pay the amount mentioned in the said cheques. The loan and liability to pay the same in one EMI of Rs.5800/- and 23 EMIs of Rs.4700/- is admitted. It is also not the case of the accused that he had made payment towards the monthly installments to which said cheques pertain. Merely because statement of account is not filed by complainant, that alone, in absence of any evidence is not sufficient to rebut the liability of the accused. Accordingly, the contention of Ld. counsel for the accused is not tenable.
24. Ld. counsel for accused also raised the contention that loan recall notice was not sent to the accused. This contention of Ld. counsel is without any merit as it is not the case of the complainant that it had sent loan recall notice to the accused pursuant to which the said cheques were issued. Case CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 10/16 of the complainant is that 24 cheques including said cheques were issued for payment of EMIs. The fact that the said cheques are in the tune of Rs.4700/- i.e. Amount fixed for EMIs is consistent with the case of the complainant that the said cheques were issued for payment of EMIs. Therefore, whether any loan recall notice was sent to the accused or not is totally irrelevant for the case.
25. Thus, accused has failed to rebut the presumption u/s 139 of the Act and to prove that the said cheques were issued as security.
Whether legal demand notice as envisaged under s.138 of the act was served upon the accused
26. Regarding this issue, it was argued on behalf of the accused that the accused didn't receive legal notice of demand whereas Ld. Counsel for the complainant argued that legal notice was dispatched at the correct address of the accused and by virtue of S. 27 General Clauses Act, 1927, the legal notice is deemed to have been served upon the accused.
27. Section 27 General Clauses Act lays down as under:
"27. Meaning of service by post--
Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression serve or either of the expressions give or send or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post."
CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 11/16
28. In Prakash Jewellers vs A.K. Jewellers [99 (2002) DLT 244] it has been held by Hon'ble High Court of Delhi that payee or the holder of the cheque is entitled to claim the benefit of presumption of service once he has dispatched the demand notice through registered post or postal certificate on the correct address of the sendee written on it and when he had proved such dispatch through original receipts. The Hon'ble Court went on to clarify that presumption of service by post under s. 27 of General Clauses Act is rebuttable. But such rebuttal doesn't assume finality merely because of sendee's denial to receive the notice. It would be so only when the sendee proves that he had not in fact received the notice and that he was not responsible for such non-service.
29. In the instant case, dispatch of legal demand notice has been proved by the complainant by copy of legal demand notice Ex.CW1/6 and original postal receipts Ex.CW1/7 & Ex.CW1/8. The AD card was received back by the complainant which is Ex.CW1/9. The accused claimed that he did not receive legal demand notice. Though, No witness from postal department was examined on behalf of the accused to prove that the accused indeed didn't receive legal notice. In such circumstances, the accused has failed to rebutt the presumption under section 27 of General Clauses Act and the legal notice is deemed to have been served upon the accused.
30. Even otherwise, it has been held by Hon'ble Supreme Court of India in C.C. Alvi Haji V. Palapetty Muhammed & Anr. 2007 STPL(DC) 952 SC that even if the accused didn't receive the legal demand notice he can pay the cheque amount within 15 days of service of summons from the court but if he fails, he can't contend that he has not received the legal demand notice.
CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 12/16 The relevant extract is reproduced hereinbelow:-
"para 17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the priviso would defeat the very object of the legislation. As observed in Bhaskaran's case (supra), if the "giving of notice" in the context of Clause (b) of the proviso was the same as the "receipt"
of notice" a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act."
31. It is not the case of the accused that he deposited the cheques' amount with the complainant within 15 days of receiving the summons. Even after appearance before the court on 12/09/2011, the accused never submitted that he did not make payment in compliance of legal demand notice only because he was not served with any such notice and that given an opportunity, he was willing to pay the cheques' amount. Therefore, in view of the above-mentioned judgment of the Hon'ble Supreme Court the contention that accused didn't receive legal demand notice and hence complainant u/s CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 13/16 138 of the Act is not maintainable due to non service of legal demand notice is not tenable.
Whether the complaint has been prosecuted by duly authorized person
32. It was argued by Ld. Counsel for the accused that Sh. Ram Niwas was not duly authorised to represent the complainant and for the said reason board resolution was not filed on record on behalf of the complainant. On the other hand, it was argued by Ld. counsel for the complainant that Sh. Ram Niwas had produced notarized power of attorney issued by the complainant and by virtue of Section 85 of Indian Evidence Act 1872, this court is bound to presume his authority to represent the complainant, unless rebutted by cogent evidence. On this issue, it would be necessary to see the effect of S. 85 of The Indian Evidence Act,1872- S. 85 Presumption as to power of attorney-
The court shall presume that every document purporting to be a power-of-attorney and to have been executed before, and authenticated by, a Notary Public, or any Court, Judge, Magistrate, Consul or Vice-Consul, or representative of the [Central Government], was so executed and authenticated.
33. It is settled proposition of law that under Section 85 of Evidence Act there is presumption that the Power of Attorney was executed by the person by whom it purports to have been executed and the person who executed the power of attorney was fully competent to execute the same. The same has been reiterated in plethora of judgments including judgment of Hon'ble High Court of Delhi in Indian Bank v. Gawri Construction Udyog Ltd. & Ors. 2011 IX AD (Delhi) 439. The relevant paragraph is reproduced herein below:
CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 14/16 "7. Mr M.S. Parthasarthy, who has signed and verified the pleadings and instituted this suit on behalf of the plaintiff bank, filed his affidavit by way of evidence and was partly examined on 23rd October, 2007. He was not produced thereafter and the plaintiff-bank examined PW-3 Shri P.R. Pujari, Chief Manger with the plaintiff-bank. Mr. Pujari has identified the signature of Mr. M.S.Parthasarthyon the plaint and has also proved the copy of Power of Attorney in favour of Mr M.S. Parthasarthy which is Ex.PW-1/2 and which has been executed by Mr. M. Gopalakrishnan, Chairman and Managing Director of the plaintiff-bank at the relevant time.
A perusal of the Power of Attorney Ex.PW-1/2 would show that vide this document, Mr. M.S. Parthasarthy was authorized to take all legal proceedings whether civil or criminal for recovering and receiving the debts of the bank and to institute, file and prosecute all actions, including civil suits on behalf of the plaintiff-bank. He was also authorized to sign, verify and file vakalatnama, written statement, etc. on behalf of the plaintiff-bank. The power of attorney purports to be executed by the Chairman and Managing Director as well as the Director and General Manager of the plaintiff
-bank and authenticated by public notary. Since, the power of attorney in favour of Mr. M.S. Parthasarthy has been attested by Public Notary, there is a statutory presumption under Section 85 of Evidence Act that the Power of Attorney was executed by the person by whom it purports to have been executed and the person who executed the power of attorney was fully competent in this regard."
34. In view of the judgment cited above, this court is bound to presume that power of attorney Ex.CW1/1 was properly executed and that Sh. Ram Niwas was duly authorized to represent the complainant. This presumption, being a rebuttable presumption, is open to challenge. However, no evidence was adduced by the accused to rebut the aforesaid presumption, and therefore it is proved that Sh. Ram Niwas is duly authorised to prosecute the complaint on behalf of the complainant.
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35. In view of discussion above, the complainant has successfully proved its case beyond reasonable doubt whereas accused has failed to prove the defence raised by him. Accordingly, accused Baldev Singh is convicted of offence punishable u/s 138 of the Act.
Copy of order be given to the accused free of cost.
Announced in Open Court on 09/07/2012 (MANISHA TRIPATHY) METROPOLITAN MAGISTRATE, SPECIAL COURT(09), DWARKA COURTS, NEW DELHI CC NO.: 4526/12 Gambit Leasing Vs Baldev Singh 16/16