Delhi District Court
Gajendra Arya vs Shatrughan Prasad on 6 February, 2019
1
IN THE COURT OF MS. SNIGDHA SARVARIA : MM : NI ACT-03
(CENTRAL) : TIS HAZARI COURTS : DELHI.
CC No.533652/16
DATE OF INSTITUTION : 24.12.2011
DATE RESERVED FOR JUDGMENT: 20.12.2018
DATE OF JUDGMENT : 06.02.2019
IN THE MATTER OF:
Sh. Gajendra Arya
R/o 9372/2, Malkhan Singh Street Gaushala Road,
Kishan Ganj, Delhi110006.
........Complainant
VERSUS
Sh. Shatrughan Prasad
Nirmala tempo Service,
289, Pratap Khand, Shop No. 7,
Jhilmil colony, Shahdara, Delhi.
..........Accused
JUDGMENT :
a) Srl. No. of the case & Date of institution :39763/2012 & 02.01.2012
b) Date of commission of offence :on the 15th day of recieving of legal demand notice
c) Name of the complainant :Gajendra Arya
d) Name of the accused :Shatrughan Prasad
e) Nature of offence complained of : S. 138 NI Act
f) Plea of the accused person :Accused pleaded not guilty
h) Final Order : Convicted
i) Date of order : 21.01.2019 CC No. 533652/16 Gajendra Arya vs Shatrughan Prasad 2 COMPLAINT UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT, 1881 BRIEF STATEMENT OF REASONS FOR DECISION OF THE CASE: JUDGMENT:
Brief facts
1. The brief facts of the present complaint filed U/s. 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "NI Act") are that the accused is well known to the complainant on 27th February 2011, as he was in need of money for his personal use the complainant gave interest free loan to the accused. That after taking the said loan amount the accused promised to repay the same to the complainant within a period of three-four months but the accused failed to make the repayment of the said loan amount to the complainant within time. That the complainant again and again approached the accused in this respect and requested him to make the payment of the amount in question then after admitting his lliabillity the accused made the repayment of the said loan amount to the complainant and for which the accused issued cheque bearing no. 0728880 amount Rs.50,000/- dated 25.04.2011 of Union Bank of India Anand Vihar, Delhi-92 in favour of the complainant. That the accused further assured the complainant that the said cheque will be encashed on its presentation by her banker and the complainant accepted the said cheque under good faith, belief and trust upon the accused. That CC No. 533652/16 Gajendra Arya vs Shatrughan Prasad 3 as per the instructions and assurance of the accused the complainant presented to said cheque for encashment with his banker, Punjab National Bank, Kashmere Gate, Delhi. But the said cheque was lastly returned dishonoured by the banker of accused with remarks "funds insufficient" vide cheques returning Memo 24.10.2011 and the complainant was informed by his banker. The said cheque was previously returned dishonoured by the accused and at the instance of the accused, the complainant presented the said cheque but again it was returned dishonored by the banker of the accused. That the complainant duly appraised the accused with the aforesaid facts of dishonouring of the said cheque issued by the accused in favour of the complainant and the complainant made demand of the cheque amount, but the accused has failed to make the payment of the said cheque to the complainant. That the accused has issued the above said cheque in favour of the complainant towards the discharge of legal debts/liability and the accused is the authorized signatory of the said cheque. The cheque amount are legally recoverable and enforceable debt and liability of accused, but the accused turned a deaf ear. That the accused issued the aforesaid cheques to the complaint deliberately with the malafide intention, knowing fully well that the said cheques would never be honoured by his banker, thus the accused has cheated the complainant and also committed an offence punishable under section 138 NI Act. That the complainant therefore sent a legal notice dated 16.11.2011 through registered A.D. and courier on 16.11.2011 which was duly served upon the accused. But the accused even after service of the legal notice has not paid a single penny to the complainant nor has replied to the said legal notice. The A.D, card was received back by the complainant. That the accused is wrongly and falsely withholding the said legitimate due amount of Rs.50,000/- and therefore, accused is also liable for criminal prosecution under the provisions CC No. 533652/16 Gajendra Arya vs Shatrughan Prasad 4 138 NI Act. That the accused issued the aforesaid cheque to the complainant intentionally and deliberately out of his malafide and dishonest intention with intent to cheat the complainant and to defraud him as after issuing the said cheque the accused did not maintain sufficient funds for encashment of the said cheque in favour of the complainant and has played a calculated fraud upon the complainant and has committed a punishable offence u/s 138 of the Negotiable Instrument Act for which he is liable to be prosecuted and punished.
Proceedings Before Court
2. In the present complaint summons were issued against the accused. The accused entered appearance and notice of accusation was framed against the accused on 14.02.2012 to which accused pleaded not guilty and claimed trial. In his defence accused stated that he had issued the cheque in question at the instance of the complainant and have signed the same. But the name of payee and date was not filled. Cheque was given as security. He stated that he had availed a friendly loan of Rs. 50,000/- but has already repaid the same in three instalments by depositing it in the bank account of the complainant at PNB in three different branches. He said that he has no liability towards the complainant.
3. In support of his case, the complainant examined himself as CW1 and was cross-examined at length. He proved his affidavit by way of evidence as Ex CWA/A cheque no. 072880 dated 25.04.2011 for Rs.50,000/- drawn on Union Bank of India in favour of the complainant as Ex.CW1/A; return memo dated 04.08.2011 as Ex CW1/B; Legal notice dated 16.11.2011 as Ex.CW1/C; postal reciept as Ex CW1/D; courier reciept as Ex CW1/E; and duly signed AD card as Ex CW1/F. The complainant closed his evidence CC No. 533652/16 Gajendra Arya vs Shatrughan Prasad 5 on 05.04.2014.
4. Statement of accused u/s 313/281 Cr.P.C was recorded on 24.11.2014 wherein accused stated that he had given the cheque in question to the complainant and had filled the amount in figures as well as words and had signed the same. However, he had not filled the name of the payee or the date therein. He stated that the cheque was given earlier to the accused as he had taken a loan of Rs. 50,000/- from the accused and had given the cheque in lieu of the same as security and had repaid the said amount of Rs. 50,000/-. However, the cheque remained with the complainant. It is further submitted that later he had also taken an amount of Rs. 40,000/- as loan from the complainant and had returned that amount as well. He stated that he has nothing to pay to the complainant. He stated that he has not received the legal notice in the present case.
5. The accused examined DW1 Raj Kumar from PNB, Kashmere Gate and he proved statement of account of the complainant's bank account from 3/6/2011 to 17/10/2011 as Ex DW1/A and his authority letter to depose on behalf of the bank as Ex DW1/B. DW2 Jatin Kumar from PNB, Vivek Vihar proved deposit receipt dated 03.06.2011 for Rs. 15,000/- Ex DW2/1 (OSR). DW3 Rajinder Kumar from PNB, Rangpuri, Nangal Devat proved deposit receipt dated 20.07.2011 for Rs. 15,000/- Ex DW3/1 (OSR). DW4 Om Prakash from PNB, Preet Vihar proved deposit receipt dated 17.10.2011 for Rs. 10,000/- Ex DW4/1. Defence Evidence was closed by the court on 12.12.2018 when despite ample opportunities accused did not lead any other evidence in his defence.
6. I have heard counsel for the parties, perused the record and have CC No. 533652/16 Gajendra Arya vs Shatrughan Prasad 6 gone through the relevant provisions of the law.
Findings
7. The following are the components of the offence punishable under Section 138 Negotiable Instrument Act:-
(1) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/part any debt or liability, (2) presentation of the cheque by the payee or the holder in due course to the bank, (3) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque, (4) giving notice in writing to the drawer of the cheque within 15 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount, (5) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice.
8. The accused has denied receiving of legal demand notice. Considering that the legal demand notice was sent at 289, Pratap Khand, Shop no. 7, Jhilmil Colony, Shahdara, Delhi and summons issued to the accused at the same address by the court were duly served upon the accused on 01.02.2012 and in the statement under S. 313 CrPC and while furnishing bail bonds the accused has written his address as 289, Shop no. 7, Pratap Khand, Jhilmil Colony, Delhi-95, thus clearly the said defence of the accused is without any merits and contrary to the record. Also, the defence of the accused that he did not receive legal demand notice Ex CW1/C is without any merits as in the decision in C.C. Alavi Haji v Palapetty Muhammad & Anr. (2007) 6 SCC 555, which states that CC No. 533652/16 Gajendra Arya vs Shatrughan Prasad 7 in case, drawer of the cheque raises an objection that he never received Legal Notice U/s 138 of N.I. Act, he can within 15 days of the receipt of summons make payment of the cheque amount and in case, he does not do so, he cannot complain that there was no proper service of Legal Notice U/s 138 of N.I. Act. Hence, in view of the Judgment in C.C. Alavi Haji (supra) the presumption of service of Legal Notice has arisen if not of the legal notice Ex CW1/C sent vide registered post then through issuance of summons by the court.
9. The defence raised by the accused is that the cheque in question bears his signatures but name of payee and date on it were not filled by him. At this juncture it would be worthwhile to discuss the provisions under S. 20 and S. 118 of the Negotiable Instruments Act, which is as under:
20.Inchoate stamped instruments. Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in [India], and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as then case may be, upon it a negotiable instrument, instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount, provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder.
118. Presumptions as to negotiable instruments of consideration Until the contrary is proved, the following presumptions shall be made:
(a) of considerationthat every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
(b) as to date that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance that every accepted bill of exchange was accepted within a reasonable time after its date its date and before its maturity;
(d) as to time of transfer. that every transfer of a negotiable instrument was made before its maturity;
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(e) as to order of endorsements that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stampsthat a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument has been contained from its lawful owner, or form any person in lawful custody thereof, by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
10. Further, in Mojj Engineering Systems Limited & Ors. Vs. A.B. Sugars Ltd.; 154 (2008) Delhi Law Times 579, the Hon'ble Delhi High Court had observed as under :-
20.Inchoate stamped instruments. Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in [India], and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as then case may be, upon it a negotiable instrument, instrument, for any amount specified therein and not exceeding the amount covered by the stamp.
The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount, provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder.
118. Presumptions as to negotiable instruments of consideration Until the contrary is proved, the following presumptions shall be made:
(a) of considerationthat every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
(b) as to date that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance that every accepted bill of exchange was accepted within a reasonable time after its date its date and before its maturity;
(d) as to time of transfer. that every transfer of a negotiable instrument was made before its maturity;
(e) as to order of endorsements that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stampsthat a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument has been contained from its lawful owner, or form any person in lawful custody thereof, by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
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11. From the aforesaid discussion, it is manifest that by reason of the provision under S. 20 NI Act, a right has been created in the holder of the cheque. Prima facie, the holder thereof is authorized to complete the incomplete negotiable instrument. Mere averment to the effect that the accused/drawer of the cheque did not fill in the details on the cheque except for signing on the cheque is not sufficient. Thus, merely that allegation of issuance of incomplete negotiable instrument does not create absolute defence in favour of the accused unless corroborative evidence exists to show that by threat or fraud, a cheque was taken. There is no law that a person drawing the cheque has to necessarily fill it up in his own handwriting. Respondent has not denied his signatures on the cheques. Once he has admitted his signatures on the cheques he cannot escape his liability on the ground that the same has not been filled in by him. When a blank cheque is signed and handed over, it means that the person signing it has given implied authority to the holder of the cheque, to fill up the blank which he has left. A person issuing a blank cheque is supposed to understand the consequences of doing so. He cannot escape his liability only on the ground that blank cheque had been issued by him. Thus, this defence is of no assistance to the accused. (.(See also:Jaspal Singh vs State decided on 16.11.2016 by Hon'ble High Court of Delhi in Crl. Rev P. 160/2016; Lillykutty vs Lawrence - 2003 (2) DCR 610 (Ker) (DB) & Ravi Chopra vs State and Anr. - 2008n (2) JCC (NI) 169)
12. At the time of framing of notice and recording of statement under S. 313 CrPC of the accused, the accused admitted the issuance of the cheque in question. Since issuance of cheque in question by the accused is not disputed, hence, presumption U/s.139 of the NI Act is raised.
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13. In Rangappa v. Sri Mohan AIR 2010 SC 1898 it was observed by the Hon'ble Supreme Court as under :
"14. In light of these extracts, we are in agreement with the respondentclaimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, 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 impact 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 accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, 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 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 liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. "
(emphasis added)
14. In view of the decision in Rangappa laid down by the Supreme Court, the presumption raised under Section 139 of the NI Act is of legally enforceable debt or liability and it is for the accused persons to raise a probable defence to rebut the presumption.CC No. 533652/16
Gajendra Arya vs Shatrughan Prasad 11
15. Section 139 NI Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the NI Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 Act is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 Act can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong those impact 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.
16. The reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139 NI Act, the standard of proof for doing so 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 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 conceivable that in some cases the accused may not need to adduce evidence of his/her own.
17. As discussed herein above, under S. 139 NI Act strong rebuttable presumptions in favour of the complainant arise but same can be rebutted by the accused by way of credible defence.CC No. 533652/16
Gajendra Arya vs Shatrughan Prasad 12
18. As regards the defence of the accused that the cheque in question was a security cheque and thus complaint under S. 138 NI Act is not maintainable is without any merits in view of the decision of the Hon'ble Apex Court in ICDS Ltd vs Beena Shabeer - 2002 (2) SCC 426 and Credential Leasing & Credits Ltd. vs Shruti Investments & Anr. Of Hon'ble High Court of Delhi decided on 29/06/2015 in Crl LP No. 558/2014 and Suresh Chandra Goyal vs Amit Singhal Crl Appeal nos. 601/2015 decided on 14/05/2015 and Credential Leasing & Credits Ltd. vs Shruti Investments & Anr. Of Hon'ble High Court of Delhi the security cheques fall within the purview of S. 138 NI Act.
19. As per decision in Credential Leasing & Credits Ltd. vs Shruti Investments & Anr. Of Hon'ble High Court of Delhi decided on 29/06/2015 in Crl LP No. 558/2014 it has been held that the scope of S. 138 would cover cases where ascertained and crystallized debt or other liability exists on the date when the cheque is presented and not only to the cases where ascertained and crystallized debt or other liability exists on the date on which it was delivered to the seller as a post dated cheque or as a current cheque with a credit period.
20. The defence raised by the accused the cheque was given earlier to the accused as he had taken a loan of Rs. 50,000/- from the accused and had given the cheque in lieu of the same as security and had repaid the said amount of Rs. 50,000/-. However, the cheque remained with the complainant. It is further submitted that later he had also taken an amount of Rs. 40,000/- as loan from the complainant and had returned that amount as well. He stated that he has nothing to pay to the complainant. The Hon'ble Supreme Court in Kumar Exports vs. Sharma Carpets - (2009) 2 SCC 513 held, that bare denial of the passing of the consideration and CC No. 533652/16 Gajendra Arya vs Shatrughan Prasad 13 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, 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.
21. In the facts of the present case, the accused had to adduce evidence of his own as he has alleged that he has no liability towards the complainant and denied taking of loan from the complainant and that cheque in question was not issued to the complainant and that he has already repaid the loan taken from the father of the complainant and as per S. 103 of Indian Evidence Act burden of proof means that a party has to prove an allegation before he is entitled to a judgment in his favour. S. 103 of Indian Evidence Act provides that burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any special law that the proof of that fact shall lie on any particular person. The provision of S. 103 of Indian Evidence Act amplifies the general rule of S. 101 of Indian Evidence Act that the burden of proof lies on the person who asserts the affirmative of the facts in issue.
22. To prove his defence that he has deposited the loan amount in the bank account of the complainant the accused examined 4 witnesses who proved deposit in the bank account of the complainant of Rs. 15,000/- on 3.6.2011 in the Vivek Vihar, Delhi branch; Rs. 9,000/- on 11.7.2011 in Loni,Ghaziabad Branch; Rs. 15,000/- on 20.7.2011 in the Nangal Dewat, Delhi branch; Rs.CC No. 533652/16
Gajendra Arya vs Shatrughan Prasad 14 10,000/- on 17.10.2011 in Preet Vihar, Delhi Branch. None of the witnesses have deposed that the accused had deposited the said amount in the bank account of the complainant through the said branches. DW1 has deposed that the details of person who had deposited the money in the account of the complainant is not known. DW4 has deposed that Ms. Kirti had deposited Rs. 10,000/- on 17.10.2011 in Preet Vihar, Delhi Branch. DW2 and DW3 have not deposed as to who deposited the aforesaid amounts in the bank account of the complainant. Thus, clearly, the defence of the accused that he has repaid the loan amount to the complainant has not been proved by the accused. The accused has also not explained as to how he came to know about the aforesaid deposits made in the bank account of the complainant.
23. In view of the aforesaid reasons, the court finds that the accused has not been unable to prove any probable defence and has failed to rebut the presumption raised U/s 139 of the NI Act.
24. Since the accused has failed to rebut the presumption raised U/s. 139 of the NI Act, there is no need to go into complainant's evidence for proving the complainant's case. There is nothing coming out in the cross examination of complainant's witness which would probabilise the defence raised by the accused or falsify the case of the complainant. Therefore, the complainant has been able to prove his case beyond reasonable doubt.
25. The complainant has been able to prove that the cheque in question i.e. cheque bearing no 072880 dated 25.04.2011 for Rs.50,000/- drawn on Union Bank of India in favour of the complainant as Ex.CW1/A was issued in discharge of legally recoverable liability owed to the complainant by the accused.CC No. 533652/16
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26. Therefore, the accused Shatrughan Prasad is convicted for the offence punishable U/s. 138 of the Negotiable Instruments Act in respect of cheques Ex CW1/A. Digitally signed by SNIGDHA SNIGDHA SARVARIA SARVARIA Date:
2019.02.06 (Announced in open 15:39:46 +0530 Court on 06.02.2019 ) (Snigdha Sarvaria) MM/NI Act-03/Central. 06.02.2019 Judge Code: 0530 CC No. 533652/16 Gajendra Arya vs Shatrughan Prasad