Delhi District Court
Sandeep Mehta vs . Rakesh Arora on 20 April, 2023
IN THE COURT OF SH. PANKAJ RAI
METROPOLITAN MAGISTRATE 05 (N.I. ACT), ROUSE AVENUE COURTS:
NEW DELHI DISTRICT
CC No.10615/2019
Sandeep Mehta Vs. Rakesh Arora
1. Complaint Case number : 10615/2019
2 Name and address of the : Sandeep Mehta
complainant S/o. Sh. P.D.Mehta
R/o. E 4/29, Sector 11, Rohini, Delhi - 110085
3. Name and address of the : Rakesh Arora
accused S/o Sh. S.D. Arora R/o A704, Madhur Jivan
Apartments, Plot No. 34, Sector 10, Dwarka, Delhi
110075.
4. Offence complained of : Section 138 of the Negotiable Instruments Act, 1881.
5. Plea of the accused : Pleaded not guilty and claim trial.
6. Final Order : Acquitted
7. Date of Institution : 14.11.2017
8. Date of Reserving the : 29.03.2023
Judgment
9. Date of pronouncement : 20.04.2023
Judgment:
1. Vide this judgment I shall dispose of the complaint filed by the
complainant under Section 138 of the Negotiable Instruments Act, 1881
(hereinafter referred to as the 'Act ').
2. Brief facts relevant for the decision of the case are as under:
It is the case of the complainant that the complainant was a retired
person and was looking for investment opportunities in the properties/rental
income. That in the year 2014, the accused, claiming to be a big builder,
approached the complainant for selling his property bearing no.8/39 built up
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entire second floor without roof rights, having land area measuring 100 sq.
yards at Subhash Nagar, Delhi. That after negotiations the agreed sale
consideration was fixed as Rs. 80 lacs. That out of this sum, an amount of Rs.
30 lacs were stated to have been paid as advance to the accused on
18.04.2014 by the complainant against receipt. It is further averred in the
complaint that the remaining balance amount was payable on or before
17.07.2014, at the time of registration of sale deed. That the accused failed to
execute the sale deed in favour of the complainant and agreed to return the
amount of Rs. 30 lacs which he has earlier received as advance payment.
That on 28.08.2017 the accused issued cheque in question bearing no.
000405 for Rs.30,00,000/ drawn on Kotak Mahindra Bank, Punjabi Bagh,
New Delhi, in discharge of his liability towards the complainant. However, the
cheque in question got dishonored on presentation on account of "funds
insufficient" vide returning memo dated 30.08.2017, constraining the
complainant to send a legal demand notice dated 28.09.2017 to the accused,
which was delivered to the accused and which was replied by the accused on
16.10.2017. However, no payment was made to the complainant within
stipulated statutory time period. Hence, the present complaint.
3. Being summoned, accused appeared before this court and notice was
framed on 11.09.2018, to which he pleaded not guilty and claimed trial. In his
plea of defence, the accused has stated that he has no outstanding liability
towards the complainant and that rather the complainant himself has to return
Rs. 7 lakhs which the complainant has taken from him on account of marriage
of his son in the year 2015. He had further stated that he has not issued the
present cheque in favour of the complainant and that he has no knowledge as
to how the cheque in question came into the possession of the complainant.
That the complainant has filed a false case against him. At the stage of
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admission and denial of documents, the accused has stated that the he has
not signed the cheque in question, however, the cheque pertains to his
account. That he has not filled the other contents of this cheque. That the bank
return memo is correct. That he has received the legal demand notice and that
he has even replied to the same.
4. To prove his case the complainant has examined himself as CW1, who
reiterated the version of the complaint and relied upon his evidence by way of
affidavit alongwith the following documents to prove the liability of the accused:
(i) Ex.CW1/A : Original cheque in question dated 28.08.2017;
(ii) Ex.CW1/B : Original Return memo;
(iii) Ex.CW1/C : Office copy of legal notice dated 28.09.2017;
(iv) Ex.CW1/D (colly) : Original postal receipts;
(v) Ex.CW1/E (colly) : copy of postal tracking report;
(vi) Ex.CW1/F : reply sent by the accused to the legal demand notice;
(vii) Ex.CW1/H (OSR) : copy of agreement to sell; and
(viii) Mark X (colly) : copy of collaboration agreement.
5. The complainant was cross examined and discharged and CE was
closed on 18.12.2018. Thereafter, statement of accused was recorded under
section 313 Cr.P.C and accused does not chose to lead DE. Hence, DE was
closed. Thereafter, the complainant filed the application under section 311 of
CrPC, which was allowed by Hon'ble High Court of Delhi. The additional
documents pursuant thereto were taken on record. Complainant was,
thereafter, further cross examined in reference to those documents on
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23.02.2023. Additional statement of accused under section 313 Cr.P.C was
recorded on 14.03.2023 and then the matter was fixed for final arguments.
Arguments heard from both the sides. Case record and written submissions
perused. There is no dispute on the propositions of law laid down in the
judgment relied upon by the parties.
6. It is submitted by Ld. Counsel for the complainant that this is a fit case
for conviction of the accused as all the essential ingredients of Section 138 of
the Act read with Section 139 of the Act have been fulfilled and that the same
has been aptly demonstrated by the complainant before the court. That the
agreement to sell entered into with the accused and collaboration agreement
have been placed on record. That the accused had falsely claimed that the
signatures on the cheque in question are not his signatures. That the legal
demand notice was duly delivered to the accused and that no payment was
made by the accused to the complainant within 15 days of its receipt. That the
defence of the accused does not inspire confidence. That the accused failed to
lead DE. That the debt was not time barred and that this court has jurisdiction.
It is finally submitted that accused failed to raise the probable defence to
disprove the case of complainant and to rebut the presumption under Section
139 of the Act. Therefore, accused be convicted for the offence under Section
138 of the Act.
7. Per contra Ld. Counsel for the accused has argued that the accused
has disputed his signatures on the cheque in question and hence there is no
presumption under section 139 NI Act. That this court has no jurisdiction as
the return memo pertains to ICICI Bank, Jhandewalan Branch and whereas
the complainant has deposited the cheque in question at ICICI Bank,
Connaught Place branch. That the complainant has no financial capacity to
give Rs.30 lacs to the accused as the complainant himself has admitted in his
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cross examination that he has purchased other properties as well. It is also
argued that the complainant has failed to disclose sufficient sources of funds
for present transaction and the adequacy of his income. That the complainant
has filed alleged bayana agreement belatedly after the closure of defence
evidence and at the stage of final arguments and that it was a forged and
fabricated document. That the complainant has not filed the civil suit for
specific performance against the accused which raises doubt about the
present case. That there is violation of provisions of section 269ST of Income
Tax Act as no person can receive an amount of Rs.2 lakhs in a day in a single
transaction which cannot be termed as a legally recoverable debt within the
meaning of Section 138 of NI Act. That the debt was time barred as the period
of limitation for recovery in 3 years. That the cheque amount is more than the
actual liability and hence, no case is made out under section 138 of NI Act
against the accused. It was argued that evidence of complainant suffered from
material lapses and was not sufficient to establish the case against accused.
He submitted that complainant has failed to prove his case beyond reasonable
doubt and accused is entitled to be acquitted of offence u/s 138 of the Act.
8. It would be apposite at the stage to briefly discuss law applicable to the
offence of dishonour of cheque. For the offence under Section 138 of the Act
to be made out against the accused, the complainant must prove the following
points, that:
(i) the accused issued a cheque on account maintained by him
with a bank;
(ii) the said cheque had been issued in discharge, in whole or
in part, of any legal debt or other liability;
(iii) the said cheque has been presented to the bank within a
period of three months from the date of cheque or within the
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period of its validity;
(iv) the aforesaid cheque, when presented for encashment,
was returned unpaid/dishonoured;
(v) the payee of the cheque issued a legal notice of demand to
the drawer within 30 days from the receipt of information by
him from the bank regarding the return of the cheque; and
(vi) the drawer of the cheque failed to make the payment
within 15 days of the receipt of aforesaid legal notice of
demand.
9. There is no dispute regarding the fulfillment of conditions no (iii) to (vi) in
the present case. The cheque (Ex.CW1/A) bears the date 28.08.2017 and it
was returned as dishonoured due to insufficient funds on 30.08.2017 vide
return memo Ex.CW1/B. It is not the case of the accused that the cheque in
question has not been deposited within its validity period. The accused has
himself admitted at the time of admission and denial of documents that the
cheque belongs to his bank account. There is no dispute regarding the
reasons of dishonorment being insufficiency of funds. It is not the case of the
accused that he was having sufficient funds in his bank account at the relevant
point of time or that the cheque return memo does not disclose correct
reasons for dishonor of cheque in question. The accused himself has stated
that the bank return memo is correct at the time of admission and denial of
documents under section 294 Cr.P.C. The issuance of legal demand notice
Ex. CW1/C is also not disputed by the accused as he himself has replied to
the same vide Ex.CW1/F. It is also an undisputed fact that no payment has
been made by the accused within a period of 15 days from the receipt of legal
demand notice from the complainant.
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10. As regards satisfaction of condition no.(i) para 8 above, the accused
has disputed his signatures on the cheque in question and he has stated that
he has not signed the cheque in question at the time of framing of notice under
section 251 of Cr.P.C. and also at the time of recording of his statement under
section 313 of Cr.P.C. The accused himself has admitted at the time of
admission and denial of documents under section 294 Cr.P.C. that the bank
return memo (Ex.CW1/B) is correct. A perusal of Ex.CW1/B shows that the
cheque in question was dishonoured for the reasons "funds insufficient" and
not due to the difference in signature of the drawer. Any reason of
dishonourment falls into the purview of section 138 of NI Act vide M/s. Laxmi
Dyechem v. State of Gujarat (2012) 13 SCC 375. It is also a settled law that
if the accused disputes his signatures on the cheque in question the burden of
proof to prove the same is upon the accused himself. The accused could have
summoned the bank witness or a handwriting expert to give an opinion upon
the signatures on the cheque in question. The accused has not got any expert
opinion on this issue. Mere denial cannot be treated as evidence. No
suggestions were given to the complainant in his cross examination that the
signatures on the cheque in question do not belong to the accused. The
accused has failed to discharge his burden of proof to prove that the
signatures on the cheque are not that of his. Hence, the arguments of Ld.
Counsel for the accused on this count are without any force and shall stands
rejected.
11. As regards the standard of burden of proof upon the accused, it was
held by Apex Court in case title "Rangappa v. Sri Mohan" (2010) 11 SCC 441
that there is only an evidentiary burden upon the accused and that the
standard of proof for doing so is that of preponderance of probabilities.
Elaborating further, Apex Court held that Section 139 of the Act is an example
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of a reverse onus and the test of proportionality should guide the construction
and the defendantaccused cannot be expected to discharge an unduly high
standard of proof.
12. In Kumar Exports v. Sharma Carpets (2009) 2 SCC 513, it was held
that the accused can either prove the nonexistence of consideration and debt
by direct evidence, or by bringing 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 nonexistence was so probable
that a prudent man may act upon the plea that they did not exist.
13. Recently in Anss Rajashekar v. Augustus Jeba Ananth (2020) 15
SCC 348 a two Judge Bench of Apex Court, reiterated the decision of the
threejudge bench of Apex Court in Rangappa v. Sri Mohan (supra). The
court held:
"12. Section 139 of the Act mandates that it shall be presumed, unless
the contrary is proved, that the holder of a cheque received it, in dis
charge, in whole or in part, of a debt, or liability. The expression "unless
the contrary is proved" indicates that the presumption under Section 139
of the Act is rebuttable. Terming this as an example of a "reverse onus
clause" the threeJudge Bench of this Court in Rangappa held that in
determining whether the presumption has been rebutted, the test of pro
portionality must guide the determination. The standard of proof for re
buttal of the presumption under Section 139 of the Act is guided by a
preponderance of probabilities. This Court held thus:
"28. 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
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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."
14. Therefore, the only question which now remains to be adjudicated by
this Court is as to whether the condition no. (ii) of para no.8 above is satisfied
or not i.e. whether the accused, on a scale of preponderance of probabilities,
has raised any probable defence to discredit the case of the complainant by
showing that the cheque in question was not issued in discharge of a legally
recoverable debt/liability so as to shift the onus placed upon him to the
complainant or not.
15. Before adverting to the above question, the argument pertaining to the
jurisdiction of this court also needs to be dealt with. It is argued by Ld. Counsel
for the accused that the banker of the complainant has been situated in
Connaught Place, Delhi whereas the cheque return memo (Ex.CW1/B) is of
ICICI Bank, Jhandewalan, Delhi and hence this court has no jurisdiction.
16. At the outset it is to be noted that the objection relating to the territorial
jurisdiction of this court has not been questioned by the accused throughout
the proceedings and that it is only at the belated stage of final arguments that
this contention has been raised. The issue of jurisdiction is no more res
integra. Reference can be had to decision in Transgietz Enterprises & Anr.
v. Ravi Kumar Zutshi decided on 02.06.2010 by Hon'ble Delhi High Court
wherein in proceedings under Section 138 of the NI Act, the proviso of Section
177 & 179 of the Cr.PC was referred to, and relying on decision in K.
Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC 510, it was held that
an offence under Section 138 of NI Act could be completed only with the
concatenation of a number of acts viz. 1) drawing of the cheque; 2)
presentation of the cheque to the bank; 3) returning the cheque unpaid by the
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drawee bank; 4) giving notice in writing to the drawer of the cheque
demanding payment of the cheque amount; and 5) failure of the drawer to
make payment within 15 days of the receipt of the notice. It was further
observed that it is not necessary that all the above five facts should have been
perpetrated at the same locality.
17. In the case of Shoreline Infrastructure Developers Ltd. v. State 2012
SCC OnLine Del 1063, it was categorically held that an objection as to the
territorial jurisdiction of the criminal court must be taken at the first instant
opportunity by the accused and it cannot be allowed to be urged at a later
stage of the proceedings. It was held that there is no provision in the Cr.PC,
which is analogous to Section 21 of the CPC, but at the same time Section
462 of the Cr.PC provides that no finding, sentence or order of any Criminal
Court shall be set aside merely on the ground that the inquiry, trial or other
proceedings in the course of which it was arrived at or passed, took place in a
wrong sessions division, district, subdivision or other local area, unless it
appears that such error has in fact occasioned a failure of justice. It was held
that the issue of territorial jurisdiction if not raised during trial will not vitiate the
finding, sentence or order on this count unless the accused is able to show
that it has occasioned a failure of justice or that prejudice has been caused to
him.
18. In Kaushik Chatterjee vs. State of Haryana & Anr., Transfer Petition
(Criminal) 456 of 2019, decided on 30.09.2020, Apex Court held as under:
"35.....there are two types of jurisdictional issues for a criminal Court
namely (i) the jurisdiction with respect of the power of the Court to try
particular kinds of offences and (ii) its territorial jurisdiction.
36. It was specifically held by this Court in Raj Kumari Vijh (supra) that the
question of jurisdiction with respect to the power of the Court to try
particular kinds of offences goes to the root of the matter and that any
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transgression of the same would make the entire trial void. However,
territorial jurisdiction, according to this Court "is a matter of convenience,
keeping in mind the administrative point of view with respect to the work of
a particular court, the convenience of the accused and the convenience of
the witnesses who have to appear before the Court".
37. After making such a distinction between two different types of
jurisdictional issues, this Court concluded in that case, that where a
Magistrate has the power to try a particular offence, but the controversy
relates solely to his territorial jurisdiction, the case would normally be
covered by the saving clause under Section 531 of the Code of 1898
(present Section 462 of the Code of 1973).
38. From the above discussion, it is possible to take a view that the words
"tries an offence" are more appropriate than the words "tries an offender"
in section 461 (1). This is because, lack of jurisdiction to try an offence
cannot be cured by section 462 and hence section 461, logically, could
have included the trial of an offence by a Magistrate, not empowered by
law to do so, as one of the several items which make the proceedings
void. In contrast, the trial of an offender by a Court which does not have
territorial jurisdiction, can be saved because of section 462, provided
there is no other bar for the Court to try the said offender (such as in
section 27). But Section 461 (1) makes the proceedings of a Magistrate
void, if he tried an offender, when not empowered by law to do."
19. The judgment of Apex Court in M/s Himalaya Self Farming Group &
Anr. v. M/s. Goyal Feed Suppliers, TP (Criminal) No. 273/2020 relied upon
by Ld. counsel for the accused rather goes against the accused inasmuch as
in that case it was held that:
"Under Section 142(2)(a) of the Negotiable Instrument Act, the
court within whose jurisdiction the branch of the bank where the
payee maintains the account is situated, will have jurisdiction to
try the offence, if the cheque is delivered for collection through an
account."
20. On the basis of above legal position, in the present case it is not in
dispute that the complainant maintains its bank account at ICICI Bank,
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Connaught Place and the cheque in question was also deposited in this
branch for encashment. This has been averred in the complaint as well as in
the evidence affidavit. Burden of proof in this regard was upon the accused to
prove to the contrary and no evidence was led by the accused in support of
this contention. Therefore, mere fact that the cheque return memo mentions
the name of another branch at Jhandewalan, will not ipso facto take away the
jurisdiction of this court as the banker of the complainant is situated within its
jurisdiction.
21. Now coming to the main issue as to whether the accused has raised any
probable defence or not. In this regard, the complainant i.e. CW1, was duly
cross examined on 18.12.2018 by Ld. Counsel for the accused. In his cross
examination as CW1, the complainant had stated that he knows the accused
since late 2013. He deposed that the agreement to sell was executed on
18.04.2014 relating to property number 8/39 measuring 100 sq yards situated
in Subhash Nagar, Delhi. He further deposed that he had paid Rs.30,00,000/
in cash to the accused and that one Anil Kumar Sakhuja and wife of the
accused were also present at that time.
22. The complainant is duly corroborated on the above aspect by
documentary evidence in the form of Ex. CW1/H (OSR) which is the bayana
agreement dated 18.04.2014 entered into between the complainant and
accused as per which the total sale consideration was Rs.80 lacs for the
property in question and the accused had received a sum of Rs. 30 lacs as
bayana/advance from the complainant as mentioned therein and that the
balance payment of Rs. 50 lacs are payable on or before 17.07.2014. It is a
settled law that a written document cannot be countenanced by any oral
evidence. Once terms of a contract between the parties are reduced into
writing, Sections 91 and 92 of the Evidence Act come into play and any oral
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evidence to prove to the contrary cannot be accepted. Mere giving of
suggestions to the complainant during his cross examination by Ld. Counsel
for the accused that Ex.CW1/H (OSR) is a forged and fabricated document is
not sufficient to discard the said agreement. It is a settled law that mere giving
of suggestions does not amount to proof of that fact. As per Section 103 of
Evidence Act, the burden of proof as to any particular fact lies on that person
who wishes the Court to believe in its existence. A perusal of Ex.CW1/H
(OSR) shows that it was also witnessed by none other than accused's wife
Mrs. Anjana Arora as witness no.2. The accused could have cited her as a
defence witness to prove that Ex.CW1/H (OSR) does not bear her signatures
as a witness in proof of his plea that it is a forged and fabricated document.
However, no such exercise was done by the accused. There is also no
explanation from the accused as to how the complainant got in his possession
documents Mark X (Colly) which is the collaboration agreement in his favour
and is a part of chain of property documents which could come into the
possession of only that party which is entering into a property purchase
transaction with the other in ordinary course of business. Therefore, it is clear
as daylight that the complainant and accused had entered into agreement to
sell Ex.CW1/H (OSR) for the property in question and that the accused had
received a sum of Rs. 30 lacs from the complainant pursuant thereto.
23. Under such circumstances it is difficult to accept the contentions of Ld.
Counsel for the accused that the complainant has no financial capacity to give
Rs.30 lacs to the accused merely because the complainant himself has
admitted in his cross examination that he has purchased other properties as
well and that the complainant has failed to disclose sufficient sources of funds
for present transaction and the adequacy of his income. This is for the reason
that the complainant in the present case is not solely relying upon the
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presumptions to prove his case. The complainant has filed on record bayana
agreement dated 18.04.2014 Ex.CW1/H (OSR) and collaboration agreement
Mark X (colly) for the property in question and it shows that a sum of Rs.30
lacs have been taken by the accused from the complainant as
advance/bayana on 18.04.2014. The submissions of Ld. Counsel for the
accused would have been relevant had there been no such documentary on
record. It is only then it could have been argued that the case in favour of
complainant stood rebutted by the cross examination of the complainant by
creating a doubt over the complainant's case. When the best evidence in the
form of documentary evidence as noted above is already placed on record
then the considerations that the complainant has no financial capacity to pay
the amount or that there is no income proof etc becomes irrelevant and pales
into insignificance. Hence, completely ignoring or discarding the documentary
evidences in such case would amount to denying the truth. The fact that the
complainant has not filed suit for specific performance against the accused is
not material as the offence of cheque dishonour is a separate offence and
existence of civil remedy does not bar criminal remedy.
24. The other argument of Ld. Counsel for the accused that the amount was
given in violation of Income Tax Act and hence it is not recoverable is without
any substance. The mere fact that the amount was given in violation of Income
Tax Act is a separate matter between revenue and party concerned and the
accused cannot derive any advantage out of it and it further does not
invalidate the proceedings under section 138 NI Act since it is a distinct
statutory offence arising upon the dishonor of cheque.
25. For this reliance is also placed upon the judgment of Hon'ble Bombay
High Court in Krishna P Morajkar v. Joe Ferrao, 2013 SCC OnLine Bom
862, wherein the High Court observed as under:
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''26. ....the entire scheme of the Income Tax Act is for ensuring that all
amounts are accounted. If some amounts are not accounted for, the
person would be visited with the penalty or at times even prosecution
under the Income Tax Act, but it does not mean that the borrower can
refuse to pay the amount which he has borrowed simply, because
there is some infraction of the provisions of the Income Tax Act.
Infractions of provisions of Income Tax Act would be a matter
between the revenue and the defaulter and advantage thereof cannot
be taken by the borrower......"
26. Reference can also be made to the recent judgment of Hon'ble Delhi
High Court in Barun Kumar v. State of NCT of Delhi & Anr Crl. Rev. P.
398/2018 decided on 25 June, 2021 wherein it had approved the above cited
case of Krishna P Morajkar (supra) and observed as follows:
"The fact that the loan has been given in violation of Section 269 SS of
the IT Act does not mean that the Court cannot look into the docu
ments at all. The learned counsel for the petitioner is correct that Sec
tion 269 SS of the IT Act mandates that loan in any amount over
Rs.20,000/ has to be by way of account payee cheque or account
payee bank draft or by use of electronic clearing system through a
bank account. Offence Section 269 SS IT Act at best makes an of
fence under Section 271 D of the IT Act but it does not mean that the
loan of Rs.15,00,000/ has not been given by the complainant to the
petitioner herein. Both the courts below have relied on the judgment of
the Bombay High Court in Krishna P Morajkar v. Joe Ferrao, 2013
SCC OnLine Bom 862, wherein the High Court observed as under:
''26. ....the entire scheme of the Income Tax Act is for ensuring that all
amounts are accounted. If some amounts are not accounted for, the
person would be visited with the penalty or at times even prosecution
under the Income Tax Act, but it does not mean that the borrower can
refuse to pay the amount which he has borrowed simply, because
there is some infraction of the provisions of the Income Tax Act. Infrac
tions of provisions of Income Tax Act would be a matter between the
revenue and the defaulter and advantage thereof cannot be taken by
the borrower......"
It cannot be said that the reliance placed by the two courts below in
the said judgment is perverse requiring interference of this Court under
Section 397 Cr.P.C."
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27. In the present matter, Ld. Counsel for the accused has further argued
that the alleged debt is not enforceable being a time barred debt and thus, the
dishonor of cheque, allegedly given against a time barred debt, cannot attract
the provisions of Section 138 NI Act. It is also argued that the actual liability
was less than cheque amount and hence no case is made out under Section
138 NI Act
28. As per the averments made in the complaint, the amount was paid on
18.04.2014 and the full and final payment was to be made on or before
17.07.2014. According to the Limitation Act, 1963, period of limitation for suits
for recovery of this amount is three years. In the present case, the said
limitation period already got expired on the date mentioned in the cheque in
question when counted from either of the above two dates and consequently, it
can be said that the cheque dated 28.08.2017 was issued against a time
barred liability.
29. Hon'ble Delhi High Court in Jage Ram Karan Singh & Anr. Vs State &
Anr. (Crl. Revision Petition no. 82 of 2013, decided on 31.07.2019) held that if
the liability of the accused has already become time barred as on the date of
the issuance of the cheque, it cannot be said that the cheque was issued in
discharge of a legally enforceable debt or liability.
30. In Sasseriyil Joseph v. Devassia in SLP (Crl.) 1785/2001, the Hon'ble
Apex Court had held that the penal provisions of Section 138 NI Act would not
apply in case where the cheque is issued by the accused for a due barred by
limitation.
31. In Vijay Polymers Pvt. Ltd. & Anr. v. Vinnay Aggarwal (2009) 110
DRJ 592, relying upon the judgment of the Supreme Court in Sasseriyil
Joseph (supra), it has been observed that, cheques issued for a timebarred
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debt would not fall within the definition of 'legally enforceable debt', which is
the essential requirement for a complaint under Section 138 of the NI Act.
32. It can be concluded from the above legal position that a cheque issued
for a time barred debt does not amount to acknowledgment of the debt nor
does it revalidates the debt. Mere giving of a cheque, without anything more,
will not revive a timebarred debt, because cheque has to be given in
discharge of a legally enforceable debt. And as such, a cheque issued towards
time barred debt would not be covered under the provisions of Section 138 NI
Act.
33. In the present case, as already discussed, the alleged liability of the
accused had become time barred as on the date of issuance of cheque in
question. A time barred debt is not a legally enforceable liability and thus, the
cheque in question, not being issued towards a legally enforceable debt, its
dishonour would not attract the provisions of Section 138 NI Act.
34. Even if for the sake of arguments, it is assumed that the debt/liability is
within time, the complainant has admitted in his cross examination on
18.12.2018 that he has taken Rs.7 lacs from the accused in the year 2015.
The relevant portion of the cross examination of the complainant is reproduced
below:
"It is correct that I have taken Rs.7 lacs from the
accused in the year 2015 on account of my son's
marriage. It is correct that I have not disclosed the said
receiving of Rs. 7 lacs in my complaint or evidence
affidavit....."
35. The above admission has made the complainant's case weak and it
creates strong suspicion about the actual quantum of liability of the accused
for the cheque amount on the date of encashment. Therefore, the liability of
Case No. 10615/2019 Sandeep Mehta vs Rakesh Arora Page No. 17/23
accused towards the complainant for the present transaction is reduced by
Rs.7,00,000/. There is no explanation from the complainant as to why the
accused would issue the cheque in question to him on 28.08.2017 without
adjusting his previous loan of the year 2015. Thus, the accused does not owe
legally enforceable debt or liability to the tune of cheque amount towards the
complainant for the transaction of present case. However, the complainant has
presented the cheque for encashment for entire amount of Rs. 30,00,000/
without making an endorsement as per Section 56 of Negotiable Instruments
Act.
36. It is a settled law that to hold a conviction in cheque bounce case, there
must be legally enforceable debt or liability as on the date of
presentation/maturity of cheque or in other words, if there is no debt or liability
to the tune of cheque amount in question on date of presentation of cheque,
Section 138 of NI Act is not made out. The same has recently been held in
Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel and others
2022 SCC OnLine SC 1376 decided by Apex Court on October 11, 2022.
37. Reliance is also placed upon the judgment of Hon'ble High court of Delhi
in Alliance Infrastructure Project Pvt. Ltd. v. Vinay Mittal 2010 (2) CCC
831 (Delhi) wherein the court has interpreted the meaning of words 'amount of
money' appearing in section 138 NI Act and held that it would mean amount
actually payable by drawer of the cheque to payee and would not mean
always the amount of cheque. Court even held that if in the notice of demand,
full amount of cheque is claimed as principal sum without giving any
adjustment of the amount received then that notice cannot be held valid. It was
held that:
"8. The question which comes up for consideration is as to what the
expression 'amount of money' means in a case where the admitted
Case No. 10615/2019 Sandeep Mehta vs Rakesh Arora Page No. 18/23
liability of the drawer of the cheque gets reduced, on account of part
payment made by him, after issuing but before presentation of cheque in
question. No doubt, the expression 'amount of money' would mean the
amount of the cheque alone in case the amount payable by the drawer,
on the date of presentation of the cheque, is more than the amount of
the cheque. But, can it be said the expression 'amount of money' would
always mean the amount of the cheque, even if the actual liability of the
drawer of the cheque has got reduced on account of some payment
made by him towards discharge of the debt or liability in consideration of
which cheque in question was issued. If it is held that the expression
'amount of money' would necessarily mean the amount of cheque in
every case, the drawer of the cheque would be required to make
arrangement for more than the admitted amount payable by him to the
payee of the cheque. In case he is not able to make arrangement for the
whole of the amount of the cheque, he would be guilty of the offence
punishable under Section 138 of Negotiable Instruments Act. Obviously
this could not have been the intention of the legislature to make a person
liable to punishment even if he has made arrangements necessary for
payment of the amount which is actually payable by him. If the drawer of
the cheque is made to pay more than the amount actually payable by
him, the inevitable result would be that he will have to chase the payee
of the cheque to recover the excess amount paid by him. Therefore, I
find it difficult to take the view that even if the admitted liability of the
drawer of the cheque has got reduced, on account of certain payments
made after issue of cheque, the payee would nevertheless be entitled to
present the cheque for the whole of the amount, to the banker of the
drawer, for encashment and in case such a cheque is dishonoured for
wants of funds, he will be guilty of offence punishable under Section
138 of Negotiable Instrument Act.
9. I am conscious of the implication that the drawer of a cheque may
make payment of a part of the amount of the cheque only with a view to
circumvent and get out of his liability under Section 138 of Negotiable
Instrument Act. But, this can easily be avoided, by payee of the cheque,
either by taking the cheque of the reduced amount from the drawer or by
making an endorsement on the cheque acknowledging the part payment
received by him and then presenting the cheque for encashment of only
the balance amount due and payable to him. In fact, Section 56 of
Negotiable Instrument Act specifically provides for an endorsement on a
Negotiable Instrument, in case of part payment and the instrument can
thereafter be negotiated for the balance amount. It would, therefore, be
open to the payee of the cheque to present the cheque for payment of
only that much amount which is due to him after giving credit for the part
payment made after issuance of cheque."
Case No. 10615/2019 Sandeep Mehta vs Rakesh Arora Page No. 19/23
38. Hon'ble High Court of Delhi in Lyca Finance Ltd. v. State, 2016 SCC
OnLine Del 4198 dismissed the appeal filed against order of acquittal of
accused. The following extracts from the said judgment are apposite to
mention:
"Thus, total amount payable in instalments was Rs. 57,000/.
CW1 admitted in his cross examination that respondent no.
2 had already paid about Rs. 40,000/ to petitioner. Statement of account Ex. CW1/1 indicated that as on 16th February, 2009 Rs. 17,100/ was outstanding balance. Over and above this, overdue charges of Rs. 2,451.48 were added. Even the aggregate of this amount comes to Rs. 29,551.48; whereas cheque amount was much more than this. Thus, the cheque being of higher amount could not be taken towards discharge of the existing legal liability.
4. Reliance has been placed on the judgments, that is, Alliance Infrastructure Project Pvt. Ltd. and Ors. Vs. Vinay Mittal, MANU/DE/0031/2010 and Angu Parameswari Textiles (P) Ltd. and Ors. Vs. Sri Rajam & Co., MANU/TN/0662/2001 to conclude that if cheque amount is much more than liability, Section 138 of the Act is not attracted. In Alliance Infrastructure (supra), it has been held as under: "8. The question which comes up for consideration is as to what the expression "amount of money" means in a case where the admitted liability of the drawer of the cheque gets reduced, on account of part payment made by him, after issuing but before presentation of cheque in question. No doubt, the expression "amount of money" would mean the amount of the cheque alone in case the amount payable by the drawer, on the date of presentation of the cheque, is more than the amount of the cheque. But, can it be said the expression "amount of money" would always mean the amount of the cheque, even if the actual liability of the drawer of the cheque has got reduced on account of some payment made by him towards discharge of the debt or liability in consideration of which cheque in question was issued. If it is held that the expression "amount of money" would necessarily mean the amount of cheque in every case, the Case No. 10615/2019 Sandeep Mehta vs Rakesh Arora Page No. 20/23 drawer of the cheque would be required to make arrangement for more than the admitted amount payable by him to the payee of the cheque. In case he is not able to make arrangement for the whole of the amount of the cheque, he would be guilty of the offence punishable under Section 138 of Negotiable Instruments Act. Obviously, this could not have been the intention of the legislature to make a person liable to punishment even if he has made arrangements necessary for payment of the amount which is actually payable by him. If the drawer of the cheque is made to pay more than the amount actually payable by him, the inevitable result would be that he will have to chase the payee of the cheque to recover the excess amount paid by him. Therefore, I find it difficult to take the view that even if the admitted liability of the drawer of the cheque has got reduced, on account of certain payments made after issue of cheque, the payee would nevertheless be entitled to present the cheque for the whole of the amount, to the banker of the drawer, for encashment and in case such a cheque is dishonoured for wants of funds, he will be guilty of offence punishable under Section 138 of Negotiable Instrument Act."
5. In Angu Parameswari Textiles (supra), it has been held thus: "4. Section 138 of the Negotiable Instruments Act reads that where any cheque was drawn for payment of any amount of money for the discharge in whole or any part of any debt or other liability and the same is dishonoured by the Bank, the person who drew the cheque shall be punishable. Therefore, the cheque drawn should be towards the discharge of either the whole debt or part of the debt. If the cheque is more than the amount of the debt due, I am afraid, Section 138 cannot be attracted. This is a case where the cheque amount was more than the amount due on the date when the cheque was presented. The presentation of the cheque and subsequent dishonour alone raises a cause of action.
When the cheque cannot be said to be drawn towards the discharge of either the whole or part of any debt or liability, Section 138 is not attracted. On this sole ground, the complaint is liable to be quashed and is accordingly quashed."(emphasis laid) Case No. 10615/2019 Sandeep Mehta vs Rakesh Arora Page No. 21/23
6. For the foregoing reasons, I do not find any perversity in the view taken by the trial court. The view taken by the Trial Court, obviously, is a possible view. In my view, petitioner has failed to make out a case for grant of leave to appeal against the judgment of the trial court. Petition is dismissed."
39. Similarly, in Starkey Laboratories India Pvt. Ltd. v. Sanjay Gujral decided on 24.09.2019 in Crl.L.P. 492/2017 Hon'ble Delhi High court has observed as under: "6. As per the books of the petitioner, a sum of Rs. 1,49,569/ was outstanding as on 11.10.2012. However, the petitioner waited for over two years to fill an amount of Rs. 2,00,000/ in the said blank cheque and deposited the same. According to the petitioner, the amount of Rs. 1,49,569/ had increased to Rs. 2,16,247/ as on the date of depositing the cheque, on account of interest calculated at the rate of 24% per annum.
7. The trial court had noted that there was no contract or arrangement whereby the respondent had agreed to pay any interest.
8. In the aforesaid view, the petitioner had been unable to establish that the cheque of Rs. 2,00,000/ had been issued by the respondent against any such liability. Even if it is accepted that the sum of Rs.1,49,569/ was due from the respondent as on 11.10.2012, as deposed on behalf of the petitioner, the liability of Rs. 2,00,000/ was not established."
9. The view taken by the trial court is a plausible one and thus no interference is called for by this Court. Accordingly, the petition is dismissed."
40. In the case of Kulvinder Singh v. Kafeel Ahmad, 2014 (2) JCC (NI) 100 it was observed by Hon'ble Delhi High Court that "The basic principle in Criminal law is that the guilt of respondent/accused must be proved beyond reasonable doubt Case No. 10615/2019 Sandeep Mehta vs Rakesh Arora Page No. 22/23 and if there is slightest doubt about commission of an offence then the benefit has to accrue to him".
41. Therefore, as discussed hereinabove that it stands proved that in the present case the alleged debt/liability was not only time barred but also there does not exist legally enforceable debt or liability of the cheque amount as on the date of presentation of cheque and thus, the defence of accused that there is no legally enforceable debt or liability of accused to the tune of amount of cheque in question towards complainant succeeds. Hence, this ingredient of Section 138 of Negotiable Instruments Act, 1881 is not proved.
42. Accordingly, accused Rakesh Arora is acquitted of the offence punishable under Section 138 of the Negotiable Instrument Act, 1881. Bail bonds stands cancelled and surety, if any, stands discharged.
File be consigned to record room after due compliance.
Announced in the Open Court
on 20th Day of April, 2023 (PANKAJ RAI)
Metropolitan Magistrate05, NI Act
RAC/New Delhi/20.04.2023
Case No. 10615/2019 Sandeep Mehta vs Rakesh Arora Page No. 23/23