Delhi District Court
Present Case Was Instituted On A ... vs Unknown on 23 April, 2012
IN THE COURT OF MS MANISHA TRIPATHY: MM (09): SPECIAL
COURT NO.9: DWARKA COURT: NEW DELHI
In the matter of:
CRID NO. 02405RO173982011
CC NO.: 4208/12
AXIS BANK LTD.
THROUGH SHRI GOVIND SINGH
AUTHORISED SIGNATORY
J3, VIKASPURI, NEW DELHI
... Complainant
Vs.
SH. PARAG JAIN
D119120, MAHENDRU ENCLAVE,
NEW DELHI, DELHI110009
ALSO AT:
HOUSE NO. 95, SANJAY NAGAR,
GALI NO - 4, GT KARNAL ROAD,
NEW DELHI, DELHI110033.
....Accused
Offence Complained of : u/s 138 N.I. Act
Date of Institution of Complaint :11/05/2011
Plea of Accused : Not Guilty
CC NO.: 4208/12 Axis Bank Ltd. V Parag Jain 1/11
Date of Final Arguments Heard :03/04/2012
Decision :Acquitted
Date of Decision :23/04/2012
:JUDGMENT:
1.Present case was instituted on a complaint filed by Axis Bank Ltd. (hereinafter referred to as 'the complainant') against Sh. Parag Jain (hereinafter referred to as 'the accused') u/s 138 of Negotiable Instrument Act 1881(hereinafter referred to as 'the act') alleging that the accused had taken Personal loan of Rs. 13,90,000/ (Rupees Thirteen Lacs Ninety Thousand Only) from the complainant and in discharge of part liability he issued cheques bearing nos. '440515', '440529' & '440528' dated 20/12/2010, 20/01/2011 & 20/02/2011 respectively, each in the sum of Rs. 40,455/ (Rupees Forty Thausand Four Hundred Fifty Five Only) drawn on Canara Bank in favour of the complainant(hereinafter referred to as 'the said cheques'). Upon presentation for encashment the said cheques were returned unpaid vide return advice dated 24/03/2011 with remarks 'Funds Insufficient'. Thereafter, the complainant sent a legal notice to the accused on 13/04/2011 demanding the cheques' amount. The accused failed to pay the cheques' amount despite service of notice to him. Therefore, the present complaint was filed by Sh. Govind Singh,authorized representative of the complainant on 11/05/2011.
2. As a prima facie case was made out on the basis of material on record, the accused was summoned on 20/05/2011. The accused made first appearance on 20/01/2012. Notice u/s 251 CrPC was served upon him on 24/02/2012 to which he CC NO.: 4208/12 Axis Bank Ltd. V Parag Jain 2/11 pleaded not guilty and claimed trial.
3. 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 exhibited following documents :
i. Evidence by way of affidavit Ex.CW1/A ii Authority letter Ex.CW1/1 iii cheque bearing no. '440515' dated 20/12/2010 Ex.CW1/2 iv Cheque bearing no. '440529' dated 20/01/2011 Ex.CW1/3 v Cheque bearing no. '440528' dated 20/02/2011 Ex. CW1/4 vi cheque return advice dated 24/03/2011 Ex.CW1/5 vii Copy of legal demand notice dated 13/04/2011 Mark 'X' viii Postal Receipts dated 13/04/2011 Ex.CW1/6 & Ex.CW1/7 ix Courier receipts dated 13/04/2012 Ex.CW1/8 & Ex.CW1/9 x Internet Tracking Report Ex.CW1/10
4. Thereafter complainant evidence was closed and entire evidence against the accused was put to him. Statement of the accused was recorded on 12/03/2012 u/s. 313 Cr.P.C. The accused admitted that the cheques in question were issued in discharge of legal liability towards the loan i.e., for payment of EMIs. He also admitted Receiving of legal demand notice. He stated that he had made payment towards cheques Ex.CW1/2 and Ex.CW1/3 even before reciving legal demand notice, and towards cheque Ex.CW1/4 on 20/05/2011 and 30/05/2011.He expressed his intent to lead defence evidence.
CC NO.: 4208/12 Axis Bank Ltd. V Parag Jain 3/11
5. Thereafter, evidence was led by the accused in his defence. The accused deposed as witness u/s. 315 Cr.P.C. and relied on following documents :
i Receipt no. 305925 dt.18/02/2011 Ex.DW1/1 ii Receipt no. 305941 dt.23/03/2011 Ex.DW1/2 iii Receipt no. 306861 dt.28/05/2011 Ex.DW1/3 iv Receipt no. 306863 dt.30/05/2011 Ex.DW1/4
6. Thereafter, final arguments were advanced by both the parties. I have given my thoughtful consideration to the arguments advanced by both the ld. Counsels.
7. Ld. counsel for the complainant argued that admittedly the said cheques were drawn by the accused for discharge of legal liability and were returned unpaid by banker of the accused due to Insufficient funds. Complainant sent the legal demand notice within one month and no payment was made within 15 days after receipt of legal demand notice. Complainant was filed within 30 days after cause of action arose, therefore, offence u/s 138 of Negotiable Instrument Act was made out.
8. On the other hand it was argued on behalf of the accused that payment against cheque no.'440515' dated 20/12/2010 and cheque no.'440529' dated 20/01/2010 was made by the accused even before issuance of legal demand notice and therefore he was not liable to pay the amount demanded in the said notice. It was further argued that the complainant had suppressed the fact of payment towards CC NO.: 4208/12 Axis Bank Ltd. V Parag Jain 4/11 cheque no.'440515' & cheque no.'440529' and illegally demanded a sum of Rs.1,21,365/ and filed a false complaint against the accused.
9. 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, 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."
10. Thus, for an offence under s. 138 NI Act essential ingredients that must be established are CC NO.: 4208/12 Axis Bank Ltd. V Parag Jain 5/11 • 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;
11. Admittedly, the said cheques Ex.CW1/2, Ex.CW1/3 and Ex.CW1/4 were issued by the accused in favour of the complainant for payment of EMIs towards the loan. The cheque was presented to the bank within validity period and was returned unpaid due to insufficient funds is established by cheque return memo dated 24/03/2011 Ex.CW1/5. Service of legal demand notice dated 13/04/2011 is admitted by the accused.
12. The point raised for determination by this court is whether accused had made payment towards cheques Ex.CW1/2 and Ex.CW1/3 even before date of dishonour.
CC NO.: 4208/12 Axis Bank Ltd. V Parag Jain 6/11
13. Deposition of the accused u/s.315 Cr.P.C. affirming payment towards Ex.CW1/ 2 and Ex.CW1/3 even before date of dishonour is reproduced hereinbelow "I have already made payment towards dishonoured cheques. Payment towards Ex.CW1/2 was made vide receipt bearing no.305927 dated 18/02/2011 which is Ex.CW1/1. Payment towards Ex.CW1/3 was made vide reciept bearing no. 305941 dated 23/03/2011 which is Ex.DW1/2. Payment towards Ex.CW1/4 was made vide reciept bearing no. 306861 dated 28/05/2011 and 306863 dated 30/05/2011 which are Ex.DW1/3 and Ex.DW1/4."
14. During cross examination of the accused it was not even put to the accused that such payment was not made by the accused or that said payment was not adjusted towards the said cheques in such manner. It is well settled principle of law that if a party fails to put its case to opponent's witness or asks no question on any material point during his cross examination, then it will be taken to accept the witness account. It was reiterated by Hon'ble Supreme Court of India in the case of Sarwan Singh v State of Punjab (AIR 2003 SC 3652 in following words : "...It is a rule of essential justice that whenever the opponent has declined to avail himself of the opportunity to put his case in cross examination, it must follow that the evidence tendered on that issue ought to be accepted. It goes without saying that a skillful crossexaminer must hear the statements in chief examination with attention, and when his turn comes, he should interrogate the witness on all material points that go against him. If omits or ignores then they must be taken as an acceptance of the truth of that part of witness's evidence."
CC NO.: 4208/12 Axis Bank Ltd. V Parag Jain 7/11
15. Thus, a party is bound to put its case to the other side during cross examination when the opponent appears as a witness. Complainant in the instant case failed to do so and thereby, deemed to have accepted the account of DW1 that payment towards the said cheques was made and the amount was so adjusted by the complainant.
16. Now the question arises that in view of payment made by the accused whether legal notice demanding payment of consolidated amount of Rs. 1,21,365/ could be said to be valid notice as envisaged u/s. 138 of the act. In M/s Alliance Infrastructure Project Pvt. Ltd. and Ors. V Vinay Mittal (CRL.M.C.2224/2009, order dated 18/01/2010) ,it was held by The Hon'ble High Court of Delhi that where part payment towards a cheque has been received by complainant before dishonour of cheque, a legal notice suppressing the fact of part payment and demanding full amount shall be invalid for the purpose of S138 of the act. The relevant para is reproduced herein below:
"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 CC NO.: 4208/12 Axis Bank Ltd. V Parag Jain 8/11 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."
The Hon'ble High Court further observed "12. ...To ask the drawer of the cheque to make payment of Rs.49,47,600/despite having earlier received a sum of Rs.16,50,000/ against that very cheque is nothing but a dishonest conduct. Had the petitioner complied with the demands made in this notice, it would have been compelled to later on chase the complainant for recovery of the excess amount paid by it and had the complainant not paid the excess amount received by him, the petitioner would also have been compelled to initiate legal proceedings against him. Therefore, a notice of demand which requires the drawer of the cheque to make payment of the whole of the cheque amount, despite receiving a CC NO.: 4208/12 Axis Bank Ltd. V Parag Jain 9/11 substantial amount against that very cheque, much before issue of notice, cannot be said to be a legal and valid notice envisaged in Section 138(b) of Negotiable Instrument Act. The expression "amount of money" used in Section 138(b) of Negotiable Instrument Act, to my mind, in a case of this nature would mean the amount actually payable by the drawer of the cheque to the payee of the cheque. Of course, if the payee of the cheque makes some demands on account of interest, compensation, incidental expenses etc, that would not invalidate the notice so long as the principal amount demanded by the payee of the cheque is correct and is clearly identified in the notice. When the principal amount claimed in the notice of demand is more than the principal amount actually payable to the payee of the cheque and the notice also does not indicate the basis for demanding the excess amount, such a notice cannot be said to be a legal and valid notice envisaged in Section 138(b) of Negotiable Instrument Act. In such a case, it is not open to the complainant to take the plea that the drawer of the cheque could have escaped liability by paying the actual amount due from him to the payee of the cheque. In order to make the notice legal and valid, it must necessarily specify the principal amount payable to the payee of the cheque and the principal amount demanded from the drawer of the cheque should not be more than the actual amount payable by him though addition of some other demands in the notice by itself would not render such a notice illegal or invalid.
17. In the instant case after payment of Rs.80,910/ principal amount payable by the accused was only Rs.44,455/. However, without accounting for the payment already received a principal sum of Rs. 1,21,365/ was demanded by the complainant, which was not payable by the accused. In light of the judgment cited above, such legal notice demanding a sum of Rs. 1,21,365/ was clearly invalid.
CC NO.: 4208/12 Axis Bank Ltd. V Parag Jain 10/11
18. For the reasons discussed above, complainant has failed to prove its case. Accordingly, the accused is acquitted of offence u/s 138 of the act.
Announced in Open Court
on 23/04/2012 (MANISHA TRIPATHY)
METROPOLITAN MAGISTRATE,
SPECIAL COURT(09), DWARKA COURTS,
NEW DELHI
CC NO.: 4208/12 Axis Bank Ltd. V Parag Jain 11/11