Delhi District Court
Rahul Sharma vs Sanjay Sharma on 14 November, 2024
IN THE COURT OF SHRI PRANJAL ANEJA,
SPECIAL JUDGE (NDPS)-02, CENTRAL DISTRICT,
TIS HAZARI COURTS, DELHI
Criminal Appeal No. 278/2023
CNR No. DLCT01-015828-2023
Rahul Sharma
Prop. of Maa Bhagwati Beads
S/o Late Mr. Devender Kumar Sharma
R/o H. No. 2814, Chahil Puri,
Kinari Bazar, Delhi-110006.
....Appellant
Versus
Sanjay Sharma
S/o Mr. Jai Kishan Sharma
R/o 2979, Masjid Khajoor
Kinari Bazar, Chandni Chowk,
Delhi-100006. ....Respondent
Preferred on : 03.11.2023
Reserved on : 03.08.2024
Pronounced on : 14.11.2024
JUDGMENT
1. The present appeal has been preferred by the appellant-accused under section 374 (3) of the Code of Criminal Procedure, 1973 (in short CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 1/25 'Cr.P.C.') against the impugned judgment dated 05.09.2023 and order on sentence dated 19.09.2023, passed by the Court of Ms. Bhujali, Ld. Metropolitan Magistrate (NI Act)-01, Central District, Tis Hazari Courts, Delhi, in Complaint Case No. 16178/2018 titled as "Sanjay Sharma Vs. Rahul Sharma". Vide judgment of conviction dated 05.09.2023, the appellant was convicted for the offence under Section 138 of the Negotiable Instruments Act, 1881 (herein after referred to in short 'NI Act') and vide order on sentence dated 19.09.2023, he was sentenced to fine of Rs. 14,00,000/- (Rupees Fourteen Lacs) to be paid to the complainant as compensation and rigorous imprisonment for 08 months. Convict was directed to pay the said fine/compensation within 30 days exclusive of that day. In default of payment of said amount/compensation, the convict shall undergo further rigorous imprisonment for period of 6 months.
Brief Facts :
2. The case of the complainant, in brief, is that the appellant/accused approached the complainant for a number of times and requested him for a personal loan of Rs. 75,00,000/-. Thereafter, after lots of requests of the appellant/accused and being well know from the family of the appellant/accused as well as having good relations with the appellant/accused, the complainant gave an amount of Rs. 57,00,000/- as personal loan. The complainant arranged the said amount from his friends and relatives and gave the same to appellant/accused @ 18 % per annum. The complainant was not having more than the aforesaid amount as demanded. An agreement was also made in this regard on 24.04.2017. The appellant/accused promised to repay the said loan of Rs. 57,00,000/- in seven installments (six installments of Rs. 9,00,000/- each and one installment of Rs. 3,00,000/-).
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3. In discharge of above said liability, appellant/accused had given seven cheques, signed, filled with amount, dates and having name of complainant, out of which one account payee post dated cheque bearing no.
033537 dated 10.07.2018, drawn on ICICI Bank, Chandni Chowk Branch, Delhi. The cheque when presented for payment, was dishonored with remarks "Funds Insufficient". Thereafter, a legal demand notice dated 30.07.2018 was sent to the accused. Since the legal demand notice went unheeded, the complainant was constrained to file the case before Ld. Trial Court. The complainant examined himself as CW-1 and tendered affidavit Ex. CW-1/A and documents Ex. CW-1/1 to Ex. CW-1/6. The complainant also confronted the accused during his cross-examination with documents Ex. DW-1/X (OSR), Ex. DW-1/X1 (OSR), Ex. DW-1/X2 (OSR), Ex. DW-1/X3 (OSR) and Ex. CW-1/6, Ex. CW-1/5.
Summoning & Trial
4. Accused was summoned and he appeared before the Ld. Trial Court which framed notice u/s 251 Cr. P.C., 1973. Accused pleaded not guilty and claimed trial. His plea of defence was recorded as under :
"The cheque in dispute belong to me and bear my signatures. None of the other particulars in the cheque was filled by me. I have received the legal demand notice of the complainant. The signatures of the loan agreement are my own. I had executed the loan agreement with the complainant. But at the time when I signed it, it was blank paper. I had only taken an amount of Rs. 3,10,000/- from the complainant. But I never issued the cheque to the complainant. Seven cheques got misplaced from my shop. The cheque in dispute is one of those cheques.
I have not returned the Rs. 3,10,000/- taken by me from the complainant. I have not filed any Police Complaint regarding my lost cheques. My cousin brother Pankaj Sharma had also taken some money from the complainant. The complainant has misused my cheques, because of that. My total liability towards the complainant is only Rs. 3,10,000/- but for that the CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 3/25 complainant has filed multiple cases against me for an excessive amount."
5. Complainant then led his evidence as CW1, he was duly cross- examined. Statement of the accused was then recorded u/s 313 r/w Section 281 Cr.P.C. as follows:
"The cheque(s) in question bears my signatures but I have not filled up the other particulars in the cheque(s) in question. I have received the legal demand notice from the complainant. The address mentioned on the legal demand notice is my correct address. The complainant is my family friend since 40 years. I had taken loan of Rs. 3,10,000/- from the complainant for investment in my business. The agreement and stamp paper were blank when I signed on them at the shop of the complainant. I have not yet returned the loan of Rs. 3,10,000/-. The cheque in dispute was misplaced from my shop. I never handed over the cheque to the complainant. I still have liability towards the complainant for an amount of Rs. 3,10,000/- only. The complainant misused my lost cheque by filling excessive amount. I want to lead the defence evidence."
6. Accused opted to lead defence evidence in which he got examined himself as DW-1.
7. The judgment rendered by the Ld. Trial Court led to the conviction dated 05.09.2023 and order on sentence dated 19.09.2023 under Section 138 NI Act.
Grounds of Appeal :
8. Against the judgment of conviction and order on sentence, the appellant/accused has filed the present appeal raising the following grounds of appeal, broadly :
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(i). It has been averred that the impugned order suffers from grave legal infirmities and the same is irrational, mechanical and passed without appreciation the evidence placed on record and therefore, arbitrary too.
(ii). It has been averred that Ld. MM appears to have passed the impugned order in a pre-determined and without judicial application mind and therefore, causing serious miscarriage of justice to the appellant.
(iii) That the Ld. Trial Court has passed the impugned order and the judgment as arbitrarily, unjustified and the same has been passed hurriedly in an unilateral manner by the Ld. MM.
(iv) It has been further averred that Ld. Trial Court has failed to appreciate that the averments of the alleged complaint did not clarify any specific date and transaction qua the loan amount and qua the cheque in questions as averred in the complaint. It is specifically stated that a complaint must have its potential ingredients for which the complainant/respondent relying upon but there is no proper explanation in respect of dates and to their events.
(v) That Ld. Trial Court has failed to appreciate the facts that the respondent has miserably failed to prove that he had advanced loan of Rs.
57,00,000/- in cash as stated in the complaint to the appellant in as much as no date of granting the loan is mentioned nor it has been proved by the respondent as to in what mode or how many occasions, the said loan was disbursed to the appellant.
(vi) That the Ld. MM was confused at the time of passing the judgment which is clear from the judgment as the onus to prove the document furnished, is upon the complainant and not upon the appellant.
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(vii) It has been further averred that Ld. MM failed to appreciate that the complainant is relying upon the false & fabricated agreement as Ex. CW-1/6 which does not render any authenticity in the eyes of law as the document does not purports any genuine witness nor it has been proved by the respondent/complainant during entire trial.
(viii) That the Ld. Trial court failed to appreciate that one of the attesting witness to the loan agreement is an Advocate who cannot appear before the Court and the same amounts to professional misconduct.
(ix) That the Ld. Trial Court failed to appreciate that respondent failed to prove his capacity to give loan.
(x) That the Ld. Trial Court failed to appreciate that the relations from whom complainant arranged the alleged amount, never deposed as witnesses.
Submissions of the parties:
9. Ld. Counsel for the appellant/accused argued that the case of the complainant is false and there is no liability of the appellant/accused. Ld. Counsel argued that the complainant stated in his complaint that he gave Rs. 57 Lacs in cash to the accused but in cross-examination, it turned out to be Rs. 54 Lacs cash and Rs. 3 Lacs through RTGS. Ld. counsel further argued that the relations i.e. father, sons, wife etc. of complainant, from whom he arranged the alleged funds, have not been summoned and examined as witness to prove the source. Ld. counsel also argued that the two witnesses to the loan agreement have also not been summoned. Ld. counsel, therefore, submitted that the ingredients of Section 138 NI Act are not fulfilled and for this reason, Ld. Counsel stated that the judgment of conviction has been wrongly passed.
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10. On the other hand, Ld. Counsel for respondent/ complainant submitted that the accused/appellant has taken contradictory stands vis-a-vis his plea of defence and cross-examination of complainant/CW-1. Ld. Counsel argued that the appellant/accused has failed to discharge his onus of rebutting the presumptions U/s 118 (a) and Section 139 NI Act and the case of the complainant duly stands proved warranting conviction of the accused. It was also argued that there is a civil decree passed against the accused. Ld. counsel further argued that the loan transaction stands duly proved vide loan agreement dated 24.04.2017 Ex. CW1/6 and as the accused has admitted his signatures on the said loan agreement and cheque in question, the presumption U/s 139 N.I. Act stood against him which has not been rebutted.
Law governing the culpability of Section 138 Negotiable Instruments Act, 1881 Legislative provisions
11. Section 138 of the NI Act provides as under:-
"138. Dishonour of cheque for insufficiency, etc., of funds in the account. - 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 be extended to two years, 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-
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(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 in due 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 cheque 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 purposes of this section, "debt or other liability" means a legally enforceable debt or other liability."
12. A bare perusal of Section 138 of the NI Act would show that there are three fundamental requirements for applicability of this provision which are: (1) that there should be legally recoverable enforceable debt and (2) that the drawer issued cheque to discharge part or whole of the debt and (3) that the cheque issued had been returned due to insufficiency of funds in the account of drawer.
Alongside, it would also be expedient to refer to the legal presumptions which go hand-in-hand with Section 138 that are laid down under Section 118 (a) and Section 139 of the NI Act reproduced as under:-
Section 118 (a) NI Act reads as under :
Presumptions as to Negotiable Instruments - Until the contrary is proved, the following presumption shall be made; -
(a) of consideration - that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;
:::: :::: ::::
CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 8/25 Section 139 NI Act reads as under :
Presumption in favour of holder It shall be presumed, unless contrary is proved, that the holder of a cheque received the cheque of the nature referred in section 138 for the discharge, in whole or in part, of any debt or other liability.
Relevant Judicial pronouncements
13. It has been held by the Hon'ble Supreme Court in Rangappa vs. Sri Mohan, (2010) 11 SCC 441 that :
".... the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability."
14. In Rajesh Jain vs. Ajay Singh, SLP (Crl.) No. 12802 of 2022 decided on 09.10.2023, the Hon'ble Apex Court has observed as under:-
34. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that 'unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability.' It will be seen that the 'presumed fact' directly relates to one of the crucial ingredients necessary to sustain a conviction under Section 138."
35. Section 139 of the NI Act, which takes the form of a 'shall presume' clause is illustrative of a presumption of law. Because Section 139 requires that the Court 'shall presume' the fact stated therein, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. But this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary as is clear from the use of the phrase 'unless the contrary is proved.' CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 9/25
36. The Court will necessarily presume that the cheque had been issued towards discharge of a legally enforceable debt/liability in two circumstances. Firstly, when the drawer of the cheque admits issuance/execution of the cheque and secondly, in the event where the complainant proves that cheque was issued/executed in his favour by the drawer. The circumstances set out above form the fact(s) which bring about the activation of the presumptive clause. [Bharat Barrel vs. Amin Chand] [(1999) 3 SCC 35].
37. Recently, this Court has gone to the extent of holding that presumption takes effect even in a situation where the accused contends that 'a blank cheque leaf was voluntarily signed and handed over by him to the complainant. [Bir Singh v. Mukesh Kumar (2019) 4 SCC 197]. Therefore, mere admission of the drawer's signature, without admitting the execution of the entire contents in the cheque, is now sufficient to trigger the presumption.
38. As soon as the complainant discharges the burden to prove that the instrument, say a cheque, was issued by the accused for discharge of debt, the presumptive device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability.
Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further.
39. John Henry Wigmore on Evidence states as follows:
"The peculiar effect of the presumption of law is merely to invoke a rule of law compelling the Jury to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge's requirement of some evidence), the presumption 'disappears as a rule of law and the case is in the Jury's hands free from any rule."
40. The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the non-existence of the presumed fact beyond reasonable doubt. The accused must meet the standard of 'preponderance of probabilities', similar to a defendant in a civil proceeding. [Rangappa vs. Mohan (AIR 2010 SC 1898)].
41. In order to rebut the presumption and prove to the contrary, it is open to the accused to raise a probable defence wherein CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 10/25 the existence of a legally enforceable debt or liability can be contested. The words 'until the contrary is proved' occurring in Section 139 do not mean that accused must necessarily prove the negative that the instrument is not issued in discharge of any debt/liability but the accused has the option to ask the Court to consider the non-existence of debt/liability so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist. [Basalingappa Vs. Mudibasappa (AIR 2019 SC 1983) See also Kumar Exports Vs. Sharma Carpets (2009) 2 SCC 513].
42. In other words, the accused is left with two options. The first option-of proving that the debt/liability does not exist-is to lead defence evidence and conclusively establish with certainty that the cheque was not issued in discharge of a debt/liability. The second option is to prove the non-existence of debt/liability by a preponderance of probabilities by referring to the particular circumstances of the case. The preponderance of probability in favour of the accused's case may be even fifty one to forty nine and arising out of the entire circumstances of the case, which includes: the complainant's version in the original complaint, the case in the legal/demand notice, complainant's case at the trial, as also the plea of the accused in the reply notice, his 313 statement or at the trial as to the circumstances under which the promissory note/cheque was executed. All of them can raise a preponderance of probabilities justifying a finding that there was 'no debt/liability'. [Kumar Exports and Sharma Carpets, (2009) 2 SCC 513.
43. The nature of evidence required to shift the evidential burden need not necessarily be direct evidence i.e., oral or documentary evidence or admissions made by the opposite party; it may comprise circumstantial evidence or presumption of law or fact.
44. The accused may adduce direct evidence to prove that the instrument was not issued in discharge of a debt/liability and, if he adduces acceptable evidence, the burden again shifts to the complainant. At the same time, the accused may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling the burden may likewise shift to the complainant. It is open for him to also rely upon presumptions of fact, for instance those mentioned in Section 114 and other sections of the Evidence Act. The burden of proof may shift by presumptions of law or fact. In Kundanlal's case- (supra) when the creditor had failed to produce his account books, this Court raised a presumption of fact under Section 114, that the evidence, if produced would have shown the non-existence of consideration. Though, in that case, this Court was dealing CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 11/25 with the presumptive clause in Section 118 NI Act, since the nature of the presumptive clauses in Section 118 and 139 is the same, the analogy can be extended and applied in the context of Section 139 as well.
45.Therefore, in fine, it can be said that once the accused adduces evidence to the satisfaction of the Court that on a preponderance of probabilities there exists no debt/liability in the manner pleaded in the complaint or the demand notice or the affidavit-evidence, the burden shifts to the complainant and the presumption 'disappears' and does not haunt the accused any longer. The onus having now shifted to the complainant, he will be obliged to prove the existence of a debt/liability as a matter of fact and his failure to prove would result in dismissal of his complaint case. Thereafter, the presumption under Section 139 does not again come to the complainant's rescue. Once both parties have adduced evidence, the Court has to consider the same and the burden of proof loses all its importance. [Basalingappa vs. Mudibasappa, AIR 2019 SC 1983; See also, Rangappa vs. Sri Mohan (2010) 11 SCC 441].
15. It has been held in Hiten P Dalal vs. Bratindranath Banerjee, (2001) 6 SCC 16 that a mere plausible explanation given by the accused is not enough to rebut the presumption and the accused has to necessarily disprove the prosecution case by leading cogent evidence that he had no debt or liability to issue the said cheque.
16. In Rangappa vs. Sri Mohan (supra), the Hon'ble Supreme Court has observed as under: -
Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective to improve the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the 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 CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 12/25 construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard of 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 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. In view of the aforesaid proposition of law laid down by the Hon'ble Apex Court, it has to be seen as to whether the respondent/complainant has been able to prove that there was legally enforceable debt or liability for which the cheques in question were issued by the appellant/accused or that the appellant/accused has been able to rebut the presumption and prove that the cheques in question had not been issued in discharge of legally enforceable debt or liability. The complainant in a case of Section 138 NI Act, in order to succeed, has to satisfy the legal ingredients of this provision viz. (1) that a person has drawn a cheque, on his bank account for payment of any amount to another person from that account for the discharge, in whole or in part, of any legally enforceable debt or other liability (2) presentment of that cheque to the bank within time (3) cheque returned by drawee bank unpaid due to insufficient balance or exceeding arrangement (4) payee makes a demand notice in writing to the drawer within 30 days of receipt of information from the bank as to dishonour of the cheque (5) drawer fails to make said payment to payee within 15 days of receipt of that legal notice.
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18. As such, once the issuance of the cheque is admitted or proved, the court is duty bound to raise a presumption that the dishonoured cheque placed before it was indeed issued in discharge of a legally enforceable debt or liability of the amount mentioned therein. Of course, the said presumption is rebuttable one and it is for the accused to prove that the cheque in question had not been issued in discharge of a legally enforceable debt or liability.
Analysis and Conclusion
19. It is a cardinal principle of criminal jurisprudence that it is the burden of the prosecution to prove the guilt of the accused beyond reasonable doubt, however the statutory presumptions wherever are available to the accused create an exception to this cardinal principle by shifting the burden of proof to the opposite party. Among the notable presumptions available under the scheme of the NI Act, two are available under Sections 118 (a) and 139 of the Act, the contours of which have been cited and discussed in the above mentioned judicial pronouncements.
20. In the instant case, as regards issuance of cheque in question is concerned, the appellant did not dispute his signature on the cheque in question, however, he took the defence that none of the other particulars in the cheque is filled by him. Appellant/ accused further took the defence that seven cheques got misplaced from his shop and cheque in dispute is one of them and that he never issued the cheque in question to the complainant/ respondent. Appellant/ accused also stated in his statement of defence that his cousin brother Pankaj Sharma has also taken some money from the complainant and because of that the complainant has misused his cheques. Appellant / accused also took the defence that he had taken only an amount of Rs. 3,10,000/- from the complainant / respondent, however he has not returned the same.
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21. In Rajesh Jain vs. Ajay Singh, SLP (Crl.) No. 12802 of 2022 , the Hon'ble Supreme Court held that mere admission of the drawer's signature, without admitting the execution of the entire contents in the cheque, is now sufficient to trigger the presumption. In the case of Satish Jayantilal Shah Vs. Pankaj Mashruwala & Anr., 1996 Cri.L.J. 3099, it has been held that no law provides that in case of any Negotiable Instruments, entire body has to be written by maker or drawer only. In the present case, the accused/appellant has admitted his signature on the cheque in question and therefore in view of the abovenoted authorities, the defence that none of the other particulars in the cheque is filled by him does not hold any ground. This fact is sufficient to raise the presumption against the appellant/accused that the cheque was drawn in discharge of a legally enforceable debt or other liability and the onus is upon him to rebut the same. The defences taken by the accused that his 7 cheques were misplaced, that his cousin brother had taken some money from complainant and that he borrowed only Rs. 3,10,000/- are to be proved by him in order to discharge the onus of rebutting the presumptions standing against him. These shall be dealt separately, however at this stage the ingredient remains satisfied that the cheque in question was drawn by the appellant / accused on his bank account.
22. The ingredient as to presentment of the cheque within time also stands satisfied as the original cheque no. 033537 Ex. CW1/1 is dated 10.07.2018 and its original return memo Ex. CW1/2 is dated 16.07.2018 implying that it has been duly presented withing the time limit of 3 months. Furthermore, accused did not dispute the genuineness and correctness of the cheque and return memo as evident from his statement recorded u/s 294 Cr.P.C. The cheque got dishonoured due to "Insufficient Funds" as per the return memo and this fact is also not in dispute. The ingredient as to the cheque in question CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 15/25 getting dishonoured for insufficient funds also stands satisfied. The receipt of legal demand notice is not disputed by the accused and admittedly no payment has been made in pursuance to that. The legal notice Ex. CW 1/3 is sent on 30.07.2018 i.e. well within 30 days from the dishonour date of the cheque. No payment is made within 15 days of the receipt of the same and therefore the complaint filed on 31.08.2018 is also well within the time limit of one month from the end of said 15 days. The ingredients as to legal demand notice are also satisfied.
23. Now, what remains to be seen is whether the appellant/accused has been able to rebut the presumptions u/s 118(a) and 139 NI Act standing against him in the wake of all ingredients of section 138 NI Act being satisfied as noted in the foregoing paras.
24. The defences taken by the appellant /accused to rebut these presumptions are mainly :
That his 7 cheques got misplaced from his shop, the cheque in question being one of those cheques and that he did not issue the same to the complainant;
That though the loan agreement dated 24.04.2017 bears his signature and he executed the same with complainant, but at that time it was blank paper;
That he had taken only an amount of Rs. 3,10,000/- from the complainant though he has not returned the same;
CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 16/25 That his cousin brother Pankaj Sharma had also taken some money from the complainant and because of that the complainant has misused his cheques.
25. Before taking up the defence as to seven cheques being misplaced, it may be noted as a background that 6 cases u/s 138 NI Act and one civil suit for recovery has been filed by the complainant against the accused. While the appellant/accused got himself examined as DW 1, he was cross examined on behalf of the complainant and during such cross examination some documents pertaining to the aforesaid Civil Suit no. 1221/2018 (decided in favour of complainant) were brought on record by the complainant such as the copy of judgement dated 31.03.2023 as Ex. DW1/X, copy of WS as DW1/X1 and copy of depositions dated 24.08.2022 & 02.11.2022 of complainant (being DW-1 in the suit) as DW1/X2. It is noted that in the said WS Ex. DW/X1 it is pleaded that the defendant (appellant/accused herein) had handed over the seven blank cheques to the plaintiff (i.e. complainant / respondent herein). When confronted with this pleading during cross-examination dt. 30.05.2023 in the trial of the present complaint case, the appellant/accused deposed that his statement made in the court that day is correct. The appellant/accused thus chose to stay with his plea that those cheques got misplaced and were used by the complainant, albeit without any explanation or any voluntary statement to explain or show how his plea of defence of misplaced cheques taken in the present case was true and not the one taken in the civil suit which runs contrary to the current plea. Furthermore noted that during his cross examination dt. 24.08.2022 Ex. DW1/X2 in the said civil suit, the appellant/accused being defendant resiled from his examination-in-chief and denied to the suggestion that he had handed over 7 cheques. He further deposed that he cannot explain how the plaintiff (i.e. complainant herein) came into possession of his cheques. He showed ignorance CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 17/25 over his plea of misplaced cheques taken in his WS and stated that his version in the court that day and plea in the WS are correct. He further volunteered to depose that he has given 3 cheques to the plaintiff in lieu of Rs. 3,10,000/- taken from plaintiff and the said 3 cheques were never presented in the bank by the plaintiff. It is to be noted here that the complainant has not disclosed any such fact of 3 cheques during the trial of the present complaint case. The fact of 3 cheques being given in lieu of Rs. 3,10,000/- is vital as it is directly concerned with the said borrowing and therefore ought to have been disclosed by the appellant/accused in the present complaint case. Also, during his further cross- examination dt. 02.11.2022 Ex. DW1/X2, he deposed that he had given 5 cheques from the cheque book to the plaintiff towards repayment of loan and 7 cheques were missing from his cheque book. When asked, he chose to remain with the stand that 5 cheques were given. Thus, contrary stands have been taken by the defendant (i.e. appellant/accused herein) during the deposition in the said civil suit and they run contrary to the deposition of the accused in the present complaint case also. No satisfactory explanation has been provided by the accused in this regard. The appellant/accused therefore cannot be seen as a reliable witness.
26. Admittedly, the appellant/accused did not lodge any police complaint for misplacing the 7 cheques nor gave any instructions to the bank for their stop payment. A prudent person is atleast expected to inform his banker about his missing cheques so as to prevent any loss or fraud. Even upon receiving the legal demand notice of this case, the accused took no steps as to rebut or reply the same. The legal demand notice clearly mentioned that the accused issued 7 cheques including the cheque in question which has been dishonoured. Hence, it was very much onerous upon the accused to have taken some active steps had CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 18/25 his story of the cheques being misplaced being true. All these aspects cast a shadow of doubt upon the defence taken by the accused.
27. Now coming to the loan agreement dated 24.04.2017 Ex. CW1/6. The appellant/accused has clearly admitted his signatures on all pages of the agreement. He has also admitted that the agreement bears his photograph at point B on the first page. Notably, there is a signature of the accused running across the said photograph and the agreement paper. The accused however takes the defence that he had signed on blank papers. Firstly, this blind plea of signing on blank papers is not tenable as the accused runs a business which entails money transactions. Secondly, during his cross-examination in the present trial he deposed that his signatures were obtained upon blank paper except the first page, which implies that when he put his signatures over the document, its first page was printed. The first page contains the e-stamp portion and the introductory part of the agreement mentioning one party to the agreement and is continuing thereafter on the second page. Therefore it does not appear to be a plausible defence that other pages were not printed.
28. Now coming to the plea of the accused that he had taken only a sum of rupees 3,10,000/- and has not returned the same. There is no documentary evidence filed by the accused in support of this plea. Moreover, with the admitting of his signatures on the loan agreement, this plea of the accused itself washes away. Accused also admits that he still owes this amount of Rs. 3,10,000/- but offers no explanation as to why repayment of the same was not made.
29. As regards the plea of the accused that his cousin brother Pankaj Sharma had also taken some money from the complainant and because of that the complainant has misused his cheques, it is to be noted that the accused did not CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 19/25 summon the said Pankaj Sharma as a witness to support his plea. It is further strange to note that nothing has been asked from the complainant/CW1 during his cross-examination as to this plea. Rather when the accused appeared as a witness for himself, complainant questioned him on this plea. The relevant testimony of accused/DW1 in this regard is reproduced as under:
"I do not know what amount of loan was taken by my cousin Pankaj Sharma from the complainant and I cannot bring him as witness in the court. It is wrong to suggest that I am bringing a false story of Pankaj Sharma to shield myself from the cases pending in the court. It is further wrong to suggest that due to that reason I cannot bring my own cousin in my favour or that my whole story of defence in the cases is false that's why my own cousin is not coming in the court."
What reveals from the above testimony is that the accused does not even know the amount of loan taken by his cousin from the complainant and he cites no reason why he could not bring his cousin as witness in the Court. This is sufficient to conclude that this plea of accused remained unsubstantiated and does not help him to rebut the presumption u/s 139 NI Act standing against him.
The onus to prove his plea lay entirely upon the accused but he did not discharge this onus.
30. The accused/appellant raised questions upon the source of lending the said amount of Rs. 57 lacs to the accused. In his testimony complainant / CW1 disclosed that he took Rs. 25 lacs from his father, Rs. 7 lacs from his brother in law Brijesh Sharma, Rs. 2 lac from his son Akhil Sharma, Rs. 1.5 lac from his son Pratik Sharma, Rs. 75,000 from his son Harsh Sharma and rest amount was arranged from his wife Suman Sharma, proprietor of Raghav Gota Store and from his savings. He also disclosed that he lent the amount to the accused at his CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 20/25 shop M/s Raghav Zari Emporium. Here it is noted that though accused tried to challenge the financial capacity of the complainant, however to no avail as complainant clearly disclosed the bifurcation of the amount with names & their relationship with him. No further question has been asked thereafter challenging those particular transactions or that those relations had no capacity to lend money to the complainant. Merely that the amount is not shown in the Income Tax Returns would not dent the case of the complainant as it is a case of dishonour of cheque in which presumption u/s 139 NI Act is already standing against the accused and he has already admitted the loan agreement which mentions the sum of Rs. 57 lacs being lent to the accused. In this regard the Hon'ble High Court of Delhi in Sheela Sharma Vs. Mahendra Pal, CRL. L.P. 559/2015 decided on 02.08.2016 observed as under:
"30. In cases where the complainant claims to have advanced a friendly loan in cash, and where the transaction of loan is not evidenced by any other documentary or other reliable evidence, no doubt, the aspect whether the availability of funds in cash with the complainant/ lender, and its advancement as loan to the accused have been reflected in the income tax returns of the complainant/ lender, or not, become relevant. If, the availability of funds, and the loan transaction itself is not so reflected, that factor is taken note of by the Court as relevant to hold that the presumption under Section 118 and 139 of the NI Act stands rebutted. However, these considerations would not be relevant, where loan transaction itself is otherwise established, either through documentary evidence - such as, a receipt or a loan agreement, or acknowledgement executed by the accused, or by oral evidence of an independent witness who is found to be credible."
In the case in hand admittedly the relations between the parties are long standing friendly and family relations and the loan advanced is also on that basis. The same is also found evidenced by a loan agreement upon which the signatures of the accused are admitted. Thus, in view of the above dictum the question of showing the amount in the Income Tax Returns becomes irrelevant in so far as the present criminal complaint u/s 138 NI Act is concerned. The argument of the Ld. Counsel for the CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 21/25 accused/appellant that the relations from whom complainant arranged the funds have not been summoned, also does not stand in the wake of above finding.
In the aforesaid judgement it was also observed that :
"24. The mere advancement of the loan in cash, may entail consequences for the party acting in breach of Section 269 SS of the Income Tax Act.That is not the concern of this Court. Whether, or not, the appellant reflected the availability of the said amount in her income-tax returns, is also not a matter of concern for this Court. That would again be an aspect to be considered by the income-tax authorities. The advancement of loan, in cash, to the tune of Rs.10 Lakhs is not prohibited in law. The transaction of advancement of loan of Rs.10 Lakhs, in cash, does is not illegal. Such a transaction is enforceable at law.
25. Breach of Section 269 SS of the Income Tax Act provides the penalty to which the person would be subjected to under Section 271D of the Income Tax Act. Section 271D does not provide that such a transaction would be null & void. The payer of the money in cash - in violation of Section 269 SS of the Income Tax Act would, therefore, be entitled to enforce an agreement of advancement of money in cash beyond Rs.20,000/-."
31. The challenge as to the complainant not having any money lending licence is also not sustainable as the present is a criminal complaint u/s 138 NI Act and not a civil suit. The criminal liability has arisen upon the cheque being dishonoured for insufficient funds while the cheque was issued in discharge of a debt or other liability and accused has failed to make payment thereof within 15 days of the receipt of legal demand notice. Reliance is placed in this regard to the case of Kajal Vs. Marwah, Crl. Appeal No. 870/2013, decided by the Hon'ble High Court of Delhi on 27.03.2014
32. Another point raised by the accused is that the complainant during his cross-examination deposed that he gave 54 lacs in cash and Rs. 3,10,000/- through RTGS which is contradictory to the complaint which asserts that complainant gave an amount of Rs. 57 lacs to the accused. The complainant has CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 22/25 explained this by further deposing that accused had returned Rs. 10,000/- in cash and the cheque of Rs. 3 lacs was given by accused in return of RTGS. Complainant further deposed and explained that he paid total Rs. 57 lacs out of which Rs. 54 lacs was cash and Rs. 3 lacs earlier given was adjusted in this total of Rs. 57 lacs meaning thereby that the loan of Rs. 57 lacs comprised of Rs,. 54 lacs cash and Rs. 3 lacs given earlier. It is noted that no further question has been asked by the accused to the complainant /CW1 thereafter in this regard. This can at the most be seen as a discrepancy, minor in nature, and not a contradiction. In this regard reliance has been aptly placed by Ld. Trial Court upon the authorities of Bharwada Bhoginibhai Hirjibhai Vs. State of Gujarat, AIR 1983 SC 753 and State of Himachal Pradesh Vs. Lekh Raj, (2003) 1 SCC
247.
33. The discussion in the foregoing paras and the appreciation of evidence leads to the conclusion that appellant has failed to set up a probable defence and to fulfil the standard of proof by the test of preponderance of probability. Consequently appellant/accused has failed to rebut the presumptions u/s 118(a) and 139 Negotiable Instruments Act, 1881 standing against him.
34. I therefore find no illegality or infirmity in the judgment dated 05.09.2023 passed by the Ld. Trial Court thereby convicting the appellant/accused for the offence punishable under Section 138 NI Act.
SENTENCE
35. In so far as sentence is concerned, vide impugned order of sentence dated 19.09.2023, the appellant has been sentenced to undergo rigorous imprisonment for eight months and directed to pay fine/ compensation of a sum Rs. 14,00,000/- within 30 days exclusive of the date of sentencing and in default of payment of the amount, he shall undergo further rigorous CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 23/25 imprisonment for period of 06 months. The imprisonment for the offence under section 138 of the NI Act is upto two years, or with fine which may extend to twice the amount of the cheque, or with both.
36. In respect of sentence, ld. counsel for appellant/convict sought lenient approach stating that there has been long standing family and friendly relationship between the parties.
37. On the other hand, Learned Counsel for the complainant/respondent contended that appellant/convict has taken contradictory stands throughout his case and has thus evaded his culpability u/s 138 NI Act in respect of the cheques in question even though the civil suit is decreed against him, and therefore the sentence awarded by Ld. Trial Court be sustained atleast. Ld. Counsel also contended that the trial has run for long time and till date, complainant/respondent awaits justice.
38. In the present case, the loan agreement is of 24.04.2017 and the cheque in question was issued for the date 10.07.2018 and after lapse of about more than 05 years, the appellant/accused has been convicted by Ld. Trial Court vide judgment dated 05.09.2023 and sentence order dated 19.09.2023 against which the present appeal is heard in which also about 01 year has lapsed, thus it has been about more than 06 years that complainant/respondent is deprived of justice. The appellant/convict did not make payment of the dishonored cheque in question despite demand made by the complainant through legal notice. Rather during the trial, appellant/convict took contradictory stands. The complainant/respondent has thus been dragged into the litigation which has lasted for about more than 06 years as of now from the date of dishonor of the cheque in question.
CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 24/25
39. Keeping in view all these circumstances, I find that the sentence including the default sentence awarded by the Ld. Trial Court requires no interference. The fine amount of Rs. 14,00,000 (Rupees Fourteen Lacs) is directed to be paid by way of compensation U/s 357(3) Cr.P.C. to the complainant/ respondent within 30 days exclusive of today. The compensation amount, if not paid in time, shall be recoverable under the provisions of Section 431 read with Section 421 Cr.P.C. The amount of Rs. 2,80,000/- (Rs. Two Lacs Eighty Thousand Only) deposited by the appellant/ accused towards 20% of compensation amount u/s 148 N.I. Act shall be adjusted against the awarded amount.
40. The present appeal is devoid of any merits and the same is hereby dismissed.
41. Copy of this judgment be supplied to the appellant/convict free of cost against acknowledgment.
42. Trial Court Record be sent back to the Ld. Trial Court alongwith copy of this judgment. Ld. Trial Court is requested to carry out the execution of this judgment.
43. Appeal file be consigned to Record Room after due compliance.
(Announced in Open Court
on 14th November, 2024) Digitally signed
by PRANJAL
PRANJAL ANEJA
ANEJA Date:
2024.11.14
18:14:08 +0530
(PRANJAL ANEJA)
Special Judge, NDPS-02,
Central,THC, Delhi/14.11.2024(kk)
CA No. 278/2023 Rahul Sharma Vs. Sanjay Sharma Pages no. 25/25