Delhi District Court
Kusum Ingots & Alloys Ltd. vs . Pennar Peterson Securities on 17 April, 2013
IN THE COURT OF SHRI GAURAV GUPTA MM1 (NI ACT)
SOUTHWEST DISTRICT: NEW DELHI
_________________________________________________
CC No. 3070/12
Unique case ID No. 02405R0959422007
under Section 138 of N.I. Act
In the matter of :
The Akarshan Cooperative Thrift & Credit Society Ltd.,
857/4A, Main Road, Mandawali, Delhi92
...... Complainant
VERSUS
Vijaya Nand Pandey
A95, Joshi Colony,
Mandawali, Delhi92
.... Accused
Date of Institution : 10.04.2007
Date on which judgment was reserved: 11.04.2013
Date of judgment : 17.04.2013
J U D G E M E N T
1. Vide this judgment I shall dispose of a complaint filed by the complainant against the accused under section 138 of the Negotiable Instruments Act, 1881, (hereinafter referred to as as the "NI Act") for dishonour of a cheque issued by the accused for a sum of Rs.27,894/ CC No. 1067/1 Page 1 of 15 (Rupees Twenty Seven Thousand Eight Ninety Four only).
2. The brief facts of the case as averred by the complainant in his complaint are that the complainant is a cooperative society, inter alia engaged in business of advancing loans. It has been averred that the accused had availed a loan for a sum of Rs.20,000/ from the complainant vide loan account No. 566. It has further been averred that in order to discharge his liability to repay the loan, the accused issued the cheque in question in favour of the complainant bearing number 329104 dated 27.01.2007, for a sum of Rs.27,894/ drawn on State Bank of India, Swasthya Vihar, Delhi. It has further been averred that when the said cheque was presented by the complainant for clearance, the same was returned unpaid by the accused's banker vide return memo dated 03.02.2007, with the remarks "Funds Insufficient". Thereafter, a legal notice dated 23.02.2007 was sent to the accused through registered post as well as UPC, however, despite service, the accused failed to make payment against the cheque within the stipulated period. Therefore, the complainant was constrained to file the present complaint.
3. After taking the presummoning evidence, the court took cognizance of the offence under section 138 NI CC No. 1067/1 Page 2 of 15 Act and directed issuance of process against the accused. In pursuance thereof, the accused made an appearance and was admitted to bail. Thereafter, notice under section 251 Cr.PC was served upon the accused on 09.06.2011 to which he pleaded not guilty and claimed trial.
4. In its evidence, the complainant examined Sh. Nirmal Singh, who is the authorized representative of the complainant as CW1 who tendered his affidavit Ex.CW1/1 in evidence. The complainant placed reliance on the following documents:
i. The dishonoured cheque as Ex.CW1/A ii. The cheque return memo as Ex.CW1/B iii. Copy of legal notice as Ex. CW1/C. iv. Postal receipts as Ex. CW1/D and Ex.CW1/E. v. Copy of loan bond as Ex.CW1/X. vi. Authority letter as Ex.CW1/Y. vii. Board Resolution as Ex.CW1/Z.
5. The complainant also placed reliance upon the following documents: i. Loan account statement as Ex.CW1/F ii. Copy of Receipt bearing no. 19352 as Ex.DW1/B1.
6. Thereafter, statement of accused was recorded CC No. 1067/1 Page 3 of 15 under section 313 Cr.PC on 21.10.2011, wherein, all the incriminating circumstances were put to the accused. The accused admitted that he had taken the loan in question from the complainant. The accused also admitted his signatures on the cheque but denied all other allegations.
7. The accused examined himself as DW1 and relied upon copy of legal notice dated 02.11.2011 as Ex.DW1/A and receipt dated 11.07.2005 as Ex.DW1/B. Shri Mohit Dubey was examined as DW2 who deposed on the lines of the stand taken by the accused. Thereafter, DE was closed.
8. Before dealing with the rival contentions raised on behalf of the parties, it would be convenient to quote the provisions of section138 NI Act hereunder:
"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 CC No. 1067/1 Page 4 of 15 account is insufficient to honour the cheque or agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision 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
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn 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 CC No. 1067/1 Page 5 of 15 said notice.
Explanation For the purposes of this section, "
debt or other liability" means a legally enforceable debt or other liability."
9. The Hon'ble Supreme Court in the case of Kusum Ingots & Alloys Ltd. Vs. Pennar Peterson Securities Ltd. & Others. AIR 2000 SC 954, has succinctly spelt out the essential ingredients for making out a case under section 138 NI Act. The same are quoted hereunder:
"i) a person must have drawn a cheque on an account maintained by him in the bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;
ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within a period of its validity whichever is earlier;
iii) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the 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 the bank;CC No. 1067/1 Page 6 of 15
iv) the payee or the holder in due course of the cheque 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 15 days of the receipt of information by him from the bank regarding the return of the cheque unpaid;
V) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.''
10. If the aforementioned ingredients are satisfied then the person who has drawn the cheque shall be deemed to have committed an offence.
11. At this juncture it would be apropos to refer to the presumptions envisaged under the NI Act. Section 118(a) provides that every negotiable instrument shall be presumed to have been made or drawn for consideration.
The Hon'ble Supreme Court in the case of Mallavarapu Kasivisweswara Rao Vs. Thadikonda Ramulu Firm & Ors. AIR 2008 SC 2898 has thus held:
"Under section 118 (a) of the negotiable instruments act, the court is obliged to presume, until the contrary is is proved, that the promissory note was made for consideration. It is also a settled position that the initial CC No. 1067/1 Page 7 of 15 burden in this regard lies on the defendant to prove the nonexistence of consideration by bringing on record such facts and circumstances which would lead the court to believe the nonexistence of the consideration either by direct evidence or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal."
12. Further, according to section 139 of the act, a presumption is drawn against the drawer and in favour of the holder that "unless the contrary is proved, the holder of a cheque received the cheque for discharge, in whole or in part, of any debt or liability. In Hiten P. Dalal Vs. Bratindranath Banerjee (2001) 6 SCC 16, the Hon'ble Supreme Court has opined as under:
"22... It is obligatory on the court to raise this presumption (under section 139 NI Act) in every case where the factual basis for raising of the presumption had been established. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused. Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court 'may presume' a certain state of affairs. Presumption are rules of evidence and do not conflict with the presumption of innocence, because by the latter all CC No. 1067/1 Page 8 of 15 that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the nonexistence of the presumed fact."
13. The accused in the instant case admitted the issuance of the impugned cheque. In the light of the ratio of the aforecited judgments, the presumptions under sections 118(a) and 139, NI Act are raised against the present accused. However, the said presumptions are rebuttable and can be dislodged by the accused on the strength of leading cogent and convincing evidence in support of his claim.
14. The defence of the accused is that the cheque in question was a blank signed cheque which was handed over to the complainant at the time of disbursement of loan alongwith 19 other blank signed cheques. The said cheques were issued as a security against the loan in question. The case of the accused is that he had repaid the entire loan, however, despite that the complainant misused his security cheque.
CC No. 1067/1 Page 9 of 1515. In order to prove his defence the accused himself stepped into the witness box and deposed as DW1. As discussed above, the onus is on the accused to rebut the presumptions under section 118 (a) & 139, NI Act which he can discharge by leading cogent and convincing evidence.
16. The accused deposed that he had paid only two installments of Rs.1,400/ each to the complainant and thereafter, he had arrived at a full and final settlement and in pursuance thereof a payment of Rs.20,000/ was made by the accused. The accused produced a receipt Ex.DW1/B for a sum of Rs.20,000/ in support of his stand. On the other hand, it was contended on behalf of the complainant that the receipt Ex.DW1/D is a forged document. The complainant produced a receipt book of which receipt also bearing no. 19352 was a part and stated that this receipt was never used by the complainant. It was submitted on behalf of the complainant that Mr. Mahender Rai is the authorized signatory of the complainant and that Mr. Mahender Rai has never signed the receipt Ex.DW1/B.
17. The receipt Ex .DW1/B was tendered in evidence by the accused and onus to prove its genuineness was also upon him. In the face of specific denial by the CC No. 1067/1 Page 10 of 15 complainant, the accused was required to prove that the receipt was genuine and not fabricated. However, accused did not lead any evidence to prove the same. The accused did not even produce the receipts pertaining to previous payments made by him that could have enabled the court to compare the receipts. The accused also did not disclosed the name or designation of the person who received the payment and signed the receipt on behalf of the complainant. Mr. Mahender Rai who was stated to be the authorized signatory was also not examined nor the signatures on the receipt got examined by an expert.
18. Further stated, the account statement (Ex.CW1/F) produced by the complainant does not reflect that a payment of Rs.20,000/ was made by the accused. Under these circumstances, the factum of payment of Rs. 20,000/ by the accused remains not proved. Even otherwise, presuming that the accused had made the said payment, it would not absolve the accused of his liability concerning dishonour of cheque issued by him as the payment of Rs.20,000/ does not relate to the impugned cheque and further, the said payment would still not be a sufficient proof that full and final settlement of the loan account was arrived at.
CC No. 1067/1 Page 11 of 1519. Besides the receipt Ex.DW1/B, the accused has not placed on record any settlement letter, NOC or any other document from which a conclusion can be drawn that a settlement was indeed arrived at between the parties and the loan stood repaid. Further, it seems highly improbable that accused did not even care to demand his 20 blank signed cheques from the complainant after the loan was repaid.
20. Accused also placed reliance upon copy of legal notice Ex.DW1/A purportedly sent to him by one Mr. N.K. Sinha, Advocate, on behalf of complainant regarding dishonour of another cheque bearing no. 329119 dated 10.10.2011. It was submitted on behalf of the accused that the above cheque and the cheque in question belong to the same series which shows that both the cheques were issued together at the time of disbursement of loan. This argument cannot be accepted as the cheque bearing no. 329119 bears the date of 10.10.2011 whereas the cheque in question bears the date of 27.01.2007. Under no stretch of imagination can it be presumed that the cheques were issued at or around the same time. The accused did not call for his bank statement or produced any other evidence that could have established the above fact. Hence, this stand of accused remains unsubstantiated.
CC No. 1067/1 Page 12 of 1521. So far as testimony of DW2, Mr. Mohit Dubey is concerned, the same does not inspire confidence. DW2 is himself a borrower of the complainant and had stood as a guarantor for the loan taken by the accused from the complainant. DW2 also admitted that recovery suit as well as complaint under Section 138 N.I. Act filed by the complainant society are also pending against him. DW2 seems to be an interested witness whose testimony cannot be relied upon.
22. It is not in doubt that whereas the standard of proof so far as the prosecution is concerned, is proof of guilt beyond reasonable doubt; the one on the accused is only mere preponderance of probabilities. However, the burden can be discharged by the accused by raising a probable defence by leading cogent and convincing evidence. There is no presumption of law that any and every statement made by the accused has to be taken as the gospel truth. The above discussed defence of the accused does not seem probable and is liable to be rejected.
23. As far as the legal notice is concerned, the accused denied that he received the same. Section 27, the General Clauses Act raises a presumption that where a CC No. 1067/1 Page 13 of 15 notice has been sent to the correct address of the notice by registered post then, unless the contrary is proved, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. The accused has not led any evidence to show that he did not receive the legal notice rather, he did not deny that the address at which the legal notice was dispatched was his correct address. Mere bald statements of the accused do not lend any credence to the stand of the accused. As the accused failed to rebut the presumption, it is deemed that the legal notice of demand was duly served upon the accused.
24. As discussed earlier, the presumptions under section 118(a) as well as 139, NI Act are rebuttable. The onus on the accused to rebut the said presumptions can be discharged by bringing on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration did not exist or its nonexistence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist. However, after examining the evidence on record, it can be concluded that the accused has failed to discharge the onus to rebut the presumptions.
CC No. 1067/1 Page 14 of 1525. In the light of the foregoing discussion and findings, it can be safely concluded that the complainant has successfully proved its case that there existed a legally enforceable liability, in discharge whereof the cheque in question were issued but, despite the service of notice, the accused failed to make payment within the stipulated period. Per contra, the accused has failed to rebut the presumptions raised against him. As the ingredients of section 138 of the NI Act are squarely made out in this case, the accused is convicted for the offence punishable under section 138 of the NI Act.
Announced in the open Court
on 17th Day of April 2013 (Gaurav Gupta)
MM01 (NI Act)/SouthWest
Dwarka/ New Delhi
CC No. 1067/1 Page 15 of 15