Delhi District Court
Anil Kumar vs State And Anr. 2008(2) Jcc (Ni) 169, ... on 30 September, 2015
IN THE COURT OF BHARAT CHUGH,
METROPOLITAN MAGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.275, TIS HAZARI COURT COMPLEX, DELHI
Anil Kumar
VERSUS
Vimal Kumar & Surender Kumar
JUDGMENT
Part A - The lis at a glance A. Serial No. of the Case 1334/10 B. Date of Commission of the offence 03.04.2007 C. Name of the Complainant Anil Kumar D. Name of Accused person & his 1. Vimal Kumar s/o Mr.Devi Singh parentage & residence r/o RZG-94, Vijay Enclave Palam, Delhi - 110045
2. Surender Kumar s/o Mr.Minshi Ram, r/o 721-MS, Timarpur, Delhi -
110054 E. Offence complained of Dishonor of cheque - culpable u/s 138 of the Negotiable Instruments Act.
F. Plea of the accused and his Pleaded not guilty. Both the accused examination in brief. claimed that the cheques in question were not issued in discharge of a legally enforceable debt or liability, but signed in blank, to facilitate the payment of telephone/electricity and other bills by the complainant.
G. Final Order Conviction
H. Judgment reserved on 24.09.2015
I. Judgment pronounced on 30.09.2015
In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 1 of 28
Part B - A brief statement of reasons for the decision (As mandated u/s 355(i) of the Code of Criminal Procedure, 1973.) Complainant's case
1. "There are two sure ways to lose a friend, one is to borrow, the other is to lend" ('The name of the Wind' by Patrick Rothfuss). The complainant would have the court believe that this is one such case, where he was made to part with considerable amounts by his two office colleagues Mr.Vimal Kumar [hereinafter 'A1'] and Mr.Surender Kumar [hereinafter 'A2'] with whom he came to enjoy friendly relations as they are all Government Servants, employed in the Department of Publication, Government of India, Civil Lines. New Delhi.
2. A bare perusal of the complaint reveals that the same is bereft of all material particulars, as to what was the genesis of the liability of the accused persons towards the complainant. In para 1 of the complaint, it is averred that 'the accused persons towards discharge of their part admitted liability issued three cheques from their joint account'. The complaint, therefore, is conspicuously silent about the details of the liability and on what account the three cheques in question came to be issued to the complainant by the accused. The details of the cheques, for the sake of reference, are as follows :-
Cheque No. Amount Drawn on Exhibited as
858964 70,000/- SBI, Alipore, Delhi Ex. CW1/A-1
006057 1,40,000/- SBI, Alipore, Delhi Ex. CW1/A-2
006058 1,30,000/- SBI, Alipore, Delhi Ex. CW1/A-3
Table 2.1 - The cheques in question
In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 2 of 28
These cheques turned out to be the ruination of their relations, as much to the dismay of the complainant, the cheques got dishonored on presentation with the remarks "insufficient funds" vide memo dated 08.03.2007. This constrained the complainant to send a legal demand notice to the accused persons, which also fell on deaf ears, leaving him with no option but to file the present case.
3. From a narration of the facts (as culled out from the complaint) it is manifest that the complaint is vague, obscure and does not mention any details as to on what account the accused persons came to be under a monetary liability towards the complainant. A mere averment that the cheques were issued on account of part admitted liability, neither does any justice to the complainant's case, nor helps the court in understanding the dispute in any way. Now the question whether the non mentioning of details of the liability is on account of inartistic drafting, as claimed by the Ld.Counsel for the Complainant, or a deliberate attempt to suppress and camouflage the genesis of the transaction, or both, is something that would be explored a little later in the judgment.
4. Fortunately, for the purpose of elucidation of facts, both the parties have pressed into service - an application u/s 156(3) filed by the complainant (CC No. 105/2007) seeking registration of FIR against the accused persons and their wives, on broadly the same facts. Certified copy of the same was filed on record by the accused and concurred to be read by the complainant for the purpose of probing into the real factual matrix.
5. The factual matrix as can be culled out from the said complaint, is that the complainant and accused persons are working in the same office. The complainant had some surplus funds available at his disposal, which he was desirous of investing, with a view to obtain good returns. The accused persons In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 3 of 28 Vimal Kumar and Surender Kumar offered to invest the complainant's money through their wives, who were into the business of finance brokerage. The complainant was promised a return of 6 % per month on his investments. Placing reliance on this representation, the complainant handed over a sum of Rs. 7,00,000/- to the accused persons. The complainant, however, did not receive any returns on his investment and grew quite anxious as to the security of his investment. After repeated requests, the accused persons agreed to return a part of the said investment through three cheques, totaling an amount of Rs. 3,40,000/-. These are the very cheques (as mentioned in table 2.1), which form the subject matter of the present controversy. These cheques got dishonored on presentation, constraining the complainant to seek registration of FIR against the accused persons for offenses, inter-alia, of cheating & misappropriation of funds.
The present complaint case was also filed u/s 138 of the Negotiable Instruments Act, 1886, seeking redress against the dishonor of the cheques.
The Defence.
6. In view of the factual matrix, the accused persons were summoned to face trial for an offence u/s 138 of the NI Act. The accused persons entered appearance and pleaded 'not guilty'. Their defence, as can be culled out from their statement u/s 313 of the Cr.P.C, is as follows :-
The accused persons Vimal Kumar (A1) & Surender Kumar (A2), admitted being the account holders of the joint account on which the cheques in question have been drawn. The accused persons also maintained that they know the complainant and are working with him in the same department since 1996 (Publication Department, Urban Development, Central Government). Hence, the case of the complainant is admitted, atleast in its broad particulars.In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 4 of 28
Accused Vimal Kumar (A1) admitted having signed Cheque No.2 & 3 (see table 2.1). As regards Cheque No.1 (Ex. CW1/A-1), he contends that the same does not bear his signatures.
As regards the other two cheques (Ex. CW1/A-2 & A-3), A1 claimed that the same were issued to the complainant, signed in blank, for the purpose of payment of electricity/mobile bill of the latter.
Accused No.2 Surender Kumar (A2) admitted being the drawer & signatory of all the three cheques in question. He too, however, denied having filled-in the particulars on the cheque. He too, contended that the cheques in question were given, signed in blank, for the purpose of payment of complainant's electricity/mobile bill. The accused argued, that even on earlier occasions, the complainant's bills had been paid by the accused. It is argued, that this was done as the complainant claimed that the bills could not be paid in cash and the complainant had forgot his cheque book at his house.
The accused, argued, that they have been falsely implicated in this case and the present case an abuse of the process of law.
7. As regards the question of dishonor of the cheque, the accused persons have not disputed the factum of dishonor of cheque on the grounds of insufficiency of funds.
8. On the question of service of legal demand notice as a precursor to the prosecution, the accused have denied having received the legal notice, however, the addresses appearing on the legal notice have been admitted by them to be their correct addresses.
This, in sum and substance, is the factual exposé.
The Law
9. The factual position being thus, Now let us quickly run through the In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 5 of 28 legal benchmark which is to be satisfied in order to constitute an offence under S. 138 N.I. Act :-
(i) Person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;
(ii) The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
(iii)That 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;
(iv)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;
(v) 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 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(vi) 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.
Being cumulative, it goes without saying that it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act.
In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 6 of 28The legal benchmark being thus. Let us apply it to the facts of the case.
Appreciation of Evidence and Application of law to the facts of the case.
On an analysis of the facts and legal position above, I find the parties to be at variance on two primary issues, viz - Service of legal demand notice; and the question of existence of legally enforceable debt/liability.
I. SERVICE OF LEGAL DEMAND NOTICE
10. Let us begin at the beginnings and examine first, the much hackneyed defence of non service of legal notice. We've already seen that the accused persons have denied the service of legal notice, but quite notably, have not disputed the correctness of their address(es) as appearing on the legal notice. The addresses once having been admitted to be their correct address, and the legal notice having been dispatched by Registered Post, a presumption of due service arises (See : Section 27 of the General Clauses Act and Section 114 of the Indian Evidence Act) and now it was incumbent on the accused persons to lead evidence to prove that the notice was not served on them. Not even an iota of evidence has been brought on record by the accused to displace the presumption of due service. A mere denial that the legal notice has not been served, would not ipso facto rebut the presumption of due service. The accused ought to have rebutted the presumption by establishing that they were not residing at the said address at the given point of time or that the notice was not served on them for any other reason, by examining the postal authorities or any other mode. It is of great importance to flag that the address on the legal notice is exactly the address on which the accused persons have been successfully served in this case. This is the very address disclosed by the accused on their Vakalatnamas, statement u/s 313 of the Cr.PC. In these circumstances there is no reason to doubt the service of legal notice.
In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 7 of 28It also deserves mention, that in any event, in view of the authoritative pronouncement of the Hon'ble Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed and Another (2007) 6 SCC 555, the rigor of the requirement of service of legal notice has been reduced to an almost vanishing point in Section 138 NI Act jurisprudence. The Hon'ble Supreme Court while distilling the true intent behind the requirement of service of legal demand notice as a precursor to launching of prosecution, has quite categorically held, that the service of summons of the court is opportunity enough for the accused to pay the cheque amount and evade prosecution and any accused who fails to pay the amount within 15 days of the service of summons, cannot shield himself behind the technical defence of non service of legal notice. The relevant extract from the decision deserves to be quoted in extenso :-
"17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 8 of 28 view, any other interpretation of the proviso would defeat the very object of the legislation."
11. The 'non service of legal notice' challenge having been met, let us now, turn to the core issue in this case and examine 'whether the cheque in question can be said to have been issued in discharge of a legal liability or not ?' II. EXISTENCE OF LEGALLY ENFORCEABLE/DEBT OR LIABILITY.
12. To appreciate this issue, let us again briefly recapitulate that the accused persons have admitted to : having drawn the cheques in question on a bank account maintained jointly in their names, having signed the cheques in question (Except Cheque No.1 in Table 2.1, which has not been signed by A1 Vimal Kumar) and also having handed over the same to the complainant. Once these foundational facts are admitted and a factual basis is established, by virtue of Section 118(a) and Section 139 of the NI Act, a presumption of the cheque having been issued in discharge of a legally sustainable liability and drawn for good consideration arises.
Section 118 of the N.I Act provides :-
"Presumptions as to negotiable instruments:
Until the contrary is proved, the following presumptions 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, indorsed, negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration;"
Section 139 of the N.I Act further provides as follows:
"Presumption in favour of holder - It shall be presumed, unless the contrary is proved, that the holder of a cheque received the In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 9 of 28 cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability"
It is therefore quite clear, that as per the scheme of the N.I Act, on proof of foundational facts, a presumption arises as to the cheques having been issued in discharge of a legal liability, and the burden of proof lies upon the accused to rebut the said presumption. This clearly is an instance of the rule of 'reverse onus' in action, where it is incumbent on the accused to lead what can be called 'negative evidence'. Evidence of a character, not to prove a fact affirmatively, but to lead evidence to show non existence of liability. Keeping in view, that this is a departure from the cardinal rule of 'presumption of innocence' in favour of the accused, and also keeping in mind that negative evidence is not easy to be led by its very nature. It is now fairly settled that the accused can displace this presumption on a scale of preponderance of probabilities and the lack of consideration or a legally enforceable debt need not be proved to the hilt or beyond all reasonable doubts. The accused can either prove that the liability did not exist or make the non existence of liability so probable that a reasonable person ought under the circumstances of the case - act on the supposition that it does not exist. Simply put, the accused has to make out a fairly plausible hypothesis. This the accused can do either by leading own evidence in his defence or even by punching holes within the case of the complainant in the testing ordeal of cross examination.
While adjudging whether in a case the presumption of consideration has been rebutted, it becomes important to underscore that a mere denial of liability or vague defence of blank cheque, cannot be taken at the mere ipse dixit of the accused. The accused has to come forth with a convincing defense that appeals to the judicial conscience and which is probable and plausible, according to the ordinary canons of prudence and human conduct. Needless to state, that if on a bare denial the presumption is stated to be rebutted, that would defeat the legislative intention of having a presumption in the first place. The reverse In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 10 of 28 onus clause, as aforesaid, has been introduced to further the legislative objective of improving the credibility of negotiable instruments. The presumption that a person would not ordinarily hand over a signed cheque (a valuable security) to another unless the same is for a liability, this presumption that is inspired out of common human conduct and affairs, has to be respected and given its full play. Only in a case where the accused comes up with a convincing defense to liability, that the presumption can be stated to have been rebutted, lest the statutory intent as adumbrated above would be the direct casualty and the credibility of negotiable instruments would take a great hit. In that light, let us embark on an examination of the defense of the accused and see if the same is a plausible one. In this venture, we would at all occasions, juxtapose the conduct of the accused with that of the hypothetical reasonable man and see how they fare.
13. In my opinion, the accused have not succeeded in rebutting the presumption of legal liability or even probablising their defence. The defence of the accused is that of handing over of the cheques to the complainant, signed in blank, on the complainant's asking as the complainant wanted to pay his electricity and mobile bills and was not carrying his cheque book, and bills could not be paid in cash. This defence does not inspire any confidence and is an affront to common sense. No man of even elementary prudence, would go on to issue cheques to another colleague, signed in blank, for the purpose of payment of the latter's electricity/mobile bills. The plea is a bald one and unsubstantiated by any particulars, much less cogent proof. The accused have failed to bring forth even an iota of evidence as to what was the bill which was sought to be paid through their cheques. They have also failed to explain as to why a blank cheque would be given in such a case, since the bills are bound to be of a specific crystallized amount, which could have been filled-in by the accused persons on the cheques. The accused persons have failed to explain as to on which date and under what circumstances the cheques were handed In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 11 of 28 over to the complainant for the alleged purpose of payment of bills. The accused persons were duty bound to disclose these facts, in order to make their defence worthy of belief. The accused have similarly failed to explain as to when the cheques were not used for the agreed purpose of payment of bills, and presented for the staggering amounts of Rs, 70,000/-, 1,40,000/- and Rs. 1,30,000/-, and the same got dishonored, why no action was taken by them complaining against such excess allegedly perpetrated upon them by the complainant, whom they had come to trust so much, so as to give him blank signed cheques for the purpose of payment of bills. The conduct of the accused persons falls way too short of the conduct of a reasonable man of even elementary prudence.
Furthermore, it has already been demonstrated in para 11 above that legal notice was validly served on the accused, the non reply to the legal notice is also a circumstance that is to be marshaled against the accused persons. Their silence in such circumstances reeks of culpability and an adverse inference deserves to be drawn against them. All in all, the conduct of the accused persons is not of a man having been wronged by a friend on misuse of a cheque, but men who are cowering under a legal liability that are unable to discharge. Nothing rankles the human heart as injustice, more so, when perpetrated by a friend. The sheer lack of indignation on the part of the accused persons raises an inference of culpability.
As opposed to this, the complainant has stuck to his guns during cross examination, and nothing could be elicited from him that would buttress the hypothesis advanced by the accused. The complainant in his cross examination dated 25.04.2011 has outlined the payments made by him by deposing to this effect :-
"In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 12 of 28
..
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I have given amount to the accused from the year 2002 to 2006 by cash and by cheques. I have paid the amount to the accused persons about 8 to 10 times.
Q. Do you remember the dates on which you have advanced the loan to the accused persons ?
Ans. I don't remember all the dates right now but I can tell the (sic) some dates now and I can also tell other dates while seeing my cheque books, passbooks, and other entries since I have given the loan to the accused persons in the form of cheques and cash on several occasions."
Nothing could be elicited from the complainant during his cross examination that would throw his story in doubt. Infact, the factum of having made payments to the accused is corroborated from the bank statement of the complainant (Ex. CW2/1) which shows various (highlighted in orange) transactions made by the complainant to the accused, ranging from Rs. 20,000/-, 30,000/- to 40,000/-. These entries have not been disputed by the accused. The accused have failed to explain as to on what account these payments were credited in their accounts by the complainant. Ld.Counsel for the Accused failed to explain this, despite being queried to this effect, even during the course of final arguments.
14. It deserves reiteration that the accused persons have not examined themselves or any other witness in defence evidence. The only evidence led by them is that of their banker as DW1. In the testimony of DW1, the accused have merely led their account statements for the year 2005 to 2006, to show that no amounts were received by them, during the said periods from the complainant., infact they had paid amounts ranging from Rs. 1000/- to Rs. 4,000/- to the complainant Anil Kumar.
In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 13 of 28The Court fails to understand as to how this helps the hypothesis advanced by the accused. Infact, this has probative force to the opposite conclusion of accused persons being under liability. First of all, the account statement pertains to the years 2005 & 2006, whereas the complainant has been able to demonstrate through their account statements Ex. CW2/1, that various amounts have been credited by them in the accounts of the accused in the years 2003, 2004 and 2005.
An adverse inference needs to be drawn against the accused for the reason that the accused persons seem to have consciously suppressed the account statement corresponding to the period 2003 to 2006, which would have confirmed the complainant's claim of various payments made to them by way of cheques. Secondly, the account statement presented by the accused is of a different account, and not the account on which the cheques in question have been drawn. Therefore, is of limited evidentiary significance.
Most importantly, even if this account statement Ex. DW1/1 is taken into consideration, it fails to advance the case of the accused, whichever way one looks at it. Infact, the accused Vimal Kumar having made certain payments to the complainant, hints at an acknowledgment of pecuniary liability towards the complainant. The defence of payment of electricity/mobile bills of the complainant through the accused's account, even in the past, stands falsified as the accused persons have led no evidence to the effect that any of their cheques have been utilized for payment of complainant's electricity or mobile bills, anytime in the past. This fact could have been easily proved by their bank statements reflecting such payments, or the records of the electricity/mobile service provider. The sheer lack of even an iota of material on the record to this effect, leads to the irresistible conclusion of the defence of the accused being sham and nothing but a cock and bull story.
In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 14 of 28The intrinsic weakness and implausibility of the defence of the accused, his unnatural silence after dishonor of the cheque and service of legal notice, the relative strength of the complainant's version, corroboration by bank records, all seen cumulatively, persuade the court to believe in the complainant's story.
15. Learned Counsel for the accused has argued, as a last ditch effort, that cheques in question were given, signed in blank and subsequent filling on of the cheque by the complainant invalidates the instrument as it constitutes material alteration. He argues that, the complainant has admitted in his cross examination of having filled-in the particulars on atleast one cheque i.e Ex. CW1-A-1 and name of the payee on cheque Ex.CW1/A-2 & Ex.CW1/A-3, this according to him, renders the cheques materially altered and case not maintainable.
This argument fails to convince for more reasons than one, first of all there is nothing on record to even probablise, much less establish, that the complainant has filled in any other cheque, except Cheque No.1 I.e Ex. CW1/1-A and name of the payee on cheque ExCW1/A-2 & Ex.CW1/A-3. With respect to the other cheques, there is nothing on record to prove that they have been filled-in by the complainant. The complainant had refuted a specific suggestion and denied having filled-in the other two cheques I.e Ex. CW1/A-2 & A-3.
Even if it is assumed for an instant, for the sake of argument, that, the body of the cheque was filled-in by the complainant (though there is nothing on record to prove that, with respect to all but first cheque). Even in that situation - It is no longer res integra that no law requires that whole body of the cheque should be filled by the drawer himself. If the signatures on the cheque are admitted, the same is sufficient. The legal permissibility of the much hackneyed 'defence of blank cheques' has been virtually denied by the In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 15 of 28 courts on account of several pronouncements to that effect (See Ravi Chopra vs State And Anr. 2008(2) JCC (NI) 169, Vijender Singh v. M/s Eicher Motors Limited & Anr. Crl.M.C. 1454/2011 decided on 05.05.2011, Tarun Gautam vs State Crl M C No.529/2012 decided on 13.02.2012 and Manoj Sharma vs Anil Aggarwal CRL.M.C. 1325/2012 decided on 20.04.2012). The relevant excerpts from a judgment by the Hon'ble High Court of Delhi in the case of Ravi Chopra vs State And Anr, may be referred to, in this regards :-
"
..
15. What appears to be clear from the above definitions that an essential feature of a cheque is that it has to be signed by the maker. This signing of the cheque need not be by hand alone.
After the amendment to Section 6 in 2002, the NI Act acknowledges that there can be an electronic cheque which can be "generated, written and signed in a secure system."
Nevertheless, the signing of the cheque is indeed an essential feature. But what about the other material particulars? Can the word "cheque"
occurring in Section 138 NI Act include a blank cheque which is signed by the drawer but the material particulars of which are left unfilled at the time it was handed over to the payee? While on the one hand Section 138 NI Act which contemplates a 'no fault liability' has to be strictly construed as regard the basic ingredients which have to be shown to exist, it requires examination of the other provisions of the NI Act in order to ascertain if a cheque that was signed but left blank can, if the material particulars are subsequently filled up and presented for payment, still attract the same liability.
...
...
18. Section 20 NI Act talks of "inchoate stamped instruments" and states that if a person signs and delivers a paper stamped in accordance with the law and "either wholly blank or have written In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 16 of 28 thereon an incomplete negotiable instrument"
such person thereby gives prima facie authority to the holder thereof "to make or complete as the case may be upon it, a negotiable instrument for any amount specified therein and not exceeding the amount covered by the stamp." Section 49 permits the holder of a negotiable instrument endorsed in blank to fill up the said instrument "by writing upon the endorsement, a direction to pay any other person as endorsee and to complete the endorsement into a blank cheque, it makes it clear that by doing that the holder does not thereby incurred the responsibility of an endorser." Likewise Section 86 states that where the holder acquiesces in a qualified acceptance, or one limited to part of the sum mentioned in the bill, or which substitutes a different place or time for payment, or which, where the drawees are not partners, is not signed by all the drawees, all previous parties whose consent has not been obtained to such acceptance would stand discharged as against the holder and those claiming under him, unless on notice given by the holder they assent to such acceptance. Section 125 NI Act permits the holder of an uncrossed cheque to cross it and that would not render the cheque invalid for the purposes of presentation for payment. These provisions indicate that under the scheme of the NI Act an incomplete cheque which is subsequently filled up as to the name, date and amount is not rendered void only because it was so done after the cheque was signed and delivered to the holder in due course.
19. The above provisions have to be read together with Section 118 NI Act which sets out various presumptions as to negotiable instruments. The presumption is of consideration, as to date, as to time of acceptance, as to transfer, as to endorsement, as to stamp. The only exception to this is provided in proviso to Section 118 which reads as under:
Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 17 of 28 acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him .
20. A collective reading of the above provisions shows that even under the scheme of the NI Act it is possible for the drawer of a cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up at a subsequent point in time and presented for payment by the drawee.
There is no provision in the NI Act which either defines the difference in the handwriting or the ink pertaining to the material particulars filled up in comparison with the signature thereon as constituting a 'material alteration' for the purposes of Section 87 NI Act. What however is essential is that the cheque must have been signed by the drawer. If the signature is altered or does not tally with the normal signature of the maker, that would be a material alteration.
Therefore as long as the cheque has been signed by the drawer, the fact that the ink in which the name and figures are written or the date is filled up is different from the ink of the signature is not a material alteration for the purposes of Section 87 NI Act."
It is therefore, apparent that, a combined reading of Section 20 and Section 87 of the Negotiable Instruments Act, as aforesaid, amply reveals that merely filling in the particulars on a blank signed cheque would not amount to material alteration, and a person giving blank cheque can be attributed with the intention of having given implied consent to the payee to fill in that cheque. The accused could not adduce any evidence or elicit anything in the cross examination of the complainant to detract from such implied authority given to the complainant or the fact that cheque has been filled by the complainant in the first place. The complainant had categorically deposed as to having filled the first cheque at the instructions of the accused. He did not waver from his stand and stood the test of cross examination on this count.
In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 18 of 28Therefore, to sum up, this defence does not advance the case of the accused in any manner, as there is no evidence that the two cheques Ex. CW1/A-2 & A-3, have been filled-in by the complainant. With respect to the First cheque Ex. CW1/A-1, there is nothing on record to rebut the implied authority with the complainant to fill the said cheque.
16. Ld.Counsel for the Accused has also argued that the alleged loan not having been disclosed in the Income Tax Returns, cannot be termed to be legally enforceable liability in view of the bar of Section 269SS of the Income Tax Act. He argues that the complainant has not filed on record any income tax returns, which goes on to show that the loan has not been disclosed.
I hasten to add, that even if it is assumed for the sake of argument that the loan was not disclosed in the IT returns, the same would be inconsequential. It is now fairly settled that the mandate of Section 269SS of the Income Tax Act, extends only to the taker or receiver of the loan and not the giver. Section 269SS of the Income Tax Act, reads as under :-
Section 269SS: Section 269SS provides that any loan or deposit shall not be taken or accepted from any other person otherwise than by an account payee cheque or account payee bank draft if,
(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or (b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid and the amount or the aggregate amount remaining unpaid ; or
(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more.."
Thus, it is clear that no person can accept any loan or deposit of Rs 20000 or more otherwise than by way of an account payee cheque or an account payee draft.
In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 19 of 28Consequences of contravention of Section 269SS have been provided in Section 271D of Income Tax Act 1961, which provides, that if a loan or deposit is accepted in contravention of the provisions of section 269SS then a penalty equivalent to the amount of such loan or deposit may be levied by the Joint commissioner.
Hence even on a bare reading of these provisions it is manifest that the bar pertains to the receiving or taking of loan and not giving the same.
This aspect is very succinctly highlighted by the Hon'ble High Court of Bombay in the relatively recent decision of Krishna P.Morajkar v. Joe Ferraro, 2013 SCC Online Bom 862, which reads as follows :-
"..
18. The learned Counsel for the respondent submitted that the observations of the Supreme Court in para 14 of the judgment in Rangappa (supra) show that the Supreme Court had not in any way cast any doubt on the correctness of the decision in Krishna Janardhan Bhat (supra), as it was based on specific facts and circumstances therein. Therefore, he submitted that observations in Krishna Janardhan Bhat (supra) about non- compliance of provisions of Section 269SS and the implications of Section 271D of the Income Tax Act would still stand as good law. The learned Counsel for the appellant submitted that even these observations would stand impliedly over- ruled. He pointed out that what was held in Krishna Janard han Bhat (supra) was that advance taken by way of loan of more than Rs. 20,000/- was only to be made by way of an ac- count payee cheque. He submitted that in Rangappa (supra) the Supreme Court was specifically considering the case of an advance of Rs. 45,000/- made in cash and yet the Supreme Court had upheld the conviction recorded. Thus even those observations based on the provisions of Section 269SS and 271D of the Income Tax Act made in Krishna Ja nardhan Bhat (supra) would stand impliedly overruled. I am entirely in agreement with the learned Counsel for the appellant because the Supreme court in Rangappa (supra) had specifically noted the judgment in Krishna Janardhan Bhat (supra). The Supreme Court had obviously noted the observations in para 26 in Krishna Janardhan Bhat (supra) that advance of more than Rs. 20,000/- was to be made only by way of an account payee cheque, and yet the Supreme In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 20 of 28 Court accepted case of a complainant who claimed to have made an advance of Rs. 45,000/- in cash and proceeded to uphold the conviction, even though the case rested on the fact that cash advance of a sum more than Rs. 20,000/- was made. Thus, on this aspect also Krishna Janardhan Bhat (supra) stood impliedly overruled by Ranga paa (supra), and the judgment is to be held rendered on the facts of that case, not laying down any law. Therefore, judg- ments which follow Krishna Janardhan Bhat (supra) can be safely ignored.
19. There is another aspect of the matter. The learned Coun- sel for the respondent pointed out that inKrishna Janardhan Bhat (supra) attention of the Supreme Court was possibly not drawn to the actual wording of Section 269SS of the In- come Tax Act. He submitted that Section 269SS of the In- come Tax Act, in fact, does not cast any burden upon a per- son making advance in cash to record it in his returns and does not prevent any such cash advance from being made. It may be useful to quote provisions of Section 269SS and 271D of the Income Tax Act as under:
Section 269SS: No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit other- wise than by an account payee cheque or account payee bank draft if,-
(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit; or
(b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fall-
en due or not), the amount or the aggregate amount remaining unpaid; or
(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more:
Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or de- posit taken or accepted by-
(a) Government;
(b) any banking company, post office savings bank or co-opera- tive bank;
(c) any corporation established by a Central, State or Provincial Act;
(d) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 21 of 28
(e) such other institution, association or body or class of institu-
tions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette:
[Provided further that the provisions of this section shall not ap- ply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural in- come and neither of them had any income chargeable to tax un- der this Act.] Section 271D - (1) If a person takes or accepts any loan or de- posit in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted. (2) any penalty imposable under sub-section (1) shall be im-
posed by the joint Commissioner.
(emphasis supplied).
A plain reading of Section 269SS shows that no person can accept any loan or deposit of a sum of Rs. 20,000/- or more otherwise than by an account payee cheque or account pay- ee bank draft. It does not say that a person cannot advance more than Rs. 20,000/- in cash to another person. It is clear that the restriction on cash advances was in fact on the tak- er and not the person who makes the advance. The penalty for taking such advance or deposit in contravention of pro- visions of Section 269SS was to be suffered by one who takes the advance. Therefore, it was obviously impermissible to invoke these provisions for preventing a person from recov- ering the advance which he has made..."
It is clear from the above that non disclosure of an advance would not make the same non recoverable as it is incumbent on the person taking the advance to disclose the loan and not the person giving the same.
What further fortifies this conclusion is the decision of the Hon'ble High Court of Delhi in Mukesh Gupta v. P.K.Bajaj (CS(OS) No. 1615/2003, DOD : 20.11.2006,wherein the court, in a civil suit for recovery, quite categorically held, that even assuming a non disclosure in tax returns, merely that, would not render the contract of loan void and loan irrecoverable. Relevant excerpts from the decision are as follows :-
In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 22 of 28"36. On issue No.2 framed vide order dated 2.2.2006, suffice would it be to note that as held in the report published as 2002 (8) SCC 31, Nutan Kumar &Ors. vs. IInd Additional District Judge &Ors., unless a statute specifically provides that a contract contrary to the provision of the statue would be void, the contract would remain binding between the parties and can be enforced between the parties themselves. Consequences, if any other in law, would follow.
37. Learned counsel for the defendants could not show any statutory provision under the Income Tax Act 1961 or any other law which stipulates that a loan transaction not recorded in the Income Tax Return or a loan transaction which is in violation of Section 69-A, 69-B or Section 269SS of the Income Tax Act would be void.
38. I accordingly hold that the suit is not barred under Sections 69-A, 69-B or Sections 269SS of the Income Tax Act..."
It is therefore clear that the claim does not become irrecoverable on account of alleged violation of Section 269SS of the IT Act. Infact, the complainant has been able to demonstrate various amounts, greater than Rs. 20,000/- having been advanced in account of the accused on various occasions. It was for the accused persons to justify as to whether they disclosed the same to the income tax department or not.
17. Reliance by the accused on C.Antony v. K.G.Raghavan Nair, (2003) 1 SCC 1, is misplaced, insofar as the factual matrix in the said case was totally different. In that case, the defence of the accused was that of issuance of the cheque in blank to a person other than the complainant. The said person was not examined by the complainant in support of it's case. This, coupled with differences of hand-writing on the cheque, raised the inference of cheque having been issued to some other person and not the complainant. This was coupled with failure of the complainant to substantiate the factum of relations with the accused and payment of amount to him in the first place. All this led the court to conclude, that the complainant had failed to prove his case and the In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 23 of 28 accused has probablised his defence.
Hence, meaningfully (and not pedantically) read, the case is totally distinguishable from the present case, where the accused has never disputed having issued the cheque to the complainant. Furthermore, there is cogent evidence of payment to the accused by the complainant and subsisting relations between the complainant and the accused. C.Antony (Supra) does not come to the rescue of the accused, in any way. It needs to be outlined that no precedent is a statute or a Euclid's theorem. Every case is to be read secundum subjectum materiam i.e in the specific light of it's own facts and circumstances and after carefully discerning it's ratio. It is well settled that judicial precedent cannot be followed as a statute and has to be applied with reference to the facts of the case involved in it. What is of essence in a decision is its ratio and not every observation found therein, nor what logically flows from the observations made in it. It is to be remembered that a decision is only an authority for what it actually decides. Any phrase or sentence used in the judgment cannot be cherry-picked and used mechanically, totally shorn out of its context.
CONCLUSION
18. All factors cumulatively seen, go on to show that the accused persons Vimal Kumar and Surender Kumar have miserably failed to probablise lack of legal liability with respect to the cheques in question. The presumption of legal liability, therefore, has gone unrebutted. The complainant has successfully proved the basic ingredients of offence u/s 138 of the N.I.Act. Resultantly, the accused Vimal Kumar and Surender Kumar, stand convicted of offence u/s 138 of the NI Act.
Since the accused Surender Kumar is the drawer and signatory of all the three In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 24 of 28 cheques in question, there is no quarrel that he can be convicted for an offence u/s 138 of the NI Act, vis-a-vis all the three cheques.
Accused No.1 Vimal Kumar has signed two of the three cheques on record I.e Ex. CW1/A2 and Ex. CW1/A3, however, it is apparent that he has not signed the first cheque in question I.e Ex. CW1-A-1 (Cheque No. 858964), although the same has been drawn on a joint account that he maintains along with accused No.2 Surender Kumar. What should be his legal liability vis-a-vis this particular cheque, is the question that needs to be pondered on.
No arguments have been advanced on this point by either side.
In my considered opinion, Accused No.1 Vimal Kumar cannot be convicted vis-a-vis the first cheque i.e Cheque Ex. CW1/A-1, as he is not the signatory of the said cheque, regardless of the fact that he is one of the joint account holders on which it is drawn. Fortunately, there is a direct judgment of the Hon'ble Supreme Court of India on this point, which clarifies the legal position of liability of a joint account holder, who is not a signatory to a cheque. In Aparna A. Shah v. Sheth Developers (P) Ltd., (2013) 8 SCC 71, it has been held :
27. In the light of the above discussion, we hold that under Section 138 of the Act, it is only the drawer of the cheque who can be prosecuted. In the case on hand, admittedly, the appellant is not a drawer of the cheque and she has not signed the same. A copy of the cheque was brought to our notice, though it contains the name of the appellant and her husband, the fact remains that her husband alone had put his signature. In addition to the same, a bare reading of the complaint as also the affidavit of examinationinchief of the complainant and a bare look at the cheque would show that the appellant In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 25 of 28 has not signed the cheque.
28. We also hold that under Section 138 of the NI Act, in case of issuance of cheque from joint accounts, a joint accountholder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint accountholder. The said principle is an exception to Section 141 of the NI Act which would have no application in the case on hand. The proceedings filed under Section 138 cannot be used as armtwisting tactics to recover the amount allegedly due from the appellant.
It cannot be said that the complainant has no remedy against the appellant but certainly not under Section 138.
The culpability attached to the dishonour of a cheque can, in no case "except in case of Section 141 of the NI Act" be extended to those on whose behalf the cheque is issued.
This Court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding under Section 138 of the Act. Even the High Court has specifically recorded the stand of the appellant that she was not the signatory of the cheque but rejected the contention that the amount was not due and payable by her solely on the ground that the trial is in progress..."
It is, clear from the above, that accused No.1 Vimal Kumar, cannot be convicted on a charge relating to a cheque, which he has not signed.
Accordingly, In the ultimate analysis, Accused No.1 Vimal Kumar stands convicted of offence u/s 138 of the NI Act with respect to : In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 26 of 28
a) Cheque No. 006057, Dated 05.03.2007, for an amount of Rs. 1,40,000/( Ex.
CW1/A2); and
b) Cheque No. 006058, Dated 01.03.2007, for an amount of Rs. 1,30,000/ (Ex.
CW1/A3) Accused No.2 Surender Kumar, stands convicted of offence u/s 138 of the NI Act, with respect to all the three cheques I.e
a) Cheque No. 858964, Dated 08.03.2007, for an amount of Rs. 70,000/ (Ex.
CW1/A1); and
b) Cheque No. 006057, Dated 05.03.2007, for an amount of Rs. 1,40,000/( Ex.
CW1/A2); and
b) Cheque No. 006058, Dated 01.03.2007, for an amount of Rs. 1,30,000/ (Ex.
CW1/A3).
19. Before parting, the court would be failing in its duty, if certain facts are not outlined. It is not in dispute that the complainant as well as the accused persons are government servants, employed in Department of Publication, Government of India, Civil Lines. It is also been demonstrated that they have been indulging in financial transactions of large amounts in stark contravention of Rule 18 of the CCS (Conduct) Rules, 1964, wherein a government servant is obligated to report his transactions to the prescribed authority, if the same exceeds a certain amount. Both the parties are complicit in blatant violation of these rules, with impunity and deserve to be dealt with appropriately by their disciplinary authorities. Let a copy of the this judgment be sent to the Department of Publications, Government of India, Civil Lines, New Delhi for In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 27 of 28 taking necessary action against complainant Anil Kumar and accused Vimal Kumar & Surender Kumar.
Let a copy of this judgment be provided forthwith to the convict, free of cost. Let the convicts be heard now on the quantum of sentence separately. A copy of this judgment be placed on the official website of the District Court. Announced in the open court today on the 30th of September, 2015 (Bharat Chugh) MM (NI Act)-01, Central District, Delhi * Judgment contains 28 signed pages 30.09.2015 In re : Anil Kumar v. Vimal Kumar & Surender Kumar Page 28 of 28