Delhi District Court
Noted In State Of Madras vs . A. Vaidyanatha Iyer Air 1958 on 19 October, 2022
IN THE COURT OF SH APOORV BHARDWAJ, MM-08
(NI ACT) SOUTH WEST/DWARKA COURTS/DELHI
In case of:-
TARUN CHAWLA ... Complainant
VERSUS
GURJEET SINGH ..... Accused
JUDGMENT
a) Sl no. of the case : 7727/2018
b) CNR of the case : DLSW020096272018
c) Date of institution 17.02.2018
d) Name, parentage and Sh. Tarun Chawla
address of the S/o Late Sh H C Chawla
complainant : R/o 7/247, 1st floor, Sunder Vihar,
Pashchim Vihar, New Delhi - 110087
e) Name, parentage and Sh. Gurjeet Singh
address of the accused : S/o Sh Kewal Singh
R/o H.no 7A, Himgiri Enclave,
Chander Vihar, Gali No. 5, Nilothi
Extension, New Delhi - 110041
f) Offence complained of : 138 NI Act
g) Plea of the accused : Pleaded not guilty
h) Arguments heard on : 22.09.2022
i) Final order : Convicted
j) Date of Judgement : 19.10.2022
BRIEF STATEMENT OF FACTS FOR THE DECISION
1. Vide this judgment, I shall decide the present complaint filed under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act') by the complainant against the accused.
Factual Matrix
2. As per the complainant, the complainant and the accused were having good friendly relations for the last many years and on the basis of this relationship the accused approached the complainant in first week of November, 2017 for advancing a friendly loan of Rs 1,20,000/- (Rupees One Lakh Twenty Thousand) with an assurance that he will return the said amount within one month positively. Thereafter the complainant extended a loan of Rs 1,20,000/- to the accused in cash on 05.11.2017 against receipt. The accused also issued the cheque in question i.e. cheque bearing no. 046337 dated 06.12.2017 for an amount of Rs 1,20,000/- drawn on State Bank of India, Vikas Puri, New Delhi Branch. The complainant presented this cheque to his bank i.e Bank of Baroda, J-10, Vikaspuri, however, the same was returned unpaid for the reason "Funds Insufficient" vide return memo dated on 08.12.2017. Thereafter, despite issuance of legal demand notice to the accused, the accused failed to pay the cheque amount within 15 days thereof and hence the present case.
3. Upon a prima facie consideration of pre-summoning evidence, cognizance of offence under section 138 NI Act was taken and the accused was summoned. Thereafter separate notice explaining the Ct No. 7727/2018 Tarun Chawla v. Gurjeet Singh 2 accusation was put to the accused under section 251 of The Code of Criminal Procedure, 1973 (hereinafter referred to as 'CrPC') to which he pleaded not guilty and claimed trial. At this stage the accused stated that the cheque in question bears his signatures, however, he denied receiving the legal demand notice. In his defence he stated that -
"My plea of defence is that I had taken a loan of Rs 55,000/- from the complainant on 7-8% p.m interest. I have already paid the loan amount. I am not liable to pay the cheque amount in question. I can produce the receipts also. It is a false case against me."
Thereafter, cross-examination of the complainant's witnesses under section 145(2) NI Act was permitted.
4. The complainant examined himself as CW1 and adopted his pre-summoning evidence as his post summoning evidence and relied on his evidence by way of affidavit Ex CW1/A and on the following documents i.e. ● Ex. CW1/1 (cash receipt) ● Ex. CW1/2 (cheque in question) ● Ex. CW1/3 (return memo ) ● Ex CW1/4 (legal demand notice) ● Ex CW1/5 and Ex CW1/6 (Postal Receipts) ● Ex CW1/7 and Ex CW1/8 (Tracking reports)
5. In his cross-examination, CW1 deposed that he has known the Ct No. 7727/2018 Tarun Chawla v. Gurjeet Singh 3 accused since the year 2015-2016. He is a director in an NBFC Company namely MCF Finlease Pvt Ltd along with his mother. The family of the accused comprises his wife, father, brother and children. He could not tell the name of family members of the accused. He has not shown the loan advanced in his ITR. The accused had taken a loan of Rs 60,000/- from his NBFC company which has been paid by him. The present complaint is based on a separate transaction. He denied having misused any security cheque given as a collateral to his company. He denied various other suggestions given by Ld. Legal Aid Counsel (LAC) for the accused.
6. In the statement of the accused under section 313 CrPC, he stated that he had never taken a loan of Rs 1,20,000/- from the complainant in his personal capacity. He stated that he had taken a loan of Rs 50,000/- from the NBFC company run by the complainant and had to pay 12 instalments of Rs 5,500/- each. He stated that he had defaulted in paying the last two instalments and thereafter the present case was filed against him. He stated that he doesn't remember signing Ex CW1/1 but it bears his signatures. He stated that the cheque in question also bears his signatures but the material particulars have not been filled by him. He further stated that the complainant has filed a false case against him by misusing the cheque and document given at the time of availing loan from his company. He did not opt to lead any Defence Evidence.
7. During the course of final arguments, Ld counsel for the complainant submitted that the complainant has duly proved his case by placing on record the entire documentary evidence. He Ct No. 7727/2018 Tarun Chawla v. Gurjeet Singh 4 further submitted that the accused has not been able to rebut the presumption. He prayed that the accused be convicted.
8. Per contra, Ld. LAC for the accused submitted that the complainant has misused a security cheque and blank signed document provided to his NBFC company by the accused. He further stated that there are no friendly relations between the parties. He further stated that the case set up by the complainant is quite unbelievable as no Director of an NBFC company would ever advance a friendly loan to one of its own clients. He also submitted that Ex CW1/1 cannot be read into evidence since the same is an unregistered document. He prayed that the accused be acquitted.
Legal Position:-
9. Before proceeding further to reflect upon the defence and evaluation of evidence, the foremost check point is whether the facts averred by the complainant fulfil the basic statutory requirement for constituting an offence under section 138 NI Act. To establish the offence under Section 138 of the NI Act against the accused, the complainant must prove the following:-
● The accused 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;
● The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
● That cheque has been presented to the bank within a Ct No. 7727/2018 Tarun Chawla v. Gurjeet Singh 5 period of three months from the date on which it is drawn or within the period of its validity whichever is earlier;
● 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;
● 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;
● 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 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 NI Act.
10. It is apt to discuss that a negotiable instrument including a cheque carries following presumptions in terms of Section 118 (a) and Section 139 of the NI Act.
Ct No. 7727/2018 Tarun Chawla v. Gurjeet Singh 6 Section 118 of the NI 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 cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability"
Thus, the combined effect of Section 118(a) and Section 139 of NI Act raises a presumption in favour of the holder of the cheque that he has received the same for discharge, in whole or in part of any debt or other liability.
11.For appreciating the legal position, reliance is placed on the judgement of the Hon'ble Supreme Court in the case of Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16 wherein it was held that:
"22. Because both Sections 138 and 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras vs. A. Vaidyanatha Iyer AIR 1958 SC 61, 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. "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" (ibid). 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. Presumptions are rules of evidence and do not conflict with Ct No. 7727/2018 Tarun Chawla v. Gurjeet Singh 7 the presumption of innocence, because by the latter all 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 non existence of the presumed fact."
Similar view has been taken by the Hon'ble Supreme Court in the case titled as K.N. Beena vs. Munyappan and Ors. AIR 2001 SC 289.
12.Further, recently the Hon'ble Supreme Court in the case titled as Basalingappa v Mudibasappa, (2019) 5 SCC 418 summarised the principles related to sections 118(a) and 139 in the following manner 25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. 25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden. 25.5. It is not necessary for the accused to come in the witness box to support his defence.
From the ratio decidendi laid down in the aforesaid judgements, it Ct No. 7727/2018 Tarun Chawla v. Gurjeet Singh 8 is clear that for the offence under Section 138 of the Act, the presumptions under Section 118(a) and Section 139 of NI Act have to be compulsorily raised as soon as execution of cheque by the accused is admitted or proved by the complainant and thereafter, burden is shifted to the accused to prove otherwise.
Whether presumption under section 118 (a) and 139 NI Act can be drawn against the accused
13. Evaluating the facts of the present case in the light of the above provision this court deems it fit to first consider as to whether the complainant has prima facie proved the issuance of cheque by the accused towards the legal liability in favour of the complainant from the account maintained by her, so as to constitute an offence under section 138 NI Act. To carve out a prima facie case the complainant has filed on record original cheque as Ex. CW1/2. The said cheque was presented to the bank within a period of three months from the date on which it was drawn and was returned dishonoured for the reason "Funds Insufficient". The return memo dated 08.12.2017 bearing the fact of dishonour of cheque in question has been exhibited by the complainant as Ex. CW1/3. The complainant then sent a legal notice, Ex CW1/4, dated 02.01.2018 i.e. within the period of statutory requirement of 30 days from the date of receipt of information of dishonour. The original postal receipt of the legal demand notice has been filed as Ex. CW1/5 & Ex CW1/6 & tracking reports have been filed as Ex CW1/7 & Ex CW1/8. In the present case the accused has admitted his signatures on the cheque in question but has denied receiving the legal notice. However, perusal of record shows that the Ct No. 7727/2018 Tarun Chawla v. Gurjeet Singh 9 address mentioned on the legal notice is the same address as furnished by the accused on his bail bonds. Therefore, since the legal demand notice was properly addressed and posted, it is presumed to have been delivered under section 114 Indian Evidence Act, 1872 (hereinafter, "Evidence Act"). Moreover, in light of the decision of the Hon'ble Supreme Court of India in C C Alavi Haji v Palapetty Muhammad (2007) 6 SCC 555, the accused not having paid the amount of cheque in question within 15 days of service of summons to him, cannot be allowed to take such a plea.
14. The above facts suffice in raising the presumption under Section 118(a) & 139 NI Act in favour of the complainant. In Rangappa v Sri Mohan (2010) 11 SCC 451, Hon'ble Supreme Court held that section 139 raises a presumption of existence of legally enforceable debt or liability and not simple existence of debt or liability. This presumption is a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of legally enforceable debt or liability can be contested.
15. When the presumption is raised in favour of the complainant, the burden is shifted on the accused to disprove the case of the complainant by rebutting the presumption raised in favour of the complainant. Being the rule of reverse onus, it is the duty of the accused to prove that he does not owe any liability towards the complainant. The accused can displace this presumption on the scale of preponderance of probabilities and lack of consideration or a legally enforceable debt need not be proved beyond a reasonable doubt as is the general rule in criminal cases. The Ct No. 7727/2018 Tarun Chawla v. Gurjeet Singh 10 accused has to make out a fairly plausible defence which is acceptable to the court. This the accused can do either by leading his own evidence or by raising doubt /demolishing the material or evidence brought on record by the complainant. With this in mind, this court now proceeds to discuss the defence of the accused.
Whether the accused has been able to rebut the presumption against him:-
16. It is trite that bald averments are not sufficient to dislodge the presumption against the accused in a trial under section 138 NI Act. Reliance can also be placed on Kumar Exports v Sharma Carpets, (2009) 2 SCC 513 in which it has been observed that:-
20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of Ct No. 7727/2018 Tarun Chawla v. Gurjeet Singh 11 proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act. (Emphasis Supplied)
17. In the present case the accused has simply stated that he had never taken a loan of Rs 1,20,000/- from the complainant. However, he has not brought on record any cogent evidence to probabilize the same.
18. Ld. LAC appearing for the accused has laboriously argued that the fact that a Director of NBFC company would give a friendly personal loan to his erstwhile client is on the face of it, highly unusual. However, the complainant has stated in his cross-examination that the accused had duly repaid a loan of Rs 60,000/- taken from his NBFC company and the present complaint is based on a separate transaction. He has also stated that his NBFC company does not take security cheques from its customers. Further, during the cross-examination he could tell about the family members of the accused although he didn't know their names. He has also disclosed the reason for which the Ct No. 7727/2018 Tarun Chawla v. Gurjeet Singh 12 accused had taken the loan from him and how he represented to pay it back to him. In view of this testimony, I find the lone circumstance that earlier the accused was a customer of the complainant's company to be quite weak to rebut the presumption against him.
19. Ld LAC has also argued that since cash receipt Ex CW1/1 is not registered the same could not be read into evidence. Firstly, since Ex CW1/1 is simply an acknowledgment/receipt of loan, it is not compulsorily registrable under the provisions of the Registration Act, 1908. Secondly, Ex CW1/1 bears the signatures of accused affixed across a revenue stamp. There is no reason to doubt these signatures. Moreover the accused has also stated in his statement u/s 313 CrPC that these signatures belong to him. He has however stated that as per his knowledge he had signed on a blank document. Once again, apart from a bald averment nothing else has been brought on record. Even otherwise, there is sufficient material on record to raise presumption against the accused in absence of Ex CW1/1 also. Therefore, merely raising technical doubts regarding the admissibility of Ex CW1/1 is of no avail to the accused.
20. Moreover the accused has taken inconsistent stands at various stages of trial. At the stage of framing of notice under section 251 CrPC he said that he had fully paid the loan of Rs 55,000/- taken from the complainant however at the stage of recording of his statement under section 313 CrPC, he stated that he has defaulted in payment of the last two instalments of a loan of Rs 50,000/- taken from the company run by the complainant. This also weighs Ct No. 7727/2018 Tarun Chawla v. Gurjeet Singh 13 against the accused.
21. In view of the evidence adduced, documents put forth and arguments advanced by the parties and further in view of the above discussion, the court is of the considered view that the accused Sh. Gurjeet Singh is guilty of offence under Section 138 of Negotiable Instruments Act, 1881 and accordingly, he is hereby convicted under Section 138 of Negotiable Instruments Act, 1881.
Announced in open court on 19.10.2022 Digitally signed by Judgment consists of 14 pages. APOORV APOORV BHARDWAJ BHARDWAJ Date: 2022.10.19 15:32:51 +05'30' APOORV BHARDWAJ MM-08 (NI Act) SOUTH WEST:DWARKA COURTS.
N.D/19.10.2022 Ct No. 7727/2018 Tarun Chawla v. Gurjeet Singh 14