Delhi District Court
Chetan Malhotra vs Ruchi Arora Page No.1 Of 13 on 6 August, 2022
IN THE COURT OF MS DIVYA ARORA, MM (NI ACT)-01,
SOUTH-WEST DISTRICT: NEW DELHI
CC No.14147-20
Under Section 138 of N.I. Act
In the matter of:
CHETAN MALHOTRA
S/o Shri V K Malhotra
R/o L-118, Gali no.7
New Mahavir Nagar
Near Gopal Mandir,
New Delhi - 110018. ... Complainant
Versus
RUCHI ARORA
w/o Shri Nitin Arora
R/o 60-C, Pocket AC-1
Shalimar Bagh, Delhi - 110 088.
Also At:-
c/o Mahes Malhotra
169, Transport Centre,
New Subzi Mandi
Azadpur, Delhi - 110 033. ... Accused
Date of Institution : 05.09.2022
Date of Judgment : 06.08.2022
CHETAN MALHOTRA VS RUCHI ARORA Page no.1 of 13
CC NO.14147-20
JUDGMENT
1. Briefly, the case of the prosecution is that the accused and the complainant were known to each other. Accused approached the complainant for a friendly loan of Rs.2 lacs for her personal needs. Considering the old relations, complainant agreed to pay a sum of Rs.2 lacs to the accused. On 07.01.2020, complainant advanced accused loan of Rs.2 lacs in cash. Accused in discharge of her legal liability issued a Cheque bearing no.643414 dated 25.06.2020 for an amount of Rs.2 lacs, drawn on YES Bank, AG-23, Shalimar Bagh, New Delhi - 110088 and assured the complainant that the same would be honoured on its presentation. However, on presentation of the said Cheque, the same was returned dishonoured vide return memo dated 29.06.2020 with the remarks ''FUNDS INSUFFICIENT'. Upon this, the complainant sent a legal demand notice to the accused dated 16.07.2020 and upon failure of accused to pay the cheque amount within the mandatory period of 15 days, the complainant has moved this court with a complaint under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred as "NI Act"). Copy of AADHAR Card of complainant is Ex.CW1/1, Original Cheque is Ex.CW1/2, Returning memo is Ex.CW1/3, Legal Notice is Ex.CW1/4, Postal receipts are Ex.CW1/5 and Ex.CW1/6 and Delivery reports are Ex.CW1/7 and Ex.CW1/8.
CHETAN MALHOTRA VS RUCHI ARORA Page no.2 of 13 CC NO.14147-20
2. On finding of prima facie case against the accused, summons were issued and the accused appeared before this court on 05.04.2021.
3. The notice under section 251 of the Code of Criminal Procedure ("Cr.P.C.") was framed against the accused vide order dated 05.04.2021 to which she pleaded not guilty. The accused deposed that," I do not know the complainant. I do not know what kind of business is my husband dealing with the complainant. The Cheque in question bears my signatures. I had received the legal notice sent by the complainant."
4. The complainant adopted his pre-summoning evidence tendered by way of affidavit (CW1/A) as his post-summoning evidence.
5. After framing of notice, complainant was cross examined by ld counsel for accused. Thereafter, the complainant evidence was closed and the matter was listed for statement of accused under Section 313 CrPC.
6. Statement of accused was recorded under Section 313 CrPC read with Section 281 Cr.P.C. on 01.04.2022 wherein all the incriminating circumstances appearing in evidence against the accused was put to her to which she stated that,'' The Cheque in question bears my signatures. I have not taken any loan from the complainant. He has filed a false case against me. I do not owe any liability towards the complainant".
CHETAN MALHOTRA VS RUCHI ARORA Page no.3 of 13 CC NO.14147-20
7. Accused in her defence examined herself as DW1 and was cross examined by counsel for complainant and DE was closed vide Order dated 07.06.2022.
8. Thereafter, the Ld. Counsel for complainant and the accused were heard at length and the matter was reserved for Judgement.
9. Before proceeding to the merits of the case, it is important to lay down the basic provision of law with respect to Section 138 NI Act which is as follows:- Section 138 of Negotiable Instruments Act, 1881 makes dishonour of cheques an offence. It provides that ''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 extend to twice the amount of the cheque, or with both''.
CHETAN MALHOTRA VS RUCHI ARORA Page no.4 of 13 CC NO.14147-20
10. In order to ascertain whether the accused has committed on offence u/s 138 NI Act, the following ingredients constituting the offence have to be proved:-
(a) The drawer of the cheque should have issued the cheque for the discharge, in whole or in part of a legally enforceable debt or other liability.
(b) The cheque 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.
(c) The drawer of such cheque fails to make the payment of the said amount of money within fifteen days of the receipt of the notice from the payee or the holder in due course demanding the payment of the said amount of money.
It is only when all the above mentioned ingredients are satisfied that the person who has drawn the cheque can be set to have committed an offence u/s 138 NI Act.
11. It is important to recall Section 118 of the Indian Evidence Act 1872 and Section 139 of the N.I Act here. Section 118 (a) of the Act provides that until the contrary is proved, it shall be presumed that ''that every negotiable instrument was made or drawn for consideration, and that CHETAN MALHOTRA VS RUCHI ARORA Page no.5 of 13 CC NO.14147-20 every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration''. Further, Section 139 of the Act lays down that ''it shall be presumed, unless the contrary is provided, 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.
12. In the case of Hiten P. Dayal Vs Bratindranath Bannerjee (2001) G SCC 16, the Hon'ble Supreme Court of India had observed that ''Because both sections 138 and 139 CrPC required that the court shall presume the liability of the drawer of the cheque for the amount for which the cheques are drawn as noted in State of Madras Vs A. Vaidhyanatha Iyer AIR 1958 SC 61, it is obligatory on the court to raise this presumption in every case where the factual basis for raising of the presumption has 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''.
13. The core issue that arises for consideration whether the cheque in question was issued by the accused in discharge of her liability.
14. The accused has admitted her signatures on the cheque in question at every stage; from notice framed u/s 251 Cr.P.C. to her examination u/s 313 Cr.P.C., and in her evidence giving rise to the presumption in favour of the holder of the cheque under S. 139 of NI Act.
CHETAN MALHOTRA VS RUCHI ARORA Page no.6 of 13 CC NO.14147-20
Thus, unless the contrary is proved, it shall be presumed that the complainant received the cheques in discharge of the debt/ liability from the accused. The standard of proof for rebuttal is on preponderance of probabilities. As held by the Hon'ble Supreme Court in decision cited as K.N. Beena vs Muniyappan And Another;(2001) 8 SCC 458, in order to rebut the presumption, mere denial by the accused will not suffice. The accused must prove by leading cogent evidence that there was no debt/ liability.
15. Major defence raised by accused is that she does not know complainant and no loan was ever taken by her from the complainant. In the present case, the onus to prove that the accused has not issued the cheque in question in favour of the complainant, primarily lied on the accused. Section 103 of the Indian Evidence Act, 1872 enunciates that the person who asserts a fact must prove the same unless the law otherwise provides.
16. Further, the Hon'ble Supreme Court in the judgment in Kumar Exports vs Sharma Carpets, (2009) 2 SCC 513 observed, " 19. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going CHETAN MALHOTRA VS RUCHI ARORA Page no.7 of 13 CC NO.14147-20 forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over". 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 proof shifted to the complainant.
17. 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. It will be utter disregard to the established principles of evidence, if the court accepts this evidence of the accused devoid of any documentary evidence to concrete the proof. The story of accused, in the absence of any credible evidence, cannot be taken as gospel truth.
18. Counsel for accused has pointed out the contradiction in the story of complainant. He argued that as per complainant, it was a friendly loan but complainant himself has stated in his complaint and cross examination that he received Rs.30,000/- as interest from the accused. To this, counsel for complainant argued that initially loan was given as a friendly loan. It is only when accused failed to pay the loan within the prescribed period, complainant asked for interest and that is when accused CHETAN MALHOTRA VS RUCHI ARORA Page no.8 of 13 CC NO.14147-20 paid Rs.30,000/- as interest to complainant. Merely stating that the interest was charged upon the said loan and there are minor contradictions in the story of complainant does not rebut the presumption of the accused person. Accused should have brought some cogent evidence on record to displace the burden of proof resting upon her.
19. Counsel for accused further argued that duration of loan is not mentioned by the complainant and the purpose of granting the loan is not clear. He further argued that complainant has taken different stances at various stages of trial. Counsel for accused pointed out that complainant has stated in his cross examination that loan was given during lockdown in January 2020 when there was no lockdown in the country. It has been held by Hon'ble Supreme court in the case of Rohit Bhai JeevanLal vs State of Gujrat (2019) 18 SCC 106 that minor inconsistencies do not lead to the rebuttal of presumption raised u nder Section 118 (a) read with Section 139 of NI Act. Last defence raised by accused is that no medical document was sought by complainant from accused at the time of advancement of loan.
20. Another argument raised by counsel for accused is that accused was financially independent at the time of alleged loan and the salary slip of accused is filed on record. It is not necessary that if a person is earning a salary or is financially independent that person will not need any kind of loan or financial help from any other person. This argument of accused does not help in rebutting the presumption lying upon her.
CHETAN MALHOTRA VS RUCHI ARORA Page no.9 of 13 CC NO.14147-20
21. Another argument raised by accused's counsel is that the complainant has not brought any document on record to prove the loan advancement. In view of law laid down by Hon'ble Apex Court in Rohitbhai J Patel vs The State Of Gujarat, criminal appeal no. 508/19 wherein it has been categorically held that the complainant need not prove the source of funds which were subsequently used for advancement of loan till the time accused has discharged his burden. In the present case accused has failed to discharge his initial burden of proof.
22. Furthermore, the counsel for accused has contended that complainant did not disclose the factum of advancement of loan in question in his ITR, yet such factor alone cannot be enslaving enough to shroud the prosecution story with doubt. The averment of the counsel for accused regarding non mentioning of loan amount in ITR to doubt the case of complainant do not inspire confidence as culpability of offence under section 138 NI Act will not freeze for the reason that there is violation of section 269 of Income Tax Act and the same does not prevent the operation of the statutory presumption of section 139 of NI Act. The prosecution u/s 138 of NI Act cannot be dismissed or stalled for non-compliance of Section 269 SS of the Income Tax Act. Such violation may give rise to an in- dependent criminal offence, but on account of violation of the said provision, the prosecution of the accused for the alleged dishonour of cheque u/s 138 NI Act does not become bad in law.
CHETAN MALHOTRA VS RUCHI ARORA Page no.10 of 13 CC NO.14147-20
23. Additionally, the accused has averred that she has only signed the impugned cheque and not filled the other particulars i.e., did not fill in the name of payee or date. The fact that the cheque with the signature of accused is in possession of the complainant with no plausible explanation coming from accused to show as to how it ended up with the complainant does not dilute the liability of the accused as the legal position on inchoate instruments is well settled. Further, inaction on the part of accused to take steps for stopping misuse or wrong encashment of his cheque by complainant suggests that he never took steps to procure back his alleged blank signed cheque. Section 20 of the NI Act provides that if a person signs and delivers a paper stamped in accordance with the loan and either wholly blank or have written 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, a negotiable instrument for any amount specified therein and not exceeding the amount covered by the stamp.
24. In Ravi Chopra v. State and others [2008 (102) DRJ 147], the Hon'ble High Court of Delhi has held that if a blank signed cheque is given then it is possible that the drawer has consented impliedly or expressly to filling up of the cheque by the payee on a later date.
25. Therefore, considering the weight of the attending circumstances viz, the consistency in the prosecution story, and the failure of the accused to put forth any reasonable and believable defence, admission of the CHETAN MALHOTRA VS RUCHI ARORA Page no.11 of 13 CC NO.14147-20 accused that signature on the cheque in question belongs to her and fact that the accused has not proved her defence to cause the probabilities to lie in her favour, an element of section 138 NI Act stands assembled.
26. Another condition qua the receiving of legal notice. Accused has admitted to the receiving of legal notice in her notice framed under Section 251 CrPC. Since accused has admitted to the receiving of legal notice, hence an ingredient with regard to offence under Section 138 NI Act is satisfied.
27. Another condition qua the presentation of the cheque within three months is concerned, the same is satisfied upon the perusal of the cheque in question bearing no.643414 (Ex.CW1/2) dated 25.06.2020 while the return memo dated 29.06.2020 (Ex.CW1/3) thus, being presented within the prescribed period of limitation of three months. The defence did not adduce any evidence whatsoever to contradict the same.
28. Another condition pertains to the cheque being returned unpaid owing to their being dishonored. Bank return memo or slip is prima facie proof of dishonor. Section 146 of the Negotiable Instruments Act, 188, in this regard comes into play which raises a presumption that the court shall presume the fact of dishonor of the cheque in case of cheque is returned vide a return memo issued by the bank having thereon the official mark denoting that the cheque has been dishonored. Again, as the defence has failed to rebut the said presumption, hence the said condition is also CHETAN MALHOTRA VS RUCHI ARORA Page no.12 of 13 CC NO.14147-20 satisfied.
29. The last condition is that accused fails to make the payment within fifteen days from the date of the receipt of the legal demand notice. In the present case, the accused has evidently failed to make the payment within the fifteen days contending that she owes no legal liability to pay the amount mentioned in the cheque in question. The accused has miserably failed to prove that said assertion and thus, the last limb of what will entail the liability against the accused, is also structured.
30. In view of the forgoing discussion, the accused has miserably failed in probabilising her defence, even on the scale of preponderance of probabilities.
31. The complainant has with the aid of evidence led a presumption of legal liability under Section 118 read with Section 139 of N. I. Act and has successfully proved the basic ingredients of offence under section 138 N. I Act.
32. Resultantly, the accused RUCHI ARORA stands CONVICTED for the offence under Section 138 NI Act. Let the convict be heard separately on the quantum of sentence.
33. Let a signed copy of the Judgment be supplied to the accused, free of cost, and a copy of the same be placed on record.
Decided on 06.08.2022
Announced in open court. (DIVYA ARORA)
MM (NI Act)-01/SW/DWK
New Delhi
CHETAN MALHOTRA VS RUCHI ARORA Page no.13 of 13
CC NO.14147-20