Delhi District Court
M/S Religare Finvest Ltd. ... ... vs . on 8 August, 2011
IN THE COURT OF SH.SUSHIL ANUJ TYAGI
METROPOLITAN MAGISTRATE: DWARKA COURT:NEW DELHI
CC No. 13821/09
IN THE MATTER OF
M/s Religare Finvest Ltd. ... Complainant
19, Nehru Place,
New Delhi 110 019
Vs.
Sh. Jai Kumar Kriplani ... Accused
Prop. M/s Lachhman Das
At: BU60, Pitampura,
Delhi
Date of institution of case : 27.08.2009
Date of reserving Judgment : 04.08.2011
Date of pronouncement : 08.08.2011
JUDGMENT
1. Serial No. of the case : 13821/2009 2. Name of the complainant : M/s Religare Finvest 3. Name of the accused : Sh. Jai Kumar Kriplani 4. Offence complained of : S.138 N. I. Act, 1881 5. Plea of accused : Pleaded not guilty 6. Final Order : Acquitted 7. Date of such order : 08.08.2011 BRIEF FACTS AND REASONS FOR DECISION OF THE CASE
1. The present complaint under section 138 Negotiable Instruments Act,1881 (hereinafter referred to as "NI Act") is filed by the complainant. 2. The brief facts of the case as per the complainant are that the accused/Jai Kumar Kriplani had availed loan facility under Loan Account No. 23884 and the accused has issued cheque bearing no. 334736 dated 15.07.2009 drawn on The Jammu & Kashmir Bank Ltd. for amount of Rs.5,63,883/ to the complainant towards discharge of part of debts accrued on account of dues on the complainant which got dishonoured on presentation for the reason "Exceeds Arrangement" vide return memo dated 16.07.2009. The complainant sent legal notice dt. 27.07.2009 to the accused vide postal receipts dated 28.07.2009 and despite service the accused did not paid the cheque amount. Hence the present complaint was filed against the accused by the complainant through its authorized representative on 27.08.2009 (hereinafter referred to as "AR").
3. The AR was examined under section 200 Code of Criminal Procedure (hereinafter referred to as "CrPC") by way of tendering of presummoning affidavit on 05.09.2009.
4. After being satisfied that prima facie ingredients of Section 138 NI Act are made out, cognizance was taken and accused was summoned under section 204 CrPC.
5. After appearance of the accused the notice under section 251 CrPC was served on the accused to which he pleaded not guilty and claimed trial. He admitted the signature on the cheque in question but denied other contents written on the body of the cheque and also denied receiving of the legal demand notice in admission/denial proceedings under section 294 CrPC.
6. In Complainant's evidence, the AR (CW 1) tendered his affidavit in post summoning evidence as Ex CW 1/2 and relied on documents:
Ex CW 1/B1 Power of attorney
Ex CW1/C Cheque in question
Ex CW1/D Return memo
Ex CW1/E Legal notice
Ex CW1/F1F3 Postal receipts
Ex CW1/G1G2 Internet generated delivery report.
7. The CW1 was examined, crossexamined and discharged. The Complainant evidence was closed.
8. The accused was examined under section 313 CrPC where all the incriminating evidence was put to the accused. It was stated by the accused that he was granted loan by complainant and had given blank signed cheque to the complainant. It was stated that he was not informed before presenting the cheque and that complainant had misused the cheque by filling the amount on it. Accused also denied the receiving of legal demand notice. Accused did not lead any defence evidence and DE was closed and the matter was fixed for final arguments.
9. During the final arguments, it is contended on behalf of the complainant that the complainant had fulfilled all the ingredients of Section 138 N.I. Act. It is contended that the legal demand notice was sent to the correct address of the accused and relying on Section 27 of General Clauses Act and Section 114 of Evidence Act, it is submitted that presumption of service is against the accused. It is argued that it was the duty of the accused to prove that he has not received the legal demand notice and this burden the accused had failed to discharge and has not rebutted the presumption of service. Reliance was placed on CC Alavi Haji Vs. Palapetty Muhammed & Anr. in 2007[2]JCC [NI] 225. It was further contended that the plea of the accused that the outstanding of Rs.5,63,883/ was not due on 15th July, 2009 (cheque date) is not tenable, as the foreclosure sheet Ex CW 1/X1 which is certified and stamped by the complainant shows that Rs.5,63,883/ was due on 10th July 2009. It is further contended that the AR was duly authorized to prosecute the present complaint and the power of attorney is sufficient to prove this fact. Reliance was place on Ravi Gupta Vs. R.C. Tiwari II(2008)DLT (CRL) 279. It is further argued that in view of Hon'ble Delhi High Court judgment in Mojj Engineering Systems Ltd.& Ors Vs. A.B. Sugars Ltd. 154(2008)DLT 579, the complainant has prima facie authority to fill the blank cheques and the liability of the accused cannot be absolved as the cheque is not a piece of paper issued for the sake of fun. It is further contended that the defence of the accused is not sustainable, that cheque bearing no. 334727334736 are issued for security as the cheque bearing no. 334727 has been cleared in favour of the complainant and the accused has never challenged the said clearance and therefore, now the accused cannot take the stand that the impugned cheque was for security. It is further contended that since the accused has not examined himself and not led defence evidence, the case of complainant is proved as the suggestions or the statement of accused under Section 313 Cr PC are not evidence. Reliance was placed on V.S. Yadav Vs. Reena in CRL A N0. 1136 of 2010 dated 21.09.2010 of Hon'ble High Court of Delhi. It is further contended that the CW 1 has deposed that it is the company policy to take blank cheques for payment and this fact has not been disputed by the accused as no suggestion was put to CW 1 about the company policy. It is further contended that the loan was recalled and according to the loan agreement no written recall notice was required to recall the loan. It is further contended that the oral notice was given to the accused and it was the duty of the accused to disprove that he has not received the notice. The learned counsel for complainant had submitted that the CW 1 could not explain the difference in the principle amount demonstrated in the foreclosure sheet Ex CW 1/X and Ex CW 1/X1 and no opportunity was given to CW 1 to explain the said difference. It is submitted that the difference in the principle amount is due to the fact that the foreclosure sheet Ex CW 1/X shows pending installments also which includes the principle amount also.
10. To support his contention the learned counsel for complainant relied on several decisions of Hon'ble High Court and Hon'ble Supreme Court of India: i. Prakash Chand Yadav Vs. Enforcement Directorate in 2009[2]JCC 1303. ii. Neeraj Sharma Vs. NCT of Delhi & Ors. 2009[2]JCC 1299.
iii. Pritish Vs. State of Maharashtra in 2002 CRI.L.J. 548.
iv. State of Bihar Vs. Md. Khalique in 2002 Cri L.J. 553.
v. Mohan Lal Jatia Vs. Registrar General, Supreme Court of India in 2010[4]JCC 2396. vi. Devinder Mohan Zakhmi Vs. Amritsar Improvement Trust in 2002 Cri. L.J. 4485. vii. Arvind Rao & Etc. Vs. State of A.P. And Others in 2002 Cri. L.J. 4487. viii. State of A.P. And Another Vs. T. Suryachandra Rao in (2005) 6 Supreme Court Cases 149. ix. Madan Lal Sharma Vs. Punjab & Haryana High Court in 2000Cri.L.J. 1512. x. Bathula Pulla Reddy and Ors. Vs. State of A.P. In 2000 Cri L.J. 1515. xi. State of A.P. And Another Vs. T. Suryachandra Rao in (2005) 6 Supreme Court Cases 149. xii. Kuldeep Kapoor Vs. Susanta Sengupta in 126(2006) Delhi Law Times 149 xiii. Prem Lata and Others Vs. Rajender Soni in 126(2006) Delhi Law Times 168. xiv. Abdul Rehman Vs. Anees Ul Haq & Ors.in 2008[2] JCC 881.
xv. V.S Yadav Vs. Reena in Crl A. No. 1136 of 2010.
xvi. V.K. Jain Vs. Sharad Jagtiani in 2006[3] JCC [NI]252.
xvii.M/s Indo Automobiles Vs. Jai Durga 2008[3]JCC [NI]351. xviii.CC Alavi Haji Vs. Palapetty Muhammed & Anr. (supra).
xix. Ravi Gupta Vs. R.C. Tiwari (supra) xx. Mojj Engineering Systems Ltd. Vs. A.B. Sugars (supra).
xxi. MMTC Ltd. & Anr. Vs. Medchl Chemicals and Pharma (P) and Another in 2002 Supreme Court Cases (Cri.) 121.
11. On the other hand the learned counsel for the accused has defended the present complaint on the basis that the accused did not have the legally enforceable liability or debt at the date of impugned cheque. It is contended that the accused has not disputed the grant of loan of Rs. 6 lacs repayable in 36 EMIs of Rs.22298/ each. It is contended that the loan was repayable through ECS mode and this is admitted by the CW 1 also. It is further submitted that the cheque cannot be said to be executed if it is not with the authority of the drawer. It is contended that in the present case, the impugned cheque was not executed in the due manner and therefore, the accused do not have the liability under the impugned cheque. It is contended that during the crossexamination of CW 1, CW 1 has admitted that the cheque was issued in blank after the signing of loan agreement. However, since the cheque is issued in blank before the disbursal of loan, it makes no difference whether it was issued before or after the loan agreement. It is further contended that para no. 8 & 9 of the loan agreement nowhere mentions that the bank is authorized to fill the blank cheque and demand the outstanding by way of filling the blank cheque and presenting the same. It is further contended that the CW 1 has admitted that at the time of dishonour of impugned cheque, accused was in default of 3 EMIs only. It is further argued that the CW 1 has admitted that the blank cheques were taken at the time of grant of loan and it was not issued on 15.07.2009 and thus it is clear that the cheque was filled by the complainant and was presented without any information to the accused. It is further contended that since the CW 1 does not have any personal knowledge about the fact of the case, therefore, he cannot depose that the impugned cheque was issued for repayment and not for security. It is further contended that the CW 1 has contradicted while deposing that the accused was served with the recall notice. It is further contended that the loan agreement para no. 8 & 9 clearly lays down that the loan can be recalled only after giving notice. It is further complainant has not been able to prove the service of recall notice and has merely pleaded that the oral notice was given to the accused. However, CW 1 has failed to depose as to who has given the notice and in which month it was given. It is further contended that the foreclosure sheets are merely print outs and not certified as per the Bankers Book Act or Evidence Act and therefore, are not proved. It is further contended that the foreclosure sheet can easily be tampered in microsoft system. It is further contended that the foreclosure sheets Ex CW 1/X & Ex CW 1/X1 are contradictory in nature and cannot be relied upon. It is further contended that the burden of proof on the accused is not same as the burden of proof on the complainant and it is not essential for the accused to lead defence evidence as the standard of proof is only showing the preponderance of probabilities. It is further contended that when the present cheque in question was issued, there was no outstanding liability of the accused, and therefore, it cannot be said that the cheque was issued towards the legally enforceable liability. To support his case, the learned counsel for the accused relied on a series of judgments: i. Alliance Infrastructure Project Pvt. Ltd. Vs. Vinay Mittal and Ors in 2010(1)LRC 97 (Del) ii. M/sCollage Culture Vs. Apparel Export Promotion Council in 2007[4]JCC [NI]388. iii. Smt. Pratima Sharma Vs. M/s Cartel Finance Pvt. Ltd. in 2007[4]JCC [NI] 292. iv. Ram Krishna Urban Cooperative Credit Society Vs. Rajendra Bhagchand Warma in 2010(1) LRC 303 (Bom).
v. K. Narayana Nayak Vs. M. Shivarama Shetty in 2009(1) DCR 403. vi. Raman Finance Corporation Vs. Harmeet Singh in 2009(1) DCR 308. vii. Chackochan T.K. Vs. P.P. Paul in 2009(2) DCR 506.
viii. Titanor Components Ltd. Goa Vs. Techno Engineers in 2009(1)DCR 585. ix. Tanaji Dinkar Wadakar Vs. Veer Chaphekar Nagari Sahakari Plat Sanstha Ltd. Pune and Others in 2009 (1)DCR 588.
x. Gopan Vs. Tonny Varghese in 2009(1) DCR 314.
xi. Mohan Lal Vs. Haji Shaikh Bashir in 2009(1) DCR 322.
xii. Ramkrishna Urban Cooperative Credit Society, Ahmednagar Vs. Rajendra Bhagchand Warma in 2011 ACD 97 (BOM).
xiii. Adarsh Gramin Sahakari Pat Sanstha Vs. Dattu Ramdasji in 011 ACD 103 (BOM) xiv. Mandvi Cooperative Bank Vs. Nimesh B. Thakore in 2011 ACD 105 (SC). xv. K.N. Beena Vs. Muniyappan & Anr. in Criminal Appeal No. 1066 of 2001. xvi. State Farm Corporation of India Vs. Nijjer Agro Foods in Criminal Appal no. 908909 of 2005. xvii.Krishna Janardhan Bhat Vs. Dattaraya G. Hegde in Criminal Appeal no. 518 of 2006. xviii.R. Rajeshwari Vs. H.N. Jagadish in Criminal Appeal no. 442 of 2008. xix. Mahesh Vs. Ramakant in 2010(2) DCR 669.
12. Heard Mr. L.M. Grover, learned counsel for the complainant and Mr. M.S. Oberoi, learned counsel for the accused. Judicial record perused.
13. After hearing the rival contentions from both the parties and perusal of judicial record, it is revealed that the main question in the present case revolves around as to whether the impugned cheque was issued towards the discharge in whole or in part of legally enforceable liability or debt as envisaged under section 138 NI Act. Thus it becomes apposite at this juncture to reproduce section 138 NI Act.
"138. Dishonour of cheque for insufficiency, etc., of funds in the accounts 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 extend to two year", or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless
(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
(b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque, "within thirty days" of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and
(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability."
14. Undoubtedly, it is a sine qua non for constitution of the offence u/s 138 NI Act that the cheque must have been issued for the discharge in whole or in part of legally enforceable liability or debt. Section 138 NI Act has to be read with the legal presumptions u/s 139 and 118 NI in favour of the payee or holder in due course. The said sections are reproduced below:
"139. 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, or any debt or other liability."
"118. Presumptions as to negotiable instruments of consideration 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 bee accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration.
(b) As to date that every negotiable instrument bearing a date was made or drawn on such date;
(c) ............................................................................"
15. These presumptions in favour or complainant are rebuttable in nature and it is no more res integra that the burden lies on the shoulder of the accused to rebut the same. the onus of proof lies on the accused.
15. The very first contention of the learned counsel for the complianant is that since the accused has not led any defence evidence and the case of the complainant is proved, is not convincing to this court. It is dogmatic that the accused has a right of silence in the criminal prosecution against him. He cannot be forced to lead defence evidence. He may not enter into the witness box to prove his case. It is trite in law that to rebut the presumption under Section 139 & 118 NI Act, it is not necessary for the accused to lead evidence to the contrary. The same can be done by disputing the complainant case by crossexamination and by the documents available on record. The standard of proof is not parimateria with the complainant. The standard of proof for the accused to demolish the complainant case and to show preponderance of probabilities in his favour. He has only to prove that the consideration does not exist or the nonexistence of the consideration is so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. The Hon'ble Supreme Court in Krishna Janardhan Bhat v. Dattatraya G.Hegde AIR 2008 SC 1325 observed that: "Para no. 23. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on records. An accused has a constitutional right to maintain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different................................ Para no. 25. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is "preponderance of probabilities". Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to the circumstances upon which he relies...................... Para no. 34. We are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This, however, shall not mean that the courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have rebutted. Other important principles of legal jurisprudence, namely presumption of innocence as human rights and the doctrine of reverse burden introduced by Section 139 should be delicately balanced. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same." Thus, it is now well established that the accused can prove the nonexistence of any debt or any other liability by raising a probable defence or by demolishing or discrediting the case of the complainant in crossexamination of witness adduced by the complainant.
16. Now on the factual matrix of the case, indisputably, the accused was granted a loan of Rs. 6 lacs by the complainant which was to be repaid in 36 EMIs of Rs.22298/ each through ECS mode and a loan agreement Ex CW1/X in this respect was executed between the parties in August 2008. The accused has paid 7 EMIs till April 2009 without any default. On cheque date i.e. 15.07.2009, the accused was in default of 3 EMIs amounting to Rs.66,894. It is also not in dispute that the complainant had taken the impugned cheque as blank from the accused at the time of loan i.e. in August 2008. Drawing an anology on the fact that the impugned cheque was in possession of the complainant, it can be comprehended that the complainant had filled the details in the body and has presented the impugned cheque. Now, it is the case of the complainant that they have recalled the present complete loan account vide para no. 8 & 9 of the loan agreement as the accused has defaulted by not paying 3 EMIs. It is apt now to reproduce para 8 & 9 of the loan agreement herein:
"8. Events of Default: A default would be deemed to have been committed if:
i. The borrower fails to pay any amount/ installlment due to RFL under this Loan agreement either towards the principal or towards interest. ii. Any of the postdated cheques provied by the borrower and/ or Electronic Debit Instructions towards repayment of any single/ multiple installments either towards the principal or towards interest is dishonoured/ fails for any reason whatsoever and/ or if any instruction for stoppayment is given by either the borrower in respect of any post dated cheque for repayment and /or Electronic debit instructions already issued. iii. Any of the representations/ warranties given by the borrower is proved to be false, incorrect or incomplete including but not limited to any income and/ or identification papers/ documents provided to RFL proving to be incorrect, forged, incomplete and/ or containing false/ fraudulent information. iv. The borrower fails to duly perform any of his/ their obligation under this Agreement.
v. The borrower fails to inform RFL of any change in their residential address or change of work place/ office (including a change of city,) change in bank account (especially with reference to the PDCs provided) or if the said account is attached in any other proceedings arising in respect of recovery of any other outstanding dues either of the borrower or guarantor to any third party.
vi. If the borrower has voluntarily or compulsorily become the subject of proceedings under any bankruptcy or insolvency law or being a company goes into liquidation or has a receiver appointed in respect of its assets or refers itself to the Board for Industrial and Financial Reconstruction or under any other law providing protection as a relief undertaking.
vii. On the death/ lunacy or other disability of the borrower/ coapplicant.
9. Termination.
On the occurrence of any of the events of default as detailed hereinabove or otherwise, RFL shall have the right to forthwith terminate the loan agreement and be entitled to recall all balance EMIs on the said loan amount (principal + interest) as immediately payable to RFT from the borrower. On any delay in such payment of the balance unpaid loan amount (principal + interest) RFL shall be entitled to claim interest @ 30 % p.a. From the date of such notice of recall/ payment till payment/ realisation." It is clear by para 8(i) of the loan agreement that the borrower is said to have defaulted if he does not pay the installment due and the complainant has right to terminate the loan agreement and to recall all balance EMIs immediately from the borrower by giving notice of recall. The learned counsel for the accused has argued that the accused has not received any recall notice and that the complainant had not sent any recall notice to the accused. CW1 during cross examination on 24.11.2010 reveals that the complainant had not given any notice of foreclosure of loan and the said deposition is corroborated by the deposition of CW 1 during crossexamination of 26.02.2011. The relevant extract during cross examination on 24.11.2010 is reproduced below: "..........It is correct that the complainant had not given any notice or any intimation of foreclosure of loan account before the dishonour of cheque............."
and the relevant para during crossexamination on 26.02.2011 is also reproduced below: "........I do not know after how many default the complainant foreclosures the customer's account. It is correct that they have not sent any intimation regarding foreclosure of the account to the accused............"
17. It is deposed by CW 1 during crossexamination on 24.11.2010 that the accused was informed orally about the outstanding dues and for recalling of loan but the CW 1 had failed to depose as to who has given such oral notice and in which month such oral notice was given. Since the CW 1 in the earlier part of his crossexamination on 24.11.2010 stated that the complainant had not given any notice for foreclosure of loan account but later stated that it was given orally which conspicuously reveals that it is an improvement over its earlier statement. Hence this statement of CW 1 with respect to the sending of foreclosure notice is not reliable in the considered view of this court. The only conclusion that can be drawn in these facts and circumstances is that the loan was not foreclosed/recalled in accordance with the terms and conditions of the loan agreement as no notice was served on the accused. At this juncture it is important to refer to para 16 of the loan agreement which none of the parties have brought to the notice of the court. It is reproduced below: "16. Notice Any notice or request to be given or made in this agreement to RFL or borrower shall be in writing and shall be deemed to be given and made when delivered to the party to which it is required to be given or made at such party's last known address as shown in this agreement or as subsequently modified by notice to the other party to this agreement."
It is amply clear that all notices or requests given or made under the loan agreement shall be in writing and shall be meant to be given only when delivered to the other party. In the present case, admittedly no written notice was sent or delivered to the accused. It is also the contention of the learned counsel for the complainant that the burden lies on the accused to disprove that he has not received the oral recall notice, however this contention is not sustainable in the eyes of law for the very obvious reason. It is the deposition of Complainant witness that the oral recall notice was given and therefore, the burden lies on the complainant to prove this fact. Section 103 of Evidence Act clearly provides that a person who wishes the court to believe in the existence of any fact, the burden lies on that person. Moreover, CW1 during cross examination on 24.11.2010 had admitted that the loan account was active on the date of presentment of impugned cheque and was not foreclosed. The relevant extract is as follows:
".........The loan account of the accused was active at the time of presentment of the cheque in question and was not foreclosed.........."
Thus, it can be safely said that the loan was not recalled/foreclosed and the total outstanding was not due upon the accused on the impugned cheque date.
18. It is also important at this stage to consider that the impugned cheque was issued in blank by the accused to the complainant. The complainant case is that the accused had given authority to fill the blank cheque and it is also clear by perusal of Section 20 N.I. Act. Section 20 of the N.I. Act reads:
"20. Inchoate stamped instruments -- Where one person signs and delivers a paper stamped in accordance with the law relating to negotiable instruments then in force (India) and either wholly blank or having written thereon an incomplete negotiable instrument, he 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. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount.
Provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder."
19. In Pioneer Drip System Pvt. Ltd. & Anr. Versus Jain Irrigation Systems Ltd. 2010 STPL(DC) 749 BOM : 2010 CRI. L. J. 2149,it was observed:
"13................................As per Section 20 of the Negotiable Instruments Act the holder is to specify amount not exceeding the amount covered by the stamp and the person signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount. However, the proviso is important. Proviso makes it clear that no person other than holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder. So, prima facie so far as original holder is concerned, drawer is liable to the only amount intended by him to be paid thereunder. Only the holder in due course to recover the entire amount mentioned in the cheque, may be in excess of the amount intended by drawer thereunder, from the drawer and in such case drawer is entitled to recover excess amount. 'Holder in due course' is defined in Section 9 of the Act. Section 20 as quoted above is very clear that holder is not entitled to amount more than intended by the drawer to be paid under the instrument.
.......................
19. Thus in my considered opinion, whenever blank cheque or post dated cheque is issued a trust is reposed that the cheque will be filed in or used as per the understanding or agreement between parties. If there is prima facie reason to believe that said trust is not honoured then continuation of prosecution under Section 138 of the Negotiable Instruments Act would be abuse of process of law. It is in the interest of justice that parties in such case are left to civil remedy. In this case, in the facts and circumstances narrated above, in my opinion, this petition should succeed. The order of issuance of process under Section 138 of the Negotiable Instruments Act is hereby quashed and set aside."
20. It is no doubt that filling of blank cheque by the holder is not material alteration in terms of Section 87 N.I. Act. Nor it is in doubt that the holder of the blank cheque can fill the details in view of Section 20 N.I. Act. However, in view of this court, the holder of blank cheque does not have untrammeled power to fill any amount in his discretion. The holder can fill the details only to the extent consented by the drawer. The cheque would be valid only if the details in the blank cheque is filled with the authority of the drawer. It is deposed by CW 1 during cross examination that it is the company policy to take blank cheques from the borrower so that in case of default they could be presented. If it was the company policy then this court fails to understand why this policy was not incorporated in the loan agreement or other documents executed with the accused. The court cannot be oblivious of the ground realities that the money lenders take blank cheques as a precondition to disbursal of loan and considering that if this was not so in the present case then why the terms pertaining to the cheque were not penned down, is a mystical question. Moreover, this court has already decided in the earlier part of this dicta that the loan was not foreclosed and therefore, the accused did not have the liability of Rs.563883/ on the cheque date. Thus filling of amount Rs.5,63,883/ by the complainant in the cheque is definitely without the authority from the accused. Therefore this court has no hitch to hold that the impugned cheque will not come within the purview of Section 20 NI Act.
21. The another contention of the learned counsel for the complainant that since the accused has himself taken a defence that cheque no. 334727 to 334736 were given as security and since the cheque 334727 was cleared with no objection/complaint from accused to the clearance and therefore the accused cannot take the stand that the impugned cheque was given for security, does not hold any water in view of this court. Merely by not objecting or complaining to the clearance of other security cheque does not bar the accused to take the defence of security cheque in the present case. In Jayantilal Deepchand Parmar v. Sou. Vaishali S. Farne & Anr. 2008 STPL(DC) 326 BOM : 2008CriLJ660, the accused has allegedly given 3 security cheques out of which two were encashed however the third cheque was dishonoured and the defence of accused that the cheque was given for security was allowed thereby acquitting the accused.
22. Finally to sum up, this court unflinchingly holds that the impugned cheque was issued by the accused to the complainant in blank at the time of grant of loan for security and would not attract the penal provisions of Section 138 NI Act. To support the conclusion, this court places its reliance on the following judgments.
23. In M.S. Narayana Menon @ Mani vs. State of Kerala & Am., 2006 (2) JCC [NI] 198 : 2006 (6) SCC 39 it was observed:
"52..................................... If the defence is acceptable as probable the cheque therefore cannot be held to have been issued in discharge of the debt as, for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of the Act."
24. In M/S. Collage Culture & Ors. v. Apparel Export Promotion Council & Anr. 2008 STPL(DC) 532 DEL, it was observed by Hon'ble Delhi High Court that:
"20. A post dated cheque may be issued under 2 circumstances. Under circumstance one, it may be issued for a debt in present but payable in future. Under second circumstance it may be issued for a debt which may become payable in future upon the occurrence of a contingent event.
21. The difference in the two kinds of postdated cheques would be that the cheque issued under first circumstance would be for a debt due, only payment being postponed. The latter cheque would be by way of a security.
22. The word 'due' means 'outstanding at the relevant date'. The debt has to be in existence as a crystallized demand akin to a liquidated damages and not a demand which may or may not come into existence; coming into existence being contingent upon the happening of an event.
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24. It would be relevant to note that the statute does not refer to the debt being payable, meaning thereby, a post dated cheque for a debt due but payment postponed at a future date would attract Section 138 of the Negotiable Instruments Act 1881. But the cheque issued not for an existing due, but issued by way of a security, would not attract Section 138 of the Negotiable Instruments Act 1881, for it has not been issued for a debt which has come into in existence."
25. In Ramakrishna Urban Cooperative Credit Society Ltd. v. Rajendra Bhagchand Warma 2010 STPL(DC) 891 BOM : II (2010) BC 481, the Bombay High Court relying on a series of judgments of Hon'ble High Courts and Supreme Court of India observed:
"14. Thus the object of the amendment and introduction of Chapter XVII in the Negotiable Instruments Act by Act o£J988 was mainly to encourage all major transactions including commercial or business transactions through cheques and to enforce credibility and acceptability of cheques in settlement of liability in general. Encouragement of payment by cheques/credit cards/debit cards rather than by cash is necessary for healthy economy. That also brings in transparency in transactions and discourages creation of black or unaccounted money through evasion of taxes or other mal practices. So, provisions like Section 138 of Negotiable Instruments Act are salutary to give reliability, credibility and acceptability of negotiable instruments like cheques in daily life. However, the object was not to provide effective and speedy remedy for recovery of loans. Law makers must not have intended or imagined that money lenders or Banks would obtain blank or post dated cheques while sanctioning/disbursing loans as securities and would use them to malte debtors/borrowers to repay loan under threat of prosecution and punishment under Section 138 of the Negotiable Instruments Act. So, it is doubtful if provisions of Section 138 of the Negotiable Instruments Act would be attracted to a case in which a blank or post dated cheque is obtained by a Bank or money lender before or while sanctioning or disbursing loan amount as security for the loan.
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21. In the present case blank cheques were issued prior to disbursement of loan as a collateral security for loan which was sanctioned. In such case there was no existing debt or liability when the cheque is issued. So, in the facts and circumstances of the case, the case does not fall within four corners of offence punishable under Section 138 of the Negotiable Instruments Act. Of course such defence is available against payee and note holder in due course."
FINAL ORDER
26. In the light of the above discussions and observations, this court has no hitch to hold that the accused had rightly and successfully rebutted the presumption u/s 139 and 118 NI Act which shall not be able to haunt the accused any more. The onus to prove the legally enforceable liability/debt shifted on the complainant which he has miserably failed to discharge. This court holds that the complainant has failed in proving their case beyond the shadow of reasonable doubts. This court exonerates the accused/Jai Kumar Kriplani for the offence under section 138 NI Act. The accused is hereby acquitted. Bail bonds are cancelled and sureties stands discharged. Endorsements, if any, stands cancelled.
Announced in the open Court on 08th day of August, 2011 (Sushil Anuj Tyagi) Metropolitan Magistrate Dwarka, New Delhi 08.08.2011 IN THE COURT OF SH.SUSHIL ANUJ TYAGI METROPOLITAN MAGISTRATE: DWARKA COURT:NEW DELHI CC No. 13821/09 IN THE MATTER OF M/s Reliance Capital ... Complainant Vs. Sh. Jai Kumar Kriplani ... Accused ORDER
1. Vide this order, this court shall decide the application under Section 340 Cr PC filed by the applicant/accused.
2. Reply to the application has been filed by the learned counsel for the respondent/complainant.
3. The learned counsel for the applicant/ accused has submitted that the complainant has intentionally not mentioned the complete facts in his complaint under Section 138 NI Act against the accused. It is submitted that it is averred in the complaint that the accused has issued the cheque for Rs. 5,63,883 the discharge of liability/ debt to the complainant, however, the accused was in default of only 3 EMIs amounting to Rs. 66,884 at the date of dishonour of cheque. It is submitted that the complainant had full knowledge of this fact and still they have filed the complaint which is supported by the affidavit sworn on Oath. It is submitted that the AR did not have the personal knowledge of the facts of the case still he has filed an affidavit regarding the facts of the case. It is further submitted that the CW 1 had admitted during the crossexamination that the blank cheques were taken from the accused, however, these facts are not mentioned in the complaint. It is further submitted that the complainant had willfully played fraud on the accused. It is further submitted that the accused did not had the liability on the date of dishonour of cheque in the tune of cheque amount. The learned counsel for the accused disputed the authenticity of the foreclosure sheets on the ground that the foreclosure sheets are not certified as per the Bankers Book Evidence Act or Evidence Act and also that they are manipulated and fabricated.
4. On the other hand the learned counsel for the complainant/ respondent submitted that the present application is not maintainable as it is not supported by any affidavit. It is further submitted that there is no need to mention all the facts in the complaint and reliance was placed on MMTC Ltd v. Medchl chemicals and Pharma (P) Ltd 2002 SCC (Cri) 121. It is further submitted that since the accused has not objected to the clearance of earlier cheque which was given for security as alleged by the accused, then the accused cannot now plead that the impugned cheque was filled and he has no liability. It is further submitted that the impugned cheque was filled as per the outstanding liability of the accused on the date of dishonour as per the records. It is further submitted that action under Section 340 Cr PC be initiated against the applicant suo moto by this court as the accused/ applicant filed this frivolous and vexatious application against the complainant.
5. Heard Mr. M.S. Oberoi, counsel for the applicant/ accused and Mr.L.M. Grover, counsel for the respondent/ complainant.
6. In the present case, it is not disputed by both the parties that the loan of Rs.6 lacs was granted to the accused by the complainant which was to be repaid in 36 EMIs of Rs. 22298/ each. It is the admitted case of the complainant that blank cheque was taken from the accused at the time of grant of loan. The blank cheque was completed by the complainant and was presented to the accused bank. It is the case of the complainant that on the date of dishonour Rs.563883/ was due to the accused. It is not in dispute that on the date of dishonour the accused was in default of only 3 EMIs which amounts to Rs. 66,894/. However, it is the case of the complainant that the loan was foreclosed and the total outstanding became due on 10.07.2009. The complainant had relied on foreclosure sheets Ex CW 1/X and Ex CW 1/X1. The foreclosure sheet Ex CW 1/X shows the status on 22.10.2010 and thus is not relevant to the issue before this court. The foreclosure sheet Ex CW 1/X1 shows the status report of 10.07.2009. The record reflects that when the said document was exhibited in evidence, the learned counsel for the accused had not objected to the mode of proof. The only objection raised was that the document is manipulated and forged. It is well settled that if the document which when tendered in evidence is not objected to by the other party then no objection can be raised subsequently with respect to the mode of proof. The learned counsel for the accused had argued that the Ex CW 1/X1 is not reliable as it does not match with the statement of account and the other foreclosure sheet Ex CW 1/X. It is contended on behalf of the accused that the principle outstanding does not match in both the foreclosure sheets, which it should have remained constant as no payment has been made by the accused after April 2009. However, the said difference has rightly been explained by the learned counsel for the complainant that the foreclosure sheet Ex CW 1/X show pending installments which obviously includes principle and interest and therefore, the principle amount is lower in Ex CW 1/X than in Ex CW 1/X. Per contra, the learned counsel for the accused has not shown why the accused did not had the outstanding of Rs. 563883/ on 10.07.2009. It is the matter of evidence that the complainant could not prove the foreclosure and the sending of recall notice to the accused but that does not mean that the accused does not have the outstanding towards the loan. Non proof does not necessary imply falsity.
7. The contention on behalf of the applicant/ accused that despite knowledge that the accused was in default of only 3 EMIs on the date of dishonour of cheque, the complainant had filed the complaint by filling the outstanding of Rs.563883/ is bad in law and therefore the complainant has filed a false complaint, is not sustainable in view of this court. The contention of the learned counsel for the accused that the complainant had not averred all the facts in the complaint is also not sustainable as it is a concrete law that it is not necessary for prosecution under Section 138 NI Act that all the facts must be stated in the complaint. It is sufficient if the facts which constitutes the ingredients of Section 138 NI Act are pleaded in the complaint. In MMTC Case (supra), it was held that the complainant need not allege existence of subsisting debt or liability against which the cheque is issued. The burden of proving loan existence of any debt or liability is on the accused which has to be discharged at the trial.
8. To part with, it is apposite at this stage to observe that the mere allegations or suggestions are neither proof nor conclusive. To form opinion for initiating enquiry under section 340 CrPC, there must exist material substance which can form the platform for proceeding. It must be something more than mere allegation or suggestion. The proceedings cannot be initiated on mere bleak suspicion or on the basis of surmises or conjectures.
9. In view of above discussions, this court is of the view that there are no sufficient grounds for forming an opinion for initiating inquiry under Section 340 Cr PC read with Section 195 (1)(b) against the complainant nor there appears any grounds against the applicant for filing false application. The application is hereby dismissed.
Announced in the open Court on 8th day of August, 2011 (Sushil Anuj Tyagi) Metropolitan Magistrate Dwarka, New Delhi 08.08.2011