Delhi District Court
M/S Mefcom Capital Markets Ltd. vs Surinder Kumar & Anr. Cc No.7452/13 & ... on 28 April, 2014
IN THE COURT OF METROPOLITAN MAGISTRATE (NI ACT)-01,
CENTRAL: ROOM NO.-275, TIS HAZARI COURT COMPLEX, DELHI
M/s Mefcom Capital Markets Ltd. Vs Surinder Kumar & Anr. CC No.7452/13 & 7454/13
28.04.2014
JUDGMENT
(Brief reasons for decision as required under section-264 Cr.PC.) Having financed a total sum of Rs.3,50,000/- to be recovered by way of 24 installments and having faced the non-payment of installments by the accused, the complainant company purportedly on the asking of the accused, presented 6 cheques (of Rs.19,710/- each) for encashment which when dishonoured, the complainant filed a case u/s-138 NI Act on 06.11.1998. The said case is CC No.-7454/2013(New CC No.). Then in the same transaction, the complainant upon repeated requests made the accused to issue one other cheque in the year 1999 for a considerable amount of Rs.2,18,654/- which when dishonoured, the complainant filed another case u/s-138 NI Act on 06.04.1999. The said case is CC No.-7452/2013(New CC No.).
2. Is there any problem in the story of the complainant? I think so.
3. First of all, there is nothing in the complaint or affidavit to show when the said 6 cheques were issued by the accused in favour of the complainant. Paragraph-10 of the complaint dated 06.11.1998 starts with the fact of accused asking the complainant to deposit the cheques. Paragraph-10 of the affidavit of AR of the complainant also proceeds on the same line. The expression used in both the documents i.e. Paragraph-10 of complaint and affidavit is "accused asked to deposit the six cheques".
3.1. What is important here to note is the fact that the complainant has used a definite article M/s Mefcom Capital Markets Ltd. Vs Surinder Kumar & Anr. CC No.7452/13 & 7454/13 1 "the" before the word "six cheques". Meaning thereby that it must have used the expression "six cheques" somewhere before paragraph-10. But there is nothing mentioned either in the complaint or affidavit to indicate the expression "six cheques" before paragraph-10. This clarifies that the complainant has failed to establish an important fact i.e. receiving of the cheques.
3.2. Needless to say that unless the complainant claims that the cheques were received by it in discharge of a liability and further establishes the said factum by evidence, the complaint can not be sustained.
3.3 The complainant has only deposited the cheques available with him. There is nothing in the affidavit of the AR of the complainant to establish that the cheques were received by the complainant from the accused in discharge of any legally enforceable liability. As such, the complaint i.e. CC No. 7454/2013 based upon 6 cheques can not be sustained.
4. However, it would be not only interesting but also necessary for the disposal of other complaint to know as to how the complainant came into the possession of the said 6 cheques.
4.1. It is in the cross-examination of AR where we can find some answers. Some relevant portion from the cross-examination may be quoted as under (similar in both the cases):
"It is correct that when the loan is sanctioned by the company schedule of EMI's are prepared."
"It is further correct that advance cheques of monthly installments of EMI's is taken by the complainant company when the loan is advanced."
"It is incorrect to suggest that the cheques are given towards the security."
M/s Mefcom Capital Markets Ltd. Vs Surinder Kumar & Anr. CC No.7452/13 & 7454/13 2 "Vol. The same are towards the payment of installments as per EMI's"
4.2. Paragraph-5 of the affidavit of AR of the complainant shows the following (similar in both the cases):
".......the loan amount and other charges was to be paid by the accused to the complainant through 24 installments......."
4.3. The above averments of affidavit and cross-examination clearly show that 24 cheques ought to have been received by the complainant from the accused at the time of advancement of loan for the purpose of EMIs. The 6 cheques are in serial number and are dated on a monthly rotation like EMIs. Therefore it has to be believed that the 6 cheques are the part of installments cheques received at the time of advancement of loan. There is no other explanation coming from the complainant. Therefore, I hold that the 6 cheques were received by the complainant at the time of advancement of loan.
4.4. If this was the position, there could not have been any liability to be discharged on account of EMI at the time when the cheques were issued/delivered as at that time EMIs could not have been matured so as to require a discharge thereof. A person is required to pay the EMI when the time comes and not before that.
4.5. What is important to note here is that Section-138 NI Act does not say that cheque is given for a liability. It says that the cheque is given in discharge of a liability. There is a clear difference between existence of a liability and discharge of liability. There may be situations where for "N" number of reasons, no occasion arises to discharge a liability despite its existence. There may be even time factor before which an existing liability is not required to be discharged. EMIs are similarly time factor liability which require their discharge when the time comes. A finance company can not take any action against a person not making the payment of any M/s Mefcom Capital Markets Ltd. Vs Surinder Kumar & Anr. CC No.7452/13 & 7454/13 3 installment before the date fixed for EMI. This shows that liability of EMI is required to be discharged when the time comes for EMI.
4.6. In the present case, the cheques were issued/delivered at the time of advancement of loan at which time there was no EMI to be paid and therefore there was no liability to be discharged. As such, the cheques issued/delivered at that time can not be treated to have been issued in discharge of a legally enforceable liability.
4.7. It would have been another thing had an accused issued any post dated cheque but at the time of issuance of the cheque there was in existence a liability to be discharged. However, if an accused issues a post dated cheque but at the time of issuance of the cheque there is no liability to be discharged but the same was to come in existence on the date of the cheque, such cheque can not be treated as having been issued in discharge of liability as at the time of issuance there was no liability to be discharged.
5. Hon'ble Supreme Court very recently in Indus Airways P. Ltd. v. Magnum Aviation P. Ltd. 2014 (4) SCALE 645, has held as under:
"The explanation leaves no manner of doubt that to attract an offence under Section 138, there should be legally enforceable debt or other liability subsisting on the date of drawal of the cheque. In other words, drawal of the cheque in discharge of existing or past adjudicated liability is sine qua non for bringing an offence under Section 138."
"The Gujarat High Court in Shanku Concretes dealing with Section 138 of the N.I. Act held that to attract Section 138 of the N.I. Act, there must be subsisting liability or debt on the date when the cheque was delivered. The very fact that the payment was agreed to M/s Mefcom Capital Markets Ltd. Vs Surinder Kumar & Anr. CC No.7452/13 & 7454/13 4 some future date and there was no debt or liability on the date of delivery of the cheques would take the case out of the purview of Section 138 of the N.I. Act. While holding so, Gujarat High Court followed a decision of the Madras High Court in Balaji Seafoods."
"For a criminal liability to be made out under Section 138, there should be legally enforceable debt or other liability subsisting on the date of drawal of the cheque."
"In our opinion, the view taken by Andhra Pradesh High Court in Swastik Coaters, Madras High Court in Balaji Seafoods, Gujarat High Court in Shanku Concretes and Kerala High Court in Ullas is the correct view and accords with the scheme of Section 138 of the N.I. Act."
5.1. Clearly, existence of liability to be discharged at the time of delivery of the cheque is a sine qua non for any prosecution under Section-138 NI Act. In the present case, as discussed earlier, when the cheques were purportedly issued, there could not have been any liability to be discharged as at that time the loan itself was allegedly advanced for which several EMIs could not have been claimed at the same moment.
6. Now coming to the second case i.e. CC No.7452/2013. In this case, the complainant has claimed that after repeated requests the accused had issued the cheque. From the legal demand notice, it appears that the cheque was allegedly issued somewhere in the 2nd week of Feb, 1999.
6.1. I have doubts on this aspect. Reason is very simple. The complainant had already faced dishonour of six cheques in the year 1998 in respect of the accused and, therefore, it would hardly be believed that the same complainant accepted a cheque of a huge amount from the same M/s Mefcom Capital Markets Ltd. Vs Surinder Kumar & Anr. CC No.7452/13 & 7454/13 5 accused in the year 1999. Even the complainant had already filed a complaint against the accused on the basis of this earlier six dishonoured cheques in the year 1998. Despite that the complainant has been able to make repeated requests to the accused to make other payment which was ultimately received by the complainant in the year 1999. This can't be believed. If the complainant was able to persuade the accused for payments even after filing of earlier complaint, it would have wanted to satisfy first the earlier payments from the accused and not to get further payment by way of a cheque in the year 1999. The circumstances show that the cheque was not received by the complainant in the year 1999.
6.2. If we go by the cheque in the present case, it is bearing a Serial No.211070. What is interesting is to note that the other six cheques are having Serial No.211062, 211063, 211064, 211065, 211066 and 211067. It clearly shows that the cheque No.211070 is in continuity of earlier cheques. If we keep into mind the fact that 24 installments were to be paid for loan and that complainant company was having a policy to get the cheques from the persons for EMIs in advance, we can safely infer that 24 cheques were received by the complainant and as per common practice, the cheques have to be as per Serial number until the Cheque Book is exhausted. Serial number of the cheques in both the cases as indicated above are clearly depicting that they belong to a common series. We can safely infer that all the cheques were received by the complainant at the time when the loan was advanced and all the cheques were received for EMIs. Resultantly we have to hold that even the Cheque No.211070 in CC No.7452/2013 also belongs to the same common series which ought to have been received by the complainant at the time of advancement of loan.
6.3. The above inference further gets fortified from the fact that the AR of complainant in his cross-examination has claimed that they used to take cheques when they are duly filled in but this claim is contradicted from the fact that the name of payee in the cheques are stamped and not mentioned in handwriting. Even colour of ink on some cheques used for filling of columns are different from colour of ink used for signatures.
M/s Mefcom Capital Markets Ltd. Vs Surinder Kumar & Anr. CC No.7452/13 & 7454/13 6 6.4. In view of the above discussion, it is held that even the Cheque No.211070 in CC No. 7452/2013 was not received by the complainant in the year 1999 but was received by it at the time of advancement of loan and for the purpose of EMIs alongwith all other cheques.
6.5. In such circumstance, the discussion held above in respect receiving of cheque without existence of any liability being discharged at the time of issuance of cheque will also apply to the Cheque No.211070 in CC No.7452/2013 (see earlier paragraphs of this order).
7. As such, I find that the complainant has failed to establish that the accused had issued the cheques in discharge of any legally enforceable liability.
8. All the cheques have been signed by the two persons and, therefore, they were charged U/s 138 NI Act. Since the complainant has failed to establish the factum of issuance of cheques and discharge of liability, I consider that both the complaints cannot be sustained. As such, both the accused i.e. Surinder Kumar and Harpal Singh are acquitted from the charge U/s 138 NI Act in both the cases i.e. CC No.7452/2013 and CC No.7454/2013.
9. A copy of this order be placed on the web site of the district courts.
(RAKESH KUMAR SINGH) MM-(NI Act)-Central-01/THC/Delhi 28.04.2014 M/s Mefcom Capital Markets Ltd. Vs Surinder Kumar & Anr. CC No.7452/13 & 7454/13 7