Delhi District Court
Sarabjit Singh vs Gurdeep Singh Sethi on 14 January, 2025
IN THE COURT OF Ms. AASTHA SHARMA, LD. JMFC (N.I. Act)-09,
SOUTH-WEST DISTRICT, DWARKA COURTS COMPLEX: DELHI
SARBJEET SINGH v. GURDEEP SINGH SETHI
Ct. Case No. 15218/2017
U/S 138 Negotiable Instruments Act, 1881
1. CNR number DLSW-02-019103-2017
2. Name of the complainant Sh. Sarbjeet Singh,
S/o Sh. Ravinder Pal Singh
R/o 2/4 Third Floor Mall Road, Tilak
Nagar, New Delhi-110018
3. Name of the accused Sh. Gurdeep Singh Sethi,
person(s), parentage &
residential address S/o Late Sh. Harnam Singh Sethi
R/o 16/28, Tilak Nagar, New
Delhi-110018
4. Offence complained of or U/s 138 of Negotiable Instruments Act,
proved 1881
5. Plea of the accused Pleaded not guilty and claimed trial
6. Final Judgment/order Convicted
Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 1
7. Date of judgment/order 14.01.2025
Date of Institution: 18.07.2017
Date of Reserving Judgment/Order: 17.12.2024
Date of Pronouncement of Judgment/Order: 14.01.2025
ARGUING COUNSELS:
Ld. Counsel for the complainant: Sh. Pradeep Murria and Sh. Vijay Thakur
Ld. Counsel for the Accused: Sh. Puran Chandra
JUDGMENT
1. Vide this judgment, this Hon'ble Court shall dispose of the present complaint filed by the complainant Sh. Sarbjeet Singh (hereinafter referred to as "complainant") against Sh. Gurdeep Singh Sethi (hereinafter "accused") under Section 138 of the Negotiable Instruments Act, 1881 read with Section 142 of Negotiable Instruments Act, 1881 (hereinafter referred to as "NI Act").
Brief facts of the case:
2. It is the case of the complainant, A. That, the complainant and the accused were known to each other as they resided in the same locality and had developed friendly relations over a course of time. That, in the first week of March 2017, complainant was approached by the accused at his residence at Delhi and accused requested for a friendly loan of Rs. 3,00,000/- for a period of 2 months for some urgent requirement. That, the complainant sought some time to arrange the funds and advanced the sum in Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 2 second week of March, 2017 at his residence in Tilak Nagar after arranging funds partly from his own savings and partly from his friends and family and advanced a sum of Rs. 3,00,000/- for a period of 2 months.
B. That, at the time of receiving the loan, the accused issued one post dated cheque bearing no. 094675 amounting to Rs. 3,00,000/- dated 02.06.2017 drawn on Allahabad Bank, Tilak Nagar, New Delhi-110018. That, the said loan was advanced in the presence of the father of the complainant and the cheque in question was also signed in his presence. That, at the time of issuing the cheque in question, the complainant was assured by the accused that the cheque will be honoured at the time of its presentation.
C. That, on presentation of the aforesaid cheque in his bank Punjab and Sind Bank, Janakpuri Branch, New Delhi for encashment, the cheque was returned dishonoured with the remarks "Insufficient Funds" vide returning memo dated 15.06.2017.
D. That thereafter, the complainant contacted the accused person and apprised the factum of dishonor of the said cheque but the accused person intentionally and deliberately avoided the payment towards his legally enforceable debt. In these circumstances, the complainant issued a statutory legal demand notice to the accused through his counsel, dated 24.06.2017, thereby requiring the accused to pay the amount of the aforesaid cheque within a period of 15 days from the receipt of the said notice. The said notice under Sec. 138 of NI Act was sent to the accused through Speed Post at his address on 24.06.2017 and through Courier at his correct address on 28.06.2017. It is further submitted by the complainant that the said notice dated 24.06.2017 was duly served on the accused person.
Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 3 E. That despite service of the above stated notice of demand, the Accused has deliberately and wilfully failed to comply with the said notice of demand and has failed to pay the amount of the aforesaid cheque within the stipulated period of 15 days from the date of receipt of the said notice. Consequently, this case was filed by the complainant against the accused, which was within the limitation period as laid down u/s 138, NI Act.
Proceedings before the court:
3. Upon a prima facie consideration of pre-summoning evidence, it appeared that the offence u/s 138 NI Act has been made out. After leading pre-
summoning evidence by the complainant, cognizance of the offence u/s 138, NI Act was taken against the accused person and he was summoned vide order dated 18.07.2017. Thereafter, the accused entered into appearance on 16.09.2017, when he was admitted to bail. On 23.01.2018, a separate notice was framed against the accused u/s 251 of the Code of Criminal Procedure, 1973 (hereinafter "CrPC"), which was read over and explained to him, to which the accused pleaded not guilty and claimed trial. At the stage of framing notice, the following aspects were admitted/denied by him:
(i) Issuance of cheques to the complainant : Admitted
(ii) Signatures on the cheque in question : Admitted
(iii) Receiving the legal demand notice : Denied In his defense, the accused has stated that he had purchased a few mobiles from the complainant and had given the cheque in question alongwith other cheques as security in the year 2015. The accused has further stated that he has already Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 4 paid for the mobile phones and that the cheques have been misused by the complainant.
4. During the trial, the complainant has led the following oral and documentary evidence by way of an affidavit Ex. CW1/H, against the accused to prove its case beyond reasonable doubt and relied upon the following documents :-
● Original cheque in question is exhibited as Ex-CW1/A. ● Original return memo is Ex-CW1/B. ● Copy of Bank account statement is Ex-CW1/B1.
Legal notice is Ex-CW1/C.
● Postal receipt is Ex-CW1/D.
Courier receipt is Ex-CW1/E.
● Proof of delivery is Ex-CW1/F & Ex-CW1/G.
Thereafter, the accused was granted an opportunity to cross-examine the complainant under Section 145(2), NI Act and the complainant along with CW-2 to CW-5 were duly cross-examined by the Ld. Counsel for the accused. Thereafter, CE was closed vide order dated 03.12.2019.
5. Thereafter, before the start of defence evidence, in order to allow the accused to personally explain the circumstances appearing in evidence against him, his statement under Section 313 CrPC was recorded without oath.
6. The accused opted to lead defence evidence during the statement under Section 313 CrPC, and he examined himself as DW-1, vide an application u/s Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 5 315 CrPC moved on behalf of the accused which was allowed by this Hon'ble court in the interest of justice vide order dated 23.01.2021. DW-1 and DW-2 were examined, cross-examined and discharged and DE was closed vide order of this court on 19.04.2022.
7. Thereafter, the matter was listed for final arguments. After hearing the final arguments from both sides and on the basis of the written submissions on record by both the parties, the matter was reserved for pronouncement of judgment.
Arguments advanced by both the parties:
8. Ld. Counsel for the complainant while reiterating the contents of the complaint has argued that all the requirements of Section 138, NI act have been fulfilled by the complainant in the present case. Ld. counsel for the complainant has pointed out the contradictions in the case of the accused by stating that the accused at the stage of Section 251 CrPC has stated that the mobile phones were purchased by him, but at the stage of DE, the accused has stated that the mobile phones were purchased by son of the accused and the bill memos were also in the name of the son of the accused.
9. Ld. Counsel for the complainant further submits that both the phones purchased by son of the accused are of merely Rs. 35,000/- and no prudent person would issue 3-4 blank signed cheques alongwith blank signed stamp papers in pursuance of such a sum.
10. Ld. Counsel for the complainant submits that Ex. CW1/J and Ex. DW1/2 are the cash memos of the phone purchased by the accused which indicate the phones were purchased in cash, and not on credit and therefore the defence of the accused fails here. The Ld. Counsel for the complainant further submits that Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 6 the accused has a good shop in prime location of Tilak Nagar, so why would he need to purchase phones worth Rs. 35,000/- on credit by issuing promissory notes and blank security cheques.
11. Ld. Counsel for the complainant further submits that the accused never asked for the security cheques back from the complainant and that is indicative of the guilt of the accused.
12. Ld. Counsel for the complainant further submits that the accused has mentioned about purchasing of the mobile phone by the son of the accused Angad, however he has not entered the witness box despite being a competent witness.
13. Ld. Counsel for the complainant has further argued that the issuance of the cheque and the signature on the cheque in question is admitted and since all the ingredients u/s 138, NI Act have been fulfilled, the accused is is liable for the offence u/s 138, NI Act and be punished with maximum punishment in accordance with law and be punished with imprisonment for a term of two years and fine of double of the amount of the said cheque.
14. Ld. Counsel for the complainant has relied upon the following judgments to support his case:
CC Alavi Haji v. Palapetty Muhammed and Another (2007) 6 SCC 555 Jammu and Kashmir Bank v. Abhishek Mittal (Delhi High Court, 2017) M/s Kalamani Tex v. P. Balasubramanian (Supreme Court of India, 2021) Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 7 Oriental Bank of Commerce v. Prabodh Kumar Tiwari (Supreme Court of India, 2022) Rangappa v. Sri Mohan (Supreme Court of India, 2010)
15. Per contra, Ld. Counsel for the accused submits that the complainant had not mentioned the fact of promissory notes and blank signed papers at the stage of the complaint or evidence by way of affidavit, and they are forged documents filed by the complainant as an after-thought. Ld. Counsel for the accused further submits that the blank papers were signed by the accused as the complainant had ensured to get insurance of the mobile phones done.
16. Ld. Counsel for the accused further submits that the accused has purchased 3-4 mobile phones for which he had issued security cheques, however he only had bills of 2 cheques to be placed on record.
17. Ld. Counsel for the accused has questioned the source of funds of the complainant and his financial capacity to lend such a big sum to the accused and that there are several inconsistencies in the amount mentioned by the complainant which he has borrowed from friends and relatives and the testimonies of the friends and relatives who have appeared as a witness in the case.
18. Ld. Counsel for the accused further submits that the promissory note does not have any witnesses and that the same was a blank signed paper by the accused which was later converted to a promissory note.
19. Ld. Counsel for the accused has relied upon the following judgments:
C. Santhi v. Marly Sherly & Anr. (High Court of Kerala, 2011) Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 8 John K. Abraham v. Simon C. Abraham & Anr. (Supreme Court of India, 2014) K. Subramani v. K. Damodar Naidu (Supreme Court of India, 2015) Satish Kumar v. State NCT of Delhi & Anr. (High Court of Delhi, 2013) Trilok Chand Jain v. State of Delhi (Supreme Court of India) Kulwinder Singh v. Kafeel Ahmad (High Court of Delhi, 2013) Ramakrishna Urban Coop. Credit Society Ltd. v. Rajendra Bhagchand Warma (2010 (2) DCR 317) M/s Collage Culture & Ors. v. Apparel Export Promotion Council and Anr. (2007 (4) JCC (NI) 138) Joseph Vilangadan v. Phenomenal Health Care Services Ltd. & Anr. (II (2011) BC 471) Satinder Kumar v. Gurvinder Singh (2011 (1) DCR 97) Taher N. Khambati v. M/s Vinayak Enterprises (1996 CLJ 560) M/s Sathavahana Ispat Ltd. v. Umesh Sharma (2006 CLJ 4812) M/s Siva Sakthi Mills v. Chandrasekar (2011 (1) DCR 627) C. Bhaskaran Nair v. B. Mohanan (2009 (2) DCR 673)
20. Ld. counsel for the accused, in consequence, has prayed that the accused be acquitted as the conditions for Section 138, NI Act have not been fulfilled and the complainant has misused the cheques against the accused.
Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 9 Appreciation of evidence:
21. I have heard counsels on behalf of both the sides, perused the record as well as relevant provisions of law.
22. Before appreciating the facts of the case in detail for the purpose of decision, let relevant position of law be discussed first. Section 138, NI provides as under:
"Section 138.- Dishonour of cheque for insufficiency, etc., of funds in the account.-
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 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;
Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 10 (B) The payee or the holder in due 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 cheque 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 purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
23. It is well settled position of law that to constitute an offence under Section 138, NI Act, the following ingredients are required to be fulfilled:
I. drawing of the cheque by a person on an account maintained by him with a banker, II. The cheque was issued for payment to another person for discharge in whole/part any debt or liability;
III. 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. RBI in its notification DBOD.AML BC.No.47/14.01.001/2011-12 has reduced the aforesaid period from 6 months to 3 months.
IV. Returning of the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque;
Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 11 V. Giving notice in writing to the drawer of the cheque within 30 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount;
VI. Failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice.
The offence under Section 138, NI Act is made out against the drawer of the cheque, only when all the aforementioned ingredients are fulfilled.
24. In the present case at hand, the complainant has filed on record the original cheque, i.e., bearing no. 351398 dated 094675 amounting to Rs. 3,00,000/-, drawn on Allahabad Bank, Tilak Nagar Branch, New Delhi (Ex. CW1/A). In notice under Section 251 CrPC, the accused has admitted that the cheque in dispute belongs to him. It is also not disputed that the cheque in question is not drawn on the account maintained by the accused person and it is impliedly admitted therefore that the accused is the drawer of the cheque. Therefore, ingredient number I stands fulfilled in the present case.
25. As per the RBI guidelines, it is essential for the cheque in question be to presented within a period of three months from the date on which they are drawn and the same be returned as unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque. In the case at hand, the cheque in question, i.e., Ex. CW1/A dated 02.06.2017 was returned vide return memo dated 15.06.2017 (Ex. CW1/B) due to the reason "Funds Insufficient" By implication thereof, the cheque was presented within three months and the same Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 12 was returned for want of sufficient funds to the credit of the drawer. Therefore, Ingredient number III & IV stand fulfilled in the present case.
26. The legal notice dated 24.06.2017 (Ex. CW1/C) was dispatched on 24.06.2017 vide Speed Post (Ex. CW1/D) and vide Courier dated 28.06.2017 (Ex. CW1/E), i.e., within 30 days of return of the bank memo indicating cheque in question being unpaid. The fact that the legal demand notice has made a clear and unambiguous demand for payment of the cheque in question is not disputed. The accused has not admitted to the receipt of legal demand notice in notice u/s 251 CrPC, however his address on the legal demand notice is the address mentioned on the notice u/s 251 CrPC, statement of accused u/s 313 CrPC and at the stage of DE. Furthermore, as per the presumption raised under Section 114 of Indian Evidence Act, 1872 and Section 27 of General Clauses Act, if the legal demand notice is sent at the correct address, then the same shall be deemed to have been duly served. As per the precedent laid down by the Hon'ble Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed, (2007) 3 SCC (Cri), "A person who does not pay within 15 days of receipt of the summons from the court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the GC Act and Section 114 of the Evidence Act."
In K. Bhaskaran vs Sankaran Vaidhyan Balan and Anr, Appeal (crl.) 1015 of 1999 (SC) (hereinafter referred to as "K. Bhaskaran"), the Hon'ble SC observed:
Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 13 "On the part of the payee he has to make a demand by `giving a notice' in writing. If that was the only requirement to complete the offence on the failure of the drawer to pay the cheque amount within 15 days from the date of such `giving' the travails of the prosecution would have been very much lessened. But the legislature says that failure on the part of the drawer to pay the amount should be within 15 days `of the receipt' of the said notice. It is, therefore, clear that `giving notice' in the context is not the same as receipt of notice."
The burden of giving notice within 30 days of return of bank memo, falls on the complainant/payee to constitute the offence u/s 138, NI Act. If the notice is sent on the correct address, then the presumption u/s 27 General Clauses Act and Section 114, Indian Evidence Act arises in the favour of the complainant/payee.
Therefore, it is deemed that the legal notice was duly served on the accused person.
The ingredient number V is fulfilled by virtue of giving of legal demand notice within 30 days from the bank return memo. The receipt of legal demand notice by the accused is deemed to be admitted as per the discussion above.
27. Moving on, it is not disputed that the accused has not made the payment of the cheque amount within 15 days of the receipt of legal demand notice.
Therefore, ingredient number VI also stands fulfilled in the present case.
28. Let us now move on to ingredient number II, Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 14 The NI Act raises two presumptions in favour of the holder of the cheque, i.e., complainant; firstly, with regard to the issuance of cheque for consideration, as contained in Section 118(a) and secondly, with regard to the fact that the holder of cheque received the same for discharge, in whole or in part, of any debt or other liability, as contained in Section 139 of the Act.
Analysing all the concerned provisions of law and various pronouncements in this regard, the Hon'ble Apex Court in the case of Basalingappa v. Mudibasappa [AIR 2019 SC 1983] held that:
I. Once the execution of cheque is admitted, Section 139 of the Act mandates that a presumption be drawn that the cheque in question was for the discharge of any debt or other liability.
II. 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.
III. To rebut the presumption, it is open for the accused to rely on evidence led by him or 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 reference to the circumstances upon which they rely.
IV. That it is not necessary for the accused to come in the witness box in support of his defence. Section 139 imposes an evidentiary burden and not a persuasive burden.
Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 15 It is therefore implied that the law regarding the presumption for the offence under Section 138, NI Act, the presumptions under Section 118(a) and Section 139 have to be compulsorily raised as soon as the execution of cheque by the accused is admitted or proved by the complainant and thereafter the burden is shifted upon the accused to prove otherwise.
29. These presumptions shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability etc. The Hon'ble Apex Court in Kumar Exports v. Sharma Carpets [(2009) 2 SCC 513], has laid down the benchmark for the burden of proof that the accused has to raise a doubt as to the presumption under Section 139, NI Act.
"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 Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 16 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 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. The accused has also an option to prove the non-existence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 17 complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue."
To put in a nutshell, the intent behind the NI Act is to prevent financial frauds and affect the socio-economic well-being of the country. If the burden is placed on the complainant to prove the existence of liability against the accused, that would be too heavy a burden as most of these transactions are in the nature of "friendly loan" and the accused would, in a normal circumstance, always deny the liability. Therefore, the legislation is drafted in a way so as to discharge the complainant from proving the liability and a presumption is raised by virtue of Section 139 read with Section 118(a) of the Act that the cheque if issued by the accused, then the same is deemed to be in discharge of some legally enforceable debt in favour of the complainant. The presumption is rebuttable and the accused "may" either prove that no legally enforceable debt existed or punch holes in the story of the complainant and give rise to a probable defence to rebut the presumption. As per the law discussed above, the burden of proof on the accused to raise a probable defence is that of "preponderance of probabilities", and not "beyond reasonable doubt." Once a probable defence is raised, then the onus is shifted to the complainant to establish that a legally enforceable liability Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 18 existed in his favour and the burden of proof on complainant in this case is that of "beyond reasonable doubt."
30. The accused can rebut the presumption as raised under the NI Act by (a) putting forth his defence at the time of framing of notice u/s 251 CrPC; (b) cross-examining the complainant; (c) when statement of accused is recorded u/s 313 CrPC; (d) or by leading defence evidence, thereby demolishing the case of the complainant. It is amply clear that the accused does not need to discharge his or her liability beyond the shadow of reasonable doubt. He just needs to create holes in the case set out by the complainant. Accused can say that the version brought forth by the complainant is inherently unbelievable and therefore the prosecution cannot stand.
31. The accused, in the present case, has emphatically disputed the fulfillment of the above ingredients and the defence of accused stands on the following limbs which will be separately dealt with:
(i) Non-execution of the promissory note by the accused and his signatures not being on the promissory note
(ii) No legally enforceable debt exists in favour of the complainant
(iii) The complainant does not have the financial capacity to extend the friendly loan as stated in his complaint 1st defence of the accused being that the promissory note was not executed by the accused and that the signatures of the accused person were taken on blank stamped papers Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 19
32. The accused in his defence at the stage of examination as DW-1 has stated that:
"Considering my relationship with the father of the complainant, complainant gave mobile phone to my son without accepting any payment. Later on complainant came at my shop and took two to three blank signed cheques, my signatures on three to four blank papers and my signatures on a blank receipt."
The accused has further argued at the stage of final arguments that the complainant had taken signatures of the accused on blank stamp papers which he later converted to promissory notes, and that is why there are no witnesses to the promissory note.
It is an established fact that mandatory requirements of promissory note includes details of the promisor, the promisee, the amount of loan executed, the date and the place where the promissory note was executed and the signatures of the promisee and these are all the conditions fulfilled by the promissory note at hand, as exhibited as Ex. CW1/I. Moreover, Section 91 of the Indian Evidence Act 1872 (hereinafter, IEA) deals with the documents which are reduced into writing. Section 91 IEA is read with Section 92 IEA while appreciating a written document, which has been brought on record in this case. The Hon'ble Apex Court in Roop Kumar vs Mohan Thedani (2003) 6 SCC 595 quoted with approval in V Anantha Raju vs T.M. Rarasimhan (Civil Appeal no 6469 of 2021 dated 26.10.2021 has held that:
"Section 91 and 92 Evidence Act would apply only when the document on the face of it contains or appears to contain all the terms of the contract. It has Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 20 been held that after the document has been placed to prove the terms under Section 91, the provisions of Section 92 comes into operation for the purpose of excluding evidence of any oral agreement or statement for the purpose of contradicting, varying, adding or subtracting from its terms."
It has been further held by the Hon'ble Apex Court in V Anantha Raju vs T.M. Rarasimhan (Civil Appeal no 6469 of 2021 dated 26.10.2021 while relying on Roop Kumar vs Mohan Thedani (2003) 6 SCC 595) that:
"When the parties deliberately put their agreement in writing, it is conclusively presumed, between themselves and their privies, that they intended the writing to form a full and final settlement of their intentions, and one which should be played beyond the reach of future controversy, bad faith and treacherous memory."
33. Therefore, there is a presumption as to genuineness and correctness of the promissory note, i.e., Ex. CW1/I which clearly states that the accused has borrowed a sum of Rs. 3,00,000/- from the complainant as a friendly loan and the complainant shall return the same with interest within the specified duration. The signatures on the document in question are not denied by the accused and infact, the accused has admitted to the signatures on the document, however has stated that the signatures of the accused were taken on blank stamped papers which was later converted to a promissory note. However, the accused has not placed anything substantial on record to substantiate his claim or has produced Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 21 any witness to corroborate his version. Mere denial in the absence of any cogent material brought on record remains bald denials.
The contradictions and inconsistencies raised by the accused alone in absence of any other evidence or supporting material is not sufficient to put any dent in the testimony of the complainant. In that regard, the Hon'ble Supreme Court of India in Rohitbhai J. Patel v. The State of Gujarat, Criminal Appeal no. 508/2019 held as follows:
"Needless to reiterate that the result of such presumption is that existence of a legally enforceable debt is to be presumed in favour of the complainant. When such a presumption is drawn, the factors relating to the want of documentary evidence in the form of receipts or accounts or want of evidence as regards source of funds were not of relevant consideration while examining if the accused has been able to rebut the presumption or not. The other observations as regards any variance in the statement of complainant and witness; or want of knowledge about dates and other particulars of the cheques; or washing away of the earlier cheques in the rains though the office of the complainant being on the 8th floor had also been of irrelevant factors for consideration of a probable defence of the appellant it is noticed that the Trial Court proceeded on a misplaced assumption that by mere denial or mere creation of doubt, the appellant had successfully rebutted the Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 22 presumption as envisaged by Section 139 of the NI Act. In the scheme of NI Act, mere creation of doubts is not sufficient."
Therefore, the presumption shall still arise if the complainant has discharged the initial burden of the cheques being issued. In the present case, the ingredient no. 1 of the cheques being issued by the drawer stands discharged and therefore a presumption u/s 118, NI is raised.
2nd defence that no legally enforceable liability exists in favour of the complainant
34. The case of the complainant is that the accused person borrowed Rs. 3 lakhs from the complainant as a friendly loan and a promissory note was also executed between the parties and blank signed security cheques were also issued by the accused against the friendly loan. As per the discussion above in the cases of Basalingappa (2019, supra) and Kumar Exports (2009, supra), once the presumption is raised u/s 118 read with Section 139, NI Act that the cheques were issued for consideration, i.e., for a legally enforceable debt in favour of the complainant, then onus of proof shifts to the accused to rebut the presumption by raising a probable defence. The accused in the present case has taken the defence that the cheques in question were issued by the accused against two mobile phones purchased by the accused on credit from the shop of the complainant and the blank papers and receipt were also taken by the complainant from the accused, which have all been misappropriated and misused by the complainant in the present case. However, the claim of the accused person has remained unproven.
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35. Qua the defence of the accused that the promissory note and the bills were presented by the complainant not alongwith the complaint, but have been filed at a later stage. It is to be noted that the accused has admitted to the signatures on the promissory note and the bills placed on record and once the documents have been admitted by the accused, it is irrelevant as to when they were produced by the complainant. Ld. Counsel for the accused has further argued that the complainant got some blank papers signed by the accused for the purchase of mobile phones on credit and no promissory note was executed between the parties. It is to be noted that the accused has a running business and the bills placed on record Ex. CW1/J (OSR) (Colly.) indicate that the total amount of the mobile phones is Rs. 35,000/- and no prudent person shall issue 3-4 blank security cheques and 2-3 blank stamped papers against purchase of mobile phones of Rs. 35,000/-. Furthermore, the accused has taken contradictory stances by stating in legal notice u/s 251 CrPC, statement of accused u/s 313 CrPC and at the stage of DE that he had purchased two mobile phones and 3-4 blank security cheques were issued against them. However, later at the stage of final arguments, Ld. Counsel for the accused has argued that the accused had purchased 3-4 mobile phones from the complainant against which the blank signed security cheques were issued by the accused but bills of only two mobile phones could be produced. The contradictory stand taken by the accused makes the version of the accused doubtful and weakens his case.
36. Furthermore, the accused at the stage of legal notice u/s 251 CrPC and statement of accused u/s 313 CrPC has stated that the accused had himself purchased the mobile phones from the complainant, against which the security cheques were issued. He has stated in legal notice u/s 251 CrPC as follows:
Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 24 "I had purchased a few mobiles from the complainant and had given cheque in question alongwith other cheques as security in the year 2015. The said cheque has been misused. I have already paid for the mobiles that I had purchased. I owe no liability towards the complainant."
In statement of accused u/s 313 CrPC, the accused has stated as follows:
"I had purchased two mobile phones from the complainant. At that time two cheques were given as security which have now been misused by the complainant. I have no liability towards the complainant."
However, the accused at the stage of DW-1 has stated that his son Angad went and purchased the mobile phones from the complainant. He has stated as follows:
"Considering my relationship with the father of the complainant, complainant gave mobile phone to my son without accepting any payment. Later on complainant came at my shop and took two to three blank signed cheques, my signatures on three to four blank papers and my signatures on a blank receipt."
"My sons had purchased two mobile phones from the complainant and the relevant bill in this regard are already Ex. CW1/J (colly.). My younger son namely Angad Deep Singh alongwith an employee Navneet Singh went at the time for purchasing of said mobile phones at the shop of the complainant."
At the stage of written submissions, Ld. Counsel for the accused has argued as follows:
Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 25 "It is submitted that the mobile phones made of Samsung was purchased in the name of sons of the accused namely Bhavneet Singh of amount of Rs. 15,800/- dated 15.05.2015 and Angad Deep Singh of amount of Rs. 19,200/- dated 15.05.2015 alongwith insurance against the mobile phone was also done at the instances of the son of the complaint and the insurance documents was also place on record and the ID Card of the agent of Insurance Sachin Rawat was also placed on record."
The bare perusal of Ex. CW1/J (colly.) bill dated 15.05.2015 amounting to Rs. 15,800/- and bill dated 15.05.2015 amounting to Rs. 19,200/- indicate that they are purchased in the name of Bhavneet Singh and Angad Deep Singh, however the bills nowhere indicate that the mobile phones have been purchased on credit, and rather the bills indicate that they are cash memos and the accused has made the payment of mobile phones at the time of purchase itself. The accused has himself taken contradictory stances about the purchase of mobile phones as discussed above and has not brought Bhavneet Singh or Angad Deep Singh in the witness box so as to clarify the version of the accused. This conduct of the accused also raises a doubt on the truthfulness of the version of the accused.
37. Furthermore, it is highly imprudent that the accused in the first place had issued 3-4 security cheques, blank stamped papers and a blank receipt against the purchase of mobile phones amounting to a mere Rs. 35,000/-, despite having long-standing friendly relations between the complainant and the accused. Secondly, it is all the more imprudent that the accused never asked for return of those security cheques and stamped papers from the complainant after he paid all the dues of the mobile phone. Thirdly, it is highly doubtful that the accused never initiated any civil or criminal proceedings against the complainant for Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 26 misappropriation and misuse of the security cheques and blank stamped papers by the complainant.
38. Further, the accused has pointed out some minor discrepancies and contradictions in the case of the complainant, to which this court is of the view that it is an established principle of law that it is duty of the court to separate grain from the chaff and any normal discrepancy in the version of a party shall not corrode the credibility of a party's case, i.e., the accused in the present case.
In the case of Mani @ Udattu Man & Ors. v. State represented by Inspector of Police, Crl. Appeal No. 382-384 of 2008, the Hon'ble Apex Court has held that:
"It is the duty of the Court to separate grain from chaff. Where chaff can be separated from grain, it would be open to the Court to convict an accused notwithstanding the fact that evidence has been found to be deficient, or to be not wholly credible. Falsity of material particular would not ruin it from the beginning to end. The maxim "falsus in uno falsus in omnibus" has no application in India and the witness or witnesses cannot be branded as liar (s). The maxim "falsus in uno falsus in omnibus" has not received general acceptance nor has this maxim come to occupy the status of rule of law. It is merely a rule of caution. All that it amounts to, is that in such cases testimony may be disregarded, and not that it must be disregarded. The doctrine merely involves the question of weight of evidence which a Court may Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 27 apply in a given set of circumstances, but it is not what may be called 'a mandatory rule of evidence'. (See Nisar Alli v. The State of Uttar Pradesh [AIR 1957 SC 366]. The doctrine is a dangerous one specially in India for if a whole body of the testimony were to be rejected, because witness was evidently speaking an untruth in some aspect, it is to be feared that administration of criminal justice would come to a dead-stop. Witnesses just cannot help in giving embroidery to a story, however, true in the main. Therefore, it has to be appraised in each case as to what extent the evidence is worthy of acceptance, and merely because in some respects the Court considers the same to be insufficient for placing reliance on the testimony of a witness, it does not necessarily follow as a matter of law that it must be disregarded in all respect as well."
As observed by the Hon'ble Apex Court in State of Rajasthan v. Smt Kalki and Anr. [1981 (2) SCC 752], it was held that:
"normal discrepancies in evidence are those which are due to normal errors of observation, normal errors of memory due to lapse of time, due to mental disposition such as shock and horror at the time of occurrence and those are always there however honest and truthful a witness may be. Material discrepancies are those which Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 28 are not normal, and not expected of a normal person. Courts have to label the category to which a discrepancy may be categorized. While normal discrepancies do not corrode the credibility of a party's case, material discrepancies do so."
3rd defence of the accused being that the complainant does not have the financial capacity to extend the friendly loan as stated in the complaint
39. Qua the defence raised by the accused vis-a-vis the financial capacity of the complainant to lend the sum of Rs. 3,00,000/- to the accused. The burden was upon the accused to rebut the statutory presumption raised in favour of the complainant as per section 118 and section 139 of the NI Act and the burden of the accused cannot be thrusted upon the complainant by bringing forth such an argument that the complainant has himself not placed on record any documentary evidence to prove his case. It was only in a circumstance where the accused would have been able to discharge his burden of proof and rebut the statutory presumption taken in favour of the complainant, that the burden would have been shifted upon the complainant. In the instant case, the accused has failed to discharge his initial onus of proof either by establishment of his own defence or by creating a doubt in the mind of the court upon the complainant's case and hence the accused has failed to rebut the presumption taken in favour of the complainant. It was held in the case of Rohitbhai Jivanlal Patel v. State of Gujarat (2019) 5 SCALE 138, "In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the Trial Court proceeded to question the want of evidence on the Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 29 part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the Trial Court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the accused-appellant. The aspect relevant for consideration had been as to whether the accused-
appellant has brought on record such facts/material/circumstances which could be of a reasonably probable defence."
Besides this, the complainant in his evidence has stated that he has a mobile phone shop through which he has a earning and he has borrowed remaining sum from friends and family, i.e., his father, his wife and friends who have appeared and examined and cross-examined themselves as complainant witness, thereby corroborating the version of the complainant. As per the explanation given by the complainant, questioning the source of funds of the complainant without any basis seems redundant and evasive. There is nothing on record that would lead the court to entertain a doubt upon the financial capacity of the complainant.
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40. Therefore, in the present case, the accused has failed to even create any doubt, let alone discharging his burden of proof to rebut the presumption u/s 139, NI Act. Further, the accused is obligated to set up a probable defence and not a possible defence, i.e., there should be some credible material or circumstance on record to show that the defence taken by the accused is a probable one. In the present case, firstly, the accused has not brought any material witness on record nor brought any documentary evidence on record to substantiate his claims. It is the duty of the accused to punch holes in the story of the complainant which he has not been able to do. The evidence brought by him on record, though admissible, did not have any evidentiary value. Secondly, the complainant has brought documentary evidence so as to prove his version of the story alongwith the benefit of presumption raised u/s 139, NI Act in his favour.
41. In light of the discussion above, this Court is of the view that the accused has not been able to rebut the presumption against him and therefore ingredient no. II has been fulfilled in the present case.
Conclusion:
33. 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 accused Gurdeep Singh Sethi is guilty of offence under Section 138 of Negotiable Instruments Act, 1881 and accordingly, accused is hereby convicted under Section 138 of Negotiable Instruments Act, 1881.
PRONOUNCED IN THE OPEN COURT Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 31 Digitally signed by AASTHA AASTHA SHARMA SHARMA Date:
TODAY ON January 14, 2025 2025.01.14
15:59:31
+0530
(Aastha Sharma)
Judicial Magistrate-Ist Class
(NI Act)-09/South-West,
Dwarka/14.01.2025
This judgment consists of 31 pages and all pages are duly signed by me.
Ct. Case No. 15218/2017 SARBJEET SINGH v. GURDEEP SINGH SETHI 32