Delhi District Court
Hans Kumar Jain vs Renu Gandotra on 17 December, 2014
IN THE COURT OF SH. SAURABH PARTAP SINGH LALER
ADDITIONAL CHIEF METROPOLITAN MAGISTRATE (EAST)
KARKARDOOMA COURT: DELHI
C.C. NO. 26/11/13
PS: Krishna Nagar
U/s 138 N.I. ACT
HANS KUMAR JAIN VS RENU GANDOTRA
JUDGMENT
A Unique ID No. of the 02402R00159912011 case B Date of institution 26.05.2011 C Date of commission of April 2011 (Cheque Dishonored in April 2011) offence.
D Name of the complainant Sh. Hans K Jain, S/o Sh. H.C. Jain, R/o 4002 Shop No. 4 and 5, Shnati Market, Shanti Mohalla, Gandhi Nagar, Delhi31 E Name of the accused & Ms. Renu Gandotra @ Poonam, Prop of M/s his parentage and Arena International, W/o Amit Marken, A106, address Phase 2, Hosiery Complex, Sector 83, NOIDA (UP) Also At: H.No.1263, 1 floor, DDA Flat, Gali st No.37, Ambedkar Nagar, Opp Pushp Vihar, Madangeer, Delhi68 F Offence complained of U/S 138 N.I. Act.
G Plea of the accused Pleaded not guilty. H Order Reserved on 20.11.2014 Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 1 of 24 A Unique ID No. of the 02402R00159912011 case I Final Order Accused acquitted of offence under section 138 of the Negotiable Instruments Act. J Date of such order 17.12.2014 BRIEF FACTS AND REASONS FOR DECISION
1.The Complainant's case in brief is that the complainant deals in clothes in the name and style of M/s Jai Durga Traders and that the accused being one of the customers of the complainant had been purchasing and making the payment on account during the period from 9 December 2010 to 23 January 2011 and as on date of the filing of the complaint are sum of Rs.9,75,460/ was due towards the accused. That in discharge of the aforesaid liability the accused issued two cheques of Rs.1,80,060/ and Rs.7,95,400/ dated 20.1.11 and 8.4.11 and bearing number 546633 and 546625 respectively, both drawn on Vijaya Bank, Mayur Vihar, Delhi. Cheques were presented for encashment and they were dishonoured on 9.4.2011 because of the reason "Payment stopped by drawer". Thereafter, the complainant issued a Legal Notice dated 2.5.2011 through his counsel to the accused by Regd. A.D./Courier at both the addresses. However, despite that the accused failed to make any payment within the statutory period, hence, this complaint.
2.Complainant led presummoning evidence and accused was summoned u/s 138 N.I. Act vide order dated 30.05.2011.
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3.Upon appearance of the accused, copies were supplied to the accused free of cost and after hearing both the parties written notice u/s 251 Cr.P.C. for the offence punishable u/s 138 N.I. Act was served to the accused on 16.09.2011 to which accused pleaded not guilty and claimed trial and the accused took the defence that the cheques do not belong to her bank account and do not bear her signatures and that she had never personally met the complainant. She also stated in reply to the notice that payment as regards cheque no.546633 was made through RTGS and that cheque No. 546625 is a security cheque as mentioned/written on its back.
4.Oral request for the cross examination of the complainant was made on 16.0.2011 and the said request was allowed by the court on the same day. Complainant was crossexamined on 13 January 2012 and 17 January 2012. Thereafter, in defence evidence the accused examined Mahender Singh, Clerk from Vijaya Bank as DW1, Jaggan Nath Sharma, Senior Manager, Vijaya Bank as DW1 again, Manjeet Singh as DW2, Renu Gandotra as DW 1 3 and accused herself appeared in the witness box as DW4 .
5.Final arguments were addressed by Ld. counsel for the Complainant as well as by Ld. counsel for the accused.
6.The questions before the court for the disposal of the complaint are: A.Whether the cheque in question was given by the accused to the complainant in discharge of legally enforceable debt? Disputed: As the 1 Application of the accused under section 315 Cr.P.C was allowed on 21.4.2014. Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 3 of 24 accused took the defence that the cheques do not belong to her bank account and do not bear her signatures and that she had never personally met the complainant. She also stated in reply to the notice under section 251 Cr.P.C that payment as regards cheque no.546633 was made through RTGS and that cheque No. 546625 is a security cheque as mentioned/written on its back. B.Whether the cheque in question was dishonoured on presentation? Undisputed: As the accused has not disputed that the cheques were dishonoured and the said fact is also clear from the return memos Ex.CW 1/E&F. C.Whether the reason for dishonor of cheque was 'payment stopped by drawer'? Undisputed: As the accused has not disputed that the cheques were dishonoured for the said reason and the said fact is also clear from the return memos Ex.CW1/E&F. D.Whether the cheque was presented within the period of 6 months from the date when it was issued? Undisputed: As the accused has not disputed that the cheques were presented in time and the said fact is also clear from the cheques Ex.CW1/C&D and return memos Ex.CW1/E&F. E.Whether the complainant made a demand for the payment of amount of money under the cheque by giving a notice in writing to the accused within 15 days of receiving information as regards dishonor of cheque from the bank? Disputed: As the accused has not admitted having received the legal notice. F.Whether the accused failed to make payment of cheque amount within 15 days of receipt of said notice? Undisputed: As the accused has not taken the defence that after having received the legal notice she made any payment to the complainant as regards the dishonoured cheques.
7.In support of the case the Complainant had tendered his evidence in pre summoning evidence as CW1 in which he has reiterated the contents of the complaint. He exhibited the Registration Certificate of Jai Durga Traders (partnership) as Ex.CW1/A, the ledger account of Arena International for the Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 4 of 24 period from 1.4.2010 to 31.3.2011 as Ex.CW1/B, cheque No. 546633 as Ex. CW1/C, cheque No. 546625 as Ex. CW1/D, the return memos dated 9.4.2011 as Ex. CW1/E&F, the legal notice dated 2.5.11 as Ex. CW1/G and the Regd. Postal receipts vide which legal notice was sent to the accused dated 2.5.2011 as Ex. CW1/H&I, Courier receipts as Ex.CW1/J&K and returned envelopes as Ex.CW1/L,M&N.
8.On the basis of the said testimony of CW1, complainant sought conviction on the ground that the cheque in question was given in discharge of the liability as per the running ledger account Ex.CW1/B.
9.On the other hand, Ld. Defence Counsel sought acquittal on the ground that accused is innocent and the cheques do not belong to her bank account and do not bear her signatures and that she had never personally met the complainant. Ld. Defence Counsel also submitted that payment as regards cheque no.546633 was made through RTGS and that cheque No. 546625 is a security cheque as mentioned/written on its back. PRESUMPTION
10. The complainant produced the original cheques, return memos, legal notice and postal receipts. He also appeared as witness to support his allegations with his testimony by way of affidavit.
Thus, the complainant produced sufficient material on record for raising the mandatory presumption, which is required to be raised in terms of section Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 5 of 24 118 (b) and section 139 of the Act, in favour of the holder of the cheque (the complainant), that the same has been issued for discharge of any debt or liability.
An argument was raised as regards the extent of presumption which can be raised in favour of the complainant and against the accused. While the complainant submitted that the presumption is as regards legally enforceable debt, the accused submitted that the presumption is as regards existence of debt only and not as regards legally enforceable debt.
11.However this issue now stands settled in the light of the judgment titled Rangappa Vs. Mohan AIR 2010 SC 1898 where a three Judges bench of the Apex Court overruled the judgment titled Krishna Janardhan Bhat Vs. Dattatraya G. Hegde AIR 2008 SC 1325 and observed in para 14 that "the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (Supra) may not be correct. ...............this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested." (emphasis supplied) The judgment titled Hiten P. Dalal Vs. Bratindranath Banerjee, AIR 2001 Supreme Court 3897(1) discusses the scope and ambit of the presumption raised under section 139 N.I. Act in the following words: "The effect of these presumptions is to place the evidential burden on the accused of proving that the cheque was not received by the complainant towards the discharge of any liability. Because both Sections 138 and 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in it is obligatory on the Court to raise this presumption in every case where the factual basis for Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 6 of 24 the raising of the presumption had been established. It introduced an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused. Such a presumption is a presumption of low, as distinguished from a presumption of fact which describes provisions by which the Court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non existence of the presumed fact."
It is further held that : "The distinction between the two kinds of presumption lay not only in the mandate to the Court, but also in the nature of the evidence required to rebut the two. In the case of discretionary presumption the presumption if drawn may be rebutted by an explanation which 'might reasonably be true and which is consistent with the innocence" of the accused. On the other hand in the case of a mandatory presumption "the burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under Section 114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The words 'unless the contrary is proved' which occur in this provision make it clear that the presumption has to be rebutted by proof and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exist. Unless therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted."
Thus, in the present case also a presumption arises in favour of the complainant and against the accused that the cheques in question were issued in discharge of a legally enforceable debt or liability. UDICIAL RESOLUTION J
12. The accused has taken the defence that the cheques do not belong to her bank account and do not bear her signatures and that she had never Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 7 of 24 personally met the complainant. She also stated in reply to the notice under section 251 Cr.P.C that payment as regards cheque no.546633 was made through RTGS and that cheque No. 546625 is a security cheque as mentioned/written on its back.
13.In the opinion of the court the accused has been able to rebut the presumption raised against her for the following reasons:
(a)Because, on the backside of cheque bearing no. 546625 the words "security cheque against delivery" are mentioned, on which there is cutting.
(b)Because the complainant has failed to explain that as to why the aforesaid words have been written on the backside of the cheque Ex.CW1/D and why there is cutting over the said words.
(c)Because the complainant has failed to explain that as to why he received cheque exhibit Ex.CW1/D from the accused with the aforesaid words written on its backside.
(d)Because the cheque Ex.CW1/C dated 20.1.2011 bears number 546633 and the cheque Ex.CW1/D dated 8.4.2011 bears number 546625. The cheque bearing number 546633 is of January 2011 whereas the cheque bearing number 546625 is of April 2011. The said anomaly in the Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 8 of 24 sequence in which the cheques have been issued, corroborates the defence taken by the accused that cheque bearing number 546625 is a security cheque and that is why on the backside of the said cheque the words "security cheque against delivery" are mentioned.
(e)Because, there is cutting on the words "security cheque against delivery" on the backside of cheque bearing number 546625 which shows that an attempt has been made to conceal the fact that the said cheque is a security cheque.
(f)Because the complainant has failed to disclose in the complaint and in his affidavit that as to when the two cheques were received by the complainant from the accused and that as to why there is a difference of about three months in the dates of the two cheques.
(g)Because the cheque bearing number 546633 corresponds to the sale shown in the ledger account of the complainant Ex.CW1/B on 16 December 2010 against voucher number 1927 of Rs.1,80,060/, but the cheque bearing number 546625 does not correspond to any such entry in the ledger account and they said cheque is with Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 9 of 24 respect to the remaining amount in the ledger account, and it is quite possible that the cheque bearing number 546625 was a security cheque and the same was utilised by the complainant by filling in it the total amount due against the accused as per the ledger account.
(h)Because the complainant has failed to file on record any bill, voucher or invoice to show that clot public goods were sold by the complainant to the accused and that the accused was liable to pay the amount shown in the ledger account Ex.CW1/B.
(i)Because the complainant has failed to prove delivery of goods to the accused and has admitted in his cross examination that no signature of the accused were taken against delivery of goods in the following words:
"I did not take any signature of the accused against delivery of goods on any document. It is wrong to suggest that the accused did not purchase the goods that is why she has not signed any document pertaining to sale, purchase/receipt of goods"
Thus, the complainant has neither produced any bill or voucher to show that sale of goods was made by the complainant to the accused and the complainant has also failed to produce any delivery receipt, to show that goods Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 10 of 24 were delivered by the complainant to the accused.
(l) Because the complainant has failed to produce any document in order to show that the entries in the ledger account Ex.CW1/B are correct and properly maintained.
(m)Because, prima facie the cheque bearing number 556625 seems to be security cheque because of the aforesaid reasons, and dishonour of a cheque given as security does not amount to an offence u/s 138 N.I. Act.
In support of the same the court would like to refer to following judgments :
Hon'ble Supreme Court in judgment titled M.S. Narayana Menon @ Mani Vs. State of Kerala AIR 2006 SC 3366 observed in para 57 as under :
57. We in the facts and circumstances of this case need not go into the question as to whether even if the prosecution fails to prove that a large portion of the amount claimed to be a part of debt was not owing and due to the complainant by the accused and only because he has issued a cheque for a higher amount, he would be convicted if it is held that existence of debt in respect of large part of the said amount has not been proved. The Appellant clearly said that nothing is due and the cheque was issued by way of security. The said defence has been accepted as probable. 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. (emphasis supplied) In Shanku Concretes Pvt. Ltd. Vs. State of Gujarat 2000 Cri.L.J 1988 (Gujarat) a loan of Rs.15,00,000/ was taken Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 11 of 24 by accused, who issued 7 post dated cheques as collateral security and it was observed by Hon'ble Gujarat High Court that no offence u/s 138 N.I. Act is made out in para 13 and 14 as under :
13. The above view further strengthens from the agreement executed between the parties. It is amply clear in the agreement that accused shall repay amount after six months of the execution of agreement and it is also made clear that for due performance of the contract.
The intention of the parties is clear from this averments that the cheques were issued as the collateral security for the due performance (vernacular matter omitted.) of the contract, by which the Company and the Director i.e. accused No. 2 bound themselves to repay the said amount. It is, therefore, clear that cheques were not issued to discharge any existing debt.
14. This Court relies on the decision cited by Mr. Majmudar of the High Court of Madras (supra), wherein a principle is laid down that to attract Section 138 of the Negotiable Instruments Act, it must be pointed out that there was subsisting liability or debt on the date when the contract was entered into. In that given case before the High Court of Madras, the contract expressly made it clear that the cheques were handed over as security. In this case, it is clear from the agreement entered into between the parties that after borrowing the money, making a statement to repay the same at some future date, the cheques were issued for due performance. Therefore, the transaction from its very nature or from the intention of the parties, as reflected in the agreement executed between the parties, is purely of a civil nature, for which a civil suit has already been filed. The very fact that the payment was agreed to some future date and there was no debt or liability on the date of delivery of the cheques, will take the case out of the purview of the Section 138 of the Negotiable Instruments Act. (emphasis supplied) In Goa Handicrafts Vs. M/s Samudra Ropes Pvt. Ltd. 2005 Cri.L.J 4072 (Bombay) a cheque was given as a security for goods already purchased and for future purchases and it Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 12 of 24 was observed by Hon'ble Bombay High Court in para 18 that dishonour of cheque given as security does not make out an offence u/s 138 N.I. Act :
18. In my view from the discussion of the evidence adduced by both parties it will have to be held that the Accused has successfully rebutted the presumption raised under Section 139 of the said Act in view of the clear admission given by P.W.1, Shirodkar in his cross examination which is consistent with the stand taken by the Accused in his examinationinchief. The cheque given by the Accused was, therefore, never meant to be deposited but was referred only as a sort of collateral security. This is clear from the evaluation of the evidence in paras 7 to 11 above. Such a cheque in my view would not entail the penal liability as envisaged under Section 138 of the said Act if it is deposited and is dishonoured. Secondly, from the aforesaid discussion, it can also be seen that the cheque in question was not given for an existing debt or legally enforceable liability. (emphasis supplied) In Laxminivas Agarwal Vs. Andhra Semi Conductors Pvt. Ltd. 2006 Cri. L.J 2643 (Andhra Pradesh) accused issued undated cheque by way of security for securing loan of Rs.4.3 lakhs taken by him and it was observed by Hon'ble Andhra Pradesh High Court in para 16 that security cheque cannot be the basis of complaint u/s 138 N.I. Act :
16. In the instant case also this Court found on question of fact that three cheques Exs.P1 to P3 were taken only as security for prompt repayment and those cheques were not issued by the accused towards the discharge of any debt or other liability. In fact, by the date on which the cheques were taken there was no debt or liability borrowed/incurred by the accused. As already observed supra, only cheques were given by the complainant to the accused on the date on which the cheques in dispute were taken from the accused. Therefore, the proved facts of the cited case are similar to the proved facts in the instant case. There is no material to show that Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 13 of 24 the decision in Shri Taher N. Khambati's case (supra) has been overruled by any subsequent decision of this Court or by the Apex Court. I am in entire agreement with the view expressed by the learned Judge of this Court in the cited case. Section 138 of the Act is being misused by the money lenders. This is one of such instances.
Admittedly, the complainant herein took pledge of title deeds relating to Ac. 6.00 of land belonging to the accused. It is also not disputed that there was fire accident in the factory of the accused and the entire property of the accused was damaged and the accused made claim before the Insurance Company. It is also not disputed that the accused herein gave reply stating about their financial condition and also promising to repay the same after the insurance claim is settled by the Insurance Company. It is the further case of the accused that though the accused demanded return of the title deeds of the land to enable them to sell the land and discharge the debt due to the complainant, the complainant refused to deliver those title deeds. It is also in the evidence that the complainant filed Criminal case of cheating against the accused and ultimately this Court quashed the said complaint. Thus, the complainant herein knowing fully well that the accused company is in financial distress on account of fire accident and knowing fully well that the accused company had no amount in the bank, filled up the blanks in the cheques as if those cheques were issued by the accused in discharge of the debt on 86 2000 and 962000 and presented the same for encashment and got those cheques dishonoured and then launched the prosecution under Section 138 of the Negotiable Instruments Act. By no stretch of imagination it can be said that the Legislature introduced Section 138 of the Negotiable Instruments Act to assist such money lenders to harass the borrowers who were in financial distress. The Legislature intends to punish only those who knowing fully well that they have no amount in the bank and yet issued any cheque in discharge of debt or liability already borrowed/incurred which amounts to cheating and not to punish those who could not discharge the debts borrowed or the liability incurred on account of financial stringency. If Section 138 of the Act can be made applicable to all the debts borrowed or the liability incurred by furnishing blank cheque as security, every borrower under a Negotiable Instrument who fails to repay the same can be prosecuted. Merely because the signatures in the cheques are admitted, it cannot be said in all cases that the drawer of the said cheque is liable for punishment under Section 138 of the Negotiable Instruments Act in the event of dishonour of those cheques. It is true Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 14 of 24 that presumption is available in favour of the payee under Sections 118 and 139 of the Negotiable Instruments Act. But, admittedly the said presumption is a rebuttal presumption and the borrower is at liberty to prove to the contra, the accused need not necessarily get into the box and state on oath and he is at liberty to point out the documents filed by the complainant to prove the date of issuance of cheque and that there was no debt or liability borrowed/incurred muchless legally enforceable debt or liability on the dates of issue of cheques and that those cheques were issued under different circumstances. Here in the instant case, the documents filed by the complainant himself under Exs.P14 and P15 disclose that by the date of taking of the cheques Exs.P1 to P3 from the accused, there was no debt or liability incurred by the accused towards the complainant. Therefore, the said letters themselves are sufficient to prove the contra to rebut the presumption available under Section 139 of the Negotiable instruments Act. Further the accused during his examination under Section 313 Cr.P.C. filed documents along with his written statement to show that the cheques in question were taken as security for the amount lent by the complainant to the accused. Hence, it cannot be said that the accused failed to prove contra to rebut the presumption available to the complainant under Section 139 of the Act. The decision of this Court in Shri Taher N. Khambati's case (supra) is very much applicable to the facts of this case. (emphasis supplied) In M/s Exports India Vs. State 2007 (4) RCR (Criminal) 300 (Delhi High Court) and it was observed by Hon'ble Delhi High Court (Hon'ble Mr. Justice A.K. Sikri) in para 5, 6 and 7 that dishonour of blank cheque given as security does not make out an offence u/s 138 N.I. Act :
5. After hearing the learned counsel for the petitioner I am of the opinion that this petition warrants to be allowed. It is obvious from the agreement in question that the same was entered into on 11.2.1999 between M/s. Bumpi Udyog and the petitioner No. 1 and this agreement specifically records giving of blank cheques bearing No. 154832 and 154833 to M/s. Bumpi Udyog. It is clear that the blank cheque was given as a security of the agency agreement and it Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 15 of 24 is nowhere stated that there is any violation of the terms and conditions of the said agreement. The case made out in the complaint is that certain dues were payable by the petitioner No. 1 to the complainant and in discharge of the said liability the cheque in question was issued as is clear from the following averments made in para 5 of the complaint, which reads as under :
"5. That consequently to discharge their liability qua complainant, accused No. 2 handed over a cheque bearing No. 154832 dated 24.04.2000 for Rs. 4,78,807/ drawn on Dena Bank, Bhawanipara, Calcutta700025 in favour of M/s. Bumpy Udyog. The cheque has been signed by accused No. 3 as partner of accused No. 1."
6. The aforesaid averments are clearly false inasmuch as it was a blank cheque given at the time of signing of the agency agreement. It may be noted that the complainant before filing the complaint had given the legal notice dated 22.5.2000 and reply to the said notice was given pointing out the aforesaid facts but in the complaint, the complainant has not at all mentioned about the said reply nor filed the same as a document along with the complaint and has, therefore, suppressed these facts as well.
7. In M/s. Balaji Sea Foods Exports (India) Ltd. v. Mac Industries Ltd., 1999(1) RCR(Criminal) 683 (Madras), the Madras High Court in identical circumstances dismissed the complaint as not maintainable which was based on undated cheque given at the time of execution of the agreement holding that there was no debt or liability when the cheque was handed over to the drawee and, therefore, the complaint could not be maintainable. This petition accordingly succeeds. Summoning order is quashed and the complaint filed by the respondent No. 2 is dismissed. (emphasis supplied) In Sam Daniel Vs. John 2005 Comp Case 17 (Madras High Court) and it was observed by Hon'ble Madras High Court in para 9 and 10 that dishonour of cheque given as collateral security does not make out an offence u/s 138 N.I. Act :
9. Strict liability under Section 138 can be enforced only when the cheque is issued in discharge of any legally enforceable debt or other liability, partly or wholly. Where a cheque is issued not for the purpose of discharge of any debt or other liability, Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 16 of 24 return of such cheque unpaid will not meet with the penal consequences and the maker of the cheque shall not, therefore, be liable for prosecution.
10. The Explanation to Section 138 provides that a debt or liability under this section means only a legally enforceable debt or other liability. In common parlance, a debt is something owed to another, a liability, an obligation, a chose in action, which is capable of being assigned by creditor to some other person. A debt due means that a particular liability is in existence. Thus in cases for an offence of dishonour of cheque, it would be relevant to examine the materials/evidence as to whether there is a "debt payable" and whether the cheque was drawn for that dischargeable debt. While there may be a debt payable in existence, that alone is not sufficient to prove that the cheque was drawn in discharge of that amount.
Where the accused raised the point that the cheque in question was not intended to be in appropriation of the debt or to be used for a discharge of the debt, but was issued only as a collateral safeguard, there cannot be presumption under Section 138 of the Negotiable Instruments Act. (emphasis supplied) In K. Narayana Nayak Vs. M. Shivarama Shetty 2009 (5) RCR (Criminal) 207 (Karnataka High Court) it was observed by Hon'ble Karnataka High Court in para 18 and 19 that dishonour of cheque given as security does not make out an offence u/s 138 N.I. Act :
18. According to the complaint, the appellant advanced the loan on the condition that he should give collateral security and post dated cheque putting the probable date on the cheque. The decisions reported in 1993 Cri LJ 2359, II 1995 BC 506 Bombay and II (1992) BC 218 on which reliance is placed by the Court below says that issue of postdated cheque has to be treated as drawn on date it is delivered and not on the date it bears. Further, according to Section 138 of the NI Act the cheque has to be presented to the bank within a period of six months from the date on which it is drawn. If there was any agreement to repay the amount after two years with interest at 10% and if the cheque was issued after two years, the cheque amount would have been more than one lakh. Moreover the Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 17 of 24 complaint reveals that the loan was advanced on condition that the respondentaccused should give a postdated cheque. That means the accused had issued the cheque on 1661996. In that view of the matter, it is clear that the cheque issued by the respondent to appellant is only as a security and not for discharge of any existing debt, as on the date of issuance of the said cheque.
19. So far as the presumption as to issuance of the cheque for consideration and in discharge of debt, the respondentaccused need not disprove the appellant's case in its entirety. He can discharge his burden on the basis of preponderance of probabilities through direct or circumstantial evidence, for which he can also rely on the evidence adduced by the complainant. The respondent in his evidence has stated that he had not taken any loan from the appellant to tide over his financial difficulties by pledging the shares that the amount shown in Ex.P.2 is part of the sale consideration of shares and as the price of the shares crashed subsequently, the appellant was unwilling either to transfer them or sell them and therefore fillings up the blank cheque after two years he has filed this case. There is evidence on record to point out handing over of share certificates. Thus, the accusedrespondent has discharged the initial onus of proof.
Considering the case on factual basis, I find that the appellant has not satisfactorily discharged the burden of proof. In this view of the matter, I need not find it necessary to go into the bye laws relating to the dealings in the stock exchange. Nonproduction of the pass book by the appellant in relation to the amount lent by him to the respondent through cheques, is fatal to the case of the complainant/appellant. As such, the appellant has failed to discharge his burden by producing documentary evidence before the Court below. Hence, viewed from any angle. I do not find any good reasons to interfere with the order of acquittal passed by the Court below. In Punjab State Coop. Supply & Mkt. Federation Ltd. v. M/s Goyal Rice & Oil Mills, (P&H) 2009(4) R.C.R.(Criminal) 612 PUNJAB AND HARYANA HIGH COURT three cheques were issued by accused by way of future liability which may arise on supply of goods by complainant to accused and it was observed by Hon'ble Punjab and Haryana High Court that Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 18 of 24 dishonour of such cheques given as security do not make out an offence u/s 138 N.I. Act.
In Sreenivasan v. State of Kerala, (Kerala) 2000(1) R.C.R.(Criminal) 323 it was observed by Hon'ble Kerala High Court in para 3 that dishonour of cheque given as security does not make out an offence u/s 138 N.I. Act :
3. A comparative reading of the principle laid down by the Andhra Pradesh High Court and the mandatory provisions laid down in Sec. 138 of the Negotiable Instruments Act is crystal clear that when a cheque has been issued as a security, no complaint will lie under Sec. 138 of the Negotiable Instruments Act. Yet another infirmity is found in the case, viz. that the averment in the complaint would be that the cheque was issued only by the petitioner. On the other hand, a notice issued by the second respondent to the petitioner, Annexure II and III, would disclose that the cheque was issued by the petitioner along with two other persons, viz. Ashok and Kamashi. In these circumstances, as rightly pointed out by the learned counsel, I find no merit on the side of the second respondent to launch a complaint under Sec. 138 of the Negotiable Instruments Act. Therefore, no purpose will be served by permitting the Magistrate to proceed with the criminal prosecution. Therefore, it can be rightly interfered by this court under Sec. 482 of the Criminal Procedure Code. (emphasis supplied) In Jitendra Singh Flora v. Ravikant Talwar, (M.P.) (Jabalpur Bench) 2001(2) R.C.R.(Criminal) 75 cheque was issued as security for construction of building and it was observed by Madhya Pradesh High Court that cheques given as security are cheques which are not issued to create any liability and their dishonour does not make out an offence u/s 138 N.I. Act.
Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 19 of 24 Adverting to the facts of the present case from the aforesaid judgments, it is clear that dishonour of a cheque given as security does not make out an offence u/s 138 N.I. Act and the very fact that the payment was agreed to some future date or subject to some contigency1 and there was no debt or liability on the date of delivery of cheque, will take the case out of the purview of section 138 N.I. Act. Penal liability u/s 138 N.I Act can be enforced only when the cheque is issued in discharge of any legally enforceable debt or other liability, partly or wholly. Where a cheque is issued not for the purpose of discharge of any debt or other liability, dishonour of such cheque will not meet with the penal consequences and the drawer of the cheque shall not, therefore, be liable for prosecution. Thus, as it stands proved that the cheque being number 556625 was not intended to be in appropriation of the debt or to be used for a discharge of the debt, but was issued only as a collateral safeguard/ security, there cannot be presumption under Section 138 of the Negotiable Instruments Act and therefore no offence under the said section is made out, qua the said cheque. Complainant relied upon judgment titled V.S. Yadav VS. Reena 172 (2010) Delhi Law Times 561 in order to prove that dishonour of a security cheque also makes out an offence u/s 1 Contingency in the present case being the delivery of goods. Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 20 of 24 138 N.I. Act, however, the said judgment is found to be silent in this regard. Rather, the said judgment is on the point that in order to rebut the presumption u/s 139 N.I. Act, the accused is to lead cogent evidence to prove the circumstances in which cheques were issued and his merely pleading not guilty and stating that cheques were issued as security would not be sufficient for rebutting the mandatory presumption of section 139 N.I. Act.
In the present case the presumption stands rebutted in view of the fact that on the backside of cheque bearing number 556625 the words "security check against delivery" have been mentioned and effort has been made to cut the said words and also because of the other corroborative reasons mentioned above. Thus, the said judgment do not apply to the facts of the present case.
(ap)Because after the sale transaction of 16 December 2010 in sum of Rs. 1,80,060/, three RTGS payments dated 30 December 2010, 18 January 2011 and 20 January 2011 in sum of Rs. 129,384/, Rs. 2 lakh and Rs. 1 lakh respectively, have been received by the complainant from the Arena International. The accused has taken the defence that payment against cheque number 546633 was made through RTGS, but the complainant has argued that the said amount was received with Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 21 of 24 respect to other transactions. However, once the complainant 1 has admitted that the complainant has received amount from Arena International through RTGS, then the onus to prove that the said payments were received with respect to other transactions and not with respect to transaction dated 16 December 2010 in sum of Rs. 1,80,060/ lies upon the complainant and not upon the accused or Arena International. (ar) Because the legal notice Ex.CW1/G was sent by registered post and courier, however, both the registered post came back and the courier sent at NOIDA address also came back. The courier which was sent to Ambedkar Nagar address was not received back and the complainant wishes to draw a presumption regarding service of the said notice on that basis alone. However, the presumption as regards service of notice by post under section 272 of the General Clauses Act is only applicable to registered post and not to courier. As the courier company is a private limited company, therefore in order to prove service of legal notice upon the accused, the 1 As the RTGS transactions are clearly mentioned in the ledger account Ex.CW1/B, which is the document of the complainant and exhibited by him in his testimony. 2 S.27 "Meaning of service by post: Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression s erve or either of the expressions give or send or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post." (emphasis supplied) Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 22 of 24 complainant should have examined an official of the said company.
(at)Because the complainant has neither stated in his complaint or in the affidavit the description and the quantity of the goods which were supplied by the complainant to the accused.
14.Once the presumption stands rebutted, the onus to prove the ingredients of offence under section 138 of the NI Act beyond reasonable doubt lies upon the complainant, which in the present case, the complainant has failed to discharge, as the complainant has miserably failed to prove the liability on the part of the accused. The complainant has failed to disclose the description of the goods which were supplied by the complainant to the accused and he has also failed to show any document to prove that the goods were received by the accused. Therefore the complainant has failed to prove the liability on the part of the accused/Arena International.
15.Conclusion In view of the above discussions, it is clear that the accused has been able to rebut the presumption u/s 139 N.I. Act. and the complainant has failed to prove the ingredients of offence under section 138 N.I. Act against the accused upon such rebuttal. Accordingly, accused Renu Gandotra @ Poonam is acquitted from the offence u/s 138 N.I. Act.
As per section 437A of the Cr.P.C, as inserted vide the Amendment Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 23 of 24 Act, which came into force on 31.12.2009, the accused shall furnish freh personal bond and surety bond within one week from today. File be consigned to Record Room.
ANNOUNCED ON 17.12.2014 (SAURABH PARTAP SINGH LALER) ACMM(East)/KKD/17.12.2014 Certified that this judgment contains 24 pages and each page bears my signatures.
(SAURABH PARTAP SINGH LALER) ACMM(East)/KKD/17.12.2014 Hans Kumar Jain Vs Renu Gandotra Section 138 NI Act Page No: 24 of 24