Delhi District Court
Supreme Court Of India In Matter Of "C. C. ... vs . Palapetty Mohd. & Anr." on 3 January, 2023
IN THE COURT OF RAHUL JAIN,
METROPOLITAN MAGISTRATE - 04, N. I. ACT,
SOUTHWEST DISTRICT, DWARKA DISTRICT COURTS, DELHI.
JUDGMENT
Zile Singh Khatri ....................Complainant Versus Aryan Sharma ....................Accused PS - Pallam Village Under Section 138 of N. I. ACT, 1881
a) Sl. No. of the case : CC No. 8118/2019
b) Name of the complainant : Sh. Zile Singh Khatri, S/o Late Sh. Badlu Ram, R/o RZB1/79, Gali No. 07, Mahavir Enclave, Palam Dabri, Road, New Delhi59.
c) Name of the accused : Aryan Sharma,
S/o Sh. Deshraj,
R/o RZR55B, Second Floor,
Mahavir Enclave, Gali No. 4, New
Delhi59.
d) Offence complained of : Under Section 138 of N. I. Act, 1881
e) Plea of accused : Pleaded not guilty
f) Final order : Convicted
g) Date of such order : January 03, 2023
BRIEF STATEMENT OF THE REASONS FOR DECISION :
1. Vide this judgment, this Court shall dispose off complaint for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 filed by the complainant Mr. Zile Singh against accused namely Aryan Sharma. In gist, it is alleged in complaint that the accused and the complainant were well known to each other for the last four years and in the first week of April, 2018, accused approached Zile Singh v. Aryan Sharma 1 of 15 the complainant for a loan of Rs 2,20,000/- ( Two Lacks twenty thousand only) for a period of six months which were paid in cash on 16.04.2018 after withdrawal of funds from the bank account of the complainant. It is further alleged in the complaint that after the expiry of six months, complainant approached the accused and demanded his money when the accused tried to avoid the complainant but later the accused issued the cheque in question Ex. CW-1/2 favour of the complainant for a sum of Rs 2,20,000/- in discharge of his legal liability towards the loan. Thereafter, complainant presented the cheque in the bank but the same got returned unpaid/dishonored by the bank with the remarks "Kindly contact Drawer/Drawee Bank and present again" vide cheque returning memo Ex. CW-1/3 dated 26.12.2018. Accordingly, the complainant informed the accused about the fate of the said cheque and requested the accused to make the payment of the loan amount but since thereafter the accused started avoiding the complainant on one pretext or the other Thereafter, the complainant served a legal notice Ex. CW-1/4 dated 23.01.2019 which was returned back with remarks "no such person", hence, this complaint.
PRESUMMONING EVIDENCE & NOTICE
2. Presummoning evidence was lead by the complainant side and after hearing complainant side, accused was summoned for offence punishable under Section 138 of The Negotiable Instruments Act, 1881. After appearance of accused, it was ensured that copy of complaint has been supplied. Notice was put to the accused for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 on 27.11.2019 by the predecessor to which accused pleaded not guilty and claimed trial. Accused denied that he took the friendly loan of Rs.2,20,000/- and stated that he had Zile Singh v. Aryan Sharma 2 of 15 taken only Rs. 50,000/- from the complainant in the year 2007-08 which was to be repaid in installments of Rs.600/- per day and only Rs.7000/- to Rs.8000/- were pending. Further, he requested the complainant to return the cheque in question to which the complainant replied that the cheque in question has been misplaced. He also stated that he had given the cheque in question as blank signed security cheque to the complainant in the year 2007-08. He admitted his signatures on the cheque but stated that no other particulars were filled by him. He denied receiving legal notice but admitted that the address mentioned in the legal notice was correct. Thereafter, matter was fixed for complainant's evidence and accused side was granted opportunity to crossexamine the complainant's evidence.
COMPLAINANT'S POST NOTICE EVIDENCE
3. Complainant examined himself as CW1, adopted affidavit of pre summoning as his evidence reiterating almost all facts of complaint, stating all exhibits available on record. Complainant was cross examined where he deposed that he was in defence services and retired in the year 1984. He deposed that was not into money lending business. He admitted that he has also filed another 138 case against some other persons. He deposed that he did not execute any written agreement and did not take any receipt of the loan amount advanced as it was a friendly loan. Moreover, when his attention was brought to the cheque returning memo where the reason for dishonour was mentioned as "Kindly contact drawer/drawee bank and present again", he admitted that he did not present the cheque again. He stated that no witness was present at the time when the accused approached him for loan and voluntarily said that the transaction happened between him and accused at his home and the cheque in Zile Singh v. Aryan Sharma 3 of 15 question was given to him at his residence by the accused with duly filled cheque. He also stated that he had given the loan in question to the accused after withdrawal of cash from his bank account. He was confronted with evidence affidavit Ex. CW-1/A and asked why it was not mentioned in the complaint that "friendly loan" was given. He answered that the word "friendly" might have been missed while drafting the complaint but he had not instructed his counsel to amend the complaint or his evidence affidavit after reading the same. He deposed that he had not attended any family function of the accused and voluntarily said that he generally used to visit the house of the accused. He was challenged on his financial capacity to which he deposed that in the year 2018 he used to get Rs. 25,000/- per month as pension. He denied the suggestions that he had received payment from the father of the accused and only Rs.7,000/- to Rs.8,000/- is balance against the accused. But he admitted that he does not issue any receipt when the loan amount is returned back. He further deposed that he used to file ITR till 2017-2018 and had not shown the present loan in his ITR and has never shown any loan in any of his ITR. He denied the suggestion that he received repayments from the borrowers on daily or monthly basis but he voluntarily said that the borrowers give money as and when they have funds. He deposed that the cheque in question was given to him on 23 or 24 December, 2018 at 8 pm and then again said, it was given to him on 23.12.2018 and he had presented the same on 24.12.2018. He was aware that the transactions more than Rs. 20,000/ and are not allowed in cash as per IT Act. He stated that he contacted the accused in January, 2019 after the dishonour of the cheque and intimated about the same but he do not remember the exact date and admitted that this fact was not mentioned in his complaint, legal notice or his evidence Zile Singh v. Aryan Sharma 4 of 15 affidavit. He deposed that the accused approached him for the loan in the first week of April, 2018 ; he had withdrawn the money 16.04.2018 and gave the same to the accused on the same date. He denied all the other suggestions put by the counsel for the accused.
4. Complainant closed his CE vide order dated 30.06.2022 and thereafter, matter was fixed for recording statement of accused.
STATEMENT OF ACCUSED
5. The statement of accused was recorded under Section 313 Cr.P.C of the Code of Criminal Procedure, 1973 read with Section 281 of The Code of Criminal Procedure, 1973 separately on 06.07.2022. Incriminating evidence was put to him. He denied the allegation that he had taken friendly loan of Rs 2,20,000/- on 16.04.2018 but stated that he had taken a friendly loan of Rs. 10,000/- from the complainant in 2008-09 for a period of two months which he used to repay in the installment of Rs. 120/- per day. Further, the cheque in question was given as security for that loan and only Rs. 4000/- to 5000/- was left pending. He alleged that the complainant misused the same. He denied receiving of the legal notice but admitted that the address mentioned in the legal notice was correct. Accused opted to lead evidence in his defence, thereafter, matter was fixed for defence evidence. But after sufficient opportunities, the accused failed to lead defence evidence. Accordingly, Defence evidence was closed and matter was fixed for argument vide order dated 19.11.2022.
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6. Final Arguments were heard on behalf of the both the parties on 02.12.2022. Case file perused.
POINTS FOR DETERMINATION : 7.1 Whether the complainant has been able to establish ingredients of offence punishable under Section 138 of The Negotiable Instruments Act, 1881 beyond shadow of reasonable doubt against the accused or not? 7.2 Final order.
APPRECIATION OF FACTS/CONTENTIONS/ANALYSIS & FINDINGS
8. To bring home conviction for offence punishable under Section 138 of The Negotiable Instruments Act, 1881, the complainant is obliged to prove :
(a) The cheque(s) was/were drawn/issued by the accused person(s) to the complainant on an account maintained by him/her/them/it with the bank for discharge, in whole or in part, of any debt or liability.
(b) The cheques(s) was/were presented to the bank within a period of six months or within period of its/their validity.
(c) The cheque(s) so presented for encashment was/were dishonored.
(d) The payee/complainant of the cheque(s) issued a Legal Demand Notice within 30 days from the receipt of information from the bank regarding dishonourment of the cheque(s).
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(e) The drawer of the cheque(s) failed to make the payment
within 15 days of receipt of aforesaid Legal Demand Notice.
(f) The complaint was presented within 30 days after the expiry of above 15 days.
UNDISPUTED/UNCONTROVERTED FACTS
09. At the outset, it is pertinent to mention herein that it is not in dispute that cheque in question belong to the accused, it bears his signatures, it was drawn on an account maintained by the accused with a bank, cheque in question was dishonored as alleged, legal demand notice was sent to correct address of accused and accused failed to make the payment of cheque in question till date. So, there is no need of discussion qua said ingredients and same can be regarded as being duly proved on record and being noncontroverted.
CONTENTIONS QUA LEGAL DEMAND NOTICE 10.1(a) The first major contention which has been raised by accused in this matter is that accused has not received any legal demand notice, therefore, ingredients of offence punishable under Section 138 of The Negotiable Instruments Act, 1881 are not complete, hence accused should be acquitted in this matter. 10.1(b) Per contra, it is contention of the complainant side that the legal demand notice was sent to the accused on his correct address(es), therefore, accused should be held guilty in this matter.
10.2 Submissions of both sides considered.
Zile Singh v. Aryan Sharma 7 of 15 This Court sees no substance in this defence of accused side. It is not the case of accused side that legal demand notice was not sent vide postal receipt(s) available on record on his correct address(es). Once, it is not disputed and proved on record that the legal demand notice was sent to correct address(es) of the accused then the defence of the accused side that accused side has not received any legal demand notice is no defence in the eyes of law in view of the judgment passed by Hon'ble Supreme Court of India in matter of "C. C. Alavi Hazi Vs. Palapetty Mohd. & Anr." reported in (2007) 6 Supreme Court Cases 555. In said judgment, Hon'ble Supreme Court of India has held that : "Any drawer who claims that he did not received the notice sent by post, can, within 15 days of receipt of summons from the court in respect of complaint Under Section 138 of the Act, make the payment of the cheque amount and submit to the court that he had made the payment within 15 days of the receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complainant is liable to be rejected. A person who does not pay within 15 days of receipt of summons from the court along-with the copy of complaint Under Section 138 of the Act, can not 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 G. C. Act and 114 of the Evidence Act."
In this case, since, the accused side has not made payment of cheque(s) amount in question within 15 days of the receipt of summons of this Court, therefore, in the light of abovesaid judgment and discussions, this Court is of the opinion that defence of the accused side that he has not received any legal demand notice is without any force and is hereby rejected CONTENTIONS QUA CONSIDERATION 11.1(a) The contentions which have been raised by defence are that the accused had taken loan in 200708 for an amount of Rs. 50,000/ and the cheque was given for the same in 200708. It is the contention of defence that accused side has been able to Zile Singh v. Aryan Sharma 8 of 15 rebut the presumption of consideration available in favour of the complainant as consideration qua cheques in question. It is contended that accused should be acquitted in this matter.
11.1(b) On the other hand, it is the contention of the complainant side that the accused had taken friendly loan of Rs. 2,20,000/ in cash on 16.04.2018 and issued the cheque in question. Legal demand notice was issued and received by accused side, hence, all ingredients of commission of offence punishable under Section 138 of The Negotiable Instruments Act, 1881 stands established on record, therefore, accused should be held guilty in this matter.
11.2 Submissions of both side considered.
Section 118 (a) of The Negotiable Instruments Act, 1881 provides as under : "Section 118. Presumption as to negotiable instruments. Until the contrary is proved, the following presumption shall be made:
(a) of consideration that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, was indorsed, negotiated or transferred for consideration;........."
Section 139 of The Negotiable Instruments Act, 1881 provides as under : "Section 139 Presumption in favour of holder. It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."
In matter of "Krishna Janardhan Bhat Vs. Dattatraya G. Hegde"
(2008) 4 SCC 54, Hon'ble Supreme Court of India has observed : "32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis Zile Singh v. Aryan Sharma 9 of 15 of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of the accused and that of the prosecution in a criminal case is different."
"34. Furthermore, whereas prosecution must prove the guilty of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of the accused is 'preponderance of probabilities'. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies."
In matter of "Mallavarapu Kasivisweswara Rao Vs. Thadikonda Ramulu Firm" (2008) 7 SCC 655, Hon'ble Supreme Court of India (though it was a civil matter related to promissory note, but is relevant to refer herein) has held : "17. Under Section 118 (a) of the Negotiable Instruments Act, the court is obliged to presume, until the contrary is proved, that the promissory note was made for consideration. It is also a settled position that the initial burden in this regard lies on the defendant to prove the nonexistence of consideration by brining on record such facts and circumstances which would lead the court to believe the nonexistence of the consideration either by direct evidence or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal."
In matter of "Bharat Barrel & Drum Mfg. Co. V. Amin Chand Payrelal" (1999) 3 SCC 35, Hon'ble Supreme Court of India (though it was also a civil matter related to promissory note, but is relevant to refer herein) has held : "12. Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118 (a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under the law to rely upon all the Zile Singh v. Aryan Sharma 10 of 15 evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the nonexistence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118 (a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its nonexistence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist."
In matter of "Rangappa Vs. Sri Mohan" (2010) 11 SCC 441 which is a Full Bench Decision, Hon'ble Supreme Court of India while discussing above said provisions, judgments and other case law on the point has held : "26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To the extent, the impugned observations in Krishna Janardhan Bhat may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, 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. However, there can be no doubt that there is an initial presumption which favours the complainant".
"27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard or proof."
"28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in Zile Singh v. Aryan Sharma 11 of 15 view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
11.3 So, precisely there is initial presumption of legally enforceable debt or liability against the accused side, but same is rebutable. The standard of proof for rebuttal is preponderance of probabilities. Accused side can lead evidence in defence, even can rely on materials submitted by complainant and can rely upon circumstances also to show nonexistence of consideration or it being improbable and need not adduce evidence of his own for the same.
11.4 The defence of the accused side considered in view of abovecited case laws. In the present case, accused had admitted that he had taken loan from the complainant but he had only disputed the amount of the loan and time of the loan. He had stated in his notice u/s 251 Cr.P.C that he had taken loan of Rs 50,000/ in the year 200708 and only Rs. 7,000/ to 8000/ were pending. While, he had stated in his statement u/s 313 CrPC that he had taken a friendly loan of Rs. 10,000/ in 200910 and Rs. 4000/ was only pending. He had denied taking any loan of Rs. 2,20,000/ on 16.04.2018. I have considered his arguments separately.
Firstly , the accused argued hat the loan amount is less than what is alleged by the complainant. Accused has not produced any oral or documentary evidence to prove that the loan was of Rs. 50,000/ or 10,000/. He has contradicted Zile Singh v. Aryan Sharma 12 of 15 himself that by alleging a loan of Rs. 50,000/ at one time and Rs. 10,000/ at another time.
The complainant has produced his passbook Ex. CW1/1 which shows withdrawal of Rs. 2,20,000/ on 16.04.2018 to prove that amount was withdrawn from bank account to give to the accused in cash. Although, this amount could have been withdrawn by the complainant for any purpose but due to presumption u/s 139 of NI Act of legal enforceable debt, it is safe to presume that the said amount could have been withdrawn to advance to the accused.
Secondly, the accused challenged the financial capacity of the complainant. The complainant produced his ITR for period 201718 which shows his gross income as Rs. 5 lacs approximately. The complainant had also deposed in his crossexamination that he used to get Rs. 25,000/ per month as pension in the year 2018.
From the above facts, it is clear that the complainant had the financial capacity to advance the amount of Rs. 2,20,000/.
Thirdly, accused argued that the cheque is a NonCTS cheque and was issued in 200708. He had further argued that NonCTS cheque could not have been issued in 2018 as alleged by the complainant. As per the guideline of the RBI mentioned at FAQs on the official website of the RBI as "Banks have been advised to issue only CTS 2010 standard compliant cheques from September 30, 2012. Earlier, there were septate clearing sessions for non-CTS cheques. However, they were discontinued with effect from December 31, 2018. As of now, non-CTS cheques cannot be presented in CTS. Bank have been advised to withdraw the non-CTS cheques from the customers. However, non- CTS cheques remain to be valid as a negotiable instrument ".
Zile Singh v. Aryan Sharma 13 of 15 From the above, it is clear that the NonCTS cheques were still valid even after 1st January, 2019 as a negotiation instrument but they were discouraged by the RBI through its notification as the object was to replace the same with CTS Cheques. RBI had taken on the project whereby they have issued many notifications from time to time directing the banks to replace the NonCTS cheques with CTS cheques.
This is in itself is not sufficient to prove that cheque was issued in 2007
08. The accused may have issued NonCTS cheque in 2018 as per the allegation of the complainant as the same were not completely out of circulation.
All this supports the presumption in favour of the complainant and the onus was on the accused to lead evidence to rebut the said presumption. The same is supported by the reasoning delivered by the Hon'ble Supreme Court dated 15.03.2019 in Rohitbhai Jivanlal Patel v. State of Gujarat & Anr., Criminal Appeal no. 508 of 2019. Moreover, the accused did not protest filing of the present complainant, nor any police complainant was filed against the alleged misuse of the present cheque in question. In the light of the documentary evidences adduced by the complainant and mere verbal statement of the accused, the defence is not tenable. The accused side has not been able to rebut the presumption of consideration with exists in favour of complainant in given circumstances, therefore, defence of accused stands rejected. FINAL CONCLUSION
12. It stands established on record in the form of evidence of the complainant given vide affidavit (which can be read in evidence at all stages as per Zile Singh v. Aryan Sharma 14 of 15 judgment of "Rajesh Agarwal Vs. State & Anr." 171 (2010) DELHI LAW TIMES 5), documents exhibited in evidence, admission(s) of accused during notice/accusations explained to him and statement of accused recorded under Section 313 of The Code of Criminal Procedure, 1973 read with Section 281 of The Code of Criminal Procedure, 1973 that accused issued cheque in question for discharge of his liability, cheque got dishonored on presentment, complainant served legal demand notice upon accused demanding the cheque amount in question, however, accused failed to make the said payment within statutory period despite service. So, all the ingredients of offence punishable under Section 138 of The Negotiable Instruments Act, 1881 stands established on record.
FINAL ORDER
13. In view of the aforementioned facts and circumstances, this Court is of the opinion that complainant has proved its case against the accused for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 beyond shadow of any reasonable doubt. Accordingly, accused namely Aryan Sharma stands convicted for offence punishable under Section 138 of The Negotiable Instruments Act, 1881.
Announced in the open Court on January 03, 2023.
(RAHUL JAIN)
MM (NI) ACT-04,
DWARKA
COURTS NEW DELHI/03.01.2023
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