Delhi District Court
Hari Singh Dron vs Jawahar Singh on 24 January, 2024
IN THE COURT OF SH. BHARAT AGGARWAL,
METROPOLITAN MAGISTRATE-01, N.I. ACT,
SOUTH DISTRICT, SAKET COURTS, DELHI
CT Case no. 472500/2016
PS - Saket
u/s 138 of the Negotiable Instruments Act, 1881
Hari Singh Dron Vs. Jawahar Singh
JUDGMENT
A. SL. NO. OF THE CASE : 472500/2016
B. DATE OF INSTITUTION : 11.08.2016
C. DATE OF OFFENCE : After 15th day of service of legal
demand notice issued by
complainant
D. NAME OF THE : Hari Singh Dron
COMPLAINANT S/o Sh. Chote Lal
R/o H. no. 1094,
Gali no.25, Block-L-Ist
Sangam Vihar, New Delhi-110080
E. NAME OF THE ACCUSED : Jawahar Singh
S/o Sh. Kamal Singh
R/o H. no. C-125,
J.J. Colony, Pocket-4,
Bindapur, Uttam Nagar,
New Delhi-110059
(near mother dairy).
F. OFFENCE : u/s 138 NI Act
COMPLAINED OF
G. PLEA OF ACCUSED : Pleaded not guilty
H. FINAL ORDER : Acquittal
I. DATE OF FINAL ORDER : 24.01.2024
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BRIEF STATEMENT OF REASONS FOR DECISION:
1. Accused is produced before the court to stand trial for the offence punishable u/s 138 of the Negotiable Instruments Act, 1881 ("Act"). He was summoned by this court to face the trial vide order dated 16.08.2016.
2. Briefly stated, it is the case of the complainant that complainant booked eight flats from the accused for his relatives and friends since 2012 to 2015 and he gave around Rs.32,00,000/- in total since 2012 to December, 2015 to the accused. It is stated that flats were booked in the name of Mr. Sagar Singh, Ms. Mithilesh, Ms. Shardha, Ms. Gulabo and Mr. Ashish and the accused is in the business of property dealing and he is the president of "Delhi Jhuggi Jhopri Ekta Manch". It is alleged that the accused promised to give the flats to all the persons in Dwarka Sector-16B and in January, 2016 accused gave a cheque of total amount taken by him ie. Rs.32,00,000/- in the name of the complainant vide cheque no. 572450 dated 08.06.2016 drawn on Canara Bank, R.K. Puram Branch, New Delhi (hereinafter referred to as "cheque in question"). It is alleged that the same was dishonoured with the remarks "funds insufficient"
vide memo dated 17.06.2016. It is further alleged that complainant issued a legal demand notice through registered AD dated 13.07.2016 and despite service, no response was issued by the accused. Accordingly, it is prayed that accused be punished for the offence punishable u/s 138 of the NI Act.
3. The accused was summoned vide order dated 16.08.2016 and on 25.03.2017, notice was framed against the accused u/s 251 Cr.P.C for the offence punishable u/s 138 of the NI Act. The accused pleaded not guilty and claimed trial. He stated that he has not taken any amount from the complainant and he has not issued the cheque in question to the complainant. He denied the signatures CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 2 of 24 and handwriting on the cheque in question. He admitted the receipt of the legal notice and stated that he has issued response to the same.
EVIDENCE LED BY THE PARTIES:-
4. The complainant in order to prove his case, examined himself as CW-1 in his case and evidence led before the court. CW-1 tendered evidence his affidavit Ex. CW-1/A and relied upon the following documents:-
i. Ex. CW1/A is cheque in question bearing no. 572450 dated 08.06.2016 for an amount of Rs. 32,00,000/- drawn on Canara Bank, R.K. Puram Branch, New Delhi.
ii. Ex. CW1/B is return memo dated 17.06.2016 with remarks "funds insufficient".
iii. Ex. CW1/C is legal notice dated 13.07.2016.
iv. Ex. CW1/D and Ex. CW1/E are postal receipts v. Ex. CW1/F is tracking report vi. Ex. CW1/G (Colly-OSR) is the receipt of DDA and related documents CW-1 was cross examined at length by the Ld. Defence Counsel. Upon his cross-examination, CW-1 inter alia stated that his monthly income is Rs.30,000/- to Rs.35,000/-. He further admitted that his son was doing work with the accused from 2008 to 2016 as active member of the Jhuggi Jhopri, Ekta Munch, NGO. He further stated that he booked eight government flats with the accused and he was unable to tell the exact date, time etc. of the booking of such flats. He stated that he gave the money from 2012 to 2015 to the accused. He further stated that due to cordial relation, he did not take the receipt of the amount paid. He further CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 3 of 24 stated that the flats were DDA flats and he made all payment to the accused in cash. He stated that he filed ITR of Rs.2,50,000/- to 3,00,000/- and he paid Rs.10,00,000/- out of his agricultural income and savings. He further admitted that no police complaint was filed against the accused and he deposed that accused showed him the property papers at the time of booking. He further admitted that no document was executed with him and the accused at the time of booking of the flat. He further deposed that cost of each flat was Rs.8,00,000/-. During the course of evidence, ITR of the complainant and his bank statement was taken on record as Ex. CW1/I and Ex. CW1/J. Complainant later deposed that he sold his tractor and the sale proceeds were given to the accused as payment towards the flats. He was confronted with his deposition on 02.05.2018 where he stated that the payment was made from his agricultural income and savings. He further deposed that he only saw the flat from the outside as he trusted the accused. Complainant did not examine any other witness to support his case.
5. Thereafter, on 11.10.2021 statement of accused u/s 313 Cr.P.C. was recorded whereby accused stated that the complainant has not given any money to him and he has never issued the cheque in question to the complainant. He alleged that son of the complainant was his employee and he stole the said cheque from his office and the same is misused.
6. Accused chose to lead evidence during recording of his statement on 11.10.2021. However, no evidence was led on behalf of accused despite several opportunities and eventually vide order dated 03.11.2023 the defence evidence was closed in the present case.
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7. Final arguments were heard from both the sides and liberty was given to file written submissions.
ARGUMENTS ADVANCED BY PARTIES AND FINDINGS THEREON:-
8. Ld. Counsel for complainant has argued that the complainant booked around eight flats from the accused for his relatives and friends since 2012 to 2015 and gave around Rs.32,00,000/- to the accused after collecting from several persons. It is alleged by the complainant that the flats were booked in Dwarka, Section 16B and eventually the cheque in question was issued by the accused towards discharge of his liability as he failed to deliver the flats. It was argued that the accused has failed to prove that the cheque in question was stolen by the son of the complainant and no witness has been examined in defence by the accused. It was further argued that accused has not rebutted the presumption under Section 139 of the Act in favour of the complainant. It was further argued on behalf of the complainant that the accused has misguided the complainant and has cheated several persons after taking their hard-earned money and accordingly, he must be punished in the present case.
9. Per contra, it was argued on behalf of the accused that he is not liable in the present case and he has not issued any cheque to the complainant. It was further argued that the cheque in question was stolen and the complainant has misused the cheque. It was also argued that the complainant has not given any date on which the money was allegedly paid by him to the accused and a concocted story has been prepared by the complainant in the present case. It was further argued by Ld. Defence counsel that the complainant has not filed any case against the accused for non delivery of the flats and he has failed to produce any witness before whom the money was advanced. Ld. Defence counsel has further argued that the accused has not received any single penny from the complainant for any sale consideration towards the flat as the accused is neither a government employee nor he was CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 5 of 24 working in DDA and as such he could not have been taking any booking of DDA flats. It was further argued that the son of the complainant Sh.Ranjit used to work with the accused and handle the day-to-day affairs of the NGO for about 25 years and he stole the cheque in question and thereafter, the complainant in collusion with his son has filed the present false case. It was further pointed out by Ld. Defence Counsel that no agreement was ever executed between the parties and there is no receipt of any payment as alleged by the complainant. It was finally argued by Ld. Defence counsel that alleged agreement between the parties is even otherwise void and not enforceable and therefore, the present case is not maintainable u/s 138 of the Act.
DECISION WITH REASONS:-
10. Before appreciating the facts of the case in detail for the purpose of decision, let relevant position of law be discussed. Section 138 of the Act 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;
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(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.
11. It is well settled position of law that to constitute an offence under S.138 N.I. Act, the following ingredients are required to be fulfilled:
(A) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/part any debt or liability;
(B) 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;
(C) returning 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, (D) giving notice in writing to the drawer of the cheque within 30 days of the receipt of information by the payee CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 7 of 24 from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount, (E) 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.
Therefore, it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the N I Act.
12. The Act raises two presumptions in favour of the holder of the cheque i.e., complainant in the present case; firstly, in regard to the passing of consideration as contained in Section 118 (a) therein and, secondly, a presumption under Section 139, that the holder of cheque receiving the same of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability.
13. Analyzing all the concerned provisions of law and various pronouncements in this regard, the Hon'ble Apex Court in Basalingappa v. Mudibasappa, AIR 2019 SC 1983, noted as follows:
(i) Once the execution of cheque is admitted, Section 139 of the Act mandates a presumption that the cheque 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 CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 8 of 24 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 the parties but also 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.
(v) It is not necessary for the accused to come in the witness box to support his defence.
14. To put in nutshell, the law regarding the presumption for the offence under Section 138 of the Act, the presumptions under Sections 118(a) and 139 have to be compulsorily raised as soon as execution of cheque by accused is admitted or proved by the complainant and thereafter burden is shifted upon the accused to prove otherwise. These presumptions shall end only when the contrary is proved by the accused, that is, that the cheque was not issued for consideration and in discharge of any debt or liability etc. The onus to prove the issuance of the cheque lies upon the complainant, and the same has to be proved beyond reasonable doubt, unless the accused admits the same. Once the issuance of cheque is established, either by admission or by positive evidence, the presumption under Section 139 of the Act comes into play.
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15. As per s. 139 of the Act 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. Therefore, here the onus shifts upon the accused to prove the non-existence of debt or other liability. Section 139 of the Negotiable Instruments Act, 1881 uses the word "shall presume", which means that the presumption under Section 139 is rebuttable. The standard of proof required to rebut the presumption under Section 139 is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or other liability, the onus shifts back to the complainant to prove by way of evidence, beyond reasonable doubt, that the cheque in question was issued by the accused in discharge, whole or in part, of any debt or other liability. If the accused is able to raise a probable defence, then the presumptions under Section 118 (a) and Section 139 will not come to the aid of the complainant. For this purpose, the accused may adduce direct evidence to prove that the cheque in question was not supported by consideration, and that there was no debt or liability to be discharged by him.
16. At the same time, it is clear that a bare denial of passing of 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 the 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 circumstances of the case, act upon the plea that they did not exist. From the legal provisions and the law laid down in various judgments, it can be safely gathered that it is for the accused to rebut the presumptions. He can do so by cross examining the complainant, or by leading defence evidence, thereby demolishing the case of the complainant. It is CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 10 of 24 amply clear that the accused does not need to discharge his or her liability beyond the shadow of reasonable doubt. He just need to create holes in the case set out by the complainant and create a reasonable doubt over the version put forth by the complainant.
17. Reverting to the facts of the case at hand, it is the case of the complainant that a total sum of Rs.32,00,000/- was paid by him to the accused on his behalf and on behalf of several intending flat purchasers towards purchase of 8 flats. It is alleged by the complainant that he collected money from several persons i.e. Sh. Sagar Singh, Ms. Mithilesh, Ms. Sharda, Ms. Gulabo and Mr. Ashish who were relatives/close friends of the complainant and as the accused was a builder and the President of Society called "Delhi Jhuggie Jhopri Ekta Manch", money was given to him in a good faith for delivery of flats in Dwarka Sector 16B, Delhi. It is alleged by the complainant that the flats were not provided within six months and accordingly the cheque in question was issued by the accused towards re-payment of the money given by the complainant.
18. During the framing of notice on 25.03.2017, the accused stated that he has not taken any money from the complainant and he has not issued the cheque to the complainant. Accused denied execution of the cheque and the handwriting on the cheque in question.
19. It is pertinent to note here that the accused did not admit execution of the cheque in question and the complainant has not led any evidence on record to prove that the cheque in question was actually executed and issued by the accused in his favour. Hence, it is evident from the record that the presumption regarding the existence of a debt or legal liability as prescribed u/s 139 of the Act CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 11 of 24 did not arise in the present case in view of specific denial of execution of the cheque by the accused.
20. The complainant was required to establish through positive evidence that the cheque bears the signatures of the accused and the same duly executed by him, which he has failed to do. The complainant has not lead evidence of any witness in the present case apart from himself. The complainant was expected to lead cogent evidence in his favour to prove the execution of the cheque in question by accused herein and the existence of a legally recoverable debt in order to prove the ingredients of the alleged offence.
21. It is further pertinent to note that the complainant has also failed to prove that the signatures on the cheque in question belongs to accused. Accused has specifically denied the execution of the cheque and hand writing on the cheque in question and in such circumstances, it was incumbent upon the complainant to prove that the cheque in question was issued by the accused himself in view of the defence taken by the accused. Complainant was required to prove the same and the complainant chose not to call the bank witness or anyone else, for reasons known to the complainant himself to prove issuance and execution. The complainant was expected to lead credible evidence on record to show that the cheque in question was issued by the accused and he has deliberately avoided his liability by alleging that the cheque in question and the handwriting on the same is not his. However, the complainant failed to discharge the burden of proof expected from him considering that the accused was successful in raising a probable defence. As discussed, the presumption available to the complainant u/s 139 of the NI Act is not attracted in the present case and in such circumstances, in the opinion of this court, it was required from the complainant that he proves CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 12 of 24 his case on record on the scale of beyond reasonable doubt that the cheque bears the signatures of the accused and it was issued towards an existing legal liability.
22. It is the case of the complainant that the cheque was issued by the accused towards discharge of his liability as he had received Rs.32,00,000/- in cash from the complainant towards booking of eight flats for relatives and friends of the complainant. It is further the case of the complainant that as the flats were not delivered by the accused within the prescribed time, the cheque in question was issued towards discharge of his liability. It is pertinent to note that complainant has chosen not to lead any evidence of any such intending purchaser of the flat supposed to be delivered by the accused despite alleging that he collected money from such persons and he acted as a mediator. In such circumstances, it was extremely essential for the complainant to lead evidence of such beneficiaries of the prospective flats to prove that they have rather made payments to the complainant with the intention to purchase flats from the accused. The non- production of such essential evidence before the court during the trial would create an adverse inference that such material witnesses would not have supported the allegations of the complainant made in the complaint.
23. It is further noticeable that the complainant has failed to prove any receipts of payment made by him to the accused and he has failed to lead evidence of any person before him such alleged payment was made by him to the accused. The complainant has vaguely mentioned the sum of Rs. 32,00,000/- without offering any explanation regarding the break-up of the amounts paid. He has not bothered to place the details of payment alongwith amount on record which was most crucial aspect of the present controversy. Even during his cross-examination, the complainant failed to clearly explain the details of payments and the transactions regarding the alleged loan.
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24. During his cross-examination, the complainant stated that he did not insist for receipt of the amount paid to the accused which is extremely surprising as despite making such payments in cash, complainant did not insist upon a receipt which casts serious doubt upon the version of the complainant. The complainant has vaguely stated in his complaint and evidence by way of affidavit Ex.CW1/1 that a payment of Rs.32,00,000/- was made by him to the accused from 2012 to 2015, however, he has failed to mention any specific dates and specific amounts of payment made to the accused. The averments made by the complainant are quite vague and ambiguous in nature. Further, the complainant has failed to explain as to why despite knowing that the alleged flats are government/DDA flats, he made the payments to the accused who admittedly is not working with DDA. The complainant has also failed to file any agreement between the parties and it is difficult to believe that one would not insist for a written agreement in respect of any transaction pertaining to an immovable property. The fact that one would make such huge payments in cash to an alleged builder/property dealer towards booking of prospective flats without obtaining receipts, does not inspire confidence of this court.
25. The complainant has placed on record one receipt allegedly issued by DDA in his favour Ex.CW1/G dated 07.02.2010. However, during his cross- examination, he failed to answer as to who had signed on the same. He further stated that the said document was handed over by the accused to him after dishonor of the cheque, which is also quite unbelievable as one would expect handing over of receipts at the time of payment and not after six years from making the alleged payment. In such circumstances, as various doubts are created from the version alleged by the complainant in his complaint and evidence by way of affidavit, he was required to prove his case beyond CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 14 of 24 reasonable doubt and he was obligated to prove existence of legally recoverable debt from the accused and also the issuance of the cheque in question by the accused. The complainant has miserably failed to do so and such exercise was also mandated on record in light of the fact that the accused has completely denied his case and none of the alleged facts has been admitted by the defence. Hence, one of the most essential ingredients of the offence prescribed under Section 138 of the NI Act has not been fulfilled in the present case and complainant has failed to led evidence in his favour to show fulfillment of ingredients of the offence against the accused.
26. Another aspect of the case is that the complainant has failed to establish the financial capacity of every individual to make the payment of such huge amounts in cash to the accused. It is relevant to deal with the contentions of both the parties regarding financial capacity of the complainant to pay a huge amount of Rs.32,00,000/- to the accused on behalf of several intending flat buyers. Perusal of the cross examination of the complainant held on several occasions, show that the complainant stated that his monthly income is about Rs.30000/- to Rs.35,000/- and his yearly saving is about Rs.3,00,000/-. The complainant firstly stated that he paid Rs.10,00,000/- to the accused out of his agricultural income and savings. However, later on he contradicted himself and stated that he paid the said amount to the complainant after selling his tractor and he also failed to produce any such documents regarding the sale of his tractor. The complainant also failed to produce any other documents regarding his income and financial capacity during the trial to show that he can make payment of Rs.10,00,000/- to the accused in cash. The complainant has also admittedly failed to place on record the receipts of payment to the tune of Rs.32,00,000/-. In the absence of an agreement, receipt and witnesses to handing over of such huge amount, the version of the complainant does not inspire much confidence of this court.
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27. Admittedly, no income tax return has been placed on record by the complainant which could prove that the complainant had sufficient income to pay Rs.10,00,000/- in cash to the accused. At this juncture, with regard to the defence pertaining to financial capacity of the complainant to advance cash loan, it is relevant to rely upon the observations of Hon'ble Supreme Court in K. Subramani v. K. Damodara Naidu, (2015) 1 SCC 99 : (2015) 1 SCC (Cri) 576, wherein it was inter alia observed by the Hon'ble Apex Court as follows:-
9. In the present case the complainant and the accused were working as Lecturers in a government college at the relevant time and the alleged loan of Rs 14 lakhs is claimed to have been paid by cash and it is disputed. Both of them were governed by the Government Servants' Conduct Rules which prescribes the mode of lending and borrowing. There is nothing on record to show that the prescribed mode was followed.
The source claimed by the complainant is savings from his salary and an amount of Rs 5 lakhs derived by him from sale of Site No. 45 belonging to him. Neither in the complaint nor in the chief-examination of the complainant, is there any averment with regard to the sale price of Site No. 45. The sale deed concerned was also not produced. Though the complainant was an income tax assessee he had admitted in his evidence that he had not shown the sale of Site No. 45 in his income tax return. On the contrary the complainant has admitted in his evidence that in the year 1997 he had obtained a loan of Rs 1,49,205 from LIC. It is pertinent to note that the alleged loan of Rs 14 lakhs is claimed to have been disbursed in the year 1997 to the accused.
Further the complainant did not produce bank statement to substantiate his claim. The trial court took into account the testimony of the wife of the complainant in another criminal case arising under Section 138 of the NI Act in which she has stated that the present appellant-accused had not taken any loan from her husband. On a consideration of entire oral and CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 16 of 24 documentary evidence the trial court came to the conclusion that the complainant had no source of income to lend a sum of Rs 14 lakhs to the accused and he failed to prove that there is legally recoverable debt payable by the accused to him.
10. In our view the said conclusion of the trial court has been arrived at on proper appreciation of material evidence on record. The impugned judgment [K. Damodara Naidu v. K. Subramani, Criminal Appeal No. 368 of 2009, decided on 10-10-2013 (KAR)] of remand made by the High Court in this case is unsustainable and liable to be set aside.
11. In the result this appeal is allowed and the impugned judgment [K. Damodara Naidu v. K. Subramani, Criminal Appeal No. 368 of 2009, decided on 10-10-2013 (KAR)] insofar as the appellant is concerned is set aside and the judgment of acquittal passed by the trial court is restored.
Further, in Basalingappa v. Mudibasappa, (2019) 5 SCC 418 : (2019) 2 SCC (Cri) 571, the observations of the Hon'ble Supreme Court on the aspect of financial capacity of the complainant to advance the cash loan, are reproduced below:-
30. We are of the view that when evidence was led before the court to indicate that apart from loan of Rs 6 lakhs given to the accused, within 2 years, amount of Rs 18 lakhs have been given out by the complainant and his financial capacity being questioned, it was incumbent on the complainant to have explained his financial capacity. Court cannot insist on a person to lead negative evidence. The observation of the High Court that trial court's finding that the complainant failed to prove his financial capacity of lending money is perverse, cannot be supported. We fail to see that how the trial court's findings can be termed as perverse by the High Court when it was based on consideration CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 17 of 24 of the evidence, which was led on behalf of the defence.
32. The High Court without discarding the evidence, which was led by defence could not have held that the finding of trial court regarding financial capacity of the complainant is perverse. We are, thus, satisfied that the accused has raised a probable defence and the findings of the trial court that the complainant failed to prove his financial capacity are based on evidence led by the defence. The observations of the High Court that findings of the trial court are perverse are unsustainable. We, thus, are of the view that judgment of the High Court is unsustainable.
The Hon'ble Apex Court in APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers, (2020) 12 SCC 724 : (2020) 4 SCC (Cri) 505, observed as follows:-
8.4. Now so far as the reliance is placed by the learned counsel appearing on behalf of the accused on the decision of this Court in Basalingappa [Basalingappa v. Mudibasappa, (2019) 5 SCC 418 :
(2019) 2 SCC (Cri) 571] , on going through the said decision, we are of the opinion that the said decision shall not be applicable to the facts of the case on hand and/or the same shall not be of any assistance to the accused. In that case, before this Court, the defence by the accused was that the cheque amount was given by the complainant to the accused by way of loan. When the proceedings were initiated under Section 138 of the NI Act, the accused denied the debt liability and the accused raised the defence and questioned the financial capacity of the complainant. To that, the complainant failed to prove and establish his financial capacity.
Therefore, this Court was satisfied that the accused had a probable defence and consequently, in absence of the complainant having failed to prove his financial capacity, this Court acquitted the accused. In the present case, the accused never questioned the financial capacity of the complainant. We are of the view that CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 18 of 24 whenever the accused has questioned the financial capacity of the complainant in support of his probable defence, despite the presumption under Section 139 of the NI Act about the presumption of legally enforceable debt and such presumption is rebuttable, thereafter, the onus shifts again on the complainant to prove his financial capacity and at that stage, the complainant is required to lead the evidence to prove his financial capacity, more particularly when it is a case of giving loan by cash and thereafter issuance of a cheque. That is not the case here.
Further recently in Tedhi Singh v. Narayan Dass Mahant, (2022) 6 SCC 735 :
(2022) 2 SCC (Cri) 726, the following was observed by the Hon'ble Supreme Court of India:-
8. It is true that this is a case under Section 138 of the Negotiable Instruments Act. Section 139 of the NI Act provides that court shall presume 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. This presumption, however, is expressly made subject to the position being proved to the contrary. In other words, it is open to the accused to establish that there is no consideration received. It is in the context of this provision that the theory of "probable defence" has grown. In an earlier judgment, in fact, which has also been adverted to in Basalingappa [Basalingappa v. Mudibasappa, (2019) 5 SCC 418 : (2019) 2 SCC (Cri) 571] , this Court notes that Section 139 of the NI Act is an example of reverse onus (see Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441 : (2010) 4 SCC (Civ) 477 :
(2011) 1 SCC (Cri) 184] ). It is also true that this Court has found that the accused is not expected to discharge an unduly high standard of proof. It is accordingly that the principle has developed that all which the accused needs to establish is a probable defence. As to whether a probable defence has been established is a matter to be decided on the facts of each case on the conspectus of evidence and circumstances that exist.
CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 19 of 24
9. It is indeed true that there is some merit in the complaint of Ms Sangeeta Bharti, learned counsel for the appellant that in the impugned judgment [Tedhi Singh v. Narayan Dass, 2018 SCC OnLine HP 2336] the High Court has not appreciated the real purpose of examining DW 1 to DW 4. She is also correct when she drew our attention to the accounts of Gramin Bank i.e. Gramin Bank, Kullu to show that before 5-8-2011 the appellant had stopped operating the account in the said bank and a very small and ignorable amount alone was available in the said account.
10. The trial court and the first appellate court have noted that in the case under Section 138 of the NI Act the complainant need not show in the first instance that he had the capacity. The proceedings under Section 138 of the NI Act is not a civil suit. At the time, when the complainant gives his evidence, unless a case is set up in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity. To that extent, the courts in our view were right in holding on those lines. However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents. It is also open to him to establish the very same aspect by pointing to the materials produced by the complainant himself. He can further, more importantly, achieve this result through the cross-examination of the witnesses of the complainant. Ultimately, it becomes the duty of the courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence.
CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 20 of 24
28. Thus, perusal of the above observations clearly show that when the accused has successfully raised a doubt over the credibility of the case put forth by the complainant or when the accused has challenged complainant's capacity to advance a loan of a huge amount in cash, then the complainant is required to establish his capacity to advance such huge amount during the course of the trial. In such circumstances, the complainant was required to prove his financial capacity and also the capacity of the other intending purchasers to pay such amounts to the accused as they have been paid by several persons on different occasions. Perusal of the testimony of the complainant in his affidavit by way of evidence as well as his cross examination would clearly reveal that he has miserably failed to show the source of funds from where he himself arranged huge amount of Rs.10,00,000/- in cash. The complainant has also miserably failed to show on record the receipt or acknowledgement of entire payment by the accused or the relevant documents showing the source of funds or any other documents evidencing his capability to advance such huge amount. Even otherwise, the complainant has not bothered to explain the dates and tranches in which the payments were made which per se creates a shadow of doubt on his allegations. Such circumstances, creates a serious doubt over the credibility and truthfulness of CW-1 and the case set up by him for trial. Accused has successfully rebutted the presumption in favour of the complainant by pointing out such flaws and circumstances from the case of the complainant himself.
29. Merely because the cheques were issued from an account maintained by the accused or that the accused is unable to give any reasonable explanation regarding the possession of the cheque by the complainant or that he failed to file a lost/theft complaint regarding the cheque in question would not invite the culpability under Section 138 of the NI Act. The complainant is required to prove CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 21 of 24 his case beyond reasonable doubt against the accused as the offence involves punishment and criminal prosecution.
30. It is also trite that the presumption of law can be rebutted by the accused by relying upon the circumstances of the case and the evidence led by the complainant on record and it is not necessary for him to lead positive evidence for proving rebuttal of presumption of law. At this stage, it is relevant to reproduce the observations of the Hon'ble Supreme Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde [(2008) 4 SCC 54 : (2008) 2 SCC (Cri) 166 : 2008 SCC OnLine SC 106], which are reproduced herein below:
31.The courts below, as noticed hereinbefore, proceeded on the basis that Section 139 raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct.
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 of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different.
35.A statutory presumption has an evidentiary value. The question as to whether the presumption stood rebutted or not, must, therefore, be determined keeping in view the other evidence on record. For the said purpose, stepping into the witness box by the appellant is not imperative. In a case of this nature, where the chances of false CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 22 of 24 implication cannot be ruled out, the background fact and the conduct of the parties together with their legal requirements are required to be taken into consideration.
45.We are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This, however, shall not mean that the courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have rebutted. Other important principles of legal jurisprudence, namely, presumption of innocence as human rights and the doctrine of reverse burden introduced by Section 139 should be delicately balanced. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same. (emphasis supplied).
31. Upon comprehensive consideration of the evidence led on record, it appears that neither the capacity of the complainant to advance the huge payment to the tune of Rs.32,00,000/- nor the existence of any 'debt or liability' to the tune of Rs.32,00,000/- as stated in the cheque in question has been proved on record by the complainant beyond reasonable doubt and accused has been successful in raising a "probable defence" and strong suspicion over the case put forth by the complainant. The cross-examination of the prime prosecution witness, i.e., the complainant has clearly raised serious doubts over the story put forth by the complainant in his complaint.
Accordingly, in view of the above observations, I am of the considered opinion that the accused has successfully rebutted the presumption u/s 139 of the CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 23 of 24 Act on the scale of preponderance of probabilities. The complainant has not been able to prove his case beyond reasonable doubt against the accused and accordingly, the accused deserves to be acquitted.
Accordingly, for the reasons stated above, this court hereby acquits the accused for the offence punishable u/s 138 of the Negotiable Instruments Act, 1881 in respect of cheque in question.
32. Copy of this judgment be given free of cost to the accused against receiving. Digitally signed by BHARAT BHARAT AGGARWAL AGGARWAL Date:
2024.01.24 15:26:23 +0530 ANNOUNCED IN OPEN COURT (Bharat Aggarwal) Today i.e. 24.01.2024 MM-01/ N.I.Act/ South/Saket/Delhi 24.01.2024 Present judgment consists of 24 pages and each page bears my initials.
Digitally signed by BHARAT BHARAT AGGARWAL AGGARWAL Date:
2024.01.24 15:26:36 +0530 (Bharat Aggarwal) MM-01/ N.I.Act/ South/Saket/Delhi 24.01.2024 CT No. 472500/2016 u/s 138 NI Act Hari Singh Dron Vs. Jawahar Singh Page no. 24 of 24