Delhi District Court
Cc No. 5790/2020 C.L. Gupta vs . Rajesh Singh Page No.1/19 on 27 January, 2022
IN THE COURT OF MS. SONIKA, M.M. 05, N.I. ACT, SOUTH
DISTRICT, SAKET, NEW DELHI
C.C. No. 5790/2020
PS : Safdarjung Enclave
C.L. Gupta (Sr. Citizen)
S/o Late Sh. P.L. Gupta ,
R/o 4/1-3, Yusuf Sarai,
New Delhi-110016. ...Complainant
Versus
Rajesh Singh
S/o Sh. R.S. Singh
Proprietor of Phoenix Surgicals
R/o B-2/177, 3rd Floor,
Safdarjung Enclave,
New Delhi-110029. ...Accused
Date of Institution : 21.11.2020
Offence complained of : 138 NI Act
Date of final arguments : 12.01.2022
Date of decision : 27.01.2022
Plea of guilt : Not guilty.
Decision : Acquitted
BRIEF FACTS AND REASONS FOR DECISION OF THE CASE
1. Vide this judgment, this Court shall dispose off the present complaint case instituted by the Complainant invoking the provisions of Section 138 of the Negotiable Instruments Act, 1881(as in after referred to as NI Act).
2. The facts giving rise to the instant complaint case, as per the complainant, may be enumerated as hereafter: On or about 25.08.2014, the accused approached the complainant for a financial help of Rs. 55,00,000/-, with the intent to expand his business and to purchase an industrial plot in SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:42:25 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.1/19 Noida. The complainant had paid an amount of Rs. 20,00,000/- by way of cheque bearing no. 027553 dated 25.08.2014 and thereafter, an amount of Rs. 35,00,000/- in cash on 04.03.2015. An agreement dated 04.03.2015 was also executed between the parties whereby the accused has admitted the receipt of 55 lakhs and the loan was agreed to be refunded by December, 2015. At the time of execution of agreement, the accused had handed over an undated cheque bearing no. 083910, drawn on Indian Bank, Safdarjung Development Enclave, New Delhi for an amount of Rs. 35,00,000/- (hereinafter referred to cheque in question) in discharge of his part liability. Thereafter, the accused repaid the remaining amount of Rs. 20,00,000/- by way of another cheque. The complainant had requested the accused repeatedly to repay the amount of Rs. 35 lacs, however, on 18.06.2019, the accused had misbehaved with the complainant and stated him to present the cheque in question for encashment. Thereafter, the complainant, by putting the date 06.07.2020 on the cheque in question, had presented the same but the same was dishonoured due to reason 'Payment Stopped by drawer' vide bank returning memo dated 07.07.2020 to 08.07.2020. Thereafter, the complainant had sent legal demand notice dated 05.08.2020 to the accused and the same was duly replied, despite which the accused failed to repay the amount. Thus, the Complainant was constrained to institute the present complaint case.
3. Upon appreciation of pre-summoning evidence affidavit, accused was summoned for an offence punishable under Section 138 of NI Act and notice under Section 251, Code of Criminal Procedure, 1973 (herein after referred to as Cr.P.C.) was served upon accused on 09.10.2021 to which he pleaded not guilty and claimed trial. On the same day, the statement of accused under section 294 Cr.P.C. was recorded, wherein he has admitted his signatures on the cheque in question as well as receipt of the demand notice and reply to the same dated 13.08.2020. He has also admitted the execution of agreement dated 04.03.2015. He stated that he had taken a loan of Rs.20 Lacs in the year 2014 from the complainant and the principal amount as well as the interest had been repaid through cheque to the complainant. He further stated that in the year SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:42:53 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.2/19 2014, he had approached the complainant for another loan of Rs.35 Lacs, and at that time, he had given the cheque in question to the complainant for security purposes, however, his C.A. had advised him not to take a loan in cash and the same was informed to the complainant. He stated that no loan was granted by the complainant to him and he had requested the complainant to return the cheque in question, however, the complainant had stated that the cheque had been destroyed. He further stated that in the year 2020, the complainant communicated to him that he was going to deposit the cheque in question in the bank, thus, he instructed his Bank to stop the payment of the same. He denied having any liability towards the complainant.
4. On the oral request of the accused, the accused was granted an opportunity to cross examine the complainant as well as his witnesses, if any.
5. During CE, the Complainant has adopted his pre summoning evidence affidavit (Ex. CW1/X) and relied upon the following documents which were duly exhibited and marked: Agreement dated 04.03.2015, executed between the complainant and the accused as Ex. CW1/1 (OSR), Cheque bearing no. 083910 dated 06.07.2020 drawn on Indian Bank, S D Enclave, New Delhi-29 (cheque in question) as Ex.CW1/2, Bank Returning Memo dated 07.07.2020 to 08.07.2020 as Ex.CW1/3, Legal demand notice dated 04.08.2020 as Ex.CW1/4, Postal Receipts as Ex.CW1/5, Copy of complainant dated 22.06.2019 lodged by the complainant against the accused at PS Safdarjung Enclave as Mark CA, copy of the reply to the demand notice dated 13.08.2020 as Mark CB, copy of the Reservation cum Allotment letter dated 17.07.2014 issued in favour of M/S Phoenix Surgicals as Mark CC.
6. The Complainant examined only one witness i.e. himself as CW-1and he was duly cross examined at length by the Ld. Counsel for accused. CE was closed vide order dated 18.12.2021.
7. Accused was, thereafter, examined U/s 281 r/w Sec 313 Cr.P.C. on 24.12.2021, wherein entire incriminating evidence was put to him. At this stage, the accused took the defence that in the year 2014, he had availed a loan SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:43:15 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.3/19 of Rs.20 lakhs from the complainant through cheque; thereafter he had approached the complainant for a loan of R.35 lakhs in the year 2015. He stated that at that time, an agreement was entered into between him and the complainant for a total amount of Rs.55 lakhs and he had handed over the undated cheque in question which was duly filled by him. He further stated that the complainant had told him that he can give the loan of Rs.35 lakhs in cash only, but his CA had instructed him not to take the amount in cash, thus, the amount of Rs.35 lakhs was never taken from the complainant. He further stated that the amount of Rs.20 lakhs was repaid by way of cheque in the year 2016- 17 and at the time of repayment, he had requested the complainant to return the cheque in question, however, the complainant had stated that the same had been destroyed by him. He further stated that in the year 2018-19, accountant of the complainant had informed him that the complainant is going to present the cheque in question for encashment and therefore, he had instructed his bank to stop the payment of cheque in question. He admitted that the demand notice was duly replied by him. He further stated that the complainant had also instituted a police complaint against him. He denied any liability towards the complainant. Since, the accused chose not to lead evidence in his defence, matter was fixed for Final arguments.
8. I have considered the rival submissions of the parties and perused the entire evidence led by the parties and the material available on record.
9. During the course of final arguments, Ld. Counsel for complainant argued that there exist legally enforceable liability in favour of the complainant on behalf of the accused and the same is evident from Ex. CW1/1. He further argued that the cheque in question (Ex.CW1/2) was issued to the complainant and the signatures had already been admitted by the accused. He further argued that upon presentation, the cheque had been dishounred and the same had been proved by Ex.CW1/3. Further, he argued that the demand notice Ex.CW1/4 was duly served upon the accused and the same was duly replied. He further argued that the complainant did not receive any payment after service of legal notice. Ld. Counsel for complainant submitted that all the ingredients of SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:43:37 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.4/19 Section 138 NI Act stand fulfilled and the accused should be convicted.
10. Per contra, ld. Counsel for accused argued that there is no legally enforceable debt/liability in favour of the accused as the alleged loan was never availed by the accused. He further argued that the alleged loan has not been shown by the complainant in the ITR, thus, it is an unaccounted transaction and the same cannot be relied upon. He further argued that Ex. CW1/1 clearly shows that the loan was to be repaid on or before 31.12.2015, however, the cheque was presented in 2020, thus, the alleged loan is a time barred debt and thereby not recoverable. He further argued that the cheque in question was issued as a security cheque only and not in discharge of any liability. He further argued that the testimony of the complainant cannot be relied upon as there are discrepancies his evidence. He prayed that the accused be acquitted of the offence.
11. In the backdrop of the foregoing factual score, this Court shall now proceed to examine the position of law governing the facts peculiar to the present case.
12. The following ingredients must be satisfied in order to bring home the guilt of a person accused for the commission of an offence punishable under Section 138 of NI Act, which has also been observed by the Hon'ble Supreme Court of India in the matter of Jugesh Sehgal Vs. Shamsher Singh Gogi, (2009) 14 SCC 683:
"9. It is manifest that to constitute an offence under Section 138 of the Act, the following ingredients are required to be fulfilled:
(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;
(ii) the cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
(iii) that cheque has been presented to the bank within a period SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:44:14 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.5/19 of six months from the date on which it is drawn or within the period of its validity whichever is earlier;
(iv) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the 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 the bank;
(v) the payee or the holder in due course of the cheque 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 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(vi) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice"
The abovementioned proposition of law was reiterated by the Hon'ble Supreme Court in the matter of Aparna A. Shah v M/s Sheth Developers P. Ltd & Anr. (2013)8 SCC 71.
13. It is a well settled principle of criminal jurisprudence that a criminal trial precedes on the presumption of innocence of the accused i.e. an accused is presumed to be innocent unless proved guilty. Thus, normally the initial burden is on the complainant/ prosecution to prove the guilt of the accused and the standard of proof for the same is beyond reasonable doubt. However, in offences under Section 138 NI Act, there is a reverse onus clause, which is contained in Sections 118 and 139 of the Act.
Section 118 of the N.I Act provides:
"Presumptions as to negotiable instruments: Until the contrary is proved, the following presumptions shall be made:
(a) of consideration - that every negotiable instrument was made or SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:44:34 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.6/19 drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration;"
Section 139 of the N.I Act further provides as follows:
"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".
14. Once the foundational facts that the cheques in question bears the signatures of the accused and the same has been drawn on account maintained by him are established, a factual base is established to invoke the presumption of cheque having being issued in discharge of a legally recoverable debt and drawn for good consideration by virtue of Section 118(a) r/w Section 139 of NI Act. It is a mandatory presumption, though the accused is entitled to rebut the said presumption.
15. In case of Kumar Exports vs. Sharma Carpets,(2009) 2 SCC 513, the Hon'ble Supreme Court had held:-
"The accused under Section 138 NI Act has two options. He can either show that the consideration and debt did not exit or that under the particular circumstances of the case, the non existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumption, an accused is not expected to prove his defence beyond reasonable doubt as it is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non existence of consideration and debt by leading direct evidence because the existence of SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:44:57 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.7/19 negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which his probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or there non existence was so probably that a prudent man under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question, was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon the circumstantial evidence and if the circumstances so relied upon are so compelling, the burden may likewise shift again on the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arises under Section 118 and 139 of NI Act".
16. The principles pertaining to the presumptions and the onus of proof were recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarise the principles enumerated by this Court in the following manner:
25.1. 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.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:45:25 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.8/19 defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the 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.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence. Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
17. As discussed above, it is clear that the accused need not discharge liability beyond the shadow of reasonable doubt rather needs to prove his defence upon preponderance of probabilities. Accused can say that the version brought forth by the complainant is inherently unbelievable and therefore, the prosecution cannot stand or the accused can give his version of the story and say that on the basis of his version, the story of the complainant cannot be believed. In the first situation, the accused has nothing to do except to point inherent inconsistencies in the version of the complainant.
18. So far as the factum of liability is concerned, in view of the mandatory presumptions of law as discussed above, if an accepted signed cheque has been produced the complainant, then there cannot be any inherent lacuna in the existence of the liability. But then, definitely, accused can create some loopholes in the story of the complainant. Accused can discharge his burden by demonstrating the preponderance of probabilities.
19. In the present case, among other arguments, one of the arguments advanced by the Ld. Counsel for accused is regarding the non existence of any legally enforceable debt/liability at the time of issuance of cheque. In my SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:45:48 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.9/19 considered opinion, the same requires to be decided at the first and foremost stage.
20. Perusal of the testimony of the complainant would show that in his affidavit of evidence, Ex. CW1/X, the complainant had deposed that the cheque in question was handed over at the time of execution of agreement, Ex. CW1/1, dated 04.03.2015 and the entire loan of Rs. 55 Lakhs was refundable by December, 2015. Further, perusal of agreement dated 04.03.2015, Ex. CW1/1 shows that the loan was agreed to be repaid by 31.12.2015. Further, during the cross-examination, the complainant has deposed that the loan was agreed to be refunded in a period of one year. The complaint has also placed on record a copy of a complaint dated 22.06.2019 registered at PS Safdarjung Enclave which was marked as Mark CA. Perusal of the same shows that therein, the complainant had stated that the accused promised to refund the entire loan amount in 2018 and during his cross-examination, the complainant claimed that the version depicted by him in the compliant Mark CA is correct.
21. Perusal of Mark CA reveals that it is allegedly a police complaint stated to be lodged by the complainant with PS Safdarjung Enclave on 22.06.2019. Admittedly, only the photocopy of the complaint was placed on record, however, the original copy of such complaint has never been brought before the court. Moreover, as per record, the complainant has not even bothered to summon and examine any concerned officer from PS Safdarjung Enclave to prove the actual receipt of such complaint at the Police Station and has therefore failed to prove that the alleged receiving on the complaint is genuine. During his cross-examination, the complainant has specifically stated that he had not even pursued the complaint with the police. The failure to pursue the complaint or even approach the appropriate authority to check the inaction of the police, again raises a serious doubt upon the deposition of the complainant and thus Mark CA is not proved and consequently cannot be read into evidence.
22. Be that as it may. Even if, the version of the complainant in Mark CA is admitted to be correct then also Section 91 r/w section 92 of Indian Evidence SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:46:12 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.10/19 Act, 1872 clearly places an embargo on leading any oral evidence for the purpose of contradicting, varying, adding etc. to the contents of the documents. In the present case, since the execution of agreement dated 04.03.2015 has not been disputed, hence, no evidence can be led to prove that the alleged loan amount was refundable in the year 2018 and not in 2015, which is contradictory to the terms of the agreement. The date of repayment of loan is specifically mentioned in the agreement, Ex. CW1/1. Bald assertion of the complainant that the amount had to be refunded in the year 2018 does not come to his rescue and further evidence to prove the same is clearly barred by law as discussed above.
23. As per the records, the cheque was presented for encashment on 07.07.2020 i.e. more than 5 years after the advancement of loan. As per law, limitation period to recover a loan amount is three years. Therefore, the period to recover the loan amount, even if the contention of complainant with respect to advancement of loan is accepted, had expired in the year 2018 maximum. Thus, on the date of presentation of the cheque in question, the debt had become barred by law of limitation.
24. Now, the question is whether the time barred debt is a legally enforceable debt u/s 138 N.I. Act or not. Here, it is pertinent to refer to the judgment passed by Hon'ble High Court of Kerala in Sasseriyil Joseph v. Devassia 2000 SCC OnLine Ker 460, (which is reported to have been confirmed by the Hon'ble Supreme Court) wherein the Hon'ble High Court held as under :-
"7. The only question that arises for consideration in this appeal is whether the respondent who issued the cheque in question in discharge of a time barred debt is liable under S. 138 of the Negotiable Instruments Act. In this case, the complainant had admitted that the loan was advanced to the accused in January, 1988 and the cheque was issued in February, 1991. Thus, by the time the cheque was issued, the debt was barred by limitation since there was no valid acknowledgment of the liability within the SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:46:38 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.11/19 period of limitation. According to the learned counsel for the appellant, the promise made by the accused to repay the time barred debt would come within the purview of S. 25(3) of the Indian Contract Act. No doubt, the promise to pay a time barred cheque is valid and enforceable, if it is made in writing and signed by the person to be charged therewith. But, it is clear from S. 138 of the Negotiable Instruments Act that in order to attract the penal provisions in the bouncing of a cheque in Chapter XVII, it is essential that the dishonoured cheque should have been issued in discharge, wholly or in part, or any debt or other liability of the drawer to the payee. The explanation to S. 138 defines the expression 'debt or other liability' as a legally enforceable debt or other liability. The explanation to S. 138 reads as under:-
"Explanation:-For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability."
8. Thus, S. 138 is attracted only if the cheque is issued for the discharge of a legally enforceable debt or other liability. In this case, admittedly, the cheque in question was issued in discharge of a time barred debt. It cannot be said that a time barred debt is a legally enforceable debt. In this connection, it is also relevant to note the decision of the Andhra Pradesh High Court reported in Girdhari Lal Rathi v. P.T.V. Ramanujachari (1997 (2) Crimes 658). It has been held in that case that if a cheque is issued for a time barred debt and it is dishonoured, the accused cannot be convicted under S. 138 of the Negotiable Instruments Act simply on the ground that the debt was not, legally recoverable. I am fully in agreement with the view expressed by the learned Judge in the decision referred to above."
25. Hon'ble High Court of Delhi, in M/s. Vijay Polymers Pvt. Ltd. vs M/s. Vinnay Aggarwal, (2009) 162 DLT 23, has also discussed the law in this regard, wherein it has been held as under:
SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:47:00 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.12/19 "12. A perusal of the aforesaid provision clearly goes to show that for analyzing the limitation of a civil liability beyond a period of three years, the acknowledgement, if any, must be there before period of limitation is over, which is not the case.
13. It may also be relevant to take note of the judgment delivered by the Bombay High Court in Smt. Ashwini Satish Bhat Vs. Shri Jeevan Divakar Lolienkar & Another [2000(5) Bom CR 9], wherein also in a similar case when a cheque was dishonoured which issued beyond the period of limitation the appeal filed by the complainant was dismissed. The relevant observations made in this regard in the aforesaid judgment are reproduced hereunder:-
"3. On the other hand, learned Advocate Shri C.A. Ferreira, appearing for the respondent, submitted before me that the dishonoured cheque in question was not in respect of a legally enforceable debt and in view of Explanation to section 138 of the said Act, the Magistrate has rightly acquitted the respondent on the said count as well as on the ground that there was doubt as to whether the amount mentioned in the said cheque was in the handwriting of the respondent as the defence of the respondent is that he had handed over to the appellant a blank cheque. In support of his submission that the dishonoured cheque in question is not in connection with any legally enforceable debt, reliance was placed by him on Girdhari Lal Rathi v. P.T.V. Ramanujachari and another, 1998 Bank J. 127 : 2000 Do Ch. (A.P.)420. He, therefore, submits that there is no case for interference with the acquittal.
4. The complainant, respondent and one Shankar Prabhudessai had entered into partnership vide Partnership Deed Exhibit P.W. 1/D on 24th August 1990. This partnership was dissolved on 13th June 1991 after an agreement was executed between the parties under which the respondent agreed to pay a sum of Rs.
SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:47:22 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.13/19 1,53,724 to the appellant/complainant within 12 months and in case he fails to make the said payment during the said period, the said amount was to carry bank interest from the date of the agreement. The case of the complainant further is that the respondent did not pay the amount as agreed under the said Agreement dated 13th June, 1991, but on 19th July, 1996 the respondent issued cheque for Rs. 3,87,500/- and this cheque has bounced.
5. The defence had taken the stand that the dishonoured cheque was not in relation to any legally enforceable debt and, as such, the respondent could not be held guilty under section 138 of the said Act. The contention of learned Advocate for the appellant is that this cheque dated 19th July 1996 itself is an acknowledgement of debt and, as such, there is no merit in the submission of the defence that the liability under dishonoured cheque is not on account of legally enforceable debt. Insofar as the dishonoured cheque is concerned, the stand taken by the respondent is that the cheque was not written by him and it is not in his handwriting and that he had, in fact, issued a blank cheque in favour of the appellant for certain purpose. This stand was specifically taken by the respondent in the course of the trial and, as such, it was necessary for the complainant to have sought the opinion of handwriting expert in case her case was that the cheque in question was in the handwriting of the respondent, so as to rebut the theory of blank cheque taken by the respondent. It is in these circumstances that the Magistrate had come to the conclusion that the dishonoured cheque in question cannot be treated as acknowledgement under section 18 of the Limitation Act, since the acknowledgement should be before the period of limitation is over and that it should be in writing. In view of this position, the Magistrate was right in Digitally signed by SONIKA SONIKA Date: 2022.01.27 12:47:50 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.14/19 coming to the conclusion that it had not been proved that the dishonoured cheque was in relation to a legally enforceable debt or liability in law. The dishonoured cheque admittedly was issued after 5 years of the said Agreement dated 13th June 1991.
6. The ruling upon which reliance has been placed by the learned advocate for the respondent is applicable on all fours. In that case loan was advanced in the year 1985 and the cheque was issued in the year 1990. By the time the cheque was issued, the debt was barred by limitation because no acknowledgement was obtained before the expiry of 3 years from the date of loan. In these circumstances, it was held there that the debt was not legally enforceable at the time of issuance of cheque and the accused could not be punished under section 138 of the said Act. In the light of Explanation to the said section, it was further held therein that in case a cheque is issued for time barred debt and it is dishonoured, the accused cannot be convicted under section 138 on the ground that the said debt was not legally recoverable.
7. For the aforesaid reasons, I do not find any merit in this appeal and the appeal is liable to be dismissed. The appeal is accordingly dismissed.
14. No contrary judgment has been cited on behalf of the complainant/respondent. Accordingly the petition is allowed..."
26. Hon'ble High Court of Delhi in M/s. Jage Ram Karan Singh & Anr vs State & Anr, 2019 SCC Online Del 9486 has summarized the law in this regard. It has been held as under:
"25. A bare perusal of the aforesaid provision clearly goes on to show that for analyzing the limitation of a liability beyond a period of three years, the acknowledgment, if any, must be there before the period of limitation is over, which is not the case in hand.
26. Further, it has been held time and again by the Apex Court as SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:48:14 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.15/19 well as by the various High Courts that mere giving of a cheque, without anything more, will not revive a time-barred debt, because cheque has to be given, as contemplated by the explanatory, in discharge of a legally enforceable debt. In this regard, it may be relevant to take note of the order dated 10.9.2001 relied upon by the learned counsel for the respondent No.2 titled Sasseriyil Joseph v. Devassia (supra)wherein, in a similar case, it has been held by the Supreme Court that, a cheque which has been issued by the accused for a due which was barred by limitation, the penal provision under Section 138 of the NI Act is not attracted. The relevant observations made in this regard in the aforesaid judgment are reproduced hereunder: -
"We have heard learned counsel for the petitioner. We have perused the judgment of the High Court of Kerala in Criminal Appeal No. 161 of 1994 confirming the judgment/order of acquittal passed by the Addl. Sessions Judge, Thalassery in Criminal Appeal No. 212 of 1992 holding inter alia that the cheque in question having been issued by the accused for due which was barred by limitation the penal provision under Section 138 of the Negotiable Instruments Act is not attracted in the case.
On the facts of the case as available on the records and the clear and unambiguous provision in the explanation to Section 138 of the Negotiable Instruments Act the judgment of the lower appellate Court as confirmed by the High Court is unassailed. Therefore, the special leave petition is dismissed."
27. In Vijay Polymers Pvt. Ltd. & Anr. v. Vinnay Aggarwal (supra), relying upon the judgment of the Supreme Court in Sasseriyil Joseph (supra), it has been observed that, cheques issued for a timebarred debt would not fall within the definition of 'legally enforceable debt', which is the essential requirement for a SONIKA Digitally signed by SONIKA Date: 2022.01.27 12:48:40 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.16/19 complaint under Section 138 of the NI Act; the extended meaning of debt or liability has been explained in the Explanation to the Section which means a legally enforceable debt or liability.
28. Useful reference may also be made to the case titled Prajan Kumar Jain v. Ravi Malhotra, 2009 SCC Online Del 3368, wherein, like the case in hand, it has been held by another Coordinate Bench of this Court that, an acknowledgment to be encompassed within the ambit of Section 18 of the Limitation Act has to be an acknowledgment in writing as also within the prescribed period of limitation. These are the twin requirements which have to be fulfilled in order to be a valid acknowledgment under Section 18 of the Limitation Act. Relevant portion of the aforesaid judgment is reproduced hereunder:
"10....This acknowledgment even as per the complaint was much after the statutory period of three years which is the prescribed period of limitation for the recovery of an outstanding amount. An acknowledgment to be encompassed within the ambit of Section 18 of the Limitation Act has to be an acknowledgment in writing as also within the prescribed period of limitation. These are the twin requirements which have to be fulfilled in order to be a valid acknowledgment under Section 18 of the Limitation Act which is admittedly not so in the instant case. In this case this acknowledgment to pay the balance amount was in terms of the settlement dated 26.1.2005 i.e. much after the statutory period of three years; it also does not speak of the acknowledgement being in writing. It was thus not a valid acknowledgment."
27. Thus, it has been settled through judicial pronouncements that for a time barred debt, proceedings under section 138, the N.I. Act are not maintainable. Section 138 is attracted only if the cheque is issued for the discharge of a legally enforceable debt or other liability. No doubt, time barred debt would Digitally signed by SONIKA SONIKA Date: 2022.01.27 12:50:50 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.17/19 come within the purview of Section 25(3) of the Indian Contract Act. The promise to pay a time barred debt is valid and enforceable, if it is made in writing and signed by the person to be charged therewith. But, it is clear from Section 138 of the Negotiable Instruments Act that in order to attract the penal provisions in the dishonouring of a cheque, it is essential that the dishonoured cheque should have been issued in discharge, wholly or in part, of any debt or other liability which is legally enforceable by the drawer to the payee. So, as per the ratio in the above mentioned judgments, if any cheque is issued for a time barred debt, the complaint under section 138 NI Act is not maintainable.
28. In the present case, it is alleged by the complainant that he has advanced loan of Rs. 35 lakhs to the accused in cash on 04.03.2015 and at that time, the agreement, Ex. CW1/1 was executed, thereby promising to pay the entire amount with interest @ 2% per month. Further, perusal of the agreement Ex. CW1/1 also shows the loan was agreed to be refunded on or before 31.12.2015 and on failure to repay the same, the Accused undertook to hand over the industrial plot allotted by Noida Authorities to the complainant, the allotment letter of which was marked as Mark CC. It is admitted fact that when the cheque in question was handed over by the complainant, the same was undated. Cheque in question bears the date 06.07.2020 i.e. more than 3 years after the due date of repayment of alleged loan. There is no acknowledgment by the accused in writing for enlarging the period of limitation. Thus, Cheque in question is clearly outside the period of limitation.
29. During his cross examination, the complainant stated that from 2015 to 2018, the accused had regularly paid the interest; however, he was not able to produce any document to prove the same. Moreover, the complainant was not able to disclose source of funds. During his cross- examination, the complainant has simply stated that he had advanced the loan from his own savings. No doubt, under section 138 NI Act, the complainant has no obligation to prove his financial capacity in all the cases. However, when the case of the complainant is that he lent such a huge amount to the accused by way of cash and the accused issued the cheque in discharge of his liability, and if the Digitally signed by SONIKA SONIKA Date: 2022.01.27 12:51:16 +05'30' CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.18/19 accused challenges the financial capacity of the complainant to advance the loan, despite the presumption under section 139 of the Act, the complainant has the obligation to prove his financial capacity or the source of money allegedly lent by him to the accused. Reliance can be placed upon the judgment passed in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 and APS Forex Services Pvt. Ltd. vs. Shakti International Fashion Linkers & Ors. 2020 SCC OnLine SC 193. In the present case, the complainant has failed to prove the same as merely stating that he had advanced the loan from his savings will not discharge the burden of the complainant. Even otherwise, he has not placed on record his ITR to prove his financial capacity despite being an income tax assesses. Admittedly, the advancement of loan amount was also not shown in the ITR.
30. It is argued by the complainant that accused has not rebutted the presumptions raised in favor of the complainant as he has not brought any cogent evidence on record. Perusal of record shows that accused through cross examination has shaken the testimony of the complainant. There are contradictions in the testimony of complainant. Moreover, the complainant has failed to show that there was an existing legally enforceable liability against the accused at the time of presentation of cheque in question. In the absence of the same, the presumption cannot be raised in favour of the complainant.
31. Thus, in view of the totality of the circumstance and the settled legal positions as discussed above, the case attempted to be built by the complainant, appears to be suffering from fatal infirmities so much so, it goes directly to the root of the case and shakes the very edifice on which the case of the complainant rests.
32. Accordingly, in light of the above discussion, the accused Rajesh Singh stands acquitted of the offence under Section 138 of NI Act.
Digitally signed by
ANNOUNCED IN THE
COURT ON 27.01.2022
SONIKA SONIKA
(SONIKA)
Date: 2022.01.27
MM-05/NI ACT/SOUTH/SAKET
12:51:50 +05'30'
NEW DELHI
CC No. 5790/2020 C.L. Gupta Vs. Rajesh Singh Page no.19/19