Delhi District Court
Hdb Financial Services Ltd vs Raj Singh on 29 May, 2012
IN THE COURT OF SH.NAVJEET BUDHIRAJA, METROPOLITAN
MAGISTRATE, SPECIAL COURT06, DWARKA COURTS, NEW DELHI.
HDB Financial Services Ltd.
VERSUS
Raj Singh
P.S.:Lajpat Nagar
U/S: 138 NEGOTIABLE INSTRUMENTS ACT
1.Serial No./CC No. of the case : 28999/10
2. Name of the complainant : HDB Financial Services Ltd.
H37, 2ndFloor, Bali Nagar, Above Bali Nagar, HDFC Bank, Delhi - 110 016
3. Date of institution : 17.07.2010
4. Name of the accused, his : Raj Singh parentage and residence WZ31, G/F, Gali No.13 Krishna Park Tilak Nagar Delhi110018
5. Date when judgment was : 11.05.2012 reserved
6. Date when judgment was : 29.05.2012 pronounced
7. Offence complained of and : Offence under Section 138 of Negotiable proved Instruments Act
8. Plea of accused : Accused pleaded not guilty and claimed trial
9. Final Judgment : Accused is acquitted for the offence under Section 138 of Negotiable Instruments Act CC.No.28999/10 Page no. 1 of 28 :J U D G M E N T: 1 Vide this judgment, I shall decide the present complaint filed by the complainant HDB Financial Services Ltd., financial institution incorporated under the Companies Act, 1956 under Section 138 of Negotiable Instruments Act (hereinafter referred to as NI Act) against the accused Raj Singh. 2 Factual matrix of the case is that on the request and representation of the accused and upon agreeing to various terms, conditions and covenants and execution of agreement no.PL55869, complainant has granted loan facility to the accused. It is further averred that accused defaulted in paying his installments consequent to which loan recall notice was sent to the accused pursuant to which accused offered one time settlement which was accepted by the complainant and issued cheque bearing number 563809 dt. 04.05.2010 amounting to Rs.1,87,681.87/ which when presented by the complainant with its banker for encashment was returned unpaid by the drawee bank vide return memo dt. 07.05.2010 for the reason "Account Closed". Thereafter, complainant through its counsel served a legal demand notice dated 02.06.2010 to the accused through speed post and courier on 04.06.2010 calling upon him to make the payment of the dishonoured cheque. It is further averred that despite service accused failed to make the payment of the cheque amount demanded through the legal notice thereby committing offence under Section 138 of NI Act for the prosecution of which the present complaint has been filed.
3 After taking cognizance of the offence under Section 138 N.I CC.No.28999/10 Page no. 2 of 28
Act, summons were issued to the accused post which accused entered appearance and was admitted to bail on 27.10.2010. Thereafter, notice under Section 251 Criminal Procedure Code (for short Cr.PC) was served upon the accused encompassing all the accusations against him to which accused pleaded not guilty and stated that he has a defence to make. Thereafter, matter got fixed for defence evidence.
4 In the meanwhile, application under Section 145 (2) of the N.I.Act was filed on behalf of the accused for recalling the witness of the complainant stating the grounds of defence which was allowed and matter got fixed for cross examination of the complainant.
5 Before proceeding with the cross examination, complainant substituted its Authorized Representative (for short AR) and the new AR Sh. Ravi Kumar tendered his evidence by way of affidavit Ex.CW1/I. Other documents relied upon by CW1 are power of attorney Ex. CW1/A, cheque Ex.CW1/B1, returning memo Ex.CW1/C1, legal notice Ex.CW1/D, Speed post Ex.CW1/E1 and complaint is Ex CW1/F. In cross examination, CW1 deposed that the power of attorney which is Ex.CW1/G in his favour was received by him from Mumbai but that he cannot say whether he had signed this attorney in presence of the attesting witnesses or not. He further stated that when the attorney was attested by the notary public he was present there and he had also signed in the notary register of the attesting notary public. He further stated that he cannot say that the signature of the attesting witness was already there or not at the time of attestation of this special power of attorney. He further stated that he handed over the attorney to the bank after signing the same for sending it to Mumbai. He admitted that no resolution, GPA or any other document was enclosed with the complaint empowering the executent of his attorney, Mr. CC.No.28999/10 Page no. 3 of 28 G.Ramesh to authorize him to represent the company in any court of law but volunteered that he can produce the aforesaid resolution and GPA. He denied the suggestion that he had no authority to depose in the court on behalf of the complainant company as his special power of attorney was not valid and there was no specific authority to depose on behalf of the company. He further stated that he did not know when did the accused approach the complainant for settlement and also did not remember the date when accused visited the company for the aforesaid purpose.CW1 denied the suggestion that the accused visited in the company for any kind of settlement.CW1 stated that he was not present when the alleged settlement was made with the complainant. He further stated that he did not know whether any settlement was arrived at between the complainant and the accused.CW1 stated that the loan granted to the accused was Rs.2,00,000/ vide loan account no.55869 and it had to be repayable in 36 installments of Rs.7,535/ each. He further stated that the accused has paid three installments but he cannot tell the exact months of payment of these installments. He further stated that he cannot tell when the cheque was given by the accused and he also did not know who has written the words "Not more than Rs.2,00,000/" on the cheque Ex. CW1/B. He further stated that he also cannot tell why the words "Not more than Rs.2,00,000/" on the cheque Ex.CW1/B were written. He further stated that he cannot tell when this cheque was given by the accused to the complainant company, but it may be given at the time of taking of the loan as the words "Not more than Rs.2,00,000/" is the amount of the loan. He admitted that he had a little bit of knowledge of the present case He further stated that he had no knowledge about the legal notice Ex. CW1/D. He denied the suggestion that Ex.CW1/E2 is false and fabricated. He admitted that no acknowledgment card or any other proof of delivery qua the legal notice Ex. CW1/D was placed on record. He further stated that he did not know about the contents CC.No.28999/10 Page no. 4 of 28 mentioned in para 5 of the complaint. Counsel for the accused questioned him that in the complaint it is mentioned that the cheque was given in pursuance to the settlement whereas in the affidavit Ex.CW1/I, it is mentioned that the cheque in question was given towards partial discharge of his liability to which he answered that the averments in the complaints are correct but he cannot say about the affidavit. He further stated that he also do not know whether any settlement letter was issued to the accused or not. He denied the suggestion that he was deposing falsely. Complainant's evidence stood closed vide order dated 29.03.2011. 6 Thereafter an application under section 311 Cr.p.c was moved on behalf of the accused recalling the complainant witness for further cross examination which was allowed by this court. In further cross examination, AR for complainant filed the statement of account of the accused alongwith the foreclosure statement bearing reference number 55869 and the same was marked as Mark 'A' and Mark 'B' and the same was objected to by Ld. Counsel for the accused as the said statement of account was computer generated which is neither signed nor stamped/certified. He further stated that he cannot bring the settlement letter and the receipt against which the cheque in question was given by the accused. He voluntarily stated that there was no such settlement arrived at with the accused. He denied the suggestion that the cheque in question was taken as blank signed as security at the time of loan application. He lastly denied the suggestion that he was deposing falsely.
7 Complainant's evidence was followed by Statement of the Accused under Section 313 Cr.P.C r/w 281 Cr.P.C wherein all the incriminating evidences were put to the accused. Accused admitted to have availed loan from CC.No.28999/10 Page no. 5 of 28 complainant for sum of Rs.2,00,000/. Regarding the issuance of the cheque, he stated that there was no settlement between him and complainant and the cheque was given blank at the time of availing the loan and not towards the settlement. Accused denied to have received the legal demand notice but stated that he was residing at the residential address i.e. WZ31, Gali No.13, Krishna Park, Tilak Nagar, New Delhi110089 for last 4 or 5 years. Lastly, he stated that he wanted to lead lead defence evidence and matter got fixed for defence evidence. 8 In defence evidence, accused got examined himself as DW1 and stated that the present complaint against him was false and fabricated. He further stated that he had never received any loan recall notice Ex.CW1/D and legal notice Ex.CW1/D. He also stated that he had never visited the complainant company for any kind of alleged settlement with the complainant company and there was never any settlement between him and the complainant company. He further stated that he had given 6 blank cheques to the complainant for security purpose and the cheque in question was one of those cheques. He further stated that the record slip of his cheque book shows that 6 cheques i.e., from no 563809 to 563814 were given to HDB financial services ltd. He further stated that he was not liable to pay the amount filled in the cheque in question. In cross examination, he admitted that he availed loan from the complainant for a sum of approximately Rs. 2,00,000/ after executing the relevant loan documents. He admitted that he has been residing at the address mentioned in the complaint for the last 9 to 10 years. He admitted that he had not repaid full amount of the loan but substantial amount has already been repaid. He denied the suggestion that he had not paid his installments in time. He further stated that he had never visited or approached the complainant to settle his loan account. He denied the suggestion that he had cheated the complainant CC.No.28999/10 Page no. 6 of 28 company by misusing the public money.
9 Accused also got examined Sh. Daroga Prashad, bank official from Syndicate Bank, New Delhi as DW2 who had brought the record of the cheques bearing number 563809 to 563819 drawn on Syndicate Bank, Rajouri Garden Branch, New Delhi - 110 027 containing the details of date of presentation of these cheques, amount and favouring in the account of Raj Singh bearing account no 91322010008759 which was Ex.DW2/A. Complainant chose not to cross examine DW2 hence defence evidence got closed vide order dated 03.04.2012 and thereafter matter got fixed for final arguments.
10 Learned counsel for complainant Mr. A.K Mishra and learned counsel for accused Mr Rakesh Kumar Garg addressed their respective final arguments at length. Before appreciating the evidences and arguments of both the parties, it would be appropriate to advert to the relevant provisions of N.I Act.
Section 138 of N.I Act reads as under
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 make with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to twice the amount of the cheque or with both.
CC.No.28999/10 Page no. 7 of 28 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 bank within a period of six months from the date on which it was drawn or within the period of its validity, whichever is earlier.
(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 15 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 Section 138 of the NI Act has three ingredients, viz., (i) that there is a legally enforceable debt; (ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which pre supposes a legally enforeceable debt; and (iii) that the cheque so issued had been returned due to insufficiency of funds. The proviso appended to the said section provides for compliance of legal requirements before a compliant petition can be acted upon by a court of law.
12 I have perused the records of the case giving consideration to the submissions of the counsels.
CC.No.28999/10 Page no. 8 of 28 13 Before deliberating upon the submission of learned counsels, it
will be useful to refer to the relevant paragraphs of the Judgment of the Apex Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde (1) Apex Court Judgments 412 SC. Para 31 reads as under...
"31. The courts below, as notice 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"
(Emphasis added) 14 The Apex Court thus reiterated well established legal position that for rebutting the presumption under section 139 of the said Act, it is not necessary in every case for the accused to step into the witness box. The Apex Court held that the standard of proof on the part of the accused and that of prosecution to prove a case is different. The prosecution has to prove the guilt of an accused beyond reasonable doubt, but the standard of proof so as to prove a defence is "preponderance of probability". Inference of preponderance of probabilities can be drawn even by reference to circumstances. In paragraph 44 the Apex Court observed thus : "The presumption of innocence is a human right (see Narendra Singh v. State of M.P., Ranjitsing Brahmajeetsing Sharma V. State of Maharashtra and Rajesh Rajan Yadav V. CBI) Article 6 (2) of the European Convention on Human Rights provides :
"Everyone charged with a criminal offence shall CC.No.28999/10 Page no. 9 of 28 be presumed innocent until proved guilty according to law." Although, India is not bound by the aforementioned convention and as such it may not be necessary like the countries forming European countries to bring common law into land with the Convention, a balancing of the accused's rights and the interest of the society is required to be taken into consideration. In India, however, subject to the statutory interdicts, the said principle forms the basis of criminal jurisprudence. For the aforementioned purpose the nature of the offence, seriousness as also gravity thereof may be taken into consideration. The courts must be on guard to see that merely on the application of presumption as contemplated under section 139 of the Negotiable Instruments Act, the same may not lead to injustice or mistaken conviction........." (Emphasis added).
In paragraph 45 the Apex Court held thus:
"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 introduces 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 added) CC.No.28999/10 Page no. 10 of 28
15 Thus, what has been held by Apex court is that presumption of innocence forms part of human rights and therefore the doctrine of reverse burden introduced by section 139 has to be delicately balanced. 16 Thus, it is amply clear from the above mentioned Judgment of Apex Court that for proving his case accused need not in every case step into the witness box to adduce defence evidence. He can rely on the broad improbabilities in the case of the complainant, the improbabilities in the evidence of the witnesses of the complainant, the acceptability of suggestions made to the complainant witnesses in the course of cross examination as also defence evidence if any. So, the presumption under section 139 of N.I Act need not be rebutted only by leading defence evidence and the said presumption can be rebutted even on the basis of the facts elicited in the cross examination of the complainant. 17 At the very outset, it is made clear that accused has not oppugned the factum of availing loan of Rs.2,00,000/ from the complainant, presentation of cheque Ex. CW1/B1 for encashment and its dishonour vide return memo dated 07.05.2010 Ex. CW1/C1 with remark "Account Closed". 18 First limb of argument advanced by learned counsel for the accused is that the power of attorney of the complainant witness Sh. Ravi Kumar (AR) is not valid and admissible in evidence as the same is not proved in accordance with law.
19 Before zeroing in on the aforesaid contention of learned counsel for the accused, let me refer to the affidavit and power of attorney of complainant CC.No.28999/10 Page no. 11 of 28 witness Ravi Kumar.
Paragraph 1 of his affidavit reads as under:
"1 That Mr. Ravi Kumar is one of the Authorized Officer of the complainant and has been duly authorised by the complainant to file and institute the present criminal complaint vide Power of Attorney dated 09.09.10 executed in his favour is exhibited herewith as Ex CW1/A."
20 Perusal of the Attorney shows that the same was notarised on 17 September 2010.Now let us refer to section 85 of the Evidence Act, 1872 which is as follows:
"85. Presumption as to powers of attorney The Court shall presume that every document purporting to be a Power of Attorney, and to have been executed before, authenticated by, notary public, or any Court, Judge, Magistrate, Indian Consul, or Vice Consul, or representative of the Central Government, was so executed and authenticated."
21 The above provision uses the words, notary, execution and authentication. Now referring to the Advanced Law Lexicon of P. Ramanatha Aiyar, where the word Notarize is defined as under: "Notarize. To take acknowledgments, affidavits or depositions, authenticate documents, as a notary public; to swear or affirm to, before a notary. To attest to the authenticity of (a signature, mark, etc.)" 22 Also referring to the functions of the Notaries as specified in Section 8 of the Notaries Act, 1952 where clause (a) reads as under:
CC.No.28999/10 Page no. 12 of 28 "8. Functions of notaries. (1) A notary may do all or any of the following acts by virtue of his office, namely: (a) verify, authenticate, certify or attest the execution of any instrument;"
23 Now turning to the definition of authentication under the Advanced Law Lexicon of P. Ramanatha Aiyar, which reads as under:
"Authentication. 1. Broadly, the act of proving that something (as a document) is true or genuine, esp. so that it may be admitted as evidence; the condition of being so proved (authentication of the handwriting).
2. Specific., the assent to or adoption of a writing as one‟s own. (Black, 7th Edn., 1999) Authentication is the process of validating the identity of someone or something (Information Technology) The act of authenticating.
A process used to confirm the identity of a person or to prove the integrity of the specific information. (Information Technology) 24 So from the above, it is clear that there is a statutory presumption under Section 85 of Evidence Act that the Power of Attorney was executed by the person by whom it purports to have been executed and the person who executed the power of attorney was fully competent in this regard. When a seal of the Notary is put on the document, Section 85 of the Evidence Act comes into play and a presumption can be raised regarding the genuineness of the seal of the said Notary, meaning thereby that the said document is presumed to have been attested by a competent Notary of that country. Mere attestation of POA cannot lead to an CC.No.28999/10 Page no. 13 of 28 inference that it was executed before the Notary Public. Execution of POA before the Notary Public and authentication by it is essential condition for valid notarization under the Notary Act and Evidence Act. The condition of notarization can only be fulfilled if it was executed before the Notary Public, meaning thereby that execution and notarization of the POA are on the same date and notarization bears the words "signed/executed before me". The Stamp of Notary indicating the registration number need to be affixed by the Notary.
25 In the complaint in hand, complainant witness Sh. Ravi Kumar has stated in Para 1 of his evidence by way of affidavit that he is authorized by the complainant vide Power of Attorney Dated 09.09.2010 Ex CW1/G to file and institute the present complaint. Counsel for the accused questioned the validity of authority of AR to represent the present complaint. Relevant portion of the said Power of Attorney is as follows:
Dated this 9th day of Sep 2010 SIGNED AND DELIVERED by Mr. G. Ramesh.......
26 So, it is clear from the above that the said power of attorney was executed by Mr. G. Ramesh on 9th day of September 2010 whereas it is shown to be notarized by notary public on 17.09.2010 which is after the date of execution. Accused has disputed the validity of POA of AR by putting questions and suggestions in cross examination of AR wherein AR admitted that POA was received by him from Mumbai and after signing the same it was again sent to CC.No.28999/10 Page no. 14 of 28 Mumbai. POA is shown to be notarized in Delhi so it seems that the executant Mr. G.Ramesh did not execute the attorney in the presence of Notary. Hence, there cannot be proper authentication of the same meaning thereby that presumption under section 85 of Evidence Act cannot be raised. Neither any other witness is examined by the complainant to prove the execution of Power of Attorney in favour of the complainant witness Sh. Ravi Kumar nor any explanation has been tendered by the complainant with regard to the aforesaid discrepancy. 27 To bolster my observation , I would like to refer to the judgment of the Allahabad High Court in Wali Mohammad Chaudhari & Ors. Vs. Jamal Uddin Chaudhari AIR (37) 1950 Allahabad 524, which analyzed Section 85 of the Evidence Act. It was observed that authentication is not merely attestation but something more. Authentication would require a person to have assured himself of the identity of the person who has signed the instrument as well as the fact of execution. It is for this reason that a Power of Attorney bearing the authentication of a Notary Public or an authority mentioned in Section 85 of the Evidence Act is taken as sufficient evidence of the execution of the instrument by the person who appears to be the executant.
28 A reference is also made to the judgment of the Supreme Court in Jugraj Singh & Anr. Vs. Jaswant Singh & Ors. 1970 (2) SCC 386. It was noticed that there was no prescribed form of authentication but reliance was placed in Wali Mohammad Chaudhari case (supra).In that context it was noticed that a proper Power of Attorney duly authenticated as required by law had to be made CC.No.28999/10 Page no. 15 of 28 before the power could be conferred on another person to execute the document or to present it for registration.
29 In Electric Construction & Equipment Company Ltd v. Jagjit Electric Works AIR 1984 Delhi 363, it was held by Delhi High Court that :
"...........It is, therefore, very essential to stress the two ingredients which are contained in Section 85 of the Evidence Act, viz., execution before the Notary Public and the authentication by the Notary Public. The words are "executed before, and authenticated by". Both these conditions must be satisfied. It appears that neither condition is satisfied in this case because the common seal was affixed on 27th November, 1973, and there is merely an attestation by a Notary Public on 13th December, 1973. There is no authentication at all. So, Section 85 of the Evidence Act does not apply to raise any presumption in favor of this power of attorney."
30 So, from the foregoing discussion, it is amply clear that complainant witness Sh. Ravi Kumar did not have a valid power of attorney in his favour to prosecute the present complaint, hence present complaint has to go on this ground.
31 Now embarking upon the next issue on which both the parties are wrangling over that is whether the cheque in question was given as blank by way of security and if yes then whether the same will fall within the purview of Section 138 of N.I Act.
32 Now coming back to the facts of the present complaint, it is CC.No.28999/10 Page no. 16 of 28
nowhere mentioned in the complaint that when did the cheque in question was issued and handed over by the accused. It merely says that cheque for Rs 1,87,681.87/ was issued by the accused pursuant to the one time settlement between the parties. On the other hand, in the affidavit of the complainant witness there is no mention of any settlement between the parties and it merely says that cheque in question was issued for partial discharge of the liability. During the cross examination of AR on 29.03.2011, question was put to him regarding the aforesaid inconsistency in the complaint and affidavit to which he stated that averments in the complaint are correct but he cannot say anything about the affidavit. So, from this testimony of AR it is manifest that the contents of the affidavit may or may not be correct. Then, he also admitted that he did not know when did accused approach the complainant for settlement and also that he was not present when the alleged settlement was made with the complainant. Then at the very next moment, he expressed ignorance as to any settlement between the complainant and the accused. Then on 12.03.2012, when AR was reexamined pursuant to the application of the accused under section 311Cr.p.c, he volunteered that there was no such settlement arrived at with the accused. Counsel for the accused put certain questions to the AR regarding the issuance of the cheque in question and the reply given by the AR to those questions throws doubt on the verity of the case of the complainant. The relevant extract of the cross examination conducted on 11.03.2011 is as follows:
"....I cannot tell when the cheque was given by the accused and I also don't know who has written the words "Not more than Rs 2,00,000/ on the cheque Ex CW1/B...I cannot tell when this cheque was given by the accused to the complainant company, but it may be given at the time of taking the loan as the words "Not more than 2,00,000/"
is the amount of the loan...I have little bit knowledge of CC.No.28999/10 Page no. 17 of 28 the present case"...
33 Reading of the aforesaid extract of the cross examination and the testimony of the AR as discussed in the preceding paragraph demonstrates that complainant witness is blowing hot and cold at the same time and appears to be waffled as to when the cheque in question was given, whether the same was given at the time of the loan or not, whether there was any settlement between the complainant and the accused post which this cheque was given. As per the averments and pleadings of the complainant cheque was issued pursuant to the accused committing default and issuance of loan recall notice on 30.04.2010 which appear to be totally misconceived and inconsistent in the light of the testimony of the complainant witness in his affidavit and his cross examination. This coupled with the absence of averments in the complaint as well as in the evidence about the specific details of the issuance and delivery of the cheque by the accused seem to aggrandize the stand of the accused that cheque in question was given as blank with signatures only at the time of loan for security purpose. Furthermore, accused has stated in his examination in chief that 6 blank signed cheques were given by him at the time of the loan for security purpose and the cheque in question is one of those cheques. In rebuttal, no suggestion has been put by the complainant to the accused in his cross examination disputing the aforesaid fact. 34 To bolster his stand, accused also got examined one official Sh. Daroga Prashad as DW2 from the bank on which cheque in question is drawn (Syndicate Bank) who furnished the details of the series of the cheque book of the accused which is Ex DW2/A. The said document shows that cheque no.563817 was presented for encashment on 29.08.2009 whereas the cheque in question i.e 563809 CC.No.28999/10 Page no. 18 of 28 which is prior in series was presented on 07.05.2010.Accused by highlighting this fact intended to show that cheque in question i.e 563809 was used prior to the cheque no.563817 and there was no point in issuing the cheque in question after 30.04.2010 when already the cheques prior in series were used earlier. Although, this fact will not weigh much with this court but it does corroborate the version of the accused that cheque in question might have been given at the time of the loan. And also the fact that no date/year of handing over of the cheque is mentioned in the complaint further strengthens the stand of the accused that cheque might have been given at the time of initial loan in the year 2005.All these circumstances raise serious doubts on the veracity of the claim of the complainant thereby probablising the version of the accused and which also go on to show that the cheque in question was not issued in the manner as has been alleged by the complainant and in fact the same might have been issued as blank for security purpose which is subsequently filled up by the complainant for behemoth amount. And on this, the law is settled that cheque issued for security purpose will not fall within the purview of section 138 of N.I Act. The proceedings under Section 138 of Negotiable Instrument Act cannot be initiated when a cheque is given as security to Banks. Such proceeding can be initiated only when there is a liability. Liability and security has to be distinguished because Section 138 is envisaged only in a case when a person issues a cheque to clear his liability or part of his liability from the account held by him in Bank and only if the said cheque is dishonoured by paying bank.
35 It has also been the stand of the accused in his statement under section 313 Cr.p.c and in his defence evidence that the cheque was issued blank i.e it bears his signature only and body of the cheque has not been filled by him. It is true that when the cheque in question contained the signature of the CC.No.28999/10 Page no. 19 of 28 account holder, it is for the accused to explain the same, but merely because Ex.CW1/ B1 cheque contained the signature of the account holder or the accused it cannot be said that the same was executed by him. In this case, it is relevant to note that the case advanced by the accused is that the cheque in question was entrusted with the complainant and the cheque contained nothing more than her signature. Going by Section 138 of the NI Act, it can be seen that 'a drawing of cheque' by a person on an account maintained by him with the 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 of other liability' are two important ingredients, especially in the background of this case. In the decision reported in Ch. Birbal Singh v. Harphool Khan (AIR 1976 Allahabad 23), it was held that execution of documents consists of signing of the document written out, read over and understood and does not consist of merely signing of a blank paper. In another decision reported in Thakurlal v. Ramadhar (1986 ALJ 480), it had been held that mere admission of putting of signature and thumb mark on a blank sheet of paper is not admission of execution of the document. In the present case, the accused did not dispute the signature in Ex. CW1/B1 cheque, but his specific case is that he had entrusted with the complainant blank cheque which contained his signature only. 36 In the case of "Gopal Vs. Tonny Varghese" 2008 (1) Civil Court Cases 642 (Kerela) it has been held that mere proof of signature on cheque is not proof of its execution. In the absence, of any positive evidence regarding the execution of the cheque by the accused, it is to be held that the accused had issued only blank cheque and the same was not executed by him. Simply because the cheque contained the signature of the accused, it cannot be said that the cheque was drawn by the accused as contemplated by Section 138 of the Act.
CC.No.28999/10 Page no. 20 of 28
37 In a recent Judgment of Kerala High Court in C.Santhi v. Mary
Sherly 2011(4) RCR Civil 269 Kerala, it has been held that mere production of cheque by complainant is not sufficient to prove execution by accused. For successful prosecution of offence under section 138 of N.I Act , complainant must allege and prove that the cheque was drawn or executed by the accused .In the absence of the allegation in the complaint that the cheque was drawn by the accused and in the absence of proof of such fact,an accused cannot be convicted for offence under section 138 of N.I Act.
38 It is pertinent to note that going by the provision namely, Section 138 of the NI Act, it can be seen that the legislature has employed certain words cautiously and not without any meaning. The word employed in Section 138 Viz., "drawn', 'discharge of any debt or other liability' are conveying the message of the legislature, through which we can understand the intention of the legislature. So while interpreting the provisions or the word, the court has to give effect to the intention of legislature. At any stretch of imagination, it cannot be said that putting signature on the blank cheque is equivalent to the word 'drawn' used in Section 138 of the NI Act. Therefore, the word 'drawn' used in Section 138 has to be understood as 'execution of cheque'.
39 A person can be said to have "drawn " a cheque , if he has made, prepared or created a cheque. A cheque is an instrument which is created in confirmity with the requirements of section 6 read with section 5 of the N.I Act. A reading of section 5 and 6 shows that a cheque consists of mainly, two parts. One is, an unconditional order in writing directing the banker to pay a certain sum of money CC.No.28999/10 Page no. 21 of 28 only, or to the order of a certain person or to the bearer of the cheque. The second part is the signature of the drawer.
40 In fairly recent Judgment of Delhi High Court in Ravi Gupta v. State of Delhi and others 1st March, 2011, para 9 and 10 are relevant which is as follows :
9. Plain reading of the above provision of law shows that criminal liability under Section 138 N.I. Act is attracted only if the dishonoured cheque was issued for the discharge in whole or in part of any existing debt or liability. The Section does not apply to a cheque issued to meet future liability which may arise on happening of some contingency. Thus, it is clear that a postdated cheque, if issued for discharge of a debt due, in the event of dishonour, would attract Section 138 of the N.I. Act but a cheque issued not for an existing debt/liability but issued by way of security for meeting some future contingency would not attract Section 138 of the N.I. Act.
10. In the matter of M.S. Narayana Menon @ Mani Vs. State of Kerala & Anr., AIR 2006 (6) SCC 39, the Supreme Court while dealing with the issue, inter alia, observed as under:
"52........If the defence is acceptable as probable the cheque therefore cannot be held to have been issued in discharge of the debt as, for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of section 138 of the Act."
41 It is also proper and necessary to point out that the amendment brought in the NI Act, penalising the dishonour of cheques, to give more CC.No.28999/10 Page no. 22 of 28 sanctity to commercial transactions involving cheques have given way, rather leverage to unscrupulous money lenders to squeeze their debtors through the instrumentality of the court by resorting to prosecution against such debtors on dishonoured cheques which are very often collected in blank form with signature alone as security. True, the maker of the instrument, who signs such a instrument in blank form invites the risk of prosecution and sometimes penal consequences, on inflated claims later incorporated in the instrument without his knowledge and consent. He has taken such risk while signing the instrument in blank form is only a lame excuse and that will not relieve the court the instrumentality of Justice from examining the genuineness of the transaction covered by the instrument. A court is expected to examine whether the transaction covered by the cheque is genuine and bona fide. In a case where the materials produced disclose of suspicious circumstances surrounding the transaction unless satisfactory explanation removing such suspicion is tendered by the holder of the instrument no conviction is legally permissible solely banking upon the statutory presumptions. 42 Complainant has also relied upon the Foreclosure letter and Statement of account Mark A and Mark B of the loan account of the accused to show that the cheque amount is outstanding against the accused as on the date of the cheque i.e 04.05.2010.The said letter shows the principle outstanding, Late payment penalty charges, cheque bouncing charges, pending installments etc and then there is a computerized statement of account. It is significant to mention that in the complaint it is stated in para 4 that accused was called upon to pay the outstanding of Rs 2,17,009.91/ and thereafter accused approached the complainant and offered one time settlement of outstanding amount to which complainant agreed and gave to CC.No.28999/10 Page no. 23 of 28 the accused certain waiver pursuant to which accused issued cheque in question. But on perusal of the statement of account, I fail to fathom as to how come amount of Rs 2,17,009.91/ was outstanding against the accused. Complainant has not filed any loan documents to show the amount/rate of the charges levied. There is no specific averment in the complaint or affidavit as to what all charges are included in the alleged outstanding and how these charges are quantified. Further perusal of the statement shows that the same is neither stamped nor signed by any person. The said statement appears to be computer generated and is not accompanied by the certificate in terms of section 65B of Evidence Act nor any witness is examined by the complainant to prove the authenticity of the said statement. Counsel for the accused had also objected to the admissibility of the said statement but complainant did not bother to make amends. Therefore, the statement of account Mark A and foreclosure sheet Mark B cannot be read in evidence. To fortify my view, I would like to place reliance on the latest Judgment of Kerala High Court in A.M Perumal v. Star Tours and Travels (India) Ltd 2011 (2) , RCR Civil 371 wherein it has been held that electronic record would be admissible in evidence only if the record produced satisfies the conditions laid down under section 65B(2) and contains a certificate as contemplated by section 65B(4) of Evidence Act. A reading of section 65B would be relevant:
65B.Admissibility of electronic records:
1) Notwithstanding anything contained in this Act, any information contained in an electronic record which is printed on paper, stored, recorded or copied in optical or magnetic media produced by a computer ( hereinafter referred to as the computer output) shall be deemed to be also a document, if the conditions mentioned in this section are satisfied in relation to the information and CC.No.28999/10 Page no. 24 of 28 computer in question and shall be admissible in any proceedings, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible.
2) The conditions referred to in subsection (1) in respect of a computer output shall be the following namely:
a) the computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process information for the purpose of any activities regularly carried on over that period by the person having lawful control over the use of the computer;
b) during the said period, information of the kind contained in the electronic record or of the kind from which the information so contained is derived was regularly fed into the computer in the ordinary course of the said activities;
c) throughout the material part of the said period, the computer was operating properly or, if not, then in respect of any period in which it was not operating properly or was out of operation during that part of the period, was not such as to affect the electronic record or the accuracy of its contents; and
d) the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities.
4) In any proceedings where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say.
a) identifying the electronic record containing the statement and describing the manner in which it was CC.No.28999/10 Page no. 25 of 28 produced;
b) giving such particulars of any device involved in the production of that electronic record as may be appropriate for the purpose of showing that the electronic record was produced by the computer;
c) dealing with any of the matters to which the conditions mentioned in subsection (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this subsection it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it.
43 Going by the evidence on record, I find that complainant has not cared to satisfy the conditions under section 65B(2).Neither Mark A and Mark B contain a certificate as contemplated under section 65B(4) of Indian Evidence Act nor the person who took out the print copy was examined. In this view of the matter, no reliance can be given to the said statement of accounts. 44 In view of the foregoing discussion, I hold that the cheque in question was issued as blank for security purpose and not towards the discharge of any debt or liability, therefore it will not fall within the province of section 138 of N.I Act. As regards the Judgment in I.C.D.S (supra) is concerned, I opine that although it is observed by Apex Court that the words "Any cheque" used in section 138 means cheque given for any purpose but it does not provide for cheque given blank, undated containing no amount which later on is filled by the holder himself for behemoth amount without there being any agreement or understanding in this CC.No.28999/10 Page no. 26 of 28 regard. Insofar as the Judgment in Constellation Enterprises (supra) is concerned, that is also on the point of duly filled up post dated cheque which obviously can be presented for encashment but that is not the case in the present complaint as discussed in the preceding paragraphs therefore both the Judgments relied upon by learned counsel for the accused are not applicable to the facts of the present complaint.
45 Regarding the admission of the accused in his cross examination that he had not repaid the full loan amount, I hold that he has also stated that substantial loan has already been repaid and no counter suggestion was put to him by the complainant and moreover in prosecution for offence under section 138 of N.I Act, we are only concerned with the fact whether accused has drawn the cheque for the particular amount as is alleged by the complainant or not and that in the present complaint is not the case as has been observed in the preceding paragraphs.
46 In view of the foregoing discussion, I hold that complainant has not approached the court with clean hands and suppressed material facts regarding issuance of the cheque in question. Complainant has failed to establish that cheque was drawn by the accused for Rs 1,87,681.87/.Complainant has also failed to prove the valid authority in favour of its witness Ravi Kumar to prosecute the present complaint and statement of account filed by the complainant is also inadmissible in evidence due to want of certificate as envisaged by Section 65B of Evidence Act. Accused has discharged initial onus by placing on record some material evincing that cheque in question was issued as blank for security purpose and not towards the discharge of any debt or liability in the manner as has been alleged by the CC.No.28999/10 Page no. 27 of 28 complainant and therefore, it will not fall within the province of section 138 of N. I Act. 47 Therefore, I hold that complainant had miserably failed to prove that cheque in question was drawn in discharge of legal enforceable debt or liability which is the bedrock of the complaint case under section 138 and merely because of the admission of signature on the cheque, it cannot be said that the drawing of the cheque was proved. In the facts and circumstances of the case, on appreciation of the evidence and on the basis of materials on the record, I further hold that accused is able to adduce rebuttal evidence by raising a probable defence which creates doubt on the case of the complainant, hence in such a scenario the evidential burden shifts back to the complainant which has not been sufficiently discharged. Hence, issuance of notice demanding payment of the cheque in question does not assume any significance in the light of the aforesaid findings of the court. Accused has proved his stand by preponderance of probabilities by showing that the cheque was given as blank not in discharge of any liability but for security purpose. Therefore, no offence under section 138 of N.I Act is made out against the accused, hence accused Raj Singh stands acquitted. He is set at liberty. Bail Bond stands discharged.
ANNOUNCED IN THE OPEN (NAVJEET BUDHIRAJA)
COURT ON 29.05.2012 METROPOLITAN MAGISTRATE
SPECIAL COURT 06,
DWARKA COURTS, DELHI.
CC.No.28999/10 Page no. 28 of 28