Delhi District Court
Kanwar Raj vs Harpal Singh on 21 August, 2023
CC No. 5674/2019
CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 1 of 31
IN THE COURT OF SH. VISVESH, METROPOLITAN
MAGISTRATE, N.I. ACT-06, CENTRAL, TIS
HAZARI COURTS, DELHI
CNR DLCT020141062019
CC No. 5674/2019
Kanwar Raj
S/o Late Sh. Khem Chand
R/o - H.No. 788, Village Burari
Delhi ...... Complainant
Vs.
Sh. Harpal Singh
R/o 119/4, Vijay Colony,
Burari, Delhi - 110084 ...... Accused
Date of Institution : 22.05.2019
Offence complained of : s.138 of The Negotiable Instruments
Act,1881
Plea of the Accused : Not Guilty
Final Order : Acquitted
Date of Decision : 21.08.2023
Appearance:
Sh. Sanjay Aggarwal, Ld. Counsel for the Complainant
Sh. Rajender Kumar, Ld. Counsel for the Accused
JUDGEMENT
1. The present Complaint has been filed by the Complainant against the Accused under section 138 Negotiable Instruments Act, 1881.
Factual Matrix Page 1 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 2 of 31
2. The brief facts as alleged by the Complainant in the Complaint are that the Complainant gave the Accused a friendly loan of ₹ 5 lakhs on by way of two cheques - firstly, cheque bearing number 936832 dated 28th of January 2014 of ₹ 3 lacs and secondly, cheque bearing number 936833 dated 3rd of February 2014 for ₹ 2 lakhs both respectively drawn on PNB bank, Burari Branch.
2.1 The Complainant has alleged that these aforesaid cheques were drawn in the name of "self" at the insistence of the Accused but the amount was immediately handed over to the Accused at the bank itself. It is also alleged by the Complainant that the pro-note was also executed by the Accused on 3rd of February 2014 to this effect and it was agreed that a lump-sum interest of ₹ 240,000 will be given by the Accused to the Complainant after the lapse of 5 years along with principal amount of ₹ 5 lakh. It is also alleged that in repayment of the said loan along with interest, the Accused issued the cheque number 163371 dated 1st of April 2019 for a sum of ₹ 740,000 drawn on Axis bank, Shakti Nagar branch.
2.2 When the Complainant presented the said cheque, hereinafter referred to as the cheque in question through his banker PNB, Burari branch, the same was returned unpaid by the banker of the Accused vide returning memo dated 17th of April 2019 with the remarks "drawer's signature differs".
2.3 The Complainant thereafter issued a legal demand notice on 25th of April 2019 through counsel calling upon the Accused to pay the said Page 2 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 3 of 31 cheque amount within a period of 15 days from receipt thereof. The said notice was duly served upon the Accused, and it is alleged that the Accused failed to pay the aforesaid cheque amount within the statutory period.
2.4 Hence, the present Complaint u/s 138 Negotiable Instrument Act 1881 (hereinafter the NI Act) was filed on 22nd of May 2019 by the Complainant, praying for the Accused to be summoned, tried, and punished for commission of the offence u/s 138 of the Negotiable Instruments Act, 1881. The Complainant has averred that the present Complaint is within the period of limitation and falls within the territorial limits of this Court's jurisdiction; thus, being tenable at law.
Proceedings before the Court
3. Pre-summoning Evidence: To prove a prima-facie case, the Complainant led pre-summoning evidence by way of affidavit Ex. CW-1/A wherein the Complainant has affirmed the facts stated in the instant Complaint.
4. Documentary Evidence: To prove the case, the Complainant has relied upon the following documents:
a) Photocopy of pass book, Ex. CW1/1 (OSR)
b) Original pro-note dated 3rd of March 2014, Ex. CW1/2
c) Original cheque bearing no. 163371 dated 1st of April 2019 for a sum of ₹ 740,000 drawn on Axis bank, Shakti Nagar Branch, Ex. CW1/3.Page 3 of 31
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d) Original cheque return memo dated 17th of April 2019, Ex. CW1/4.
e) Office Copy of legal notice dated 25th of April 2019, Ex. CW1/5.
f) Postal receipts and track report with returned envelope bearing endorsement 'Refused', Ex. CW1/6 (Colly).
5. Summoning of the Accused: On finding of a prima-facie case against the Accused, the Accused was summoned on 28th of May 2019 where the Accused appeared before the Court on 16th of November 2019.
6. Framing of notice & plea of defence: Notice u/s 251 Cr.P.C. was framed against the Accused on 9th of January 2020 to which he pleaded not guilty and claimed trial. The plea of defence of the Accused was recorded where the Accused had stated that he had taken a sum of ₹ 2 lakh in cash at 3% interest per month from the Complainant on 25th of August 2014. It was stated that the Accused had given a cheque for a sum of ₹ 50,000 to the Complainant which were subsequently encashed by the Complainant. Subsequently, it was stated that the Accused had gone to the house of the Complainant to give him ₹ 1.5 lakh which were received by the Complainant and the Accused had asked for return of his cheque. To this, it is stated that the Complainant had refused to return the same stating that the same has been dishonoured. The Accused then stated that he had issued the cheque in question to the Complainant as blank signed cheque at the time of taking of the loan and the Complainant has also given him a receipt of ₹ 2 lakh, the photocopy of which is Page 4 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 5 of 31 in the possession of the Accused and the original of which is with the Complainant. It was also stated by the Accused that he had made a Complaint against the Complainant in PS Burari and that he did not owe any liability towards the Complainant. Receipt of the legal demand notice was denied by the address mentioned therein was stated to be correct.
7. Evidence of the Complainant: After the framing of notice, the Accused was granted permission to cross-examine the Complainant. Thereafter, the Complainant was examined as CW1, adopting the pre-summoning evidence as post-summoning evidence and was cross examined and discharged. Thereafter, Complainant evidence was closed, and the matter was listed for statement of the Accused u/s 313 Cr.P.C. r/w Section 281 Cr.P.C.
8. Statement of the Accused: Statement of the Accused was recorded u/s 313 Cr.P.C. r/w Section 281 Cr.P.C on 17th of August 2022, wherein all the incriminating circumstances appearing in evidence against the Accused were put to him to which the Accused reiterated the stance taken in the notice of accusation in addition to admitting the execution of Ex. CW1/2.
9. Defence Evidence: The Accused has examined himself as DW-1. Thereafter, a separate statement of the Accused to that effect was recorded and defence evidence was closed. The matter was then fixed for final arguments.
10.Final Arguments: Final arguments were advanced by both sides. I Page 5 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 6 of 31 have heard the submissions of the Ld. Counsel for the Complainant as well as the Accused. I have also perused the record.
Legal Position
11.For the application of s.138 of the Negotiable Instruments Act, 1881, the following legal requirements must be satisfied from the averments in the Complaint as well as the evidence of the Complainant: -
(a) That a person has drawn a cheque, 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 legally enforceable debt or other liability;
(b) That the cheque has been presented to the bank within a period of three months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(c) That the cheque has been returned by the drawee bank unpaid, for the reason that 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 agreement made with that bank;
(d) That the payee or holder in due course has made a demand for payment of the said amount of money by giving a notice in writing to the drawer of the cheque within 30 days of receipt of information from the bank regarding the return of the cheque as unpaid;
(e) That the drawer of the cheque fails to make the payment of the said amount of money to the payee or holder in due course within 15 days of receipt of the said notice;
11.1. The aforesaid legal requirements are cumulative in nature, i.e. only Page 6 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 7 of 31 when all of the aforementioned ingredients are duly proved is the drawer of the cheque deemed to have committed an offence under s. 138 of the Negotiable Instruments Act.
11.2. The provision of s.138 is buttressed by s.139 and s.118 of the Act.
s. 139 of the Act provides that the Court shall presume, that the holder of a cheque received the cheque for the discharge, wholly or in part of any debt or other liability. s.118 of the Act provides inter alia that the Court shall presume, until the contrary is proved, that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.
11.3. What follows from the aforesaid is that the offence u/s 138 of the Negotiable Instruments Act operates on reverse onus of proof theory. The presumptions u/s 139 and s. 118 of the Act mandate the Court to draw them, when a given set of facts are shown to exist. The same is evident by the peremptory language "Shall Presume"
used. However, the said presumptions are rebuttable in nature, i.e. it is open for the defence to disprove the same by establishing facts to the contrary.
11.4. In the case of Hiten P. Dalal v. Bratindranath Banerjee1, the Hon'ble Supreme Court had occasion to examine the confines of the presumption u/s 139 of the Act, wherein it held as follows:
"22. Because both Sections 138 and 139 (..) "introduce an exception to the general rule as to the burden of proof 1 (2001) 6 SCC 16 Page 7 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 8 of 31 in criminal cases and shifts the onus on to the Accused."
(Ibid. at p. 65, para 14.) (...) The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the Accused adduces evidence showing the reasonable possibility of the non- existence of the presumed fact.
Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man".
(...) in the case of a mandatory presumption, the burden resting on the Accused person in such a case would not be as light as it is where a presumption is raised under Section 114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the Accused is reasonable and probable. It must further be shown that the explanation is a true one. ........ Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted". (emphasis supplied).
11.5. Also, in the case of Rangappa v. Sri Mohan2, it was held that:
"(..)we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. (..)
28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an Accused has to rebut the presumption under Section 139, the standard of proof for 2 (2010) 11 SCC 441 Page 8 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 9 of 31 doing so is that of "preponderance of probabilities".
(...) As clarified in the citations, the Accused can rely on the materials submitted by the Complainant in order to raise such a defence and it is conceivable that in some cases the Accused may not need to adduce evidence of his/her own(...)"(emphasis supplied) 11.6. With regard to the factors taken into account for rebutting the presumption u/s 139 read with s.118 of the Act, the judgement of Hon'ble Delhi High Court in V.S. Yadav v. Reena 3 assumes importance, wherein it was held that:
"Mere pleading not guilty and stating that the cheques were issued as security, would not amount to rebutting the presumption raised under Section 139 of N.I. Act. (...) The Accused, by cogent evidence, has to prove the circumstance under which cheques were issued". (emphasis supplied) Appreciation of evidence
12.Now I shall proceed to deal with the legal ingredients one by one and give my finding on whether the evidence on record satisfies the legal ingredient in question or not.
(a) That a person has drawn a cheque, 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 legally enforceable debt or other liability 12.1.This condition pertains to the issuance of the cheque itself. It is pertinent to note that the Accused, in his notice of accusation has admitted his signature on the cheque in question. Further, the 3 CRL. A. No. 1136 Of 2010 Page 9 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 10 of 31 cheque has been drawn on the account of the Accused. This leads to drawing of an inference u/s 139 read with s.118 of the Act, that the cheque was issued in discharge of a legally recoverable debt or other liability.
12.2.In the case of Bharat Barrel & Drum Mfg. Co. v. Amin Chand Pyarelal 4, it was held:
"12. (...) the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. The Court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. (emphasis supplied)"
12.3. Also, in the case of Kumar Exports Vs. Sharma Carpets 5, it was held:
"When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose 4 (1999) 3 SCC 35 5 2009 (2) SCC 513 Page 10 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 11 of 31 of the presumption is over.
The Accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist 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 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 their non-existence was so probable that a prudent man would 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 circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to 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 arising under Sections 118 and 139 of the Act. The Accused has also an option to prove the non-existence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the Complainant, that is, the averments in the Complaint, the case set out in the statutory notice and evidence adduced by the Complainant during the trial. Once such rebuttal evidence is adduced and accepted by the Court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the Complainant and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the Complainant's rescue. (emphasis supplied)"
Page 11 of 31Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 12 of 31 12.4.In sum, it is the defence of the Accused that he had only taken a loan of ₹ 2 lakh from the Complainant on 25th of August 2014 and had issued two cheques (as security) and a receipt for the same. It is also the case of the Accused that one of those cheques is the cheque in question and the receipt is Ex. CW1/D1 on record. Further, it is the case of the Accused that the loan amount was returned by way of a cheque of ₹ 50,000 which was honoured and also, by way of cash amounting to ₹ 1.5 lakh on 13th of May 2019.
12.5. Now, in so far as the defence of blank signed/security cheque is concerned, the said aspect is well settled by the case of Bir Singh Vs. Mukesh Kumar 6, wherein the Hon'ble Supreme Court observed and held:
"37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted."
38. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the Accused to prove that the cheque was not in 6 2019 (4) SCC 197 Page 12 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 13 of 31 discharge of a debt or liability by adducing evidence." 12.6.The presumption, having been raised against the Accused, it falls upon the Accused to rebut it. The Accused has chosen to do so by cross-examining CW - 1 and by appearing in his defence as DW-1.
12.7.The cross-examination of CW - 1 reveals certain very interesting aspect about the case of the Complainant. CW - 1 on the one hand states that the amount of ₹ 5 lakh was advanced by way of cash by withdrawing it from the bank but on the other hand, CW - 1 admits that the bank statement evidencing the same is not on record. Moreover, CW - 1 has also admitted that despite being an income tax payee, he has not shown the said amount in his ITR.
12.8.The aspects outlined in the foregoing paragraph cast a modicum of doubt on the case of the Complainant and operate to dispute the factum of advancement itself. It is quite hard to believe that the Complainant would have been drawn such a huge sum from his bank and advance the loan by way of cash without there being any document/witness independently able to prove the said advancement. It is also quite unreasonable that the Complainant would have advanced the said loan in cash with drawn from his bank account rather than transferring it directly to the bank account of the Accused. CW - 1 has not even cared to annex any bank statement evidencing such a withdrawal in cash from his account, let alone advancement of the same to the Accused. Thus, the factum of advancement of the loan is not established by way of any independent evidence except the ipse dixit of the Complainant.
Page 13 of 31Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 14 of 31 12.9. In these circumstances, the failure of CW-1 to show the amount in his ITR assumes relevance. The said situation has been examined in Sheela Sharma Vs. Mahendra Pal 7 wherein it was held that:
"31. In cases where the Complainant claims to have advanced a friendly loan in cash, and where the transaction of loan is not evidenced by any other documentary or other reliable evidence, no doubt, the aspect whether the availability of funds in cash with the Complainant/lender, and its advancement as loan to the Accused have been reflected in the income tax returns of the Complainant/lender, or not, become relevant. If, the availability of funds, and the loan transaction itself is not so reflected, that factor is taken note of by the Court as relevant to hold that the presumption under Section 118 and 139 of the NI Act stands rebutted. However, these considerations would not be relevant, where loan transaction itself is otherwise established, either through documentary evidence-such as, a receipt or a loan agreement, or acknowledgement executed by the Accused, or by oral evidence of an independent witness who is found to be credible". (emphasis supplied) 12.10. A failure to reflect the loan amount in the ITR would be very relevant in the case like the present, where, admittedly the alleged friendly loan which was advanced in cash and the loan does not stand proved by any reliable (independent) evidence/document. The factum of not showing the loan in the ITR would be relevant not from the point of recoverability of the amount u/s 138 of the NI Act but from the point of view of rendering the factum of advancement of the loan itself, quite doubtful. The Complainant has also relied 7 2016 SCC OnLine Del 4696 Page 14 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 15 of 31 upon Ex. CW1/2 in support of the factum of advancement but, as the discussion in the succeeding paragraphs will show, the case of the Complainant is at variance with the document itself when the same is looked at in conjunction with Ex. CW1/D1 etc. 12.11.The next aspect of the testimony of CW - 1 is quite crucial. CW -
1 goes on to state that the cheque in question was given at the same day as that appearing on Ex. CW1/2, i.e., 3rd of February 2014 and that the same was in duly filled up condition. Now, when the attention CW - 1 is drawn to one ikrarnama 8 (Ex. CW1/D1) dated 25th of August 2014, he admits its execution.
12.12. The focal document on which the case of the Complainant rests is another ikrarnama, Ex. CW1/2 dated 3rd of February 2014 which is a unilateral undertaking akin to a pro-note purportedly noting that an amount of ₹ 5 lakh was taken by the Accused and in lieu of the same, cheque number 163371 drawn on Axis bank (i.e., the Cheque in question) purportedly given by the Accused to discharge the liability. It is pertinent to note herein that the date of the cheque in question is conspicuously absent in Ex. CW1/2.
12.13.Thus, so far as the instrument Ex. CW1/2 is concerned, it has been executed on 3rd of February 2014 and as such the instrument does not contain anything postponing the right to sue. Even though the Complainant has stated in the Complaint that the amount was payable after 5 years, there is not an iota of evidence on record even 8 agreement Page 15 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 16 of 31 by way of any stipulation on Ex. CW1/2. It merely mentions that the cheque in question has been given so that the debt may be discharged in a timely fashion but the date of maturity etc. is not indicated. The testimony of CW-1 in this regard is also quite unreliable, as the succeeding paragraphs shall show.
12.14.In such circumstances, the limitation period shall commence from the date of the instrument and the said period shall expire on 3rd of February 2017 as per Article 359 of the Limitation Act, 1963. The Complainant. The Complainant has not been able to prove any acknowledgement or payment during the subsistence of limitation period to bring his case within the meaning of s.18 and 19 of the Limitation Act, 1963 so as to operate to grant a fresh period of limitation in specific circumstances outlined therein.
12.15.Moreover, the Complainant has not been able to link the payment of ₹ 10,000 on 24th of January 2017 appearing in Ex. DW1/C2 10 to the Accused in any manner and the merely the name "Harpal Singh"
appearing therein would not ipso facto point the finger of accusation at the Accused and mean that the same was deposited by the Accused as there could very well be other persons with the same name. In either case, the accused has not admitted the said aspect to any extent and as such, the debt is clearly time-barred on the date of issuance of the cheque in question, i.e., 1st of April 2019.
935. On a bill of exchange or promissory note payable on demand and not accompanied by any writing restraining or postponing the right to sue. Three years. The date of the bill or note.
10Especially in view of the denial of DW-1 Page 16 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 17 of 31 12.16.Here, it is pertinent to refer to the judgment in Sasseriyil Joseph v.
Devassia 11, (which is reported to have been confirmed by the Hon'ble Supreme Court 12) wherein it has been 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 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 11 2000 SCC OnLine Ker 460 12 SLP (Crl.) No.1785/2001 Page 17 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 18 of 31 was issued in discharge of a time barred debt. It cannot be said that a time barred debt is a legally enforceable debt.
12.17.In M/s. Vijay Polymers Pvt. Ltd. vs M/s. Vinay Aggarwal13, has held"
"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 14, 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:-
"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 Rs1,53,724 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 13 (2009) 162 DLT 23 14 2000(5) Bom CR 9 Page 18 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 19 of 31 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.
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 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."
12.18.In M/s. Jage Ram Karan Singh & Anr vs State & Anr 15, 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 15 2019 SCC Online Del 9486 Page 19 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 20 of 31 hand.
Further, it has been held time and again by the Apex Court as 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 16 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.
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."
12.19.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 16 supra Page 20 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 21 of 31 issued for the discharge of a legally enforceable debt or other liability. In the instant case, the debt is admittedly time barred and there has been no acknowledgement in terms of s.18 of the Limitation Act, 1963 to extend limitation period. No doubt, time barred debt would come within the purview of Section 25(3) of the Indian Contract Act, 1872. 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, which is not the case in the present matter. Accordingly, the Complaint ceases to be maintainable on this ground alone.
12.20.Now, coming over to Ex. CW1/D1, it is a bilateral agreement executed on 25th of August 2014 (i.e., much after the execution of Ex. CW1/2) evidencing and advancement of ₹ 2 lakh to the Accused on interest at the rate of 3% per month and in lieu of the same, handing over of two cheques - i.e., cheque number 163371 (i.e., the cheque in question) and 163372 as security. However, the interest is agreed to be paid each month in cash.
12.21.It must be recalled herein that CW-1 relies upon Ex. CW1/2 in support of his case but has also admitted execution of Ex. CW1/D1 in his cross-examination. Now, this creates a strange set of affairs.
Page 21 of 31Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 22 of 31 this would mean that there were in fact two loan transactions between the parties and not one - Firstly, loan of ₹ 5 lakh which was advanced on 3rd of February 2014 and secondly a hitherto undisclosed loan of ₹ 2 lakh advanced on 25th of August 2014. What further belies the case of the Complainant is the statement of CW - 1 that the cheque in question was given duly filled up by the Accused on 3rd of February 2014. If such was really the case, it would not have been possible for the Accused to give the same cheque which filled up earlier for ₹ 740,000 as a security for the 2nd loan of ₹ 2 lakh. Thus, the testimony of CW - 1 when juxtaposed with Ex. CW1/2 and Ex. CW1/D1 has the case of the Complainant inextricably tied up in knots and beyond the pale of plausibility. It is quite pertinent to note that even going by Ex. CW1/D1 itself, the debt would have become time barred on 25th of August 2017, i.e., much before the date on the cheque in question.
12.22.Now, as it often happens in prosecutions u/s 138 of NI Act which rely upon reverse onus clauses, the Complainant often rushes to the material brought forth by the defence to use as a crutch to support his own faltering case, conveniently forgetting that his case must stand on legs of its own. One cannot expect to walk afar on borrowed legs, lest one may trip and fall.
12.23.A similar harebrained approach is adopted by the Complainant who now seeks to rely on admission of the Accused of his signature on Ex. CW1/2 in his statement u/s 313 r/w s.281 Cr.P.C to stand as proof of the factum of advancement of the loan. It is contended that Page 22 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 23 of 31 the subsequent statement as DW-1 denying execution of Ex. CW1/2 is an afterthought and must be disregarded. Be that as it may, it must be remembered that the statement u/s 313 r/w s.281 is not on oath and cannot be equated to testimonial evidence on oath as DW-1. Therefore, the testimony of DW-1 denying the execution of Ex. CW1/2 shall prevail over the admission made u/s 313 r/w s.281 Cr.P.C. Even otherwise, the statement u/s 313 Cr.P.C cannot be used as a foundational basis to support the case of the Complainant when the Complainant has not been able to do so in any other manner.
12.24.The bulk of the defence plea is revealed when DW - 1 steps into the witness box. He states that on 25th of August 2014, he had taken ₹ 2 lakh from the Complainant in respect of which Ex. CW1/D1 was executed. DW - 1 also states that two cheques were given as undated and blank signed on the same date and one of those cheques is the cheque in question. He states that he has returned the loan amount in part by way of bank transfer of ₹ 50,000 (Ex. DW1/1) and pursuant to the request of the Complainant and upon the promise that the cheques would be returned, the remainder amount of ₹ 1.5 lakh was handed over to the Complainant at his residence and Ex. CW1/D2 was executed wherein it was discovered that the Complainant had wrongfully added additional words in the said document marked at Point B to B1 and in whose regard, the Accused had lodged the Complaint, Ex. CW1/D3.
12.25.Now, Ex. CW1/D2 is dated 13th of May 2019, i.e., much after the Page 23 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 24 of 31 expiry of limitation period under either Ex. CW1/2 or Ex. CW1/D1 and is executed unilaterally by the Complainant as a declaration that in settlement of outstanding dues and in respect of dishonoured cheque number 163371, an amount of ₹ 1.5 lakh is received from the Accused. It is the case of the Accused that the last line to the effect that the remaining amount shall be paid separately and the date shall be determined by the Accused soon is stated by the Accused to be super added by the Complainant pursuant to a wrongful intent.
12.26.It is pertinent to note that the said document has been executed long after the extinguishment of the limitation period of the principal debt and also after the dishonour of the cheque in question. Even the payment of ₹ 50,000 on 25th of July 2018 to the Complainant is also much after the expiry of the limitation period of the debt. As such, neither of such payments would operate to grant any fresh period of limitation to recover the principal debt. Even though the Accused is not able to prove that the Complainant had wrongfully added the writing mentioned at point B to point B1, the conduct of the Accused in lodging a police Complaint is consistent with the said fact and there exists a modicum of plausibility and credibility in their defence plea.
12.27.When confronted with the said prospect, a faint plea is taken by the Complainant by way of suggestion that the amount of ₹ 50,000 was deposited into the bank account in lieu of cash amount received from the Complainant. Needless to say, no such separate transaction Page 24 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 25 of 31 has even been remotely established between the parties to spark even a modicum of indulgence of this Court. All in all, DW-1 has stuck to his guns and his testimony has withstood the test of cross- examination.
12.28. The controversy regarding mode of proof of Ex. CW1/D1 to D3 may be shortly examined. S. 58 of the Indian Evidence Act, 1872 declares that facts admitted need not be proved and secondary evidence17 of document admitted by the person against whom they are to be proved are admissible in evidence 18. Hence, there exists no legal bar on admissibility of Ex. CW1/D1-D3 and the ground taken on behalf of the Complainant that they are photocopies scarcely holds in view of the admission of CW-1 in his cross- examination.
12.29. The Ld. Counsel for the Complainant has, at the time of final arguments, heavily relied on the inconsistency in the stand taken in the notice of accusation vis-à-vis the statement of Accused u/s 313 r/w 281 Cr.P.C. and the deposition as DW-1 to contend that the Accused has taken manifestly contrary defence pleas at different points in respect of the vital legal ingredients of the offence. In addition, it is stated that the when the Accused has admitted the signature on the cheque in question and the pro-note as well, the Complainant is entitled to recover the amount under the cheque without any further proof. It is also contended that the Accused did 17 Which would include photocopy u/s 63 of the Indian Evidence Act, 1872 18 As per s.65 of the Indian Evidence Act, 1872 Page 25 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 26 of 31 not even care to reply to the legal demand notice.
12.30. To examine these contentions in the right perspective, it must first be realised that the burden to establish all the ingredients of the offence and that too beyond reasonable doubt lies upon the Complainant and never shifts. Though the case of the Complainant is initially aided by the presumptions existing in his favour, ultimately the case of the Complainant must stand on its own legs. The Complainant cannot call to his aid and assistance, any inconsistencies, irregularities or infirmities in the defence to support his own case. Further, the standard of proof upon an Accused to prove his defence is not as heavy as that on the Complainant.
12.31. The Accused is not necessarily required to adduce any oral/documentary evidence in his defence. The Accused can very well rely upon the material placed on record by the Complainant or on the cross-examination of the Complainant witnesses to probabilize his defence. It is not necessary for the Accused to establish each and every line of his defence to the hilt. It is sufficient if the Accused establishes his plea on a preponderance of probabilities. It is also open to the Accused to take varying pleas of defence in the alternative as even if one of such pleas is reasonably believed by the Court, the Accused is entitled to be acquitted.
12.32. Going by this logic, once the Accused has cast doubts on the financial capacity, the factum of advancement as well as other crucial aspects like limitation, he is not now bound to adduce Page 26 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 27 of 31 evidence/documentary record in respect of any of his other specific plea regarding the terms of the alleged advancement or its repayment. The Accused has been able to rebut the case of the Complainant on merits.
12.33. Even if the defence of the Accused is held to be inconsistent and an adverse inference19 is drawn, the fact remains that the same is an inference and not evidence. It must be kept in mind that ultimately, it is the case of the Accused that the loan was of a lesser amount and the cheque was presented for an excessive amount, which the Complainant was not entitled to recover. As an aside, the Accused has also been able to sufficiently cast doubt on the case of the Complainant by casting doubt on the factum of advancement and establishing that the case of the Complainant is at variance to the standard of a reasonable man. Moreover, an adverse inference cannot tilt the scales in favour of the Complainant when the essential ingredients of the offence have not been established by the material put forth by the Complainant. Hence, the aforesaid contentions advanced from the side of the Complainant are found to be without merit.
12.34. The upshot of the above is that the Accused has been successful in rebutting the initial presumption raised against him, shifting the onus of proving the existence of legally enforceable debt or other liability, back upon the Complainant. Considering the materials on 19 u/s 114 of the Indian Evidence Act, 1872 Page 27 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 28 of 31 record, the Complainant has miserably failed to discharge the same and the said ingredient remains unfulfilled as against the Accused.
(b) That the cheque has been presented to the bank within a period of three months from the date on which it is drawn or within the period of its validity, whichever is earlier;
12.35.This requirement is satisfied on a perusal of the cheque in question Ex. CW1/3 which bears date of 1st of April 2019 and the return memo Ex. CW1/4 which bears the date of 17th of April 2019. The defence has led no evidence to controvert the same and hence, this ingredient stands fulfilled as against the Accused.
(c) That the cheque has been returned by the drawee bank unpaid, for the reason that 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 agreement made with that bank 12.36.s. 146 of the Negotiable Instruments Act, 1881 provides that the Court shall, on production of bank's slip or memo having therein the official mark denoting that the cheque has been dishonored, presume the fact of dishonour of such cheque, unless and until such fact is disproved. The bank return memo Ex. CW1/4 on record states that the cheque in question has been returned dishonoured for the reason "Drawer's Signature Differs". The defence has led no evidence to controvert the same and hence, this ingredient is also fulfilled as against the Accused.
(d) That the payee or holder in due course has made a demand for payment of the said amount of money by giving a notice in writing to the drawer of the cheque within 30 days of receipt of information Page 28 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 29 of 31 from the bank regarding the return of the cheque as unpaid 12.37.As regards the service of legal demand notice, the Complainant has sent the same, Ex. CW1/5 to the Accused. The original postal receipts in respect of the same are already on record as Ex. CW1/6- 7 However, the Accused has denied receiving any legal demand notice in his notice of accusation. Further, in his examination u/s 313 read with s.281 Cr.P.C., the Accused has denied receipt of legal demand notice. However, he has admitted that the address appearing on the legal demand notice is his correct address.
12.38.Perusal of the record reveals that the address mentioned in the legal demand notice is identical to the address informed by the Accused in his examination u/s 313 read with s.281 of the Cr.P.C. Moreover, the returned envelope on record bears the endorsement "Refused", which also denotes sufficient service upon the Accused, unless the Accused is able to establish to the contrary.
12.39.section 27 of the General Clauses Act provides that service of any document sent by post, shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document unless the contrary is proved. A like presumption is also carved out under section 114 Indian Evidence Act, 1872 which when applied to communications sent by post, enables the Court to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. A bare denial by the Accused in his notice of accusation and in his examination u/s 313 Page 29 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 30 of 31 read with s.281 Cr.P.C. would not assume the character of defence evidence, as held in V.S. Yadav v. Reena 20. Hence, the Accused has not been able to rebut the presumption of service of legal demand notice. Resultantly, the benefit of the presumption accrues in the favour of the Complainant and this ingredient is fulfilled as against the Accused.
(e) That the drawer of the cheque fails to make the payment of the said amount of money to the payee or holder in due course within 15 days of receipt of the said notice 12.40.In the instant case, the Accused has denied receiving legal demand notice, in the notice of accusation u/s 251 Cr.P.C. and the statement of the Accused u/s 313 read with s.281 Cr.P.C.
12.41. In C.C.Alavi Haji vs Palapetty Muhammad 21 it was held by the Hon'ble Supreme Court:
"17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a Complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the Court in respect of the Complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of Complaint with the summons) and, therefore, the Complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the Complaint under Section 138 of the 20 supra 21 (2007) 6 SCC 555 Page 30 of 31 Visit eCourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 5674/2019 CNR. DLCT020141062019 Kanwar Raj Vs. Harpal Singh Page 31 of 31 Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation."
12.42.Hence, regardless of the said averment in respect of non-receipt of legal notice, it was open to the Accused to make the payment due under the cheque within 15 days of service of summons of the instant case. However, the Accused has failed so to do, on the ground that he does not owe any liability towards the Complainant. Hence, this ingredient stands fulfilled as against the Accused.
Decision
13. Before proceeding to give the final verdict, this Court deems it fit to bring on record its gratitude to both Ld. Counsel for their able assistance throughout.
14.As all the ingredients of the offence are not cumulatively satisfied against the Accused, the Accused Harpal Singh is hereby Acquitted of the offence u/s 138 of the Negotiable Instruments Act, 1881.
VISVESH Digitally signed by VISVESH
Date: 2023.08.21 15:56:09 +05'30'
ANNOUNCED IN OPEN (VISVESH)
COURT ON 21.08.2023 MM, NI ACT-06, CENTRAL
TIS HAZARI COURTS,
DELHI
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