Delhi District Court
Suneet Finman Pvt. Ltd. vs . Avinash on 28 November, 2022
IN THE COURT OF SHRI AJEET NARAYAN, M.M-02, SHAHDARA DISTRICT,
KKD COURTS, DELHI
CT. No.: 104/19
U/s: 138 N. I. Act
P.S Farsh Bazar
Suneet Finman Pvt. Ltd. Vs. Avinash
JUDGMENT
1. Sl. No. of the case : 104/19
2. Date of institution of the case : 08.01.2019
3. Name of complainant : Suneet Finman Pvt. Ltd.
Office at 101, Hargovind Enclave,
New Delhi-110092.
4. Name of accused, parentage : Anivash, S/o Sh. J.S. Anand
R/o H. No. 4/2281, Gali No. 3,
Bihari Colony, Shahdara, New
Delhi.
5. Offence complained of
or proved : 138 N. I. Act
6. Plea of accused : Accused pleaded not guilty
7. Final order : Acquittal
8. Date on which order was reserved: 22.10.2022
9. Date of pronouncement : 28.11.2022
Page 1 of 20
BRIEF REASONS FOR THE DECISION OF THE CASE
Factual Background of the case
1. Briefly stated facts of this case as per complaint are that accused person approached and made a representation before the complainant bank for availing vehicle loan and the complainant relying upon the representation made by and on behalf of the accused person and believing the same to be true sanctioned and disbursed the amount financed in terms of the subject agreement No. 08/2277. The accused to repay the loan amount issued cheque No. 63635 dated 24.09.2018 for an amount of Rs.4,06,267/- drawn on State Bank of India in favour of complainant bank towards discharge of his legal liability.
It is further alleged that the complainant bank presented the above- mentioned cheque with his bank, but the said cheque was returned dishonored with remarks "Fund Insufficient" vide return memo dated 17.11.2018.
It is further alleged that thereafter, complainant served a legal demand notice dated 30.11.2018 to the accused through speed post on dated 01.12.2018 calling upon accused to pay the amount of the said cheque within 15 days of the receipt of the notice, but the accused has failed to pay the amount of cheque without statutory period of 15 days of the notice. So, present case was filed under Section 138 Negotiable Instruments Act.
Page 2 of 20 Proceedings Before Court
2. On the basis of pre-summoning evidence, accused was summoned for the offence u/s 138 Negotiable Instrument Act vide order dated 08.01.2019. Accused put his appearance on 05.12.2019 through his counsel, and thereafter, a notice under Section 251 Cr.P.C was framed against him on 04-10-2021, by this court to which he pleaded not guilty and claimed trial. Plea of defence of accused has been recorded as per which he states that the cheque in question along with other 6-7 cheques were issued to the complainant in the year 2014 as blank security cheque. He has already paid Rs.3,60,000/- approx. to the complainant. He has liability to the tune of around Rs.70,000/- approx. He has no liability of Rs.4,06,267/- as claimed by the complainant. He stated that his cheque has been misused.
The complainant has relied upon the documents, i.e., true copy of resolution passed in the committee of Directors dated 05.12.2016, which is Ex.CW1/A, the original cheque bearing no. 63635 dated 24.09.2018, which is Ex.CW1/B, cheque returning memos dated 17.11.2018 as Ex.CW1/C, Legal demand notice dated 30.11.2018 through Speed post which is Ex.CW1/D, original postal receipt of speed post is Ex.CW1/E, and tracking report is Ex.CW1/F respectively. The complaint u/s 138 NI Act is Ex.CW1/G. Thereafter, complainant was duly cross-examined by learned counsel for accused. Thereafter, CE was closed, on 22.03.2022.
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3. In statement of accused recorded on 05.05.2022, accused stated that the cheque in question does not bear his signature. He had given the cheque in question along with 6-7 cheques in the year 2014 as blank security cheques to the complainant. He has already paid approx. Rs.3,60,000/- to the complainant. He has present liability to tune of approx. Rs.70,000/- He has no liability as claimed by the complainant and his cheque has been misused.
In his defence evidence, despite opportunities, accused has not lead DE. Hence DE was closed on 14.09.2022.
Afterwards, final arguments were heard and after hearing the arguments, trial was concluded.
4. I have heard counsel for the parties, perused the record and have gone through relevant provisions of the law.
Findings
5. Before appreciating the facts of the case in detail for the purpose of decision, let relevant position of law be discussed first. Now, Section 138 Negotiable Instrument Act provides as under:
Section 138.- Dishonour of cheque for insufficiency, etc., of funds in the account.- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is Page 4 of 20 returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless--
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation -- for the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability. Page 5 of 20
It is well settled position of law that to constitute an offence under S.138 N.I. Act, the following ingredients are required to be fulfilled:
(1) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/part any debt or liability;
(2) Cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier;
(3) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque, (4) giving notice in writing to the drawer of the cheque within 30 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount, (5) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice.
Being cumulative, it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the N I Act.
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6. The Act raises two presumptions in favour of the holder of the cheque i.e., Complainant in the present case; firstly, in regard to the passing of consideration as contained in Section 118 (a) therein and, secondly, a presumption under Section 139, that the holder of cheque receiving the same of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability.
Analysing all the concerned provisions of law and various pronouncements in this regard, the Hon'ble Apex Court in Basalingappa v. Mudibasappa, AIR 2019 SC 1983, noted at para 23 as follows [Bharat Barrel and Drum Manufacturing Company v. Amin Chand Pyarelal, (1999) 3 SCC 35; M.S. Narayana Menon alias Mani v. State of Kerala and another, (2006) 6 SCC 39; Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54; Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513; Rangappa v. Sri Mohan, (2010) 11 SCC 441 referred]:
(i) Once the execution of cheque is admitted, Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
(ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. Page 7 of 20
(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
(iv) That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
(v) It is not necessary for the accused to come in the witness box to support his defence.
7. To put in nutshell, the law regarding the presumption for the offence under Section 138 N.I. Act, the presumptions under Sections 118(a) and 139 have to be compulsorily raised as soon as execution of cheque by accused is admitted or proved by the complainant and thereafter burden is shifted upon the accused to prove otherwise. These presumptions shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability etc. The onus to prove the issuance of the cheque lies upon the complainant, and the same has to be Page 8 of 20 proved beyond reasonable doubt, unless the accused admits the same. Once the issuance of cheque is established, either by admission or by positive evidence, the presumption under Section 139 of the Negotiable Instruments Act, 1881 arises. We can summarize the general principles in the following way:
Onus of proof: Section 139 of the Negotiable Instruments Act, 1881 states that it shall be presumed, unless the contrary is proved that the holder of a cheque received the cheque, of the nature referred to in Section 138, for the discharge, in whole or in part, of any debt or other liability. Therefore, here the onus shifts upon the accused to prove the nonexistence of debt or other liability. Section 139 of the Negotiable Instruments Act, 1881 uses the word "shall presume", which means that the presumption under Section 139 is rebuttable. Standard of proof: The standard of proof required to rebut the presumption under Section 139 is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or other liability, the onus shifts back to the complainant to prove by way of evidence, beyond reasonable doubt, that the cheque in question was issued by the accused in discharge, whole or in part, of any debt or other liability, and now the presumptions under Section 118 (a) and Section 139 will not come to the aid of the complainant. Page 9 of 20 Mode of Proof: The accused may adduce direct evidence to prove that the note/cheque in question was not supported by consideration, and that there was no debt or liability to be discharged by him. However, the Court need not insist in every case that the accused should prove the nonexistence of the consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated.
At the same time, it is clear that a bare denial of passing of consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances upon the consideration of which, the Court may either believe that the consideration and debt did not exist, or their nonexistence was so probable that a prudent man would, under circumstances of the case, act upon the plea that they did not exist.
As discussed above, from the legal provisions and the law laid down in various judgments, it can be safely gathered that it is for the accused to rebut the presumptions. He can do so by cross examining the complainant, or by leading defence evidence, thereby demolishing the case of the complainant. It is amply clear that the accused does not need to discharge his or her liability beyond the shadow of reasonable doubt. He just needs to create holes in the Page 10 of 20 case set out by the complainant. Accused can say that the version brought forth by the complainant is inherently unbelievable and therefore the prosecution cannot stand.
8. In the present case, the accused in his defence under Section 251 Cr.P.C. and Section 313 Cr.P.C has not accepted his signature on the cheque but he has accepted issuance of cheque as blank security cheque.
In his statement under Section 251 CrPC, accused has stated that the present cheque along with 6-7 cheques were issued to the complainant in the year 2014 as blank security cheque and accused has already paid Rs. 3,60,000/- approx. to the complainant and he has present liability to the tune of around Rs. 70,000/- towards complainant. Accused has accepted receiving of legal demand notice.
It seems that the denial by the accused regarding his signature is bald denial, because accused has accepted the issuance of cheque as blank security cheque. It is common practice to issue blank security cheque, but security cheque is always issued by signing on cheque, blank security cheque is never issued without signing. On one side accused is admitting issuing blank security cheque, and on the other side he is denying the signature on cheque. Hence, this denial of accused of his signature is a bald denial and can't be accepted. Even otherwise, accused person has accepted taking loan alleged by complainant, his only defence is that he has paid back Rs. 3,60,000/- to the Page 11 of 20 complainant out of total liability of Rs. 4,06,000/-. It is not his defence that he has lost his cheque or someone has stolen his cheque and has forged his signature, hence his contention that his signature is not present on cheque, is untenable. Also, the cheque has been dishonoured due to funds insufficient and not signature differ, hence in such a scenario, a presumption shall be raised under Section 139 r/w Section 118 of NI Act that cheque in question was issued in discharge of valid debt or liability and it is thereafter upon him, to rebut them by adducing evidence. If upon preponderance of probabilities, the accused is able to do the same, onus once again shifts back on the complainant to prove its case beyond reasonable doubt.
9. The accused has cross examined complainant/CW-1, but has not lead DE for purpose of proving his defence. The main question to be decided is whether there was outstanding liability towards accused of cheque amount as claimed by the complainant or whether cheque was misused by the complainant.
It is the case of complainant that complainant has provided vehicle loan to accused and accused has issued cheque in question of Rs 4,06,267/- for discharging the liability outstanding towards complainant.
It is the case of accused that that the cheque in question along with 6-7 other cheques were given as blank security cheque to complainant and he has already made payment of Rs. 3,60,000/- to the complainant and his present liability is to the tune of Rs., 70,000/-.
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10. Regarding the defence of the accused that he had issued blank signed undated cheque, it is manifest that by reason of the provision under Section 20 NI Act, a right has been created in the holder of the cheque. When a blank cheque is signed and handed over, it means that person signing it has given an implied authority to any subsequent holder to fill it up. Prima facie, holder thereof is authorized to complete the incomplete inchoate instrument. Thus, merely the allegation of issuance of incomplete negotiable instrument does not create absolute defence in favour of the accused. There is no law that a person drawing the cheque has to necessarily fill it up in his own handwriting. Hence, once accused has admitted his signature on cheques, he cannot escape his liability on the ground that same has not filled in by him. A person issuing a blank cheque is supposed to understand the consequences of doing so. Thus, this defence is of no assistance to accused. (Jaspal Singh v. State, Crl. Rev. 160/2016, by Hon'ble High Court of Delhi, & Ravi Chopra v. State 2008 (102) DRJ 147, relied on.) As regards the defence of accused that cheque in question was security cheque is without any merits in view of the decision of Hon'ble Apex Court in ICDS Ltd Vs. Beena Shabeer (2002) (2) SCC 426 and of Hon'ble High Court of Delhi in Credential Leasing & Credits Ltd. Vs. Shruti Investments & Anr 223 (2015) DLT 343, that security cheques fall within the purview of Section 138 NI Act. As per the decision of Credential Leasing & Credits Ltd. vs. Shruti Page 13 of 20 Investments & Anr (supra) it has been held that the scope of Section 138 NI Act would cover cases where ascertained and crystallized debt or other liability exists on the date when the cheque is presented and not only to the cases where ascertained and crystallized debt or other exists on the date on which it was delivered to the seller as a post-dated cheque or as a current cheque with a credit period. Hence, it would have to be examined in a case to case basis, whether an ascertained or crystallized debt or other liability exists or not.
11. Accused has only cross examined the complainant for rebutting the presumption. Accused has not lead DE for rebutting the presumption and proving his defence.
In this case accused has taken the defence that present cheque along with 6-7 cheques were issued to the complainant in the year 2014 as blank security cheque and accused has already paid Rs. 3,60,000/- approx. to the complainant and he has present liability to the tune of around Rs. 70,000/- towards complainant. As regards the defence of the accused of issuing security cheque, accused has to adduce the evidence of his own. Accused has not proved this fact of paying back Rs. 3,60,000/- to the complainant by any independent evidence. Accused has to bring on record some material to prove his defence. Also, accused like a prudent man has not made any written communication to the complainant for return of his blank cheque, if he has issued the blank security cheque. Also, he has not made any police complaint regarding Page 14 of 20 the same. Also, accused did not give stop payment instructions to his banker qua the cheque in question when cheque was not returned to him. Here, accused has not proved his main defence by any independent evidence.
Since accused has not stepped into witness box to lead DE, only thing is to be seen is cross examination of complainant, that whether the defence of accused is getting probabilized by the case of complainant or not.
12. It is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". Also, accused can rely on the evidence brought on record by the complainant to rebut the presumption. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. Apex court in Rangappa v. Sri Mohan, (2010) 11 SCC 441 has held that:
".............27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong Page 15 of 20 whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof.
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 doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own......."
For proving his defence, the accused has only cross-examined the com- plainant. Coming to the case of the complainant, there are some material contradic- tions and weakness in the case of complainant. AR of the complainant has admitted in cross examination that details of vehicle loan financed and details of vehicle number are not mentioned in complaint anywhere. Also, there is no loan agreement, loan amount, loan date mentioned in the complaint. CW-1 has clearly admitted in his cross-exami- nation that accused has paid Rs. 2,97,000/- till date against the loan financed. CW- 1 has also clearly admitted in his cross-examination that cheque amount is Page 16 of 20 greater than loan amount. Complainant has deposed that he has received the cheque for filing the complaint by Rajiv Saxena, from Accounts Department of Complainant company. He has deposed that accused has not handed over the cheque in question to him and it was given to the company. It seems that, complainant is not aware about the facts and circumstances of the transaction between the parties. AR or Power of attorney should have witnessed the transaction or should possess due knowledge regarding the transaction.
Complainant company has not filed the loan application, loan agreement, and other documents regarding the vehicle loan as alleged in the complaint.
Coming to the most important and glaring discrepancy, the present complaint has been filed on the basis of an amount of Rs.4,06,267/-. The question that arises is whether the complainant was competent to do so. The complainant having admitted that accused has paid Rs. 2,97,000/-, the liability outstanding was only Rs. 1,09,267/-, the cheque could not have been presented for the entire amount of Rs.4,06,267/-, but only for the balance after making an endorsement on the same. It is clear that the subsisting outstanding liability was of Rs. 1,09,267/-, and the cheque was not meant to be presented for the entire amount of Rs.4,06,267/-. Therefore, the cheque which is of Rs.4,06,267/- cannot be said to be in discharge of a legally enforceable debt or liability. The cheque having been presented for the entire amount was not a legally permissible course of action for the complainant. The legal notice having also been sent for the entire sum, the same also stands invalidated. This all makes the version of complainant doubtful.
Page 17 of 20
It is a settled position of law that where the cheque amount is more than the underlying liability, the complaint under Section 138 NI Act is not maintainable. Reliance in this regard is placed on the Hon'ble Delhi High Court decision in M/s Alliance Infrastructure Project Pvt. Ltd. and Ors. Vs. Vinay Mittal, Crl. M.C. No. 2224 of 2009, wherein the Hon'ble High Court observed that:
"When the principal amount claimed in the notice of demand is more than the principal amount actually payable to the payee of the cheque and the notice also does not indicate the basis for demanding the excess amount, such a notice cannot be said to be a legal and valid notice envisaged in Section 138(b) of Negotiable Instrument Act. In such a case, it is not open to the complainant to take the plea that the drawer of the cheque could have escaped liability by paying the actual amount due from him to the payee of the cheque. In order to make the notice legal and valid, it must necessarily specify the principal amount payable to the payee of the cheque and the principal amount demanded from the drawer of the cheque should not be more than the actual amount payable by him though addition of some other demands in the notice by itself would not render such a notice illegal or invalid."
In the present case the complainant company had presented the cheque in question for an amount which was more than what was actually due to it and had sent the legal demand notice for the cheque amount, which was neither the actual amount of the legal liability so due nor the amount towards part payment of the legal liability. That being so, the very first ingredient of the offence is not made out since the cheque cannot be said to have been given in discharge of the whole or part amount of the liability owed to the complainant.
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13. Although accused has not proved this fact by any independent evidence that he has issued the blank security cheque, and he has already made part payment, but accused has created doubts over the version of complainant by way of preponderance of probability.
In the light of above discussion, along with other surrounding circumstances defence of accused seems plausible. Hence, in the present case, accused has probabilised his defence on the scale of preponderance of probability, now the burden shifts on the complainant to prove the existence of legally enforceable debt.
In the present case, complainant has not filed any vehicle loan application, loan agreement, has not mentioned loan date, loan amount and vehicle number etc., with the complaint to show that complainant has provided vehicle loan to the accused of Rs. 4,06,267/-, and there is a subsisting liability against the accused.
14. Therefore, in the light of above discussion, along with other surrounding circumstances, defence of accused seems plausible. The accused has been able to rebut the presumption in favour of the complainant, as standard of proof to prove a defence on the part of the accused is only preponderance of probabilities, inference of which can be drawn not only from the materials brought on record by the parties, but also by reference to the circumstances upon which he relies.
On the other hand, the complainant has failed to prove his case beyond all reasonable doubts.
15. Accordingly, this court holds that, the defense has successfully rebutted the presumption as existing in favour of complainant. The complainant has not been able to Page 19 of 20 establish that there was a legal debt or liability outstanding on the part of accused towards the complainant. Hence, accused Avinash, is hereby acquitted for the offense u/s 138 NI Act.
Digitally signedby AJEET
AJEET NARAYAN
NARAYAN Date:
2022.11.28
15:16:26 +0530
Announced and dictated directly (AJEET NARAYAN)
in the open court on 28.11.2022 MM-02/Shahdara/KKD Courts
28-11-2022
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