Delhi District Court
Indiabulls Credit Services Ltd vs Abrar Ahmad on 21 August, 2012
IN THE COURT OF SH. AKASH JAIN, METROPOLITAN
MAGISTRATE (NI ACT)01, DWARKA COURTS, NEW DELHI.
CC NO 2978/12
Unique case ID no. : 02405R0951032007
Indiabulls Credit Services Ltd.
Through its Authorized Representative
Registered office at : F60, Second Floor,
Malhotra Building, Connaught Place,
New Delhi110001.
Also at :
Plot No.23, Local Shopping Complex,
Mayur Vihar, Phase2,
New Delhi110091. ......................... Complainant
VERSUS
Abrar Ahmad
S/o Sh. Istyaq Ahmad
R/o 2852, Bazar Pahari Bhojla,
Gali Bulbuli Khan Ajmeri Gate,
Delhi110006.
Also at:
Shop No.2, Asaf Ali Road Ajmeri Gate,
Near Hanuman Vatika,
Delhi. ................................ Accused
P.S.: Pandav Nagar
U/S:138 r/w 142 NI Act
a) Date of institution : 05.10.2007
b) Date of reserving the judgment : 16.08.2012
c) Date of pronouncement of judgment : 21.08.2012
CC NO. 2978/12 Page no. 1 of 19
d) Offence complained of : Section 138 of Negotiable
Instruments Act.
e) Plea of accused : Pleaded not guilty and claimed
trial.
f) Final Judgment : Acquitted
: JUDGMENT :
1.Vide this judgment, I shall dispose of the present complaint filed by the complainant, Indiabulls Credit Services Ltd. under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as the 'NI Act') against the accused Abrar Ahmad.
2. Factual matrix of the case as per complainant is that the complainant is a limited company incorporated under the provisions of Indian Companies Act, 1956. It is averred that the accused approached the complainant company for obtaining personal loan and on request made by the accused, the complainant sanctioned and disbursed a sum of Rs.34,318/ in favour of the accused in terms of loan account no.S000100227. It is stated that the accused had promised to make timely & regular payment of scheduled EMIs to the complainant without any default, but the accused miserably failed to abide by the terms & conditions of the loan agreement in question and committed regular defaults in payment of EMIs. In such circumstances, the complainant recalled the loan account in question and asked the accused to repay the recalled amount. On receipt of loan recall CC NO. 2978/12 Page no. 2 of 19 notice, the accused approached the complainant at his office to settle the loan account by making full and final payment of outstanding loan amount. It is stated that the accused in discharge of his legal liability issued a cheque bearing no.529534 dated 24.07.2007 for a sum of Rs.43,909/ drawn on ICICI Bank Ltd. in favour of the complainant company towards total outstanding loan amount. However, the said cheque when presented for encashment by the complainant was dishonoured by the bankers of accused for the reason "Insufficient Funds" vide returning memo dated 02.08.2007. Thereafter, the complainant company sent a legal notice dated 21.08.2007 through registered post with AD & UPC on 23.08.2007 to the accused intimating him about the dishonour of cheque in question and calling upon him to pay the amount covered by the cheque within 15 days of receipt of the said notice. The accused though failed to make any payment within stipulated period of time. Hence, the present complaint.
3. Perusal of the record shows that the present complaint was received by way of assignment by this court on 05.10.2007. On the basis of pre summoning evidence led by the complainant on 05.10.2007, Ld. Predecessor Court took cognizance of the offence under Section 138 of NI Act against the accused and issued summons against him. Upon service of the summons, the accused entered his appearance before the court on 30.06.2011 and was admitted to bail. Thereafter, on 08.11.2011, notice under CC NO. 2978/12 Page no. 3 of 19 Section 251 Cr.P.C. was served upon the accused by Ld. Predecessor Court, to which accused pleaded not guilty and claimed trial. The matter was then fixed for complainant's evidence.
4. The complainant in support of its case examined Sh. Sandeep Kumar, AR of the complainant as CW1 who while reiterating the contents of complaint placed reliance upon following documents as under : Ex. CW1/A : Certificate of Incorporation Ex. CW1/B1 : Special Power of Attorney in favour of the AR Ex. CW1/C : Cheque in question Ex. CW1/D : Returning memo in question Ex. CW1/E : Legal Notice dated 21.08.2007 Ex. CW1/F and CW1/G (colly) : Postal Receipts Ex. CW1/H : Complaint in question.
5. CW1 was duly crossexamined by the counsel for accused. During crossexamination, CW1 stated that accused had paid total amount of Rs. 9055/ towards repayment of loan in question. CW1 stated that he does not remember as to when cheque in question was given by accused to the complainant but the same was given in lieu of settlement arrived at between the parties. CW1 further stated that the settlement between the parties was arrived at on approaching the accused by the collection agent of complainant. CW1 also stated that accused had paid total 5 EMIs so far and on the date of issuance of cheque in question total 5 installments were due.
CC NO. 2978/12 Page no. 4 of 19 CW1 denied the suggestion that the cheque in question was a security cheque & that the same was manipulated by the complainant.
6. Thereafter, complainant's evidence was closed. Statement of accused under Section 313 Cr.P.C. was consequently recorded wherein all the incriminating circumstances were put to the accused. The accused admitted to have obtained loan for a sum of Rs.34,118/ from the complainant company and admitted to have signed the cheque in question. However, he stated that the said cheque was handed over by him to the complainant as blank without filling any particulars as a security at the time of disbursement of loan. The accused admitted the factum of dishonor of cheque in question and denied the service of legal notice dated 21.08.2007 upon him. Accused also denied any alleged settlement carried out with the complainant qua entire loan account in question. Thereafter, the matter was fixed for defence evidence. Accused/DW1 in his examination in chief admitted that he had availed the loan in question from the complainant and loan was to be repaid in 36 EMIs. DW1 stated that at the time of processing of loan, 10/12 blank signed cheques were taken by the complainant from him for the purpose of security & the cheque in question being one of those cheques is misused by the complainant. DW1 further stated that on the date of issuance of cheque in question, his liability was not to the extent of cheque amount as he had never entered into any settlement with the CC NO. 2978/12 Page no. 5 of 19 complainant. Accused/DW1 got duly crossexamined & discharged. Thereafter, defence evidence got closed by the accused and the matter was fixed for final arguments. The court heard the final arguments on behalf of both the parties and carefully perused the record.
7. Ld. Counsel for the complainant argued that each and every ingredient of offence under Section 138 NI Act is proved by them beyond reasonable doubt. It is argued that the accused in his evidence and statement recorded under Section 313 Cr.P.C. admitted the factum of taking loan from the complainant and committing default in repayment of the same. It is further argued that the accused has failed to rebut the presumptions as contemplated by Section 118 (b) & 139 NI Act.
8. The counsel for accused on the other hand argued that the cheque in question is one of the blank signed security cheques given by accused to the complainant at the time of disbursement of loan. It is argued that on the date mentioned on cheque in question, the liability of the accused was not to the extent of amount mentioned in the cheque. It is also argued that no alleged settlement of loan account in question was carried out between the parties.
9. On giving thoughtful consideration to the rival contentions made by both the parties and after careful perusal of record, following inferences can CC NO. 2978/12 Page no. 6 of 19 be drawn. The accused admittedly took a loan of Rs.34,118/ from the complainant which was to be repaid in 36 EMIs of Rs.1811/ each. Out of said EMIs the accused only paid 5 EMIs to the complainant. The cheque in question was admittedly issued by the accused in favour of complainant and the same when presented for encashment, was returned unpaid/ dishonored with the remarks "Insufficient Funds".
10. The accused has primarily raised two defences mentioned herein below :
i) That the legal demand notice dated 21.08.2007 was never received by the accused.
ii) That the accused never entered into any alleged settlement with the complainant and the cheque in question was given by him to the complainant in blank signed at the time of sanctioning of loan. As such, the cheque was not issued by the accused in discharge of any legal debt or other liability towards the complainant.
11. With respect to first defence raised by the accused, it is pertinent to note that the complainant has proved that the legal demand notice Ex. CW1/E was duly sent to the accused through registered post and UPC on following address :
Abrar Ahmad CC NO. 2978/12 Page no. 7 of 19 S/o Istyaq Ahmad H.No.2852, Bazar Pahari Bhojla Gali Bulbuli Khan Ajmeri Gate, near Razia Sultan Tomb, Delhi110006.
Also at: Abrar Ahmad S/o Istyag Ahmad Shop No.2, Asaf Ali Road Ajmeri Gate, Near Hanuman Vatika, Delhi.
Now, perusal of the bail bond furnished by the accused and vakalatnama filed by the counsel for accused reveals that both the addresses in legal notice dated 21.08.2007 are identical and same with the addresses given in the said bail bond and the vakalatnama.
12. At this juncture, it would be pertinent to refer to Section 27 of the General Clauses Act which reads as under:
"S.27 Meaning of service by post Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression "serve" or either of the expressions "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the CC NO. 2978/12 Page no. 8 of 19 document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post."
13. The Hon'ble Supreme Court in "K. Bhaskaran vs. Sankarn Vaidhyan Balan" (supra), has held as under:
"........(24) No. doubt Section 138 of the Act does not require that the notice should be given only by "post".
Nonetheless the principle incorporated in Section 27 (quoted above) can profitably be imported in a case where the sender has despatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such nonservice. Any other interpretation can lead to a very tenuous position as the drawer of the cheque who is liable to pay the amount would resort to the strategy of subterfuge by successfully avoiding the notice.........."
14. Also, it is well settled in the case of CC Alavi Haji vs. Palapetty Muhammed and Anr., (2007) 6 Supreme Court cases 555 that, " .............. 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 complainant under Section 138 of Act, make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of CC NO. 2978/12 Page no. 9 of 19 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 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 General Clauses Act and Section 114 of the Evidence Act ....."
15. Hence, in view of aforesaid legal propositions & evidence on record, it is held that the legal demand notice was sent to the correct address of the accused by the complainant and therefore it is deemed to be served upon the accused. Thus, the first defence raised by the accused is not tenable.
16. Coming to the second defence raised by the accused, it would be apposite to refer to the provisions of section 118 and 139 of NI Act. Section 118 (a) provides that, unless the contrary is proved, it is to be presumed that the Negotiable Instrument (including a cheque) had been made or drawn for consideration. Under section 139 of NI Act, the Court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part of a debt or liability. Thus, in complaints under Section 138 the court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or CC NO. 2978/12 Page no. 10 of 19 liability is on the accused.
17. It is pertinent here to note the case of Hiten P. Dalal Vs. Bratindranath Banerjee, 2001 Crl. L.J 4647 wherein Hon'ble Supreme Court while dealing with sections 138 and 139 of NI Act held that whenever a cheque was issued to the complainant for a specific amount, there is a presumption that it is towards discharge of legally enforceable debt. In the event of dispute, the burden is on the accused to prove that there is no subsisting liability as on the date of issuing of cheque and the proof must be sufficient to rebut the presumption and mere explanation is not sufficient. So, there is obligation on the part of the Court to raise the presumptions under Sections 118 and 139 of the NI Act in every case where the factual basis for raising of the presumption had been established.
18. However, it is not out of place here to refer to the ratio of judgments in M.S. Narayana Menon v. State of Kerala, AIR 2006 SC 3366 and Krishna Janardhan Bhat v. Dattatraya G. Hegde, 2008 AIR (SC) 1325, on the point that it is not necessary that the rebuttal is always essentially by leading separate contrary evidence and it would suffice if the accused can demonstrate from the crossexamination of the complainant that the burden to prove contrary is discharged. So far as, presumption as to issuance of cheque for consideration and in discharge of debt, the accused need not CC NO. 2978/12 Page no. 11 of 19 disprove the complainant case in its entirety. He can discharge his burden on the preponderance of probabilities though direct or circumstantial evidence for which he can rely on evidence adduced by the complainant.
19. In the present case, the main defence of the accused is that on the date mentioned on cheque in question, the liability of the accused was not to the extent of cheque amount in question. Moreover, no settlement is stated to have taken place by the accused with the complainant in lieu of which cheque in question is alleged to have been given. Also, the cheque in question is a security cheque given by the accused to the complainant at the time of sanctioning of loan.
20. Now, perusal of statement of account of accused Ex. CW1/K makes it abundantly clear that on the date of issuance of cheque i.e. 24.07.2007, only two installments were paid by accused to the complainant and about five installments were due to be paid by him including installment for the month of July 2007. It is contended by the complainant that accused committed regular defaults in payment of loan installments to them, as a result of which a loan recall notice was given to the accused and on receipt of the loan recall notice, the accused approached the complainant and entered into full and final settlement qua entire loan account in question in relation to which cheque in question was given by the accused. The CC NO. 2978/12 Page no. 12 of 19 complainant though failed to place on record proof of sending any such loan recall notice to the accused. During crossexamination, CW1/AR of complainant stated that he does not know the place where alleged settlement took place between the parties. CW1 further stated that the settlement was arrived at between the parties on approaching the accused by the collection agent of complainant which is contradictory to the statement made by CW1 in his affidavit in evidence i.e. accused approached the complainant for carrying out settlement of the loan account. Complainant also failed to place on record any proof of settlement allegedly arrived at between the parties. CW1 also during his crossexamination admitted this fact that no written settlement letter was issued by complainant in lieu of issuance of cheque in question by the accused. Hence, this court is of the opinion that the complainant failed to prove that the loan recall notice was sent to the accused and that the settlement was arrived at between the parties qua loan account in question.
21. Coming to the defence raised by accused that the cheque in question was not given by him in discharge of any legally recoverable debt but it was isseud in blank signed for the purpose of security at the time of disbursement of loan, it may be stated that mere admission of the signatures on cheque by accused is not sufficient to fasten criminal liability upon him. The onus to prove outstanding liability and alleged settlement lies upon the CC NO. 2978/12 Page no. 13 of 19 complainant. The complainant though failed to explain as to how payment of installments was admittedly received by them on 29.11.2007, 31.12.2007, 18.02.2008 and 31.03.2008 after alleged recalling of loan and alleged settlement with the accused. Statement of account of accused Ex. CW1/K clearly illustrates the acceptance of aforesaid payments by the complainant from accused as EMIs even after alleged settlement of the loan account in question. It is highly improbable if not impossible that a person would pay the installments which are also accepted by financial institution as EMIs after taking the cheque for full and final settlement qua entire loan in question.
22. All these circumstances raise serious doubts on the veracity of the claim of the complainant thereby probablising the stand of the accused 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 for security purposes which is later on filled up by complainant. The law in relation to cheques issued for security purposes is discussed in judgments hereinbelow:
23. In M.S Narayanan Menon Vs. State of Kerala and Others. 2006 SCC 39 , it has been held by Apex Court that :
"..........If the defence is accepted as probable the cheque therefore cannot be held to have been issued in CC NO. 2978/12 Page no. 14 of 19 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 N.I Act...."
24. In Shanku Concretes Pvt. Ltd. Vs. State of Gujrat 2000 Cri.L.J 1988 (Gujrat) a loan of Rs.15,00,000/ was taken by accused, who issued 7 post dated cheques as collateral security and it was observed by Hon'ble Gujrat High Court that no offence u/s 138 N.I. Act is made out in para 13 and 14 as under :
"...13. The above view further strengthens from the agreement executed between the parties. It is amply clear in the agreement that accused shall repay amount after six months of the execution of agreement and it is also made clear that for due performance of the contract. The intention of the parties is clear from this averments that the cheques were issued as the collateral security for the due performance (vernacular matter omitted.) of the contract, by which the Company and the Director i.e. accused No. 2 bound themselves to repay the said amount. It is, therefore, clear that cheques were not issued to discharge any existing debt.
14. This Court relies on the decision cited by Mr. Majmudar of the High Court of Madras (supra), wherein a principle is laid down that to attract Section 138 of the Negotiable Instruments Act, it must be pointed out that there was subsisting liability or debt CC NO. 2978/12 Page no. 15 of 19 on the date when the contract was entered into. In that given case before the High Court of Madras, the contract expressly made it clear that the cheques were handed over as security. In this case, it is clear from the agreement entered into between the parties that after borrowing the money, making a statement to repay the same at some future date, the cheques were issued for due performance. Therefore, the transaction from its very nature or from the intention of the parties, as reflected in the agreement executed between the parties, is purely of a civil nature, for which a civil suit has already been filed. The very fact that the payment was agreed to some future date and there was no debt or liability on the date of delivery of the cheques, will take the case out of the purview of the Section 138 of the Negotiable Instruments Act...."
25. In Sam Daniel Vs. John 2005 Comp Case 17 (Madras High Court) it was observed by Hon'ble Madras High Court in para 9 and 10 that dishonour of cheque given as collateral security does not make out an offence u/s 138 N.I. Act :
"...9. Strict liability under Section 138 can be enforced only when the cheque is issued in discharge of any legally enforceable debt or other liability, partly or wholly. Where a cheque is issued not for the purpose of discharge of any debt or other liability, return of such cheque unpaid will not meet with the penal consequences and the maker of the cheque shall not, therefore, be liable for prosecution.
CC NO. 2978/12 Page no. 16 of 19
10. The Explanation to Section 138 provides that a debt or liability under this section means only a legally enforceable debt or other liability. In common parlance, a debt is something owed to another, a liability, an obligation, a chose in action, which is capable of being assigned by creditor to some other person. A debt due means that a particular liability is in existence. Thus in cases for an offence of dishonour of cheque, it would be relevant to examine the materials/evidence as to whether there is a "debt payable" and whether the cheque was drawn for that dischargeable debt. While there may be a debt payable in existence, that alone is not sufficient to prove that the cheque was drawn in discharge of that amount. Where the accused raised the point that the cheque in question was not intended to be in appropriation of the debt or to be used for a discharge of the debt, but was issued only as a collateral safeguard, there cannot be presumption under Section 138 of the Negotiable Instruments Act..."
26. Keeping in view the aforesaid legal propositions, it is clear that dishonour of a cheque given as security does not make out an offence u/s 138 NI Act and the very fact that the payment was agreed to some future date and there was no debt or liability on the date of delivery of cheque, will take the case out of the purview of section 138 N.I. Act. Penal liability u/s 138 N.I Act can be enforced only when the cheque is issued in discharge of any legally enforceable debt or other liability, partly or wholly. Where a CC NO. 2978/12 Page no. 17 of 19 cheque is issued not for the purpose of discharge of any debt or other liability, dishonour of such cheque will not meet with the penal consequences and the drawer of the cheque shall not, therefore, be liable for prosecution.
27. In the present case, the accused has managed to show that he did not have the legal liability or debt to the tune of cheque amount in question i.e. Rs.43,909/ towards the complainant on the date mentioned on the cheque i.e. 24.07.2007, as such, the accused has successfully rebutted the presumption of section 139 and section 118 NI Act and has successfully proved his defence that the cheque in question was given as a security cheque and not in discharge of any legal debt or liability. Final Order:
To hold a person guilty of committing a criminal offence under section 138 of NI Act, all the ingredients of the said offence should be proved against the accused but in the present case one of the main ingredients i.e. whether the cheque in question was issued in discharge of any legal debt or other liability is not proved against the accused, therefore, there is no need of considering whether complainant has proved other remaining ingredients of offence under section 138 NI Act against the accused.
CC NO. 2978/12 Page no. 18 of 19 In view of the aforesaid discussion, this court is of the considered opinion that the complainant has failed to prove its case against the accused.
All the ingredients of Section 138 of Negotiable Instruments Act have not been duly proved on record. Accordingly, accused Abrar Ahmad S/o Sh.
Istyaq Ahmad is hereby acquitted of the offence u/s 138 Negotiable Instruments Act.
B/B and S/B stands discharged.
Announced in the open (AKASH JAIN) Court on 21.08.2012 MM01 (NI Act) Dwarka Courts, New Delhi CC NO. 2978/12 Page no. 19 of 19