Delhi District Court
Pradeep vs Lalit Kumar on 24 July, 2018
IN THE COURT OF SHRI PUNEET NAGPAL, MM (NI ACT)-01,
SOUTH-WEST DISTRICT: NEW DELHI
New CC No.5003102/16
Under Section 138 of N.I. Act
In the matter of:
PRADEEP
s/o Shri Ved Prakash
R/o House no.58
Village Tajpur Khurd
New Delhi - 110 071.
... Complainant
Versus
LALIT KUMAR
s/o Shri Dharmawati
R/o Hanuman Chowk,
A Block, House no.02,
Phase -2,
P.O. Chhawla
New Delhi.
... Accused
Date of Institution : 08.08.2016
Date on which judgment was reserved : 10.07.2018
Date of Judgment : 24.07.2018
JUDGMENT
1. Shorn off unnecessary details, the case of the complainant as narrated in the complaint is that the complainant knows the accused and is having friendly relations as the accused is running a milk agency in Chhawla. It has been averred in the complaint that the accused had approached the complainant for a friendly loan of Rs.1 lac for a period of five months. The accused offered the complainant an additional New CC No.5003102/16 PRADEEP VS LALIT KUMAR amount of Rs.10,000/- over the amount of Rs.1 lac. The complainant agreed to the proposal of accused and advanced a sum of Rs.1 lac. Thereafter, in discharge of his legal liability to repay the above said loan alongwith interest / premium, the accused issued a cheque bearing no.302385 dated 05.06.2016 for sum of Rs.1,10,000/- drawn on Punjab National Bank, Goyla Khurd, New Delhi (Ex.CW1/1) (hereinafter called as cheque in question) to the complainant and assured the complainant that the cheque shall be honoured at the time of its presentation. The complainant presented the cheque in question for encashment on 15.06.2016 which to the despair of the complainant, got dishonoured on presentation with the remarks ''Funds Insufficient'' vide cheque return memo dated 15.06.2016 (Ex.CW1/2). Thereafter, the complainant immediately contacted the accused, however, on one pretext or the other, the accused started to avoid the complainant. This constrained the complainant to send a legal notice dated 22.06.2016 (Ex.CW1/3) to the accused. The said legal notice was received by the accused on 25.06.2016. However, the legal demand notice went unheeded and this led to the filing of the present complaint.
2 Cognizance of the offence under Section 138 NI Act was taken against the accused and summons were issued. The accused entered appearance. Notice under Section 251 CrPC was framed against the accused to which he pleaded not guilty. In his plea of defence, recorded on 21.02.2017, accused admitted that the cheque in question was handed over to the complainant. However, it was the version of the accused that the cheque was New CC No.5003102/16 PRADEEP VS LALIT KUMAR handed over in blank signed condition. Accused also admitted the fact of taking of loan from the complainant. However, it was the version of the accused that the amount of loan was only Rs.15,000/- and not Rs.1 lac as has been averred by the complainant. It was also submitted by the accused that he has repaid the loan amount of Rs.15,000/- alongwith interest of Rs.3,000/- to the complainant. The accused admitted the fact of having received the legal demand notice sent by the complainant.
EVIDENCE OF THE COMPLAINANT
3. In Post Summoning Evidence, the complainant chose to examine himself as sole complainant's witness and appeared as CW1 and adopted his Pre-Summoning Evidence tendered by way of affidavit Ex.CW1/A. The accused had filed an application under Section 145(2) NI Act and the accused was allowed to cross examine the complainant. However, nothing substantial could be elicited from the cross examination of the complainant which could support the defence of the accused or create doubts on the credibility of the witness. In his cross examination, the complainant testified that he was earning sum of Rs.45,000/- per month during the relevant time. It was testified by the complainant that the cheque in question was duly filled up at the time of when the same was handed over by the accused to him. The complainant admitted that the whole loan amount was advanced in cash and the same was lying with him at his residence.
New CC No.5003102/16PRADEEP VS LALIT KUMAR DEFENCE OF THE ACCUSED 4 The version of facts as discernible from the plea of defence recorded at the stage of framing of notice under Section 251 CrPC, from cross-examination of complainant CW1, from statement of accused recorded under Section 313 CrPC and from the testimony of the accused (DW1) are that the accused has admitted the factum of taking loan from the complainant. However, it is version of the accused that he had only taken a loan of sum of Rs.15,000/-. The accused has testified as DW1 that he has already repaid sum of Rs.15,000/- to the complainant in installments of Rs.200/- per day. It has also been testified by the accused that the complainant had taken a blank signed security cheque from him at the time of advancement of loan. The accused admitted that he has not received any receipt from the complainant in respect of alleged repayment of alleged sum of Rs.18,000/-. During his cross-examination, the accused admitted that he knows the complainant for the last six years. The accused testified that the complainant was maintaining a diary in which the record of the payment was made.
5. The accused had testified during his testimony that he had taken sum of Rs.15,000/- only as friendly loan from the complainant in presence of one Shri Deepak. At the instance of the accused, the said Deepak was summoned as defence witness and who appeared as DW2 and testified that he had no knowledge regarding the facts of the present case.
New CC No.5003102/16PRADEEP VS LALIT KUMAR
6. The accused also chose to examine one Shri Ram Kumar who appeared as DW3. The witness testified that he used to pay sum of Rs.200/- per day for period of three months to one person whose name was not known to him. The witness pointed towards the complainant during his testimony and deposed that he had paid sum of Rs.200/- per day to the person who was standing in front of him. During his cross-examination, the witness admitted that he had not obtained any receipt regarding the payment of Rs.200/- per day. It was testified by the witness that he used to hand over sum of Rs.200/- at the shop of the complainant. However, the witness was unable to disclose the details of the shop owned by the complainant. The witness admitted that the loan was not taken by the accused in his presence and that the fact that the accused has taken loan of Rs.15,000/- was told to him by accused himself.
7. The factual position being thus, now let us quickly run through the legal benchmark which is to be satisfied in order to constitute an offence u/s 138 NI Act-:
(i) that the person must have drawn a cheque on an account maintained by him in a bank for payment of certain amount of money to another person from out of that account.
(ii) that a cheque should have been issued for discharge, in whole or in part, or any debt or other liability.
(iii) that the cheque has been presented to the bank within a period of six months from the date on which it was drawn or within the period of its validity whichever is earlier.New CC No.5003102/16
PRADEEP VS LALIT KUMAR
(iv) that cheque is returned by the bank unpaid because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank.
(v) that the payee or the holder in due course of the cheque makes a demand for the payment of said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of the information by him from the bank regarding the return of the cheque as unpaid.
(vi) the drawer of the said cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
8. Being cumulative, it goes without saying that it is only when, all the aforementioned ingredients are satisfied, that a person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the NI Act.
9. The service of legal notice having been admitted and therefore, let us turn into the core issue as to whether the cheque in question was issued to discharge legal liability towards the complainant.
10. File perused and submissions heard. Let us determine, whether the accused has succeeded in establishing the defence taken by him.
New CC No.5003102/16PRADEEP VS LALIT KUMAR EXISTENCE OF LEGALLY ENFORCEABLE DEBT OR LIABILITY.
11. Let us briefly recapitulate that the accused has admitted that the cheque in question bears his signature. However, it is the case of the accused that the cheque in question was issued as a blank signed cheque and the same has been misused by the complainant. Therefore, once the accused admits that the cheque in question bears his signature and the cheque in question is drawn on a bank account maintain by him, a factual basis is established, to invoke the presumption of cheque having been issued in discharge of a legally sustainable liability and drawn for a good consideration arises by virtue of Section 118(a) read with Section 139 of NI Act.
12. It is an established proposition of law that once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under 139 NI Act has to be raised in favour of the complainant. It is a mandatory presumption though the accused is entitled to rebut the said presumption. In a catena of judgments, it has been laid down by the Hon'ble Apex court that such presumption in favour of the complainant cannot be rebutted by a mere plausible explanation but more than a plausible explanation by way of rebuttal evidence.
13. In my opinion, the accused has not succeeded in rebutting the presumption of legal liability or even probablizing his defence. The defence of the accused is that he has not taken the alleged loan of Rs.1 lac but has taken loan of Rs.15,000/- only New CC No.5003102/16 PRADEEP VS LALIT KUMAR from the complainant. Ld. Counsel for the accused has argued that admittedly, no written document was executed at the time of advancement of loan and that the complainant was not having any knowledge regarding the financial status of the accused and therefore, the story of the alleged friendly loan of Rs.1 lac as has been proffered by the complainant is implausible and preposterous. The submission advanced on behalf of the accused is specious as the accused has himself admitted that he was a debtor of the complainant. The accused has only disputed the amount of loan which was advanced to him by the complainant. Thus, the burden of proving the fact that the loan amount was Rs.15,000/- and not Rs.1 lac, was on the accused and the accused has failed to discharge the same. Apart from the interested testimony of the accused, not even an iota of evidence has been recorded on record to prove the assertion that the loan amount was only Rs.15,000/-. At the same time, the accused has testified that the whole loan amount of Rs.15,000/- has been repaid. However, there is no documentary evidence, much less cogent to prove the assertion of the accused that loan amount was only Rs.15,000/- as against the alleged amount of Rs.1 lac.
14 At the same time, I am not inclined to believe the testimony of the accused (DW1) as the accused had deposed that the loan amount of Rs.15,000/- was advanced by the complainant in presence of one Shri Deepak. However, the testimony of Deepak, DW2 belies the claim of the accused as the said witness has testified that he has no knowledge regarding the facts of the present case. Thus, the assertion of the accused that sum of New CC No.5003102/16 PRADEEP VS LALIT KUMAR Rs.15,000/- was advanced as loan, is not backed by any evidence on record.
15. Ld. Counsel for the accused has argued that the repayment of the loan amount was done in installments of Rs.200/- per day by the brother of the accused who appeared as DW3. DW3 had deposed that he used to pay sum of Rs.200/- per day to some person for a period of three months. However, during his testimony, the said witness was even unable to disclose the name of the complainant or tell the name of shop of the complainant where he used to go and make payment on behalf of his brother i.e. the accused. Therefore, the testimony of DW3 does not inspire confidence as the conduct of the witness is not that of a reasonable man. It is highly un-natural that a person who is meeting someone continuously for period of three months, will not be having knowledge of the name of that other person with whom one is meeting on regular basis. Therefore, the testimony of DW3 does not inspire confidence and the testimony is not worthy of credence.
16. At the stage of final arguments, Ld. Counsel for the accused has argued that the complainant has admitted in his cross examination that the alleged loan was given in cash and the same has not been disclosed by him in his income tax returns, and therefore, the same cannot be termed as legally enforceable debt in view of the bar of section 269 S.S. of the Income Tax Act, 1961.
New CC No.5003102/16PRADEEP VS LALIT KUMAR
17. This argument advanced by Ld. Counsel for the accused is devoid off merits as it is a settled law that even if, the loan amount has not been disclosed by any person in his / her income tax returns, the same would be inconsequential. It is now fairly settled that the mandate of section 269 S.S. of the Income Tax Act extends only to the taker or receiver of the loan and not the giver. A bare perusal of section 269 S.S. of the Income Tax Act, 1961 shows that no person can accept any loan or deposit of Rs.20,000/- or more otherwise then, by way of an account payee cheque or an account payee draft.
18. Consequences of contravention of section 269 S.S. of the Income Tax Act have been provided in section 271 D of Income Tax Act, 1961, which provides, that if, a loan or deposit is accepted in contravention of provisions of section 269 S.S. of the Income Tax Act, then a penalty equivalent to the amount of such loan, or deposit may be levied by the Joint Commissioner. Hence, even on a bare reading of these provisions, it is manifest that the bar relates to the receiving or taking of loan and not giving the same.
19. This aspect is very succinctly highlighted by Hon'ble High court of Bombay in the decision tilted as 'Krishna P. Morajkar vs. Joe Ferroa' decided on 19.07.2013, 2013 SCC online Bombay 862, which reads as follows:
''18. The Ld. Counsel for the respondent submitted that the observations of the Supreme Court in para 14 of the Judgment in Rangappa (supra) shows that the Supreme Court New CC No.5003102/16 PRADEEP VS LALIT KUMAR had not in any way casts any doubt on the correctness of the decision in Krishna Janardhan Bhat (supra), as it was based on specific facts and circumstances therein. Therefore, he submitted that observations in Krishna Janardhan Bhat (supra), about non-compliance of provisions of section 269 S.S. of the Income Tax Act and implications of section 271 D of Income Tax Act would still stand as good law. The Ld. Counsel for the appellant submitted that even these observations would stand impliedly over ruled. He pointed out that what was held in Krishna Janardhan Bhat (supra), was that advance taken by way of loan of more than Rs.20,000/- was only to be made by way of an account payee cheque. He submitted that in Rangappa (supra), the Supreme Court was specifically considering the case of an advance of Rs.45,000/- made in cash and yet the Supreme court had upheld the conviction recorded. Thus, even those observations based on the provisions of section 269 S.S. and section 271 D of the Income Tax Act made in Krishna Janardhan Bhat (supra), would stand impliedly overruled. I am entirely in agreement with Ld. Counsel for the appellant because the Supreme court in Rangappa (supra) had specially noted the judgment in Krishna Janardhan Bhat (supra), that advance of more than Rs.20,000/-
was to be made only by way of an account payee cheque, and yet the Supreme Court accepted the case of the complainant who claimed to New CC No.5003102/16 PRADEEP VS LALIT KUMAR have made an advance of Rs.45,000/- in cash and proceeded to uphold the conviction, even though the case rested on the fact that the cash advance of sum more than Rs.20,000/- was made. Thus, on this aspect, also, Krishna Janardhan Bhat (supra), stood impliedly overrule by Rangappa (supra), and the Judgment is to be held rendered on the facts of that case, not laying down the law. Therefore, judgments, which follow Krishna Janardhan Bhat (supra), can be safely ignored.
19. There is another aspect of the matter. The Ld. Counsel for the respondent pointed out that in Krishna Janardhan Bhat (supra), attention of the Supreme Court was possibly not drawn to the actual wording of section 269 S.S. of the Income Tax Act. He submitted that section 269 S.S. of the Income Tax Act, in fact, does not cast any burden upon a person making advance in cash to record it in his returns and does not prevent any such cash advanced from being made. ........................''.
A plain reading of section 269 S.S. shows that no person can accept any loan or deposit of a sum of Rs.20,000/- or more otherwise then by way of an account payee cheque or account payee draft. It does not say that a person cannot advance more than Rs.20,000/- in cash to other person. It is clear that the restriction on cash advances was infact on the taker and not the New CC No.5003102/16 PRADEEP VS LALIT KUMAR person who makes the advance. The penalty for taking such advance or deposit in contravention of provisions of section 269 S.S. was to be suffered by the one who takes the advance. Therefore, it is obviously impermissible to invoke these provisions for preventing a person from recovering the advance which he has made..............''.
20. It is clear from the above that non disclosure of an advance would not make the same non recoverable as it is incumbent on the person taking the advance to disclose the loan and not the person giving the same.
21 What further fortifies this conclusion is the decision of Hon'ble High court of Delhi in the case of Mukesh Gupta vs P. K. Bajaj, CS (OS), number 1615/2003 decided on 20.11.2006, wherein the court, in a civil suit for recovery, quite categorically held, that even assuming a non disclosure in tax returns, merely that, would not render the contract of loan void and loan irrecoverable relevant excerpts from the decision are as follows:-
''36. On issue no.02 framed vide order dated 02.02.2006, suffice would it be note as held in report published as 2002 (8) SCC 31, Nutan Kumar & Ors vs Iind Additional District Judge & Ors., unless a statute specially provides that a contract contrary to the provisions of the statute would be void, the contract would remain binding between the parties and can be enforced between the New CC No.5003102/16 PRADEEP VS LALIT KUMAR parties themselves. Consequences, if any, other in law, would follow.
''37. The Ld. Counsel for the defendant could not show any statutory provisions under the Income Tax Act, 1961, or any other law which stipulates that a loan transaction not recorded in the Income Tax Returns, or a loan transaction which is in violation of section 69A, 69B or section 269 S.S. of the Income Tax Act, would be void.
38. I accordingly hold that the suit is not barred under section 69A, 69B or section 269 S.S of the Income Tax Act.....''.
22. It is, therefore, clear that the claim does not become irrecoverable on account of alleged violation of section 269 S. S. of the Income Tax Act. On the other hand, it was for the accused to justify as to whether he had disclosed the same to the income tax department or not.
23 As a last ditch effort, at the time of final arguments, it has been argued on behalf of the accused that the complainant is a money lender and therefore, he is debarred from recovering his loan, in absence of a money-lending license.
24. This argument of Ld. Counsel for the accused also fails to persuade me for more reasons than one. Firstly, there is nothing on record to suggest that the complainant has been giving loans to other people on interest earlier. It needs no gain New CC No.5003102/16 PRADEEP VS LALIT KUMAR saying that, in order for the complainant to be a money-lender, it needs to be proved that he is engaged in the business of grant of loans to several people in a commercial manner and with a certain regularity. No evidence has been brought on record to demonstrate that he is a money lender. The allegations, therefore, has remained unsubstantiated.
25 Secondly, even assuming the complainant to be a money lender for an instant, the same would not render the present complaint non-maintainable. In this regard, it is apposite to refer to the decision of Hon'ble High Court of Delhi rendered in case titled as 'Kajal vs Marwah' (Crl. Appeal No.870/2003, date of decision 27.03.2014), wherein the Hon'ble High Court of Delhi under similar facts held:-
''In my view, even if the appellant / complainant was engaged in lending money, that would not debar her from filing a complaint under Section 138 NI Act, if a cheque issued to her towards repayment of the loan advanced by her is dishonoured by a bank for want of funds and the drawer of the cheque fails to make payment within the prescribed time, after receipt of legal notice from the render. Section 3 of Punjab Registration of Money Lenders Act, 1938, which applies to Delhi, to the extent it is relevant provides that notwithstanding any contained in any other enactment for the time being in force, a suit by a money lender for the recovery of a loan shall, after the commencement of the act, be dismissed unless the money lender at the time of institution of the suit is registered and hold a valid license or holds a certificate from the commissioner under Section 11 of the Act, specifying the loan in respect of which the suit is instituted or if he is not already a registered or licensed money lender, he satisfies the court that he has applied for such New CC No.5003102/16 PRADEEP VS LALIT KUMAR registration or license, but the application is pending. The aforesaid provision does not debar a money lender from instituting a complaint under Section 138 of the NI Act, 1881, which is a remedy enforceable before a criminal court, and totally independent of a civil suit. The criminal liability is incurred only in case a cheque is issued in discharge of a debt or any other liability, the said cheque is dishonoured for want of funds and the borrower fails to make payment of the amount of the cheque even after the receipt of notice from the lender''.
26 It is, therefore, apparent that the embargo is with respect of filing of suit for recovery of money or simply the recovery of that money. This fails to have a bearing on the present case, since what is at hand is a complaint case under Section 138 NI Act, which is not a recovery proceedings but are proceedings to punish a person who after issuing a cheque fails to honour the same and also commits a default in paying the said amount on receipt of the notice.
27. Furthermore, the accused has already admitted that he had received the legal demand notice sent by the complainant. The non reply of the legal notice, is also circumstances that is to be marshalled against the accused. The conduct of the accused in not taking any legal action against the complainant on his refusal to return the cheque in question after the repayment of the loan amount as alleged by the accused reeks of culpability and an adverse inference deserves to be drawn against him.
28. Therefore, in my opinion, the accused has not succeeded in rebutting the presumption of legal liability even on New CC No.5003102/16 PRADEEP VS LALIT KUMAR the scale of preponderance of probabilities. The defence of the accused cannot be termed as a plausible defence.
29. The sheer lack of even an iota of material on record, to this effect, leads to the irresistible conclusion of the defence of the accused being sham and nothing but a complete lie.
30. Therefore, all factors, cumulatively seen, go on to show that the accused has miserably failed to probablize the defence set up by him with respect to the cheque amounting to Rs.1,10,000/- (Ex.CW1/1). The presumption of legal liability under Section 118 (a) read with Section 139 of the NI Act has gone unrebutted. The complainant has successfully proved the basic ingredients of the offence under Section 138 of the NI Act.
31 Resultantly, the accused Lalit Kumar stands convicted for the offence under Section 138 of the NI Act.
32. Let the convict be heard on quantum of sentence.
33. Let a digitally signed copy of the Judgment be supplied to the accused, free of cost.
Digitally signed by PUNEET NAGPAL PUNEET Date:
Decided on 24.07.2018 NAGPAL 2018.07.24
15:23:15
Announced in open court. +0530
(PUNEET NAGPAL)
MM (NI Act)-01/SW/DWK
New Delhi
New CC No.5003102/16
PRADEEP VS LALIT KUMAR