Delhi District Court
Complainant vs Mr. Ashok Kumar Mongia on 22 December, 2022
Om Wati v. Ashok Kumar Mongia
IN THE COURT OF MS. CHHAVI BANSAL
MM (NI ACT) DIGITAL COURT-03, SOUTH, SAKET COURT
NEW DELHI
MRS. OM WATI
W/o Late Sh. Krishan Lal,
R/o H. No. 26/63, Saidulajab Extension,
New Delhi-110030.
.... Complainant
VERSUS
MR. ASHOK KUMAR MONGIA
R/o H. No. 26/77, Saidulajab Extension,
New Delhi-110030
.... Accused
Complainant Case no. 4752/2021
CNR No. DLST-0201-4591-2021
Title Om Wati v. Ashok Kumar
Mongia
Date of Institution of Complaint 23.09.2021
Date of Final Arguments 09.12.2022
Date of Pronouncement of 22.12.2022
Judgment
Offence Involved Under Section 138 NI Act
Plea of the Accused Pleaded not guilty
Final order Acquitted
Digitally
signed by
CHHAVI
CHHAVI BANSAL
BANSAL Date:
2022.12.22
16:52:45
+0530
CC No. 4752/2021 Page No. 1/13
Om Wati v. Ashok Kumar Mongia
JUDGMENT
1. The complainant has filed the present case under Section 138 Negotiable Instruments Act, 1881 (hereinafter referred to as "NI Act") seeking prosecution of the accused regarding the alleged dishonour of the cheque in question issued in discharge of the legal liability of the accused.
2. The Brief Factual Matrix, as per the case of the complainant, is as follows:
2.1 That the complainant, an illiterate widow and senior citizen aged about 64 years, and the accused are neighbours. 2.2 That the complainant approached the accused sometime in December 2014 and the accused induced the complainant to invest in LIC (Life Insurance Corporation). This resulted in the complainant investing giving a sum of Rs. 80,000/- for investment in LIC.
2.3 That, taking advantage of the illiteracy of the complainant, the accused invested the amount of Rs. 80,000/- in 'Lotus Agricultural and Marketing Cooperative Society Ltd.' (hereinafter referred to as "Lotus Agricultural") instead of LIC. 2.4 That in July 2021, the complainant got to know that her money was not invested in LIC by the accused, but was rather invested in Lotus Agricultural. Upon learning the same, the complainant confronted the accused, upon which the accused admitted his fraud and tendered apologies by assuring to repay the amount of Rs.80,000 and thus issued the cheque bearing no. 164480 dated 03.08.2021 for Rs. 80,000/- Ex. CW-1/1 in favour of the complainant.
2.5 That the complainant presented the said cheque Ex. CW-1/1 for encashment, but the same returned dishonoured with the remarks "Funds Insufficient" vide Return Memo dated 04.08.2021 Ex. CW-1/2.
2.6 That the complainant was constrained to issue a Demand Notice dated 20.08.2021 Ex. CW-1/3 to the accused demanding payment CHHAVI Digitally signed by CHHAVI BANSAL BANSAL 16:53:02 +0530 Date: 2022.12.22 CC No. 4752/2021 Page No. 2/13 Om Wati v. Ashok Kumar Mongia of the cheque amount. However the accused did not repay the same even after receiving the demand notice on 23.08.2021 through post.
2.7 That the complainant filed the present case seeking prosecution of the accused u/s 138 NI Act since the accused did not make payment of the cheque amount even despite receiving demand notice.
3. After the complaint was filed, cognizance was taken and the accused entered appearance on 16.12.2021. On 22.03.2022, Notice u/s 251 of the Code of Criminal Procedure (hereinafter referred to as, "Cr.PC") was framed upon the accused to which accused pleaded not guilty and claimed trial. At the time of framing of notice, admitted his signatures on the cheque in question and also stated that he did receive the demand notice from the complainant. However, the accused then stated the following in his defence:
" I was an agent of PACL company, whose subsidiary is Lotus Agriculture and Marketing Corporation Society Ltd. The complainant had initially invested a sum of Rs. 30,000/- in Lotus Agriculture and Marketing Corporation Society Ltd. Complainant later invested an additional amount of Rs. 50,000/- in the same company. Later on, SEBI had seized all the accounts of PACL group. I had issued the cheque in question to the complainant as an assurance to the complainant that her money is secure. I had clearly instructed complainant to not present the cheque for encashment, and to return the cheque to me once the complainant receives money from the company in which she invested."
4. As part of Complainant's Evidence, the complainant examined himself as CW-1, and was cross-examined on 31.08.2022. In her cross- examination, the complainant inter alia stated that she had given a sum of Rs.80,000/- to the accused about nine years ago, that the said sum was given in two instalments: one instalment of Rs.30,000/- and the other Digitally signed CHHAVI by CHHAVI BANSAL BANSAL Date: 2022.12.22 CC No. 4752/2021 Page No. 3/13 16:53:11 +0530 Om Wati v. Ashok Kumar Mongia instalment of Rs.50,000/-. Complainant stated that she paid the second instalment about 4-5 months after the payment of the first instalment, that she was not accompanied by her children or anyone else at the time she made the payment, that the accused handed over certain documents to the complainant at the time the complainant made the payment. CW-1 was shown the application form Ex. CW-1/D1, upon which CW-1 agreed that the photograph and the thumb impression on the application form were hers. CW-1 was also shown a copy of her passbook, voter ID, Aadhar card Ex. CW-1/D2 (colly.), and her Pan Card Ex. CW-1/D3, and CW-1 affirmed that all the said documents were hers. CW-1 was also shown a receipt for Rs. 50,000/- Ex. CW-1/D4 and another receipt for Rs. 30,000/- Ex. CW-1/D5, and CW-1 agreed to the suggestion that those receipts were issued to her by the accused, and further that CW-1 herself had the original receipts of the copies of receipts Ex. CW-1/D4 and Ex. CW-1/D5. CW-1 further agreed to the suggestion that she had paid an instalment of Rs.30,000/- in July 2013, and further that she made the payment of the second instalment of Rs.50,000/- only after she was satisfied with the veracity of the transaction and because she had faith in the accused. CW1 further stated that she did not know if she had made the payment of Rs.50,000/- in November 2014.
5. Thereafter, the complainant closed his evidence and the matter was listed for recording of Statement of the Accused u/s 313 r/w 281 Cr.P.C. In the said statement, the accused stated that he was an agent of PACL company and Lotus Agricultural was a subsidiary of PACL company. Accused stated that the complainant was interested in investing with Lotus Agricultural and that the complainant paid Rs.30,000/- to the accused in connection with the same, which was invested by the accused in Lotus Digitally signed CHHAVI by CHHAVI BANSAL BANSAL Date: 2022.12.22 16:53:21 +0530 CC No. 4752/2021 Page No. 4/13 Om Wati v. Ashok Kumar Mongia Agricultural sometime in July 2013. Accused stated that the complainant paid a further sum of Rs.50,000/- in November 2014, and that the same was also duly invested in the aforementioned company. Accused mentioned that due receipts and policy bonds were given to the complainant regarding her investment. Accused then stated that, around the time of maturity of the invested amount of the complainant- which was sometime during 2019-2020, it came to fore that the accounts of the aforementioned company had been seized before the investment of the complainant could mature. Accused then stated that the complainant used to verbally abuse him and used to pick fight with him over the investment of the complainant, and that the complainant was not ready to understand that the accused merely acted in the capacity of an agent. Accused stated that it was under those circumstances that he was constrained to issue the cheque in question Ex. CW1/1 to the complainant. Accused mentioned that the complainant assured that she would return the cheque to the accused once she receives the funds from the company in which she invested. Vide same statement under Section 313 r/w 281 Cr.P.C., the accused opted to lead Defence Evidence. However, on 27.09.2022, Ld. Counsel for the Accused submitted that the accused does not wish to lead any Defence Evidence. Hence, the matter was listed for final arguments.
6. In the Final Arguments advanced on 09.12.2022, both parties reiterated their central contentions. It was argued on behalf of the complainant that the accused ought to be convicted on the grounds that all the ingredients of Section 138 NI Act stand fulfilled in the present matter since Section 138 NI Act covers the situation where cheques are issued for "other liability", that the accused has taken advantage of the complainant being an illiterate widow by misleading her to believe that the accused is an Digitally signed CHHAVI by CHHAVI BANSAL BANSAL Date: 2022.12.22 16:53:29 +0530 CC No. 4752/2021 Page No. 5/13 Om Wati v. Ashok Kumar Mongia agent of LIC while in fact the accused was an agent of Lotus, and that the accused has not been able to rebut the presumption u/s 118 NI Act which operates in favour of the complainant.
7. Per contra, it was argued on behalf of the accused that the ingredients of Section 138 NI Act are not fulfilled in the present case as the complainant has not been able to successfully show that the accused had legal liability towards the complainant as the cheque in question was issued by the accused because the complainant was a neighbour of the accused and the cheque was issued only to inspire the faith of the complainant in the company which the accused was representing as an agent, that the complainant has not mentioned anything about her engaging the accused as an agent for an investment made by the complainant in July 2013 and thereby that the complainant has concealed material facts, and that the accused did not take advantage of the complainant being an illiterate widow since the complainant had her children to consult and accompany while participating in the investments of the accused. It was thus prayed that the accused be acquitted.
8. Submissions heard. Record perused.
9. Section 138 of the NI Act reads as under:
138 Dishonour of cheque for insufficiency, etc., of funds in the account. --Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without CHHAVI Digitally signed by CHHAVI BANSAL BANSAL Date: 2022.12.22 16:53:37 +0530 CC No. 4752/2021 Page No. 6/13 Om Wati v. Ashok Kumar Mongia 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.
10. Thus, there are five essential ingredients which ought to be fulfilled to establish culpability for an offence u/s 138 NI Act:-
I. The cheque is drawn by a person on an account maintained by them for payment of money and the same is presented for payment within a period of three months from the date on which it is drawn or within the period of its validity; II. The cheque was drawn by the drawer for discharge of any legally enforceable debt or other liability; III. The cheque was returned unpaid by the bank due to either insufficiency of funds in the account to honour the cheque or that it exceeds the amount arranged to be paid from that account on an agreement made with that bank; IV. A demand of the said amount has been made by the payee or holder in due course of the cheque by a notice in writing given to the drawer within thirty days of the receipt of information of the dishonour of cheque from the bank;
CHHAVI Digitally signed by CHHAVI BANSAL BANSAL Date: 2022.12.22 16:53:44 +0530 CC No. 4752/2021 Page No. 7/13 Om Wati v. Ashok Kumar Mongia V. The drawer fails to make payment of the said amount of money within fifteen days from the date of receipt of notice.
11. Moreover, Section 139 NI Act reads as under:
139. Presumption in favour of holder.--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.
12. Section 139 thus raises a crucial presumption in favour of the complainant. In view of Section 139, the burden falls upon the accused to show that the cheque once admitted was not issued in discharge of any legally enforceable debt or liability. The contours of Section 139 NI Act have been established in a catena of judgments, and it is no more res integra that Section 139 NI Act casts a reverse onus upon the accused to show that the accused had no liability towards the complainant qua the cheque for which the complainant seeks to prosecute the accused, and that the presumption under Section 139 NI Act is essentially rebuttable in nature.
13. In Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16, the Hon'ble Supreme Court of India held as under:
"22. Because both Sections 138 and 139 require that the court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras v. A. Vaidyanatha Iyer [AIR 1958 SC 61 : 1958 Cri LJ 232] it is obligatory on the court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. "It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused." (Ibid. at p. 65, para 14.) Such a CHHAVI Digitally signed by CHHAVI BANSAL BANSAL Date: 2022.12.22 16:53:52 +0530 CC No. 4752/2021 Page No. 8/13 Om Wati v. Ashok Kumar Mongia presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter, all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. 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.
23. In other words, provided the facts required to form the basis of a presumption of law exist, no discretion is left with the court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, "after considering the matters before it, the court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists"
[ Section 3, Evidence Act] .
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'." (emphasis supplied)
14. Furthermore, in Rangappa v. Sri Mohan, (2010) 11 SCC 441, the Hon'ble Apex Court went ahead to observe as under:
"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 Digitally signed CHHAVI by CHHAVI BANSAL BANSAL Date: 2022.12.22 16:54:00 +0530 CC No. 4752/2021 Page No. 9/13 Om Wati v. Ashok Kumar Mongia 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 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 or 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."
15. Thus, in view of the settled position of law as discussed above, the complainant has to establish its case by satisfying the ingredients of Section 138 NI Act, while the accused can dispute the main case of the complainant or discharge its burden by rebutting the presumption codified u/s 139 NI Act.
16. In order to satisfy the central ingredient u/s 138 NI Act, i.e. the existence of legal liability, the case of the complainant needs to be examined. The complainant claims a cheque amount of Rs. 80,000/- from the accused, which the complainant says that the accused is liable to pay since the accused invested the money of the complainant in Lotus Agricultural while promising to invest the CHHAVI Digitally signed by CHHAVI BANSAL BANSAL Date: 2022.12.22 16:54:49 +0530 CC No. 4752/2021 Page No. 10/13 Om Wati v. Ashok Kumar Mongia same in LIC, and that the accused issued the cheque in question Ex. CW-1/1 to the complainant in order to refund the money of the complainant wrongly invested in Lotus Agricultural.
17. However, no evidence has been led by the complainant to show that the accused had promised that her funds would be invested in LIC, and that the accused played a fraud upon the complainant by investing the said funds in Lotus Agricultural instead of investing the same in LIC. Per contra, the accused has placed certain documents on record when he confronted the complainant with the same in the cross examination of the complainant. Said documents include the application forms Ex. CW-1/D1 and Ex. CW-1/D6, and the receipts Ex. CW-1/D4 and Ex. CW-1/D5, and it can be seen that the name of Lotus Agricultural is shown clearly on all the documents.
18. From the aforesaid position of documents, it does not appear that the complainant was in any way misled about her investment in Lotus Agricultural. Both the application forms Ex. CW-1/D1 and Ex. CW- 1/D6 bear the photographs and the thumb impressions of the complainant at the relevant places. Due receipts have been placed on record in regard to the investment of the complainant of Rs. 30,000/- made on 13.07.2013 as per the receipt Ex. CW-1/D4, and of Rs. 50,000/- made on 10.11.2014 as per the receipt Ex. CW-1/D5. There is no dispute involved in regard to the total amount invested by the complainant, i.e. Rs. 80,000/-, and the same is also evident in terms of both the receipts Ex. CW-1/D4 and Ex. CW-1/D5. The accused has not disputed the fact that the complainant did not obtain the return of her invested funds from the concerned company. However, it has been stated that the accused issued the cheque in question Ex.
CHHAVI Digitally signed by CHHAVI BANSAL BANSAL Date: 2022.12.22 16:54:09 +0530 CC No. 4752/2021 Page No. 11/13 Om Wati v. Ashok Kumar Mongia CW-1/1 only upon the insistence of the complainant and with a view to provide some sense of assurance to the complainant, given the fact that the complainant and the accused were neighbours. It is also an admitted position of facts that the money given by the complainant to the accused was with the view that the accused could invest the same with Lotus Agricultural, which the accused did as can be seen from the application forms Ex. CW-1/D1 and Ex. CW-1/D6 and from the receipts Ex. CW-1/D4 and Ex. CW-1/D5. Thus, it is clear that the accused did not take any money from the complainant in his personal capacity, and was only acting as an agent of Lotus Agricultural in accepting the total sum of Rs. 80,000/- from the complainant.
19. The legal position of agents in regard to the transactions akin to those mentioned in the complaint is clearly laid down in the various provisions of the Indian Contracts Act, 1872. Section 230 of the Indian Contracts Act, 1872 states that:
"Section 230: Agent cannot personally enforce, nor be bound by, contracts on behalf of principal.--In the absence of any contact to that effect an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. --In the absence of any contact to that effect an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them." Presumption of contract to contrary.--Such a contract shall be presumed to exist in the following cases:--
(1) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad;
(2) where the agent does not disclose the name of his principal; (3) where the principal, though disclosed, cannot be sued."
20. Thus, in view of Section 230 of the Indian Contracts Act, 1872, the position of law is clear that agents cannot be held personally liable for the transactions entered into by them on behalf of the principal in the absence of a clear agreement to the contrary. In the present case, CHHAVI Digitally signed by CHHAVI BANSAL BANSAL 16:54:17 +0530 Date: 2022.12.22 CC No. 4752/2021 Page No. 12/13 Om Wati v. Ashok Kumar Mongia there is no averment on behalf of the complainant that the accused was contractually bound to be personally liable as an agent for the money he had taken from the complainant. There is nothing on record to show that the liability of the accused was in his personal capacity and not in the capacity of an agent. In the established set of facts that the accused acted in the capacity of an agent and was not personally liable to the complainant, there emerges nothing to indicate that the accused had any legal liability towards the complainant for which the accused issued the cheque in question.
21. Given the absence of legal liability on part of the accused towards the complainant in these facts and circumstances, this court is of the view that the complainant has not been able to satisfy the primary ingredient to establish any liability of the accused as the accused was acting in the capacity of an agent, and much less an criminal liability on part of the accused which might attract indictment under Section 138 NI Act.
22. In view of the aforesaid discussion, this court holds the considered view that the cheque in question was not issued by the accused in discharge of any debt or legal liability towards the complainant and that no liability under Section 138 NI Act thus arises on part of the accused towards the complainant. Therefore, Accused Ashok Kumar Mongia stands Acquitted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881.
Digitally signed by CHHAVI CHHAVI BANSAL
Announced in Open Court on 22.12.2022 BANSAL
Date:
2022.12.22
16:54:23
+0530
(Chhavi Bansal)
MM (NI Act) Digital Court-03 (South)
Saket Courts: New Delhi/22.12.2022
CC No. 4752/2021 Page No. 13/13