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[Cites 15, Cited by 0]

Delhi District Court

Kusum Ingots & Alloys Ltd. vs . Pennar Peterson Securities on 29 June, 2013

                                  1

 IN THE COURT OF SHRI GAURAV GUPTA MM­1 (NI ACT) 
          SOUTH­WEST DISTRICT: NEW DELHI
   _________________________________________________

CC No. 357/12

Unique case ID No.   02405R0187872011

under Section 138 of N.I. Act 

In the matter of :­

India Bulls Housing Finance Ltd. 
F­60, Second Floor, Malhotra Building,
Connaught Place, New Delhi­110001
Through its Attorney/Authorised 
Representative Sh. Arun Kumar          ...... Complainant

                              VERSUS

Neeraj Kumar Gupta 
R/o V­157/C Mandir Wali Gali
Arvind Nagar, New Delhi­110053                .... Accused

Date of Institution                :                  09.06.2011
Date on which judgment was reserved:                  03.06.2013
Date of judgment                   :                  29.06.2013


                        J U D G E M E N T

1. Vide this judgment I shall dispose of a complaint filed by the complainant against the accused under section 138 of the Negotiable Instruments Act, 1881, (hereinafter referred to as as the "NI Act") for dishonour of a cheque CC No. 357/12 Page 1 of 13 2 issued by the accused for a sum of Rs. 13,90,000/­ (Rupees Thirteen Lacs Ninety Thousand Only).

2. The brief facts of the case as averred by the complainant in its complaint are that the complainant is engaged in the business of providing its customers with various types of loan facilities. It has been averred that the accused had availed a loan facility from the complainant vide loan account no. HHEGUG 00011809 . However, the accused did not make a regular payments and was not updating his accounts. It has further been averred that in order to discharge his liability and towards "discharge of part of debts" , the accused issued the cheque in question in favour of the complainant bearing number 664503 dated 19.03.2011, for a sum of Rs.13,90,000/­ drawn on State Bank of India, Yamuna Vihar, Delhi. It has further been averred that when the said cheque was presented by the complainant for clearance, the same was returned unpaid by the accused's banker vide return memo dated 22.03.2011, with the remarks "Funds Insufficient". Thereafter, a legal notice dated 11.04.2011 was sent to the accused through speed post as well as courier, however, despite service, the accused failed to make payment against the cheque within the stipulated period. Therefore, the complainant was constrained to file the present complaint.

CC No. 357/12 Page 2 of 13 3

3. After taking the pre­summoning evidence, the court took cognizance of the offence under section 138 NI Act and directed issuance of process against the accused. In pursuance thereof, the accused made an appearance and was admitted to bail. Thereafter, notice under section 251 Cr.PC was served upon the accused on 13.02.2012 to which he pleaded not guilty and claimed trial.

4. In its evidence, the complainant examined Sh.Arun Kumar, who is the authorized representative of the complainant as CW1 who tendered his affidavit Ex.CW1/1 in evidence. The complainant placed reliance on the following documents:

i. The complaint as Ex.CW1/A. ii. Copy of Power of Attorney as Ex. CW1/B. iii. The dishonoured Cheque as Ex. CW1/C. iv. The cheque return memo as Ex.CW1/D. v. Copy of legal notice as Ex. CW1/E. vi. Postal receipts as Ex. CW1/F­1 & F­2. vii. Proof of deliver as Ex. CW1/G­1 & G­2. viii.Copy of loan agreement as Ex.CW1/H. ix. Statement of Loan account as Ex. CW1/I.

5. Sh. Rajit Kumar Legal Officer of the complainant was examined as CW­2, who proved the foreclosure CC No. 357/12 Page 3 of 13 4 statements dated 31.03.2011 as Ex. CW2/A. Both the witnesses were cross examined and discharged.

6. Thereafter, statement of accused was recorded under section 313 Cr.PC on 21.10.2011, wherein, all the incriminating circumstances were put to the accused. The accused admitted his signatures on the cheque but denied all other allegations.

7. The case of the accused is that the accused had taken the loan from GE Money Consumer Financial Services Ltd. and the same was transferred to the complainant a complainant had offered to charge interest at the lesser rate than that charged by GE Money. It is the case of the accused that at the time of signing the loan documents, the complainant had taken 25 blank signed cheques from the accused as security which were not meant to be presented. It is further the case of the accused that the cheque in question was also a blank signed security cheque which the complainant has misused. The accused denied that any settlement had been arrived at between him and the complainant and he further stated that on the date of presentation of the cheque, the outstanding liability of the accused towards the complainant was less than the amount mentioned in the cheque.

CC No. 357/12 Page 4 of 13 5

8. In order to prove his case, the accused examined three witnesses. Sh. Bhuwan Chander from Postal Department, Palam, New Delhi was examined as DW­1, who relied upon letter issued by Senior Superintendent, Post Offices, West Delhi, Nariana, New Delhi as Ex. DW1/1 and copy of Weeding Out Rules as Ex. DW1/2. Sh. Sandeep Raj, Dy. Manager, India Bulls Housing Financial Ltd. was examined as DW­2 who relied upon copy of Sale Deed as Ex. DW2/A, Copy of List of document as Ex. DW2/B and Copy of title search report as Ex. DW2/C. DW­1 and DW­2 were not cross examined despite grant of opportunity.

9. The accused himself stepped into the witness box as DW­3. The accused relied upon certified copy of Petition u/s 14 SARFAESI Act as Ex. DW3/A, Copy of FIR no. 14/10 as Mark A, copy of Status Report regarding the said FIR as Mark B and copy of complaint as Mark C. DW­3 was cross examined at length by the counsel for complainant. Thereafter, DE was closed.

10. In order to constitute an offence under the provision of Section 138 N.I. Act, certain ingredients must be satisfied. The Hon'ble Supreme Court in the case of Kusum Ingots & Alloys Ltd. Vs. Pennar Peterson Securities Ltd. & Others. AIR 2000 SC 954, has succinctly spelt out the CC No. 357/12 Page 5 of 13 6 essential ingredients for making out a case under section 138 NI Act. The same are quoted hereunder:

"i) a person must have drawn a cheque on an account maintained by him in the bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;

ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within a period of its validity whichever is earlier;

iii) that cheque is returned by the bank unpaid, either 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;

iv) the payee or the holder in due course of the cheque 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 15 days of the receipt of information by him from the bank regarding the return of the cheque unpaid;

V) the drawer of such 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.'' CC No. 357/12 Page 6 of 13 7

11. If the aforementioned ingredients are satisfied then the person who has drawn the cheque shall be deemed to have committed an offence.

12. At this juncture it would be apropos to refer to the presumptions envisaged under the NI Act. Section 118(a) provides that every negotiable instrument shall be presumed to have been made or drawn for consideration. The Hon'ble Supreme Court in the case of Mallavarapu Kasivisweswara Rao Vs. Thadikonda Ramulu Firm & Ors. AIR 2008 SC 2898 has thus held:

"Under section 118 (a) of the negotiable instruments act, the court is obliged to presume, until the contrary is is proved, that the promissory note was made for consideration. It is also a settled position that the initial burden in this regard lies on the defendant to prove the non­existence of consideration by bringing on record such facts and circumstances which would lead the court to believe the non­existence of the consideration either by direct evidence or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal."

13. Further, according to section 139 of the act, a presumption is drawn against the drawer and in favour of the holder that "unless the contrary is proved, the holder of CC No. 357/12 Page 7 of 13 8 a cheque received the cheque for discharge, in whole or in part, of any debt or liability. In Hiten P. Dalal Vs. Bratindranath Banerjee (2001) 6 SCC 16, the Hon'ble Supreme Court has opined as under:

"22... It is obligatory on the court to raise this presumption (under section 139 NI Act) in every case where the factual basis for 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. Such a 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. Presumption 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 non­existence of the presumed fact."

14. The accused in the instant case admitted his signatures on the impugned cheque. In the light of the ratio of the aforecited judgments, the presumptions under sections 118(a) and 139, NI Act are raised against the present accused. However, the said presumptions are CC No. 357/12 Page 8 of 13 9 rebuttable and can be dislodged by the accused on the strength of leading cogent and convincing evidence in support of his claim.

15. The accused himself admitted that the loan was transferred to the complainant and that he himself had signed the loan documents. As upon transfer, a fresh loan agreement was executed between the accused and the complainant, the complainant became the lender and the accused a borrower.

16. In the complaint, it has been alleged that the cheque in question was issued in "discharge of part of debts" (sic.). However, during cross examination, CW­1 who is also the authorized representative of the complainant, stated that the cheque was given by the accused in terms of settlement qua total outstanding loan. He also categorically stated that the said settlement was oral and the same was not reduced into writing. This contention seems rather improbable. All the loan documents pertaining to the loan account of the accused are in writing. Even the foreclosure statements produced by the complainant are in writing. Such version that a big finance company like the complainant would transact orally with its customers seems highly unlikely. Not even a CC No. 357/12 Page 9 of 13 10 single document has been placed on record which would point towards any such settlement as alleged by the complainant.

17. It was argued on behalf of the complainant that when regular defaults were committed by the accused, his loan account was declared as NPA and thereafter foreclosure statements was drawn. However, again no document was placed on record to show that the account was declared as NPA. It is pertinent to mention that there are two foreclosure statements filed by the complainant on record. The first foreclosure statement Ex. CW2/A was drawn up on 31.03.2011. The second foreclosure statement Ex. DW3/C is dated 04.05.2012. Interestingly, the cheque in question is dated 19.03.2011 and the date of its dishonour is 22.03.2011 i.e. prior in time to the two foreclosure statements.

18. No explanation has come from the complainant as to why two or rather three foreclosure statements were prepared. As the cheque was stated to have been issued in pursuance of a settlement, prior to that the loan must have been recalled, the account declared as NPA, foreclosure statement drawn. However, nothing has come on record to establish the same. The complainant has failed to CC No. 357/12 Page 10 of 13 11 demonstrate how the entire principal amount of Rs. 13,90,000/­ became due without recalling the loan. Further, as discussed earlier, the complainant has failed to show that the settlement was indeed arrived at with the accused.

19. The standard of proof so far as the prosecution is concerned, is proof of guilt beyond reasonable doubt; the one on the accused is only mere preponderance of probabilities. The accused can discharge his burden by raising a probable defence or by pointing out the lacunae in the case of the complainant thereby, rendering it improbable.

20. The accused denied that he ever settled the loan account with the complainant. Rather, he had lodged an FIR against the officials of the complainant under the provisions of Prevention of Corruption Act. The accused throughout maintained that his security cheque has been misused by the complainant. The accused also relied upon certified copy of Petition u/s 14 SARFAESI Act Ex. DW3/A which was filed by the complainant against the accused and wherein this fact has been mentioned by the complainant that certain cheques were taken from the accused at the time of entering into the loan agreement. This fact was not denied on behalf of the complainant. A suggestion had come from the complainant that EMIs were CC No. 357/12 Page 11 of 13 12 paid by way of cheques which was denied by the accused. Perusal of accounts statement Ex. DW3/CA and Ex. CW1/I would show that the payments were being made through ECS barring certain occasions of default. The above goes on to support the contention of the accused that the cheque in question was a security cheque.

21. As far as the legal notice is concerned, the accused denied having received of the same. It was argued that the pin­code mentioned on the postal receipt is incorrect. In C.C. Alavi Haji Vs P. Muhammed & Anr. 2007, CriLJ 3214 , the Hon'ble Supreme Court has held as follows:

" It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that the did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and , therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court alongwith the copy of the complaint under Section 138 of the Act, cannot obviously contend that CC No. 357/12 Page 12 of 13 13 there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation."

The accused admitted that he had duly received the summons of the court at his address mentioned in the record. In view of the ratio of the aforecited judgment, the accused cannot claim that legal notice was not served upon him.

22. In the light of the foregoing discussion and findings, it can be safely concluded that the complainant has failed to establish its case. It could not be proved that the cheque was issued in discharge of liability of the accused as the complainant failed to prove the alleged settlement and also the liability of the accused to pay the cheque amount on the date of its presentation. Hence, the complaint must fail and is accordingly dismissed. Accused is acquitted for the offence punishable u/s 138 N.I. Act. 



Announced in the open Court
on 29th Day of  June 2013                     (Gaurav Gupta)
                                      MM­01 (NI Act)/South­West
                                           Dwarka/ New Delhi


CC No. 357/12                                                        Page 13 of 13