Delhi District Court
M/S Lado Sarai Chit Fund Pvt. Ltd. vs . Hem Chander Gupta on 19 August, 2020
THIS JUDGEMENT IS PRONOUNCED THROUGH VIDEO
CONFERENCING VIA CISCO WEBEx APPLICATION
IN THE COURT OF MS. APOORVA RANA
METROPOLITAN MAGISTRATE (SOUTH) 01,
N.I. ACT, SAKET COURTS : NEW DELHI
CC No.1050/2015 & 463988/2016
M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta
1. Complaint Case number : CC No.1050/2015 &
CIS No. 463988/2016
2 Name of the complainant : M/s Lado Sarai Chit Fund
Pvt. Ltd.,
Having its Office at D12,
2518, Sector19, Shiv Durga
Vihar, Lakadpur, Faridabad,
Haryana.
& Branch Office at
F224, Lado Sarai, New
Delhi110030.
3. Name and address of the : Hem Chander Gupta,
accused S/o Sh. R.K. Gupta,
R/o C124, Daya Nand
Colony, Lajpat NagarIV,
New Delhi110024.
4. Offence complained of or : Under Section 138 of the
proved Negotiable Instruments Act,
1881.
5. Plea of the accused : Pleaded not guilty and
claimed trail.
CC No.1050/2015 & 463988/2016
M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 1 of 18
6. Final Order : Acquittal
7. Date of Institution : 07.07.2015
8. Date of Reserving the : 13.02.2020
Judgment
9. Date of pronouncement : 19.08.2020
Judgment:
1. Shorn of unnecessary details, the facts giving rise to the present complaint are that the complainant is a private limited company engaged in chit fund business. That the accused became a member of chit fund maintained by the complainant in a group of Rs.20 lacks, being number LSCF10, having ticket number 15, with effect from January 2012 to August 2013. It has been averred by the complainant that upon the aforesaid chit being prized in favour of the accused, the entire payment of Rs.13,00,000/ in respect of the said chit was made by the complainant to the accused by way of two cheques of Rs.3 lakhs and Rs.9 lakhs each and the balance of Rs.1,00,000/ was adjusted to words the instalments of chit amount. That the accused had agreed and undertaken to pay the instalments towards the prized chit regularly and punctually, which he failed to do. That, consequently, a total amount of Rs.17 lakh, along with an interest of Rs.1,36,500/-, CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 2 of 18 accrued upon the accused in respect of the prized chit. That in discharge of the liability the accused had issued a cheque to the complainant in 2013 for a sum of Rs.18,36,500/-, which however, got dishonoured due to insufficient funds. Subsequent to the dishonor of this cheque, the complainant sent a legal notice dated 27.08.2013 to the accused, upon receipt of which, the accused along with his son Yogendra Gupta and Rohtash Gupta, approached the complainant company and requested the complainant to not initiate criminal case against them. That the accused sought some time for making this entire payment towards the cheque in question as well as other cheques to the complainant and also offered to pay interest at the rate of 18% per annum to the complainant. That at the same time, the accused, in discharge of his liability, issued cheque bearing number 769164 dated 31.03.2015 for an amount of Rs.24,78,500/, drawn on bank account maintained with HDFC Bank, Lajpat Nagar, New Delhi110024, (hereinafter referred to as the 'cheque in question') in favour of the complainant. That cheque in question was returned unpaid upon presentation on account of "funds insufficient"
vide return memo dated 23.04.2015. That the accused failed to repay the due amount despite repeated requests by the complainant. Further, legal demand notice dated 22.05.2015 was duly sent by complainant to the accused in this regard, but to no avail. Hence, the present complaint under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 3 of 18 'NI Act').
2. Upon service of summons, accused entered an appearance in the present matter for the first time on 02.12.2015 and was admitted to bail. Notice under Section 251 Cr.P.C. was served upon accused on 22.03.2016, to which the accused pleaded not guilty and claimed trial. In his statement of defence, the accused stated that the cheque in question was given as a blank signed cheque as security for the Chit Fund, in the year 20122013 and was never issued to the complainant in discharge of any legal liability by the accused. Thereafter, accused was allowed to cross examine the complainant under section 145 (2) NI Act. After cross examination of the complainant, matter was fixed for recording statement of the accused under Section 313 Cr.P.C. In the said statement recorded on 12.09.2019, the accused, while reiterating the defence taken by him at the time of framing of notice, added that he is not liable to pay Rs.18,36,500/to the complainant as the complainant had only given Rs.3 lakhs and Rs.9 lakhs were never given to him by the complainant. He further stated that he has paid around 34 instalments towards the prized chit. Matter was thereafter, fixed for defence evidence which was closed on 27.11.2019. Thereafter, the matter was fixed for final arguments.
CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 4 of 18 Evidence
3. In order to support the case of the complainant, the AR of the complainant stepped into the witness box as CW1 and tendered his affidavit Ex.CW1/X into evidence, wherein, averments made in the complaint were reiterated. He also relied upon various documents such as Ex.CW1/1 which board resolution dated 21.05.2015, Ex.CW1/2 (colly) [OSR] which is copy of application form, Ex.CW1/3 (OSR) which is copy of agreement of guarantee, Mark E which is copy of passbook, Ex.CW1/5 (OSR) which is copy of receipt dated 03.02.2012. Ex.CW1/6 (OSR) which is payment voucher, Ex.CW1/7 (colly) [OSR] which is copy of borrower agreement, Ex.CW1/8 (colly) which is legal notice dated 27.08.2013 and 09.09.2013, Ex.CW1/9 which is cheque in question, Ex.CW1/10 which is cheque return memo, Ex.CW1/12 which is legal notice dated 22.05.2015 with respect to cheque in question and Ex.CW1/13 (colly) which is courier receipts. He also relied upon the document which are marked as Mark A to Mark E. No other witness was examined on behalf of the complainant.
Furthermore, one set of documents, i.e., Mark A (colly) was placed on record by CW1 during his cross examination.
4. Accused, on the other hand, did not examine any witness in his defence despite grant of opportunity for the CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 5 of 18 same.
Arguments
5. Ld. counsel for the complainant has argued that all the requirements of Section 138 NI Act have been met with in the present case, and hence, the accused be convicted. On the other hand, it has been argued on behalf of the accused that the complainant has not been able to prove its case beyond reasonable doubt and that he should be acquitted in the matter. I have heard the Ld. counsels for the parties and have perused the record carefully.
Points for determination and reasons for decision
6. For an offence under Section 138 of NI Act to be made out against the accused, the complainant must prove the following points:
(i) The accused issued a cheque on account maintained by him with a bank.
(ii) The said cheque has been issued in discharge, in whole or in part, of any legal debt or other liability.
(iii) The said cheque has been presented to the bank within a period of 3 months from the date of cheque or within the period of its validity.
(iv) The aforesaid cheque, when presented for encashment, was CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 6 of 18 returned unpaid/dishonored.
(v) The payee of the cheque issued a legal notice of demand to the drawer within 30 days from the receipt of information by him from the bank regarding the return of cheque.
(vi) The drawer of the cheque failed to make the payment within 15 days from the receipt of above mentioned legal notice of demand.
7. Thus, on the basis of the evidence adduced, the points that warrant determination are as follows:
Whether the accused issued the cheque in question to the complainant for discharge, in whole or in part, of any debt or other liability?
8. It is a well settled principle of criminal jurisprudence that a criminal trial proceeds on the presumption of innocence of the accused i.e. an accused is presumed to be innocent unless proven guilty. Thus, normally the initial burden to prove is on the complainant/prosecution to prove the guilt of the accused. Also, the standard of proof required is that of "beyond reasonable doubt". However, in offences under Section 138 NI Act, there is reverse onus clause contained in Sections 118 and 139 of the Act. Thus, the primary burden of proof in order to prove the issuance of the cheque lies upon the complainant, and the same has to be proved beyond reasonable doubt, unless the accused admits the same.
CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 7 of 18 Further, the explanation to Section 138 of the Negotiable Instruments Act, 1881 states that for the purpose of this Section, "debt or other liability" means a legally enforceable debt or other liability.
However, once the issuance of cheque is established, either by admission or by positive evidence, the presumption under Section 139 of the Negotiable Instruments Act, 1881 arises. Section 139 of the Negotiable Instruments Act, 1881 states that it shall be presumed, unless the contrary is proved that the holder of a cheque received the cheque, of the nature referred to in Section 138, for the discharge, in whole or in part, of any debt or other liability. Therefore, here the onus shifts upon the accused to prove the nonexistence of debt or other liability. Section 139 of the Negotiable Instruments Act, 1881 uses the word "shall presume", and the meaning of the word "shall presume" in Section 4 of the Evidence Act, shows that the presumption under Section 139 is rebuttable.
Furthermore, the standard of proof required to rebut the presumption under Section 139 is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or other liability, the onus shifts back to the complainant to prove by way of evidence, beyond reasonable doubt, that the cheque in question was issued by the accused in discharge, whole or in part, of any debt or other liability, and now the presumptions under Section 118 (a) and Section 139 will not CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 8 of 18 come to the rescue of the complainant. [Bharat Barrel & Drum Manufacture Co. Vs. Amin Chand Pyarelal (1999) 3 SCC 3S and M.S. Narayan Menon Vs. State of Kerala (2006) 6 SCC 39 relied upon].
Mode of Proof: The accused may adduce direct evidence to prove that the note in question was not supported by consideration, and that there was no debt or liability to be discharged by him. However, the Court need not insist in every case that the accused should prove the nonexistence of the consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that a bare denial of passing of consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable, has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances (including presumption under Section 114 Evidence Act), upon the consideration of which, the Court may either believe that the consideration and debt did not exist, or their non existence was so probable that a prudent man would, under circumstances of the case, act upon the plea that they did not exist. [Kishan Rao Vs. Shankaguda, 2018 (8) SCC 165, Mosaraf Hossain Khan Vs. Bhageeratha Engg. Ltd. & Ors (2006) 3 SCC 658, Goa Plast (P) Ltd. Vs. Chico Ursula D Souza (2004) 2 SCC 235, Monaben Ketanbhai Shah Vs. State of Gujarat (2004) 7 SCC 15, Prem Chand Vijay Kumar Vs. Yashpal Singh (2005) 4 SCC CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 9 of 18 417, DCM Financial Services Vs. J N Sareen (AIR 2008 SC 2255), K. Bhaskaran Vs. Shankaran Vaidhyan Balan (1999) 7 SCC 510 relied upon].
9. Averting to the facts of the present case, the accused has, inter alia, stated in his defence against substance of accusation u/s 251 Cr.P.C. as well as in his statement u/s 313 Cr.P.C. that the cheque in question was given in a blank signed manner as security for the Chit Fund, in the year 20122013. Further the complainant has placed on record various documents in support of his contention, namely, the application form Ex.CW1/2(colly), showing that the accused had applied for becoming a member of the chit fund with chit number LSCF 10/15; the guarantee agreement, Ex.CW1/3 (0SR), showing that Yogendra Gupta and Mukesh Gupta were guarantors with respect to the chit fund of the accused; ledger account statement, Mark E, showing that the claimed amount was disbursed to the accused; receipt, Ex.CW1/5 and payment voucher, Ex.CW1/6, showing that the accused had received Rs.13 lakhs from the complainant towards prized chit; and borrower agreement and undertaking by the accused to repay the amount, both Ex.CW1/7 (colly). Now, the accused has taken the defence in his statement under section 251 of Cr.P.C. that the cheque in question was given as a security cheque in respect of the chit fund and was never issued to the complainant in discharge of any legal liability by the accused. Further, in his statement of defence under section 313 of Cr.P.C., the accused has added that CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 10 of 18 the accused is not liable to pay Rs.18,36,500/ to the complainant as the complainant had only given Rs.3 lakhs to him and Rs.9 lakhs were never given by the complainant. He also added that he has paid around 34 instalments towards the prized chit fund. Even though the cheque in question has been admittedly signed by the accused, the averments made by the accused inspire confidence and are worthy of consideration for the following reasons:
(a) The complainant has placed on record document, Ex.CW1/5, showing that a receipt was executed by the accused with respect to Rs.13 lakhs received from the complainant in respect of chit number LSCF 10/15. As per his own version, complainant had disbursed Rs.12 lakhs to the accused and the remaining Rs.1,00,000/ was adjusted towards the instalments of the chit. However, despite this document, the complainant has failed to bring on record any document showing that the said amount of Rs.12 lakhs was actually disbursed to the accused in respect of the chit. The ledger account statement, Mark E, placed on record by the complainant cannot be relied upon as a proof of disbursement of the said amount as the same has not been duly proved in terms of section 65B of the Indian Evidence Act, 1872. The ledger account statement is a computer generated statement which has not been supported by a certificate under section 65B of the Indian Evidence Act, 1872, by the complainant. Further, there is nothing on record to prove the genuineness and the authenticity of the said statement.
Neither does it bear the stamp or seal of the complainant CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 11 of 18 company, nor has it been signed by the person making it. The complainant even failed to examine the person/employee of the complainant who had prepared/printed the said statement, in order to prove the correctness of the entries made therein. It has not even been asserted in the present complaint or in the entire evidence on record that the ledger account statement was prepared by the complainant in regular course of its business. Moreover, even otherwise, the ledger account statement only shows the disbursement of Rs.12 lakhs, in toto, in favour of the accused, and the complainant has failed to show or explain as to how and for what period the additional amount claimed through the cheque in question was levied as interest on the principal amount.
(b) Next, the complainant has averred in his complaint that after the complainant had planned to initiate criminal proceedings against the accused in respect of dishonor of earlier cheque given by him to the complainant, the accused, with his son Yogender Gupta and Rohtash Gupta approached the complainant to seek time from him to make the entire payment towards the chit in question and another chit and also offered to pay interest at the rate of 18% per annum on the amount due. However, it is hard to believe that while every other detail regarding the chit in question was seemingly documented by the complainant, this fact of enhancement of interest to 18%, as offered by the accused, was not recorded/documented anywhere. In fact, quite interestingly, in the legal notice sent by the CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 12 of 18 complainant to the accused, the complainant mentioned this interest to be at the rate of 16% per annum instead of 18% per annum. This gives rise to the probability that the complainant may have whimsically enhanced the amount due on behalf of the accused to the complainant and has claimed the same through the cheque in question.
(c) Furthermore, the testimony of CW1 is fraught with certain inconsistencies as discussed hereinafter. The complainant has placed on record a document, Ex.CW1/2, on record pertaining to one chit bearing number LSCF15, which is not only different from the chit in question, i.e., LSCF 10, but is also for an amount of Rs.20 lacs. Now, CW1 has made a contradictory statement in his crossexamination dated 10.08.2017, stating that, the accused had subscribed to chits for Rs.10 lakhs only and he had never subscribed to any chit of Rs.20 lacs. This statement of the accused raises doubts regarding the genuineness of the documents placed on record by the complainant and gives rise to a probability that the documents placed on record may actually pertain to some other chit fund subscribed to by the accused or may not be genuine.
(d) Further inconsistency is brought to light when, after having appeared as witness for the complainant, CW1 feigns ignorance even regarding something as germane to the case of the complainant as the amount of the prized chit of the accused. Further, in fact, he did not even know as to when this amount was given to the accused and stated that the same would be CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 13 of 18 within the knowledge of one Mr. Vijender Pawar, who looks after the business of the complainant, but who was never called as witness on behalf of the complainant.
(e) Again, during his crossexamination, CW1 has stated that the prize money towards the chit in question was given to the accused in one go. He even denied the suggestion of the counsel of the accused that the amount was given in different instalments to the accused. However, this statement of CW1 is contradicted by his own document, Mark E, relied upon by complainant, which though, not admissible in evidence, shows that Rs.3 lakhs were allegedly disbursed to the accused in January 2012 and Rs.9 lakhs were disbursed to the accused in February 2012, which is in consonance with the suggestion put to CW1 by the counsel of the accused during his cross examination.
(f) CW1 has also stated during his crossexamination that the cheque in question amount is inclusive of the interest levied upon the principal amount due by the accused to the complainant. However, not a single document has been placed on record to show the rate of interest initially charged upon the amount of the prized chit, let alone the subsequently enhanced interest of 18% per annum, allegedly offered to be paid by the accused. In fact, as per his own admission, CW1 himself was not aware of the interest component of the cheque in question amount and was also ignorant about the number of instalments paid by the accused till that date.
CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 14 of 18
(g) In addition to the above, CW1, on being specifically asked so, failed to produce on record the documents pertaining to registration of chit fund business of the complainant, and the same was not even part of the documents, Mark A (colly), furnished by him. Despite being asked to do so, the complainant failed to produce on record any document showing that the necessary sanction was obtained from the state government/concerned authority by the complainant, prior to the commencement of the chit, in terms of provisions of the Chit Fund Act, 1982. In fact, CW1 stated during his cross examination, dated 11.02.2019, that such a requirement of obtaining sanction from state government to conduct chit business was not a prerequisite as per law. However, section 4 of the Chit Fund Act, 1982, specifically mandates the obtaining of previous sanction of the state government/concerned authority, prior to commencement of any chit. Furthermore, CW1 even admitted during his crossexamination that chit agreement relating to the accused was not filed with the registrar of chits or with any other authority. This is in clear violation of section 9 of the Chit Fund Act, 1982. Not only this, CW1 even admitted that the minutes of meeting with respect to proceedings of every draw of lots, though prepared by the complainant, were not placed on record. This specially gains relevance in view of the statement of CW1 to the effect that all documents pertaining to the chit fund and the present complaint, available with the complainant, had been placed on record by the witness. All this CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 15 of 18 gives rise to sole inference that the complainant company had not adhered to the requirements of the Chit Fund Act ,1982, in carrying on its chit fund business and that the complainant company may, thus, be illegally carrying out its chit fund business. In such a scenario, the debt owed to the complainant, if any, on account of the said chit business, cannot fall in the category of a legally recoverable debt, in terms of section 138 of NI Act.
(h) Last but not the least, the defence of the accused throughout the course of proceedings has remained constant and there is no inconsistency/contradiction in the same as would prove to be fatal to the defence of the accused.
10. Thus, though the accused admits to having issued the cheque in question to the complainant, however, the above discussion raises suspicion in the version of the complainant regarding the actual personal liability of the accused due towards the complainant and one cannot turn a blind eye to the possibility that the cheque in question, though being a security cheque, may have been misused by the complainant to fill in a larger amount than due by the accused. It is a settled law that if the cheque is for an amount more than the amount of debt due, Section 138 NI Act cannot be attracted and the complaint is liable to be quashed on this sole ground itself (reference placed on Lyca Finance Limited Vs. State and Anr, Delhi HC 2016). Accordingly, the accused has been successful in rebutting the presumption under section 139 of CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 16 of 18 the negotiable instruments Act, on a scale of preponderance of probabilities.
11. Now, the burden of proof shifts to the complainant to prove its case beyond reasonable doubt and to show the existence of a legally enforceable debt in the present case. However, as discussed above, the version of the complainant in its complaint is, on several grounds, discordant with the testimony of its witness CW1. The testimony of CW1 itself was fraught with a number of inconsistencies and contradictions visàvis the documents placed on record in support of the case of the complainant and thus, does little to corroborate the version of the complainant as stated in its complaint and affidavit of evidence. Not only this, the complainant even failed to prove that it has been legally carrying out its chit fund business, in compliance of provisions contained under the Chit Fund Act, 1982. The complainant even failed to examine any other person in support of its case and hence, failed to show and prove the existence of a legally enforceable debt in the present case.
12. Thus, a holistic appreciation of evidence on record raises suspicion in the story of the complainant and renders the version of the complainant dubious. Moreover, the complainant has not been able to remove the said suspicion, as discussed above. As held in the case of K. Bhaskaran Vs. Sankaran Vaidhyan Balan [(1999) 7 SCC 510], the offence under Section 138 of NI Act is completed CC No.1050/2015 & 463988/2016 M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 17 of 18 by a concatenation of all the essential ingredients of the offence, and since in the present case, there is found to be an absence of a legally enforceable debt or other liability, meaning thereby, that one of the essential ingredients of the offence under Section 138 is not made out, therefore, there is no requirement to dwell upon the existence of other ingredients, i.e., the reason for return of the cheque as unpaid, and the delivery of the mandatory legal notice.
Conclusion
13. In view of the above discussion, I am of the considered opinion that the complainant has failed to establish its case beyond reasonable doubt against the accused. Accordingly, accused Hem Chander Gupta, S/o Sh. R.K. Gupta, is hereby acquitted for offence punishable under Section 138 NI Act. Copy of this judgment be given free of cost to both the sides.
Announced on 19.08.2020
through videoconferencing Digitally
signed by
in presence of counsel for accused and APOORVA
APOORVA
RANA
son of accused. RANA Date:
2020.08.19
18:16:13
+0530
(Apoorva Rana)
Metropolitan Magistrate01 (South),
NI Act/Saket/New Delhi/19.08.2020
CC No.1050/2015 & 463988/2016
M/s Lado Sarai Chit Fund Pvt. Ltd. Vs. Hem Chander Gupta 1 of 18