Delhi District Court
Sanjay Goel vs Kamal Garg Cc No.-2356/10 1 on 28 May, 2011
IN THE COURT OF SH. RAKESH KUMAR SINGH:
METROPOLITAN MEGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.-42, TIS HAZARI COURT COMPLEX, DELHI
28.05.2011
JUDGMENT
a. Serial No. of the case
2356/10
b. Date of the commission of the offence
04.02.2009
c. Name of the complainant
Sanjay Goel.
d. Name of accused person and his parentage and residence
Kamal Garg@Kamal Gupta, S/o Mitter Sain, R/o 64, Ram Pura, Delhi-35.
e. Offence complained of or proved
Dishonor of cheque for insufficient funds punishable under Section-138 NI Act.
f. Plea of the accused and his examination (if any)
Not guilty. Cheque lost. Cheque misused. No legal demand notice. No liability.
g. Final Order
Held guilty. Convicted.
h. Date of such order
28.05.2011
i. Brief reasons:
Whether a self cheque would come within the ambit of Section-138 NI Act is the primary issue involved herein. And only if it goes in the favour of the complainant, we have to deal with the other issue which has to be decided on the peculiar facts of this case.
2. The cheque bears a word "Self-" in place of the payee name.
Contentions of the ld. counsel for the accused may be summarized as under:
i. The symbol "-" put after the word "self" is indicating that the cheque was scored off;Sanjay Goel vs Kamal Garg CC NO.-2356/10 1
ii. Complainant is neither a payee nor endorsee;
iii. Complainant is also not a holder in due course;
iv. The cheuqe is not a bearer cheque.
2.1. To substantiate his contentions, ld. counsel for the accused has relied upon the following judgments:
Anil Kumar vs Ramakrishana Kartha 2009(2) CCC 535, Hon'ble Kerala High Court;
Dr. Jiten Barkakoti vs Subrata Patangia And Anr 2006(1) DCR 278, Hon'ble Guahati High Court;
Srimathi vs Renuka 2010(1) CCC 344, Hon'ble Karnataka High Court.
2.2. Ld. counsel for the complainant has argued that accused is in the habit of issuing self cheque and there is no bar under Section-138 NI Act in respect of such self drawn cheque. Ld. counsel for the complainant has relied upon the following judgments:
Mahesh Goel vs S K Sharma, 1997 Cri LJ 2868 Hon'ble P&H High Court;
Intech Net Ltd & Ors. Vs State & Anr IV (2007) BC 468 Hon'ble AP High Court;
Prabhakaran vs Natesan 1998 (2) CTC 396 Hon'ble Madras High Court.
3. Having given my considerable thoughts to the rival arguments, I am of the opinion that a self cheque is also covered under Section-138 NI Act.
3.1. First contention of the ld. counsel for the accused is not only wrong but also misleading. The symbol "-" put after the word "self" does not amount to the scoring off the cheque. Scoring off the cheque simply means deleting the direction appearing on the cheque as to bearer or order. If the word "bearer" is deleted, it will amount to the scoring off the cheque and thereafter cheque will cease to be a bearer cheque.
3.2. No doubt, the complainant is not a payee of the cheque in question since the payment is not directed to be made to him as required by section-7 NI Act. The complainant is also not an endorsee of the cheque since there is no direction to pay the amount to him or to his order.
3.3 However, in the present case, accused had made an endorsement by signing the cheque on the back. Section-15 NI Act is categorical in this regard which reads as under:
Sanjay Goel vs Kamal Garg CC NO.-2356/10 215. Indorsement. When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to indorse the same, and is called the indorser.
There is no requirement that such signing must be in the name of someone. However, if indorsement is not made in favour of anyone, the same shall be treated as "indorsement in blank" as per section-16 which reads as under:
16. Indorsement in" blank" and" in full". "Indorsee".- (1) If the indorser signs his name only, the indorsement is said to be" in blank," and if he adds a direction to pay the amount mentioned in the instrument to, or to the order of, a specified person, the endorsement is said to be" in full"; and the person so specified is called the" indorsee"
of the instrument.
Explanation-II appended to Section-13 NI Act provides what may be bearer. The same reads as under:
Explanation (ii).-A promissory note, bill of exchange or cheque is payable to bearer which is expressed to be so payable or on which the only or last indorsement is an indorsement in blank.
3.4. Clearly, if the endorsement is in blank, cheque would be payable to bearer.
3.5. Apart from the above, Section-54 also provides that an instrument endorsed in blank is payable to bearer. This section goes to say that even if such instrument is originally payable to order, the same shall be payable to bearer. The Section reads as under:
54. Instrument indorsed in blank.- Subject to the provisions hereinafter contained as to crossed cheques, a negotiable instrument indorsed in blank is payable to the bearer thereof even although originally payable to order.
3.6. The above discussion clearly shows that the cheque in question is a bearer cheque. It is not in dispute that the complainant had presented this cheque with the banker for payment. This fact itself goes to show that the complainant was in possession of the cheque.Sanjay Goel vs Kamal Garg CC NO.-2356/10 3
3.7. Section-9 of the Act defines the term "Holder in due course". It makes a clear distinction between the positions when a cheque is payable to bearer and when it is payable to order. If the cheque is payable to bearer, any person who for consideration became the possesor of such cheque is the holder in due course. Whereas if the cheque is payable to order, only a payee or endorsee of the cheque can become a holder in due course. The section reads as under:
9. "Holder in due course" -- "Holder in due course" means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if (payable to order), before the amount mentioned in it became payable and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.
3.8. A glance to the above provisions leave no doubt that it is not an ingredient of Section 138 of the Negotiable Instruments Act that the cheque should be drawn in the name of another person. All that is required is that the cheque should be drawn by the person from the account maintained by him. It can be drawn in his own name as self or in the name of third person. It should be for payment of the debt or any liability. It may be pertinent to mention that a three judges bench decision of Hon'ble Supreme Court in Rangappa Vs. S. Mohan decided on 07.05.2010 (earlier contrary view in Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54 has been overruled) has held that:
"14. In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct."
3.9. In Intech Net Ltd & Ors. Vs State & Anr IV (2007) BC 468, Hon'ble AP High Court has held that:
"9. In Mahesh Goyal's case 1997 Cri LJ 2868 (P & H) (2 supra), at paras 8 and 9 it was held as under:
"8. The expression "holder in due course" is clear and unambiguous. The words are plain and meaning clear. A holder in due course is a person who is possessor of an instrument even then it is payable to bearer. He must be in possession on it. If the bill is payable to holder then he has to be a payee or indorsee of the same.
9. In the present case in hand perusal of the cheque indicates that it was addressed as payable to "self and that the word bearer has not been deleted. It is not even scored off. There were certain transactions alleged and the money was claimed to be due. The respondent was in possession of the same and presented it before the bank, but it was dishonoured. He was obviously holder in due course.Sanjay Goel vs Kamal Garg CC NO.-2356/10 4
When other conditions were satisfied, there was no question of holding that merely because the cheque was addressed to self. Section 138 in the facts would not be attracted. Once the cheque had been given for valid consideration, the respondent must be taken to be holder in due course."
(Emphasis supplied)
10. In Michael Kuruvilla's case 1998 (2) Andh LD (Cri) 957 (Ker) (3 supra) a learned single Judge of Kerala High Court after following the Judgment of the said Court in A. K. Hameed v. Appakutty and after considering the definition of 'Holder in due course' under Section 9 of the Act held that though the cheque does not contain the name of the payee and the printed words "or bearer" are struck off and also it is written pay to cash, is a legal and valid negotiable instrument. It has to be implied that the direction is to pay to the bearer and there is nothing on record to show that the appellant cannot be treated as holder in due course as contemplated under Section 9 of the Act. Having observed so, the learned Judge set aside the judgment of the trial Court in finding the accused not guilty of the offence under Section 138 of the Act and held that the accused was guilty of the offence and accordingly convicted him for the said offence.
11. In Prabhakaran's case 1998 (4) Crimes 554 (Mad) (4 supra) a learned single Judge of the Madras High Court held that once the complainant becomes the bearer and he presented the cheque for encashment, virtually the complainant becomes the holder in due course and as such, it could very well be said that he is competent to file a complaint on the non-payment of the cheque amount after dishonour of the cheque.
12. Coming to the facts of the case on hand, the petitioners have admitted the issuance of the cheques in question, but pleaded that it was not issued towards the loan transaction as alleged in the plaint but was issued towards advance payment for supply of goods. It was pleaded that there was a transaction between the corporates i.e. the first petitioner and the complainant for supply of goods through invoice. However, the first petitioner made an advance payment of Rs. 5,00,000/- by way of demand draft, but the goods were not delivered and taking advantage of the self-cheques given in the process of the said transaction, the complainant fraudulently tried to have an unjust enrichment and thus utilized the self-cheques. Once the issuance of the cheques is admitted and as the words "or bearer" have not been struck off, the complainant is held to be the holder of the said cheques in due course though it was written as self and thus he is entitled to receive the cash and on dishonouring of the said cheques, he can very well file the complaint. The contention of the petitioners that the said cheques was issued in the process of transaction Sanjay Goel vs Kamal Garg CC NO.-2356/10 5 between the first petitioner and the complainant for supply of goods has to be substantiated during the course of trial by the petitioners by leading evidence. Under these circumstances, I see no ground to quash the impugned proceedings at this stage."
3.10. Decisions relied upon by the accused are distinguihsbale on facts.
In Anil Kumar vs Ramakrishana Kartha 2009(2) CCC 535, Hon'ble Kerala High Court has held that:
"Ext. P1 shows that it is payable to Krishnadas. There is no indorsement by Krishnadas in favour of first respondent. Even if, there was delivery of Ext. P1 cheque by the brother of the payee in favour of first respondent as alleged in the complaint and that too for considerations claimed by first respondent as PW1 at the time of his examination, he can not be the holder in due course as defined under S. 9 of Negotiable Instruments Act so long as there is no indorsement in his favour. Hence first respondent is not a holder in due course."
(The cheque in that case was payable to order and therefore it was held that there must be an endorsement in favour of the complainant to make him a holder in due course. Whereas in the present case, the cheuqe is not payable to order but is endorsed in blank which becomes bearer by virtue of Section-54 NI Act).
In Dr. Jiten Barkakoti vs Subrata Patangia And Anr 2006(1) DCR 278, Hon'ble Guahati High Court has held that:
"5. Learned counsel for the respondent complainant was fair enough to submit that Ext. 1, cheque, was not payable to bearer or to the complainant. It was a self- drawn cheque and there is also no endorsement anywhere in the body of the cheque for payment of the amount in favour of the complainant. Thus, we find that the provision of Sections 13 and 14 of the Act as regards the bearer cheque and even the provision of Sections 15 and 16, as regards endorsement, are not at all applicable to the present case as admittedly it was not a bearer cheque in favour of the complainant nor Ext. 1 contained any endorsement under Section 15 or 16 of the Act."
(The cheque in that case was not payable to bearer and even there was no endorsement. Whereas in the present case not only the word 'bearer' has not been deleted but also there is an endorsement in blank on back of the cheque).
In Srimathi vs Renuka 2010(1) CCC 344, Hon'ble Karnataka High Court has observed that:
"17. Further, it is pertinent to note that Ex. P2-cheque bears signature of the accused on its face and also on reverse of it. This goes to show that the said cheque was intended to be used as a 'self-cheque', but not as the one issued by her to any other Sanjay Goel vs Kamal Garg CC NO.-2356/10 6 person......"
The above was merely an assumption. However, a close perusal of the above said decision goes to show that the cheque in question was payable to a named person and not a self cheque. In Para-3(b) of the said decision, it has been mentioned as under:
"......the accused issued a crossed cheque bearing No. 109411 in favour of the complainant......"
Clearly, the cheque was not a self cheque. The decision in Shrimathi (supra) was primarily based upon the peculiar circumstances prevailing therein and on the basis of observation of Hon'ble Supreme Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde, AIR 2008 SC 1325 wherein it has been observed that:
"The proviso appended to the said section provides for compliance with legal requirements before a complaint petition can be acted upon by a court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability."
Relying upon the above observation, Hon'ble Karnataka High Court in Shrimathi(supra) has held as under:
"19......Therefore, since the very fact that the complainant lent to the accused the loan of rs. 70,000/- on 27.03.2001 and the accused issued in favour of the complainant and delivered to her Ex. P2- cheque dated 06.04.2001 for the said loan amount of Rs. 70,000/- have not been established by the complainant, no presumption under Section 139 N.I. Act could be raised in favour of the complainant........."
However, the above observation in Krishna Janardhan Bhat v. Dattatraya G. Hegde, AIR 2008 SC 1325 has itself been overruled by the larger bench of the Hon'ble Supreme Court, any law based upon such observation can not hold the field. A three judges bench decision of Hon'ble Supreme Court in Rangappa Vs. S. Mohan decided on 07.05.2010 (earlier contrary view in Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54 has been overruled) has held that:
"14. In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct."
In Rangappa(supra), the case of the accused was also that of a lost cheque. However initially, the High Court dealing with matter had held that:
Sanjay Goel vs Kamal Garg CC NO.-2356/10 7'6. 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 Section 139 of the Negotiable Instruments Act has to be raised by the Court in favour of the complainant. The presumption referred to in Section 139 of the N.I. Act is a mandatory presumption and not a general presumption, but the accused is entitled to rebut the said presumption. What is required to be established by the accused in order to rebut the presumption is different from each case under given circumstances. But the fact remains that a mere plausible explanation is not expected from the accused and it must be more than a plausible explanation by way of rebuttal evidence. In other words, the defence raised by way of rebuttal evidence must be probable and capable of being accepted by the Court. The defence raised by the accused was that a blank cheque was lost by him, which was made use of by the complainant. Unless this barrier is crossed by the accused, the other defence raised by him whether the cheque was issued towards the hand loan or towards the amount spent by the complainant need not be considered. ...' The judgment of conviction upon the above basis recorded by the Hon'ble High Court was finally upheld by the Hon'ble Supreme Court in Rangappa (supra).
3.11. In the light of the above discussion, it can be safely said that accused can not escape the liability even in cases where the cheque is drawn in the name of 'self'. Contention of the accused is rejected.
Discussion on factual position
4. Other issues raised by the accused are as under:
I. Complainant failed to prove accumulation of money;
ii. No legal demand notice was ever served upon the accused;
iii. Cheque was lost;
Accumulation of money:
4.1. Complainant has filed his income tax return for the assessment year 2008-09 and 2009-10. Complainant claimed that money was received as a gift from his relatives. He claimed that the receiving of gifts from the relatives was shown in the Income Tax Return of the year 2009-10. He further claimed that the loan of Rs. 3,00,000/- given by him to the accused was also shown in the Income Tax Return of the year 2009-10.
4.2. Ld. counsel for the accused has tried to punch some small holes in the story. He contended that complainant in Sanjay Goel vs Kamal Garg CC NO.-2356/10 8 his cross-examination did failed to tell names of such relatives.
Contention has missed one thing i.e. the fact that a suggestion was subsequently put to the complainant that complainant had not taken any gift from Neelam, Pawan and Renuka. The suggestion was categorically denied by the complainant. In such circumstances, the contention of the ld. counsel for the accused can not be of any help.
Ld. counsel has further contended that the fact that in the same year complainant had given a gift of Rs. 56,000/- to Renuka and also received a gift of Rs. 75,000/- from her is itself contradictory.
4.3. I do not find any substance in the contention. There is no bar if one gives a gift to another and later on received gifts from that person. A genuine person will show all his transactions of the relevant assessment year. The complainant might have given gift of Rs. 56,000/- to Renuka in the beginning of the year and might have received a gift of Rs. 75,000/- from Renuka at any subsequent point of time. He did show both these transaction in his ITR which is clearly a sign of his genuineness. (It may be pertinent to note that to a specific question put to him in the cross-examination, the complainant has answered that Pwan Kumar, Neelam and Renuka are family members within the nuclear family).
The ITR of 2009-10 is also showing an entry "Kamal Garg 300000.00" in the colomn "Current assests, Loan and Advances". Interestingly, accused has never cross-examined the complainant on this point. This entry stands as it is.
4.4. In the circumstances discussed above, it has to be held that accused failed to rebut the existence of liability.
Non service of legal demand notice
5. Accused has taken a defecne that no legal demand notice was served upon him. The main ground is that addresses appearing on the legal demand notice and postal articles are not his.
The submission does not found support from the record.
5.1. Complainant had sent the notice at two following addresses:
i. H.NO. 1435, Second floor, Gali No. 98, Devaram Park, Near Talab, Tri Nagar, Delhi-35;
ii. 687-688, Phase-I, MIE, Bahadurgarh, Haryana.
Postal envelope was returned with a "refusal' from the first address and with a report "Bar bar jaane va snadesh dene par bhi praptkarta milta nahi.."
5.2. Summons for 23.04.2009 received back with a report "Ek aurat...upar se niche aayi.....usne apna naam Sunita bataya aur Kamal Garg ko apna ladka bataya.............jubani bayan kiya ki Kamal Garg ghar par nahi hai....." (report dated 28.03.2009).Sanjay Goel vs Kamal Garg CC NO.-2356/10 9
"Mauke par maujud ek shaksh mila jisne apna naam Kamal Garg.......unhone summon va copy padhkar summon lene se saaf mana kar diya...." (report dated 08.04.2009).
(In such circumstances, a Bailable Warrant was issued. The same was received back unexecuted. The report thereon is dated 11.05.2009 and was based upon statement of one Mahesh).
The report is ".....Mahesh... mulaki hua jisne bataya ki main abhi karib 20 din se kiraye par aaya jo Kamal Garg ke baare mein suna hai ki wo karib 1 mahina pehle makan khali karke namalum jagah par chale gaye...."
(The accused has never tried to controvert these reports by any cogent evidence.) The BW was again issued at the same address and this time BW was received executed however on the bonds accused indicated a different address.
5.3. Complainant has tried to connect the accused with the first address by confronting the accused with EX. DW3/AX1 which is a documents pertaining to Sale tax of Kamal Industries.
Kamal Garg taken a stand that "Garg Polymers" is run by his uncle.
However, the record shows otherwise. The Form S T-1 is showing that the business of "Garg Polymers" belongs to the father of the accused. Details of surety (Annexure-IV attached with the Form VAT- A-1 for grant of registration of Kamal Industries) is showing that "Garg Polymers" belong to the father of the accused. Mitter Sain i.e. the father of the accused also stood surety (Form VAT-B-2) for Kamal Industries and pretended to be the properitor of "Garg Polymers"
TIN-06671703246.
From the record, it has been established that "Garg polymers" belongs to the father of the accused.
Ex. DW3/AX1 is clearly showing the address of the "Garg polymers" as 687 MIE Bahadurgarh.
It may be pertinent to mention here that there is no necessity for the complainant to know all the addresses of any accused or for that matter of any person with whom he is having dealings. Business transactions are primarily conducted on faith. If any person gives one address in a business dealing with another, the second person will necessarily try to communicate at that address.
In the present case, complainant has established that he had sent the legal demand notice at the addresses known to him.
(In all the circumstances discussed above i.e. the reports on returned envelopes, reports on returned summons & BWs, existence of "Garg Polymers" at the address given in the postal receipts and connection of the father of accused with the "Garg Polymers", it would be hard to believe that accused has successfully controverted the correctness of his addresses appearing on the legal demand notice and postal articles).Sanjay Goel vs Kamal Garg CC NO.-2356/10 10
5.4. And if such is the position, Section-27 General Clauses Act and Section-114 Evidence Act will come to rescue the complainant. In this respect it will be apt to quote a three judges bench of Hon'ble Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed and Another (2007) 6 SCC 555:
"17. 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 he 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 along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the 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. As observed in Bhaskarans case (supra), if the giving of notice in the context of Clause (b) of the proviso was the same as the receipt of notice a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act."
5.5. In the circumstances, contention of the accused as to non service of legal demand notice is rejected.
Issue of lost cheque
6. Accused has taken a defence that the cheque in question was lost by one Pradeep Kumar who was in the possession thereof.
6.1. For this purpose, accused has examined Pradeep Kumar, his ex-employee. This witness stated that on 10.08.2008, he lost his purse containing a signed blank cheque of Kamal Garg, a feiw visiting cards, electricity bill and cash of Rs. 530/- and he made an application Ex. DW2/A to Police post-Tikri Border.
This witness has been cross-examined thouroghly.
6.2. DW2/A is a hand written application in respect of some missing articles addressed to chauki incharge, Tikri Border. This application is allegdly written by the Defence witness Pradeep Kumar. The document bears a stamp of Tikri Border Police Post and a name Hari Om and date 10/08/2008.
Sanjay Goel vs Kamal Garg CC NO.-2356/10 116.3. Something is strange here. DW2/A is in original. Normally, if one makes a complaint to the police authorities in writing, only two result will follow. One, if the writing is in duplicate i.e. with a copy, office may return the copy(and not the original) after due endorsement. Second, if writing is not in duplicate i.e. only peace of paper, office will retain the same and in that event office may convey to the complainant the DD No. or such entries in respect of the complaint. But in the present case, witness was having with him the original complaint itself. The witness does not know if the complaint was entered into any register. In his cheif, the witness stated that he handed over the application to some official and came back to his house.
"I handed over the application to some police official in the police post and came back to my house."
Interestingly, witness did not claim that he had written the complaint in duplicate or had made a photocopy of the said complaint.
However, in the cross-examination, he changed his stand and stated that the police official returned a copy of complaint duly stamped.
"When I went to the tikri border police post and made a complaint and they return me a copy of the complaint with a stamp."
However, what he prpduced in his examination in chief is the original of the complaint and not any coopy thereof.
In the circumstances, the document DW2/A can not be relied upon.
The witness though denied the suggestion about the forged stamp, he stated that he could not say anything about the stamp.
"However I cannot say anything about the stamp appearing on exhibit DW2/A."
"....my complaint was taken by the said police man and taken inside the police post."
Even the witness does not know the age or rank or name of the police official who had taken his complaint.
6.4. Accused has never called any official from the Tikri Border Police Post to prove the factum of the so called complaint made by Pradeep Kumar. However, complainant tried to establish the factum of alleged forgery in DW2/A by making an application for summoning the record pertaining to PP Tikri Border in respect of signature of Hari Om. Interestingly, this application was opposed by the accused. Though record was summoned, purpose thereof remained unserved. The said Hari Om having expired, the Police Authorities sent a copy of a complaint (FIR 3/09 U/s 279/337 IPC) having signature of Hari Om. This did not help. The issue remained as it was.
6.5. Having not summoned the record in respect of the so called complaint lodged for missing cheque and having Sanjay Goel vs Kamal Garg CC NO.-2356/10 12 opposed the application of the complainant for summoning of record, the accused created a suspicious circumstance about the story of lodging the complaint by the Pradeep Kumar. This suspicioun coppled with above discussed situation, does raise an inference that no complaint was made in respect of missing cheque.
6.6. One more point may be noted.
The so called complaint was allegedly made on 10.08.2008, Pradeep Kumar left the job of the accused in October 2008, Pradeep Kumar conveyed the information about such complaint to the accused in June 2009 and Pradeep Kumar was examined in chief on 06.08.2010. However, the application, written on a rough peace of paper remained as it is. Pradeep Kumar never mentioned about the missing cheque to the accused, left the job and indulged in his own business, but retained the application with all due care.
6.7. Apart from the above, this witness i.e. Pradeep Kumar is otherwise not reliable.
Witness claimed to have joined the accused in June 2008 for learning the manufacturing of Bakelite powder without any remuneration. He has further claimed that only in June 2008 he came to know about Kamal Industries.
(However, statement of account of his bank (Ex. DW2/X1) is showing transactions in the name of Kamal Industries in the year 2007).
He claimed the reason for not disclosing the fact of missing cheque to the accused as an apprehension that the accused might not have retained him for learnig work.
(However, interestingly, he left the learning himself in October 2008. What did prevent him from telling the accused about the missing cheque after he left the learning? Even further there is also a strange fact. This witness claimed himself to be engaged in the business of sale/purchase of cloths prior to year 2007 (examination in chief) or prior to June 2008 (cross-examination dated 27.11.2010) and even after leaving the so called learning process (cross-examination dated 12.08.2010 and 04.12.2010). What was the use of the so called learning 4-5 months if he was to be indulged in his in his earlier business? What was he apprehended for he was not to stick with the company of the accused? Answer is clear. The witness has made a concocted story).
In such circumstances, I am unable to give any credit to this witness.
6.8. Accused has failed to establish the factum of lost cheque.
Other contentions
7. The contention that name of the accused is Kamal Gupta and not Kamal Garg is basically irrelevant because accused has not disputed that the cheque in question belongs to him and is drawn on his bank account and bears his signature. What else is necessary? If one introduces himself "Garg" to another, how the later person will question the statement? If complainant knows him by Kamal Garg, what is the problem? Accused in his cross-examination has Sanjay Goel vs Kamal Garg CC NO.-2356/10 13 admitted that his father uses "Garg" on many occasions. The surety bond executed by the father of the accused was supported by some documents. Copy of Election ID card of the father of the accused and a rent agreement dated 31.12.1999 both filed with the surety bond are showing the name of the father of the accused as "Mittar Sain Garg".
This contention of the accused has to be rejected.
7.1. Ld. counsel for the accused has also tried to rely upon some improbabilities in respect of advancement of loan in a short period and for a short period.
Giving of a loan is purely a human conduct based upon individual thinking and peculiar circumstances. If a person is in need and ask a loan from his friend with an assurance to return the same in short period and upon that basis the friend extends his help to that person, can the conduct of that friend be questioned on the ground that it was improbable to give loan in a short period and for a short period. The answer should be in negative.
7.2. Accused has also taken a defence that other columns of the cheque were not filled in by him. For this purpose, he has examined Sayed Sarfraz, Handwriting Expert to establish that other columns of the cheque were not filled in by the accused.
7.3. In my considered view, unless accused successfully establish the factum of cheque being lost, the defence of non filling of other columns of the cheque (even if established) can not help the accused since he has already admitted the signature on the cheuqe.
7.4. And as discussed earlier, accused has failed to establish such facts. Even he has failed to rebut the mandatory presumptions of law in respect of the consideration and existence of liability. No law does require that all the columns of the cheque must be filled in by the drawer himself. Section-20 NI Act takes care of such situation. In this respect, it would be useful to quote the Hon'ble High Court in Ravi Chopra vs. State decided on 13.03.2008, wherein it has been held that:
"15. What appears to be clear from the above definitions that an essential feature of a cheque is that it has to be signed by the maker. This signing of the cheque need not be by hand alone. After the amendment to Section 6 in 2002, the NI Act acknowledges that there can be an electronic cheque which can be "generated, written and signed in a secure system." Nevertheless, the signing of the cheque is indeed an essential feature. But what about the other material particulars? Can the word "cheque" occurring in Section 138 NI Act include a blank cheque which is signed by the drawer but the material particulars of which are left unfilled at the time it was handed over to the payee? While on the one hand Section 138 NI Act which contemplates a 'no fault liability' has to be strictly construed as regard the basic ingredients which have to be shown to exist, it requires examination of the other provisions of the NI Act in order to ascertain if a cheque that was signed but left blank can, if the material Sanjay Goel vs Kamal Garg CC NO.-2356/10 14 particulars are subsequently filled up and presented for payment, still attract the same liability.
18. Section 20 NI Act talks of "inchoate stamped instruments" and states that if a person signs and delivers a paper stamped in accordance with the law and "either wholly blank or have written thereon an incomplete negotiable instrument"
such person thereby gives prima facie authority to the holder thereof "to make or complete as the case may be upon it, a negotiable instrument for any amount specified therein and not exceeding the amount covered by the stamp." Section 49 permits the holder of a negotiable instrument endorsed in blank to fill up the said instrument "by writing upon the endorsement, a direction to pay any other person as endorsee and to complete the endorsement into a blank cheque, it makes it clear that by doing that the holder does not thereby incurred the responsibility of an endorser." Likewise Section 86 states that where the holder acquiesces in a qualified acceptance, or one limited to part of the sum mentioned in the bill, or which substitutes a different place or time for payment, or which, where the drawees are not partners, is not signed by all the drawees, all previous parties whose consent has not been obtained to such acceptance would stand discharged as against the holder and those claiming under him, unless on notice given by the holder they assent to such acceptance. Section 125 NI Act permits the holder of an uncrossed cheque to cross it and that would not render the cheque invalid for the purposes of presentation for payment. These provisions indicate that under the scheme of the NI Act an incomplete cheque which is subsequently filled up as to the name, date and amount is not rendered void only because it was so done after the cheque was signed and delivered to the holder in due course.
20. A collective reading of the above provisions shows that even under the scheme of the NI Act it is possible for the drawer of a cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up at a subsequent point in time and presented for payment by the drawee. There is no provision in the NI Act which either defines the difference in the handwriting or the ink pertaining to the material particulars filled up in comparison with the signature thereon as constituting a 'material alteration' for the purposes of Section 87 NI Act. What however is essential is that the cheque must have been signed by the drawer. If the signature is altered or does not tally with the normal signature of the maker, that would be a material alteration. Therefore as long as the cheque has been signed by the drawer, the fact that the ink in which the name and figures are written or the date is filled up is different from the ink of the signature is not a material alteration for the purposes of Section 87 NI Act.
Sanjay Goel vs Kamal Garg CC NO.-2356/10 1523. Recently this Court in Jaipal Singh Rana v. Swaraj Pal Singh (order dated 22nd February, 2008 in Crl. M.C. 7821/2006) after discussing the law on the topic, held that in a case involving the offence under Section 138 NI Act, the Magistrate would be justified in declining to refer the cheques for opinion of the handwriting expert where the signatures of the drawer on the cheque were not disputed by the drawer. The situation is no different as far as the present case is concerned. It may be added here that there may be good reasons for not dishonouring a cheque merely because the ink of the signature and ink of the material particulars is different or that the handwriting is different. Numerous situations can be thought of where the handwriting and the ink can differ. For instance when an entire cheque is typed as to its material particulars, and the signature is in the handwriting of the drawer, such cheque can hardly be said to be void for that reason.
24. This Court is unable to accept the contention of the petitioner that if the signatures on the cheques are shown to be much prior to the date of filling up of the material particulars that would probablise the defense of the Petitioner. That the signature on the cheques is that of the petitioner is not disputed. The Petitioner has even in his cross-examination in fact admitted the fact that the cheques were issued by him and were handed over to the complainant along with a covering letter. For the reasons explained it matters little if the name of the payee, date and amount are filled up at a subsequent point in time, subject of course to what is stated in the proviso to Section 118 NI Act.
26.1 Since much reliance was placed on the judgment in Kalyani Baskar, the facts in the said case may be noticed first. In para 2 it is stated that the accused there had raised a preliminary objection that she "has not signed the cheque or issued it to the complainant respondent." This is a major distinguishing feature of the said decision in its application to the facts of the present case where the accused is not disputing his signatures on the cheques. The observations in para 12 of the said decision have therefore to be understood in the above factual context. Since an essential ingredient of Section 138 is the signature of the drawer on the cheque, the trial court there could not have denied the accused the chance to prove that defense. The defense of denial of signatures naturally required the opinion of the handwriting expert."
8. Lastly, ld. Counsel for the accused contended that on the back of the cheque there appears a third signature dated 04.02.2009 which has not been explained by the complainant and therefore the circumstances should be taken as doubtful.
8.1. Since no explanation was coming from either side, concerned bank was directed to depute a responsible official so that circumstances may be clarified. Sh. Krishna Shah, Manager(Accounts) Bank of Baroda, Rampura, New Delhi Sanjay Goel vs Kamal Garg CC NO.-2356/10 16 explained that due to heavy rush some body might have signed on the back of the cheque inadvertently.
8.2. This explanation may not be sufficient, however, no other explanation has been suggested by the accused. In the absence of any explanation from any side, two course may be adopted. One is that the clarification given by the Manager be accepted and the second is that the issue may be left as it is.
8.3. I consider that either way, the result can not rescue the accused. All the basic ingredients of the Section-138 NI Act has already been fulfilled by way of mandatory presumptions of law. Accused has failed to rebut the presumptions.
8.4. Some observations of Hon'ble Supreme Court and Hon'ble Delhi High Court may be quoted.
A three judges bench of Hon'ble Supreme Court in Rangappa Vs. S. Mohan decided on 07.05.2010 has observed that:
"15. Coming back to the facts in the present case, we are in agreement with the High Court's view that the accused did not raise a probable defence. As noted earlier, the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the 'stop payment' instructions to his bank. Furthermore, the instructions to 'stop payment' had not even mentioned that the cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version. Apart from not raising a probable defence, the appellant-accused was not able to contest the existence of a legally enforceable debt or liability. The fact that the accused had made regular payments to the complainant in relation to the construction of his house does not preclude the possibility of the complainant having spent his own money for the same purpose. As per the record of the case, there was a slight discrepancy in the complainant's version, in so far as it was not clear whether the accused had asked for a hand loan to meet the construction-related expenses or whether the complainant had incurred the said expenditure over a period of time. Either way, the complaint discloses the prima facie existence of a legally enforceable debt or liability since the complainant has maintained that his money was used for the construction-expenses. Since the accused did admit that the signature on the cheque was his, the statutory presumption comes into play and the same has not been rebutted even with regard to the materials submitted by the complainant. "
In case titled V S Yadav vs Reena CrLA No. 1136/2010 decided on 21.09.2010, Hon'ble High Court of Delhi has observed that:
Sanjay Goel vs Kamal Garg CC NO.-2356/10 17"3. The appellant had taken a stand that no reply to the notice of legal demand was sent by the respondent, instead, envelopes with blank sheets in it were sent by the respondent. In her examination under Section 281 Cr. P.C. she did not deny issuance of cheques, but, took a defence that cheque were issued as security for seeking loan but no loan was advanced and the cheques were therefore without consideration. The learned MM observed that conviction under Section 138 of N.I. Act cannot be made acting on evidence of complainant and considering the presumption under Section 139 of N.I. Act. The complainant has to prove beyond reasonable doubt the debt or liability of the accused. Learned MM observed that complainant had not specified the date of giving loan and a reasonable man would remember the date of giving substantial sum of money as loan to other and this blissful forgetness of the date by the complainant raised doubt about the liability of the accused, more so, in view of the stand taken by the accused that the cheques were issued as security and the same were never returned.
4. It must be remembered that reasoning for appreciating evidence does not mean that reasoning bereft of logic. Reasoning also does not mean mis- reasoning. All reasoning must stand the test of basic logic of a judicial mind showing that the judge had knowledge of law and had appreciated facts in the light of law. Section 6 of N.I. Act defines Cheque as under:
"A ''cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form"
A bare definition of cheque shows that cheque is a Bill of Exchange drawn on specified banker and is an order by drawer on his own agent i.e. bank for payment of certain sum of money to the bearer or the order to person in whose favour cheque is drawn. This order of payment by person to the holder of cheque is not made in casual manner just for the sake of fun. This order is made for consideration and that is why Section 139 of the N.I. Act provides that the holder of a cheque is presumed to have received the cheque in discharge of whole or in part of a debt or liability. It was sufficient for complainant to prove the debt and liability by making a statement that the cheques were issued by the respondent for payment of debt. Merely because the complainant did not remember the exact date and stated that the loan was taken from him about a week before 23rd/24th June, 2006, would not throw doubt on the testimony of the complainant, more so, when the complainant specifically testified that the accused and her husband were having business in the name of S.K. Enterprises, situated at RZ-133/213 and he was approached for a Sanjay Goel vs Kamal Garg CC NO.-2356/10 18 friendly loan by the accused/respondent through her husband.
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7..............The Trial Court in this case turned a blind eye to the fact that every accused facing trial, whether under Section 138 of N.I. Act or under any penal law, when charged with the offence, pleads not guilty and takes a stand that he has not committed the offence. Even in the cases where loan is taken from a bank and the cheques issued to the bank stand dishonoured, the stand taken is same. Mere pleading not guilty and stating that the cheques were issued as security, would not give amount to rebutting the presumption raised under Section 139 of N.I. Act. If mere statement under Section 313 Cr. P.C. or under Section 281 Cr. P.C. of accused of pleading not guilty was sufficient to rebut the entire evidence produced by the complainant/ prosecution, then every accused has to be acquitted. But, it is not the law. In order to rebut the presumption under Section 139 of N.I. Act, the accused, by cogent evidence, has to prove the circumstance under which cheques were issued. It was for the accused to prove if no loan was taken why he did not write a letter to the complainant for return of the cheque. Unless the accused had proved that he acted like a normal businessman/prudent person entering into a contract he could not have rebutted the presumption u/s 139 N.I. Act. If no loan was given, but cheques were retained, he immediately would have protested and asked the cheques to be returned and if still cheques were not returned, he would have served a notice as complainant. Nothing was proved in this case."
9. No quarrel with the proposition (laid down in In M.S. Narayana Menon Alias Mani v. State of Kerala and Another (2006) 6 SCC 39 relied upon by the accused) that it is not necessary for the accused to disprove the existence of consideration by way if direct evidence. Hon'ble Supreme Court has held therein that:
"This Court, therefore, clearly opined that it is not necessary for the defendant to disprove the existence of consideration by way of direct evidence.
The standard of proof evidently is pre-ponderance of probabilities. Inference of pre- ponderance of probabilities can be drawn not only from the materials on records but also by reference to the circumstances upon which he relies.
Presumption drawn under a statute has only an evidentiary value. Presumptions are raised in terms of the Evidence Act. Presumption drawn in respect of one fact may be an evidence even for the purpose of drawing presumption under another."
9.1. However, in the present case, at every point, accused has given merely an explanation to the circumstances, however, he has failed to establish the same by way of any cogent evidence or even by the material brought on record by the complainant. A mere explanation is not sufficient.
Sanjay Goel vs Kamal Garg CC NO.-2356/10 19In Bharat Barrel & Drum Manufacturing Company v. Amin Chand Pyarelal, (1993) 3 SCC 35 (Para. 12) it has been held that:
"Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbably or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist."
9.2. It is manifestly clear that a mere explanation of the accused in the absence of any material justifying his statement can not be treated as sufficient.
9.3. Reliance placed by the accused on Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54 will not help him.
It is pertinent to mention that the mandatory presumptions extend also to the existence of legally enforceable debt or liability. See a three judges bench decision of Hon'ble Supreme Court in Rangappa Vs. S. Mohan decided on 07.05.2010 (earlier contrary view in Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54 has been overruled). It was held by their Lordships that:
Sanjay Goel vs Kamal Garg CC NO.-2356/10 20"14. In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct."
10. It is now a settled position that the offence of dishonour of cheque is a technical offence involving a reverse onus clause. It is not the complainant who has to establish the liability, but the accused who has to rebut the same. Mandatory presumptions of law extends also to the existence of legally enforceable debt or liability. Accused has to rebut the same. I am of the view that unless the mandatory presumptions of law are rebutted, accused cannot claim himself to being absolved from the criminal liability only by pleading that he is not guilty.
10.1. Complainant has establish his case that the instant cheque of Rs. 3,00,000/- was issued by the accused to discharge the liability of loan. He has also established the other ingredients of the offence. Accused has failed to rebut the mandatory presumptions of law arising in favour of the complainant.
11. I accordingly return a finding of guilt against the accused Kamal Garg @ Kamal Gupta.
12. The accused Kamal Garg @ Kamal Gupta is hereby convicted for the offence as punishable under Section-138 NI Act, 1881 charged in the present complaint case.
13. Let the convict be heard on the point of sentence.
14. A copy of this order be placed on the official website of the District Court.
(Rakesh Kumar Singh) MM(NI Act)-01, Central 28.05.2011 Sanjay Goel vs Kamal Garg CC NO.-2356/10 21