Delhi District Court
Is Placed On The Judgment Of Hon'Ble Sc In ... vs . State Of Gujarat on 2 March, 2022
Jai Interiors v. Sajid Siddiki, CC No. 615630/2016
IN THE COURT OF MS. TWINKLE CHAWLA: MM, NI ACT-02, SOUTH-EAST
DISTRICT, SAKET COURTS COMPLEX: NEW DELHI
Jai Interiors v. Sajid Siddiki
CC No. 615630/16
U/s 138 Negotiable Instruments Act, 1881
1. CIS number : DLSE020011472013
2. Name of the Complainant : Jai Interiors through its Proprietor, Sh. Jai
Kishan, F-295, Lado Sarai, Opp. Sai Baba
Mandir, New Delhi- 110030.
3. Name of the Accused, parentage : Sh. Sadiq Siddiki,
& residential address B-714, Tigri Colony, New Delhi - 110062.
Also at:
Plot No.778, I-Block,
Sourabh Vihar, Nagar Market,
Hari Nagar Extension-III,
Jaitpur Badarpur Road,
New Delhi - 110044
Mobile No. 9971810210
4. Offence complained of or : U/s 138 of Negotiable Instruments Act,
proved 1881
5. Plea of the Accused : Pleaded not guilty and claimed trial.
6. Final Judgment/order : Convicted
7. Date of judgment/order : 02.03.2022
Page 1 of 22
Jai Interiors v. Sajid Siddiki, CC No. 615630/2016
JUDGMENT
1. Complainant has filed the present complaint under Section 138 /142 of Negotiable Instruments Act, 1881 ("NI Act") on the averments that, the Accused approached the proprietor of the Complainant firm for financial help, on the ground that that he had to make payment of the wooden materials purchased by him.
2. Pursuant to this request, the Proprietor of the Complainant advanced the loan of Rs.
1,75,000/- in cash to the Accused in December 2011 with the assurance of the same being repaid within 6-7 months. Per the Complainant, after repeated follow-ups, the Accused issued the cheque bearing no. 187231 dated 08.03.2013 for Rs. 1,75,000 drawn on HDFC Bank, Malviya Nagar, New Delhi in favour of the Complainant (hereinafter referred as "cheque in question"). However, when the Complainant presented the cheque in question; the same was returned unpaid vide return endorsement 08.03.2013, for the reason "account closed". The Complainant sent the legal demand notice dated 03.04.2013 through his counsel by speed post on 06.04.2013 at the registered address of the Accused. The notice sent to Accused vide speed post has been received by the Accused on 08.04.2013. Hence, despite the service of the legal demand notice Accused failed to make the payment and hence, Complainant filed the present complaint.
3. After taking pre-summoning evidence, Accused was ordered to be summoned in this case for commission of offence under Section 138 of Negotiable Instruments Act, 1881, vide order dated 14.08.2013.
4. Accused appeared on 24.02.2014 and was released on bail on 10.07.2018. On finding a prima facie case, notice U/s 251 of the Criminal Procedure Code, 1973 ("CrPC") Page 2 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 was served upon the Accused on 03.02.2018 to which he pleaded not guilty and opted to contest after disclosing the following defence:
"In year 2010, there were business transactions between me and the complainant. I gave a blank signed cheque as security and advance for the transaction of business which was to be encashed after delivery of goods by the complainant. I stopped dealing with the complainant in the year 2011 due to which the complainant misused the cheque. I received the legal demand notice which was issued in the name of my father which I handed over to him."
5. Vide order dated 15.10.2018, opportunity was granted to the Accused to cross examine the Complainant. The Complainant/CW1 has filed the affidavit of evidence Ex. CW1/A and also proved following documents:-
Ex. Cheque bearing no. 187231 dated 08.03.2013 of Rs.
CW1/1: 1,75,000/-.
Ex. Return memo dt. 08.03.2013.
CW1/2:
Ex. Legal demand notice dt. 03.04.2013
CW1/3:
Ex. Postal receipt dt. 06.04.2013 in respect of the legal demand
CW1/4: notice.
Ex. Returned registered AD Card
CW1/5:
Ex. Tracking report in respect of the legal demand notice.
CW1/6:
Complainant Evidence was closed vide separate statement of the Complainant on 01.08.2019.
6. Thereafter, Accused was examined under Section 313 of CrPC for explaining the circumstances appearing against him in the Complainant's evidence. He denied the Page 3 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 Complainant's case and pleaded false implication in the present case and opted to lead evidence in his defence.
7. The Accused examined himself as DW-1, after moving the appropriate application u/s 315 CrPC and one other witness, namely Sh. Ahmad Raza, as DW-2. DW1 and DW2 were examined, cross-examined and discharged. Defence Evidence was closed vide separate statement on 29.11.2021.
8. I have heard Ld. Counsel for the parties and have perused the case file along with the written submissions filed by the parties carefully and meticulously. Submissions of the Complainant and Accused
9. The Ld. Counsel for the Complainant has submitted that all ingredients of Section 138 NI Act are fulfilled in the present case and hence, the presumption under Section 139 NI Act arises in the favour of the Complainant, which has not been successfully rebutted by the Accused.
10. Per contra, Ld. Counsel for the Accused has submitted that the Accused had business relations with the Complainant and the cheque in question was issued during such work and not towards any loan liability. It has further been stated that the complaint is not maintainable as the legal demand notice is addressed to the father of the Accused and not the Accused. Hence, the Ld. Counsel for the Accused has also submitted that the presumption under Section 139 NI Act is not attracted as the Accused never received the legal demand notice.
Page 4 of 22
Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 Legal Framework Ingredients of Section 138 NI Act:
11. The Hon'ble Supreme Court of India ("Hon'ble SC") in Kusum Ingots & Alloys Ltd and Ors v. K Pennar Peterson Securities Ltd and Ors., (2000) 2 SCC 745 ("Kusum Ingots Case"), has clearly stipulated that "the ingredients which are to be satisfied for making out a case under the provision are:
(i) a person must have drawn a cheque on an account maintained by him in a 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 months1 from the date on which it is drawn or within the 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 as unpaid; and
(v) the drawer of such cheque fails to make payment of the said amount of money 1 Reduced to three months vide RBI circular dated 4.11.2011. Page 5 of 22
Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice;
If the aforementioned ingredients are satisfied then the person who has drawn the cheque shall be deemed to have committed an offence."
12. Therefore, if the aforesaid ingredients are made out, the Accused is deemed to have committed an offence under Section 138 NI Act.
Presumption under Section 139 NI Act/Section 118 NI Act:
13. Section 139 NI Act states that:
"Presumption in favour of holder: It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability"
14. Section 139 NI Act is a type of reverse onus clause, which stipulates a presumption in the favour of the Complainant as to fact of a cheque being received in discharge of a legal debt or liability.
15. Further, Section 118(a) of the NI Act, states as follows:
"Presumptions as to negotiable instruments. -- Until the contrary is proved, the following presumptions shall be made:
(a) of consideration --that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been Page 6 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;"
16. The Hon'ble SC has in a number of judgments dealt with the combined effect of the presumptions raised under Section 139 and Section 118(a) NI Act.
17. The following proposition can be summarized on a perusal of the judgments of the Hon'ble SC in Kalamani Tex v. P. Balasubramanian, 2021 SCC OnLine SC 75; APS Forex Services Pvt. Ltd. v. Shakti International Fashion Linkers and Ors. ("APS Forex Case"), AIR 2020 SC 945; Rohitbhai Jivanlal Patel v. State of Gujarat and Ors., AIR 2019 SC 1876 ("Rohitbhai Case"); Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513 ("Kumar Exports Case"); K.N. Beena v. Muniyappan and Anr., (2001) 8 SCC 458; and Dhanvantrai Balwantrai Desai v. State of Maharashtra, 1964 Cri. LJ 437:
(i) Once the execution of cheque is admitted; Section 139 of the NI Act mandates a presumption that the cheque was for the discharge of legally enforceable debt or liability;
(ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the Accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities;
(iii) Something which is probable has to be brought on record by the Accused for getting the burden of proof shifted to the Complainant. To disprove the presumptions, the Accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so Page 7 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist;
(iv) The words "unless the contrary is proved" which occur in Section 139, make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by Section 139 NI Act cannot be said to be rebutted;
(v) To rebut the presumption, it is open for the Accused to rely on evidence led by him or Accused can also rely on the materials submitted by the Complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely;
(vi) That it is not necessary for the Accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
Analysis
18. In the case at hand, it is not in dispute that the cheque in question was drawn by the Accused from his bank account. Further, it is also not in dispute that the Accused is the signatory of the cheque in question as in the defence disclosed by the Accused Page 8 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 U/s 251 CrPC and Section 313 CrPC statement; he has duly admitted the same. Presentation of the cheque in question by the Complainant is also not in dispute. Although, in the course of arguments, the Ld. Counsel for the Accused has submitted that there is no separate return memo and hence, the dishonour is not proved. It is noted that the endorsement of dishonour is made on the back side of the cheque leaf, Ex. CW1/2; and that the Accused has himself in his statement u/s 313 CrPC stated that his account was closed at the time of presentation of the cheque in question. Accordingly, the dishonour of the cheque in question by way of the return memo, Ex. CW1/2, is also not in dispute. Hence, it is clear that the cheque in question was returned unpaid for the reason "Account Closed", which is species of the genus of funds insufficient and hence, falls within the ambit of Section 138 NI Act (Reliance is placed on the judgment of Hon'ble SC in Laxmi Dyechem vs. State of Gujarat and others, (2012) 13 SCC 375).
19. The Complainant sent the legal demand notice, dated 03.04.2013 (Ex. CW1/3) by way of speed post on 06.04.2013 (Ex. CW1/4 (Colly)). The same was received by the Accused on 08.04.2013 (evinced by tracking report, Ex. CW1/6). Although the Accused has admitted the receipt of legal demand notice in his cross examination dt. 27.10.2021; he has stated that the legal demand notice is improper as it is addressed to his father, i.e., Sadique Siddiki and not to him (i.e., Sajid Saddiki). Ld. Counsel for the Complainant has also accepted that the legal demand notice has been addressed to the father of the Accused and not the Accused, due to an inadvertent error. It is also a matter of record that the address of the Accused and the father of the Accused is the same and that the summons issued by the Court have been accepted by the Page 9 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 Accused at the same address and pursuant to the issuance of the summons, it is the Accused who has appeared in Court and not his father, namely, Sadique Siddiki.
20. The Hon'ble SC in C.C. Alavi Hazi vs Palapetty Muhammad & Anr, (2007) 6SCC 555 ("CC Alavi Hazi Case") has noted the object and purpose of the requirement of sending the legal demand notice in the following terms:
"However, with a view to avert unnecessary prosecution of an honest drawer of the cheque and with a view to give an opportunity to him to make amends, the prosecution under Section 138 of the Act has been made subject to certain conditions."
21. Hence, where a drawer of the cheque in question has received information as to dishonour and a demand of payment is made and he has understood that the demand has been made from him, he cannot find fault with the legal demand notice sent by the Complainant. In the same vein, the aforesaid judgment in CC Alavi Hazi (supra) also noted that:
"It is, thus, trite to say that where the payee dispatches the notice by registered post with correct address of the drawer of the cheque, the principle incorporated in Section 27 of the G.C. Act would be attracted; the requirement of Clause (b) of proviso to Section 138 of the Act stands complied with and cause of action to file a complaint arises on the expiry of the period prescribed in Clause (c) of the said proviso for payment by the drawer of the cheque. Nevertheless, it would be without prejudice to the right of the drawer to show that he had no knowledge that the notice was brought to his address."
(emphasis supplied) Page 10 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016
22. In the present case, the Accused has himself in his defence evidence accepted that the address in the legal demand notice was correct and that the said notice was also received at the said address by his relative. Further, in the CC Alavi Hazi (supra) case, the Hon'ble SC has further noted that: "Any drawer who claims that he did not receive the notice by post, can, within 15 days of receipt of summons from the court in respect of the complaint U/s 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 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 complaint U/s 138 of the Act, cannot obviously contend that there was no proper service of notice as required U/s 138, by ignoring statutory presumption to the contrary U/s 27 of the General Clauses Act and Section 114 of the Evidence Act.".
23. In the present case, perusal of the report of the process server in respect of the summons evinces that the summons were received by the Accused and he, i.e., the Accused has stated that the summons were also meant for him and not his father. Further, pursuant to the summons, it is the Accused who has appeared and not his father, thereby bolstering the view that he knew that the demand was made from him. Moreover, in the evidence affidavit filed by the Complainant, the name of the accused is noted as Sajid Siddiki, i.e., the Accused herein.
24. Hence, the legal demand notice was sent on the correct address of the Accused.
Therefore, a presumption of due service is drawn U/s 27 of General Clauses Act, 1897; which provides that where the notice is sent by registered post to the correct Page 11 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 address, the same shall be presumed to have been duly served. Thus, the legal demand notice Ex. CW1/3 is held to have been duly served upon the Accused. It is also pertinent to mention that the discharge application moved by the Accused on the same ground was dismissed by Ld. Predecessor of this Court vide order dt. 23.08.2016; and the said order has not been challenged by the Accused in any forum; and has attained finality.
25. Finally, the complaint has been filed within the limitation period. Therefore, essential ingredients mentioned from (i) to (v) as stipulated by the Hon'ble SC in Kusum Ingots Case (supra), have been duly satisfied.
26. Further, as noted above, once the execution of the cheque by the Accused is proved/admitted, the presumption of the same being drawn for consideration stands attracted in terms of Section 139 NI Act. Now, in the case at hand, so far as the question of existence of basic ingredients for drawing of presumption U/s 118 (a) and 139 of Negotiable Instruments Act, 1881 is concerned, from the aforesaid discussion, it is apparent that the Accused has not denied his signatures on the cheque in question that has been drawn in favour of the Complainant on a bank account maintained by the Accused; and hence the said presumption can be drawn. The Ld. Counsel for the Accused has stated that such inference cannot be drawn as the Accused had given the cheque as a blank signed cheque and the particulars on the same have been filled by or at the instance of the Complainant. At this stage, reliance can be laid on the observations of the Hon'ble SC in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197 ("Bir Singh Case"); wherein it has been held that:
"It is immaterial that the cheque may have been filled in by any person other Page 12 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted...
38. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the Accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence...
40. Even a blank cheque leaf voluntarily signed and handed over by the Accused, which is towards some payment, would attract presumption Under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
27. The same view has been endorsed by the Hon'ble High Court of Delhi in Ravi Chopra v. State, CRL.M.C. 5211/2006; wherein it was observed that:
"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."
(emphasis supplied) Page 13 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016
28. Hence, in view of such clear stipulation by the Hon'ble SC and Hon'ble Delhi High Court, it is immaterial whether or not the particulars on the cheque have been filled by the Accused or not, to the extent the Accused has admitted to have appended his signatures on the cheque in question. Accordingly, the applicability of the presumption under Section 139 NI Act is not dependent upon the Accused filling the particulars on the cheque. Accordingly, it is required to be presumed that the cheque in question was drawn for consideration and the holder of the cheque i.e., the Complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the Accused to establish a probable defence so as to rebut such a presumption.
29. In the segment on legal framework, set out above, the legal proposition with respect to the burden of proof upon the Accused has already been discussed. Hence, it is now to be examined as to whether the Accused brought any material on record or pointed out glaring discrepancies in the Complainant's version for dislodging the presumption which meets the standard of preponderance of probabilities.
30. The Accused in the present case, has taken the following line of defence with a view to rebut the presumption:
(a) Misuse of security cheque given:
Ld. Counsel for the Accused has submitted that the cheque in question was given as a security cheque to the Complainant in the form of a blank signed cheque in 2010 as there were business transactions between the Complainant and the Accused. The Accused has further stated that in 2011, they stopped dealing with each other and hence, the cheque in question was to be returned to Page 14 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 the Accused. However, as per the Accused, the Complainant refused to return it as the cheque in question was stated to be lost by the Complainant. Hence, the Accused has submitted that the cheque in question has been misused as: (i) the loan of Rs. 1,75,000/- was never advanced by the Complainant to the Accused; and (ii) the Complainant refused to return the cheque in question by stating that the same had been lost. In support of his defence, the Accused examined himself as DW-1 and his employee, namely Sh. Ahmad Raza, as DW-2.
(i) Loan of Rs. 1,75,000 was never advanced in cash to the Accused The Accused has deposed on oath that the cheque in question was given as a blank signed cheque along with other signed cheques to the Complainant as they had business relations. However, it is noted that in the deposition, the Accused has not stated that he has not taken any loan from the Complainant.
Further, in the questions put to the Complainant in the cross-examination as well, no suggestion has been given to the effect that no loan was advanced to the Accused. Be that as it may, the case of the Accused in his defence evidence as well as in the cross-examination of the Complainant is that the Accused and the Complainant had business relations and hence, the cheque in question was given to the Complainant. The Complainant in his cross-examination has refused the same.
The Accused in his cross-examination has admitted that he had not brought on record any document/bill to show that the Complainant and the Accused worked together. The Accused has also deposed one Mr. Ahmad Raza as DW- Page 15 of 22
Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 2, who is stated to be an employee of the Complainant and the Accused in their common business. However, in the cross-examination, DW-2, despite specific questions being put to him, has been unable to disclose the nature of common business run by the Complainant and the Accused; the exact location of the office of the Accused as that of the Complainant; and the details of the meeting with the Complainant. Further, he has also stated that:
"I am not aware of any transaction conducted by the accused and complainant together, as that was not my work. Accordingly, I do not know and cannot tell that whether any entry of goods done by me pertained to any project conducted by the accused and complainant together. I do not know whether any joint office of the Accused and Complainant existed."
Additionally, while in the cross-examination of the Complainant, the suggestion as to supply of timber by the Complainant to the Accused and part repayment of the amount by the Accused to the Complainant was given; no such details have been deposed by the Accused and DW2. In fact, neither DW1 nor DW2 have specified the nature of business dealing between the Complainant and the Accused.
It is also to be noted that the Accused and DW2 have deposed differently qua the circumstances surrounding the issuance of the cheque in question to the Complainant. The Accused has remained silent as to the date and time of issuance of the cheque to the Complainant in his defence evidence; in his defence at the time of notice, he has stated that he had issued the said cheque in Page 16 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 2010. However, in the cross-examination of DW-2, he has deposed that the cheque in question was handed over in 2011. Further, while the Accused had stated at the time of notice that the cheque in question was given as a blank signed cheque, DW-2 has in his cross-examination stated that the said cheque already had the amount filled, and while he did not remember the exact figure, it was more than Rs. 1,00,000/-. Accordingly, there are inconsistencies between the deposition of DW-1 and DW-2. Further, the scanty nature of their depositions, also do not inspire confidence from the point of view of a reasonable man. Neither the Accused nor DW2 have specified the nature of transaction between the Complainant and the Accused, which according to them, warranted the issuance of the cheque in question to the Complainant. While it is a matter of record that both the Complainant and the Accused were in the same business, and even the Complainant in his complaint has stated that there were business relations between the Accused and the Complainant; but by this fact alone, presumption of liability cannot be rebutted as the said commonality can be the starting point of friendly relations as well, which is the case of the Complainant in the present matter; in the absence of further details by the Accused on the circumstances surrounding the issuance of the cheque in question.
Lastly, the transaction of friendly loan does not get disproved only because it was given in cash or because there was no written agreement or witness as the Hon'ble SC in a recent judgment of Rohitbhai Case (supra) observed that:
"The observations of the Trial Court that there was no documentary Page 17 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 evidence to show the source of funds with the Respondent to advance the loan, or that the Respondent did not record the transaction in the form of receipt of even kachcha notes, or that there were inconsistencies in the statement of the Complainant and his witness, or that the witness of the complaint was more in know of facts etc. would have been relevant if the matter was to be examined with reference to the onus on the complaint to prove his case beyond reasonable doubt. These considerations and observations do not stand in conformity with the presumption existing in favour of the Complainant by virtue of Sections 118 and 139 of the NI Act. Needless to reiterate that the result of such presumption is that existence of a legally enforceable debt is to be presumed in favour of the Complainant. When such a presumption is drawn, the factors relating to the want of documentary evidence in the form of receipts or accounts or want of evidence as regards source of funds were not of relevant consideration while examining if the Accused has been able to rebut the presumption or not."
(emphasis supplied) Accordingly, since presumptions stand in the favour of the Complainant and the Complainant is not required to prove his case beyond all reasonable doubt; such consideration (absence of written agreement/witnesses/cash transactions), at the outset do not help the Accused in rebutting the presumption. Accordingly, the defence of the Accused does not seem to be plausible; and is only possible, being inconsistent and bearing certain contradictions in material Page 18 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 particulars. Hence, the fact of advancement of loan has not been rebutted successfully by the Accused.
(ii) The cheque in question was lost by the Complainant:
The Accused has submitted that the cheque in question was given in business dealings as security and that the same was not returned by the Complainant as it was stated to be lost by the Complainant. The Accused has in his cross- examination admitted that no legal action was initiated by him for the return of the security cheque from the Complainant.
As noted by the Hon'ble SC in Kumar Exports Case (supra), the circumstantial evidence has to be seen from the point of a reasonable/prudent man. Accordingly, when a signed cheque of the Accused was in the custody of the Complainant; and there was no outstanding of the Accused towards the Complainant; especially when according to the Accused's version, the friendly relations between them had broken down in 2011; why did the Accused not take any legal action for getting the security cheque back, or in the least, issue a written notice to the Complainant to return the said cheque. The Hon'ble Delhi High Court in VS. Yadav v. Reena, 172 (2010) DLT 561, where the Accused had similarly pleaded that no loan was ever taken and yet the security cheques were not returned by Complainant; noted that:
"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 Page 19 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 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 under section 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."
(emphasis supplied) Similarly, the Hon'ble SC in Shree Daneshwari Traders v. Sanjay Jain & Anr., AIR 2019 SC 4003, observed that:
"the defence of the Respondent that though he made payment for the commodities/rice bags, the blank cheques were not returned by the Appellant-Complainant is quite unbelievable and unacceptable."
(emphasis supplied) Moreover, recently, the Hon'ble SC in APS Forex Case (supra) has noted that:
"However, to rebut the presumption, the Accused was required to lead the evidence that full amount due and payable to the Complainant has been paid. In the present case, no such evidence has been led by the Accused. The story put forward by the Accused that the cheques were given by way of security is not believable in the absence of further Page 20 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 evidence to rebut the presumption."
(emphasis supplied) Further, it is also to be noted that while the Accused has stated that he was informed by the Complainant that the cheque in question was lost; DW-2 has deposed that he had been informed by the Complainant and he further told the Accused; again raising an inconsistency between their depositions. In view hereof, the contention of the Accused qua absence of liability towards the Complainant in absence of any legal action/communication seeking return of the security cheque; and in light of failure of DW-1 and DW-2 to depose as to the details of the business transaction, circumstances of issuance of the cheque in question, mode of fulfillment of liability by the Accused; the defence of the Accused is only by way of mere/bare denial and does not inspire confidence from the stand point of a reasonable man.
If anything, the defence of the Accused only proves that there were friendly relations between the parties (hence, the Accused trusted that the Complainant would not misuse the security cheque) and hence, a loan transaction could have existed.
(b) Non-disclosure of the loan amount in ITR:
Ld. Counsel for the Accused in the course of arguments has also submitted that the loan has not been disclosed by the Complainant in his income tax return ("ITR"). With respect to this contention, it is noted that it is trite law that non- disclosure of loan in ITR, may give rise to consequences under Income Tax Act, 1961; but does not make the transaction illegal/void; and hence the Page 21 of 22 Jai Interiors v. Sajid Siddiki, CC No. 615630/2016 liability under Section 138 NI Act, remains untouched. Reliance is placed on the decision of Hon'ble Delhi High Court in Dilip Chawla v. Ravinder Kumar and Ors., 2017 SCC OnLine Del. 9753. Hence, infraction of provisions of the Income Tax Act, 1961 remain a matter between revenue and defaulter and the advantage thereof cannot be taken by defaulting borrower.
31. In these circumstances and in view of the above detailed discussion, this court is of the considered opinion that the Accused has failed to rebut the presumption under Section 139 of Negotiable Instruments Act, 1881 in favour of the Complainant and ingredients of Section 138 of Negotiable Instruments Act, 1881 are fully proved. Therefore, Accused is held guilty and convicted for commission of offence punishable under Section 138 of the Negotiable Instrument Act, 1881. Let he be heard on the quantum of sentence on 11.03.2022 at 12:00 noon.
ORDER: CONVICTED
Announced in Open Court (Twinkle Chawla)
02.03.2022 MM (NI-Act 02), South East
Saket Court, New Delhi
Note: This judgment contains 22 pages and each page has been signed by me.
(Twinkle Chawla) MM (NI-Act 02), South East Saket Court, New Delhi Page 22 of 22