Delhi District Court
Pronouncements To That Effect (See Ravi ... vs State And Anr. 2008(2) on 26 August, 2015
IN THE COURT OF BHARAT CHUGH,
METROPOLITAN MAGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.275, TIS HAZARI COURT COMPLEX, DELHI
Mahesh Kumar Aggarwal
VERSUS
Mukund Mohan Jha
JUDGMENT
Part A - The lis at a glance A. Serial No. of the Case 7815/13 B. Date of Commission of the offence 24.03.2013 C. Name of the Complainant Mahesh Kumar Aggarwal D. Name of Accused person & his Mukund Mohan Jha, parentage & residence s/o Sh.Arjun Jha, r/o B-660, Gali No.5, Amrit Vihar, near Panch Mukhi Hanuman Mandir, Burari Village, Delhi - 110084.
E. Offence complained of Dishonor of cheque - culpable u/s 138 of the Negotiable Instruments Act.
F. Plea of the accused and his Pleaded not guilty. Contended that the examination in brief. cheques in question were not given to the complainant but to a third person by the name of Deepak as security for loan taken from him.
G. Final Order Conviction H. Judgment reserved on 19.08.2015 I. Judgment pronounced on 26.08.2015
Part B - A brief statement of reasons for the decision (As mandated u/s 355(i) of the Code of Criminal Procedure, 1973.) Complainant's case
1. "There are two sure ways to lose a friend, one is to borrow, the other to Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 1 of 20 lend" ('The name of the Wind' by Patrick Rothfuss). The complainant would have the court believe that this is one such case of a friendly loan, where all trace of 'friendship' has disappeared, but the 'loan' has remained, seeking redress for which, the complainant has come knocking at the doors of justice.
2. Shorn of unnecessary details, the complainant claims, that he is in the business of trading of stainless steel utensils. The accused is also stated to be into the same business and on account of common business, the complainant claims to become acquainted with the accused and have known him from the last 5 years.
3. The complainant claims, that in the last week of December, 2011, the accused approached the complainant with a request for an amount of Rs. 30,000/- for emergency needs that had allegedly cropped up. The complainant agreed to help the accused and gave him a bearer cheque of Rs. 30,000/- (Cheque No. 040602 dated 30.12.2011 drawn on Union Bank of India, S.S.I.Branch, Wazirpur Industrial Area, Delhi - 110052), drawn on an account in the name of his proprietorship concern M/s Jindal Steel Corporation and the same was duly encashed by the accused.
4. The complainant claims to have further advanced two amounts of Rs. 40,000/- and Rs. 4,25,000/- to the accused on 27.03.2012 and 29.03.2012 respectively. The said amounts were also paid to the accused in the mode as mentioned above i.e through bearer cheques (No. 040611 dated 27.03.2012 & No. 040612 dated 29.03.2012), payment on which is stated to have been made to the accused over the counter. The complainant, therefore, claims to have advanced a total sum of Rs. 4,95,000/- to the accused, with a stipulation of return within a period of 6 months.
5. The accused, however, failed to return the amount within the said period Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 2 of 20 and kept seeking more time from the complainant. Finally, in February, 2013 after much persuasion from the complainant, the accused claims to have issued two cheques in favour of the complainant (Cheque No. 306954, dated :
22.2.2013 for a sum of Rs. 70,000/- and Cheque No. 306955 dated 22.2.2013 for a sum of Rs. 4,25,000/-).
6. These cheques, much to the dismay of the complainant, got dishonored on presentation with the remarks "account is inoperative/dormant" vide memo dated 23.02.2013 and consequently form the subject matter of the present proceedings. This constrained the complainant to send a legal demand notice to the accused, which also fell on deaf ears, leaving him with no option but to file the present case.
The Defence.
7. The accused entered appearance and pleaded not guilty. He admitted that the cheques in question pertain to his bank account and have been signed by him. He, however, denies having filled-in the particulars on the cheque and contends that the cheques were not given to the complainant but to one Mr. Deepak as security for a loan taken from him. The accused claims, that he never took any loan from the present complainant. He admitted that, his account got closed due to non availability of funds. As regards, the service of legal notice, the accused denied the service of legal notice as well as disputed the correctness of his address as appearing on the legal notice.
This, in sum and substance, is the factual exposé.
The Law
8. The factual position being thus, Now let us quickly run through the legal benchmark which is to be satisfied in order to constitute an offence under S. 138 N.I. Act :-
Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 3 of 20(i) 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;
(ii) The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
(iii)That cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier;
(iv)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;
(v) 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 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(vi) The drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
Being cumulative, it goes without saying that it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act.
The legal benchmark being thus. Let us apply it to the facts of the case.
Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 4 of 20Appreciation of Evidence and Application of law to the facts of the case.
9. Let us examine, the clichéd defence of non service of legal notice. The accused has denied the service of legal notice and also disputed the correctness of his address appearing on the legal notice. In his plea of defence recorded on 12.08.2013, the accused has stated "I had not received the legal demand notice from the complainant but the address appearing on it is incorrect in respect of house number as 660. However, the correct house number is 661".
In my opinion, the plea as to non service of legal notice is downright false and frivolous, for the simple reason that, the address on the legal notice/postal articles is exactly the address on which the accused has been successfully served in this case on more occasions than one. Infact, the address mentioned by the accused on his bail bonds and earlier Vakalatnama is the very address on which the legal notice has been dispatched. This is tantamount to admission of his address as appearing on the legal notice to be the correct address. The address once having been admitted to be his correct address, and the legal notice having been dispatched by Registered Post, a presumption of due service arises (See : Section 27 of the General Clauses Act and Section 114 of the Indian Evidence Act) and now it was incumbent on the accused to lead evidence to prove that the notice was not served on him. Not even an iota of evidence has been brought on record by the accused to displace the presumption of due service. A mere denial that the legal notice has not been served, would not ipso facto rebut the presumption of due service. The accused ought to have rebutted the presumption by establishing that he was not residing at the said address at the given point of time or that the notice was not served on him for any other reason, by examining the postal authorities or any other mode. In these circumstances there is no reason to doubt the service of legal notice. The legal notice has been returned with the remarks 'refusal' which is, needles to state, tantamount to valid service.
Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 5 of 20In any event, in view of the authoritative pronouncement of the Hon'ble Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed and Another (2007) 6 SCC 555, the rigor of the requirement of service of legal notice has been reduced to an almost vanishing point in Section 138 NI Act jurisprudence. The Hon'ble Supreme Court while distilling the true intent behind the requirement of service of legal demand notice as a precursor to launching of prosecution, has quite categorically held that the service of summons of the court is opportunity enough for the accused to pay the cheque amount and evade prosecution, any accused who fails to pay the amount within 15 days of the service of summons, clearly cannot shield himself behind the technical defence of non service of legal notice. The relevant extract from the decision deserves to be quoted in extenso :-
"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."Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 6 of 20
10. The 'non service of legal notice' challenge having been met, let us now, turn to the core issue in this case and examine 'whether the cheque in question can be said to have been issued in discharge of a legal liability or not ?'
11. In that, let us again briefly recapitulate that the accused has admitted having drawn the cheque on a bank account maintained in his name and also having signed the same. Now once these foundational facts are admitted and a factual basis is established, by virtue of Section 118(a) and Section 139 of the NI Act a presumption of the cheque having been issued in discharge of a legally sustainable liability and drawn for good consideration, arises.
Section 118 of the N.I Act provides :-
"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 accepted, indorsed, negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration;"
Section 139 of the N.I Act further provides as follows:
"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"
Hence it is clear that, as per the scheme of the N.I Act, on proof of foundational facts - a presumption arises as to the cheque having been issued in discharge of a legal liability, and the burden of proof lies upon the accused Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 7 of 20 to rebut the said presumption. This clearly is an instance of the rule of 'reverse onus' in action, where it is incumbent on the accused to lead what can be called 'negative evidence'. Evidence of a character, not to prove a fact affirmatively, but to lead evidence to show non existence of liability. Keeping in view, that this is a departure from the cardinal rule of 'presumption of innocence' in favour of the accused, and also keeping in mind that negative evidence is not easy to be led by its very nature. It is now fairly settled that the accused can displace this presumption on a scale of preponderance of probabilities and the lack of consideration or a legally enforceable debt need not be proved to the hilt or beyond all reasonable doubts. The accused can either prove that the liability did not exist or make the non existence of liability so probable that a reasonable person ought under the circumstances of the case - act on the supposition that it does not exist. Simply put, the accused has to make out a fairly plausible hypothesis. This the accused can do either by leading own evidence in his defence or even by punching holes within the case of the complainant in the testing ordeal of cross examination.
While adjudging whether in a case the presumption of consideration has been rebutted, it becomes important to underscore that a mere denial of liability or vague defence of blank cheque as security, cannot be taken at the mere ipse dixit of the accused. The accused has to come forth with a convincing defence that appeals to the judicial conscience. Needless to state that if on a bare denial the presumption is stated to be rebutted, that would defeat the legislative intention of having a presumption in the first place. The reverse onus clause has been introduced to further the legislative objective of improving the credibility of negotiable instruments. The presumption that a person would not normally hand over a signed cheque to another unless the same is for a liability has to be respected and given its full play. Only in a case where the accused comes up with a convincing defence to liability, that the presumption can be stated to have been rebutted, lest the statutory intent as adumbrated Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 8 of 20 above would be the direct casualty. In that light let us proceed to examine the defence of the accused and answer whether the same is a plausible one. In this we would at all occasions juxtapose the conduct of the accused with that of the hypothetical reasonable man and see how he fares.
12. In my opinion, the accused has not succeeded in rebutting the presumption of legal liability. Despite various opportunities the accused has not cross examined the complainant, nor led any evidence of his own. In these circumstances, the version of the complainant has gone unrebutted and there is no reason to disbelieve the same. The defence of the accused of having given the cheque to said Mr.Deepak has gone totally unsubstantiated. Leave alone examining the said witness or proving any complaint etc against him, the accused has not even cross examined the complainant or enter the witness box. It is notable that, in addition to the presumption of legal liability/debt as discussed above in the complainant's favour, the complainant has also relied upon Ex. CW1/A, to corroborate his case. Ex. CW1/A is the photocopy of a certificate issued by the complainant's bankers (Union Bank of India) certifying that three cheques (for an amount of Rs. 30,000/-, 40,000/- & 4,25,000/- respectively) were encashed from their account in favour of Mukund Mohan Jha. This further strengthens & corroborates the presumption of legal debt/liability, already existing in favour of the complainant
13. Learned Counsel for the accused has argued, with great vehemence that the cheque in question was given, signed in blank and subsequent filling on of the cheque by the complainant invalidates the instrument as it constitutes material alteration. He argues that, a bare perusal of the cheque reveals that there is a difference in handwriting.
This argument fails to convince for more reasons than one, first of all there is nothing on record to even probablise, much less establish, that the complainant Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 9 of 20 has filled in the cheque. Merely because handwriting on the cheque is, as per the accused, different, does not prove anything. A situation cannot be ruled out wherein the accused might have got the cheque filled in by somebody else. Even if it is assumed for an instant, for the sake of argument, that, the body of the cheque was filled-in by the complainant or at her instructions (though there is nothing on record to prove that). Even in that situation - It is no longer res integra that no law requires that whole body of the cheque should be filled by the drawer himself. If the signatures on the cheque are admitted, the same is sufficient. The legal permissibility of the much hackneyed 'defence of blank cheques' has been virtually denied by the courts on account of several pronouncements to that effect (See Ravi Chopra vs State And Anr. 2008(2) JCC (NI) 169, Vijender Singh v. M/s Eicher Motors Limited & Anr. Crl.M.C. 1454/2011 decided on 05.05.2011, Tarun Gautam vs State Crl M C No. 529/2012 decided on 13.02.2012 and Manoj Sharma vs Anil Aggarwal CRL.M.C. 1325/2012 decided on 20.04.2012). The relevant excerpts from a judgment by the Hon'ble High Court of Delhi in the case of Ravi Chopra vs State And Anr, may be referred to, in this regards :-
"
..
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 Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 10 of 20 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 particulars are subsequently filled up and presented for payment, still attract the same liability.
...
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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 Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 11 of 20 the holder in due course.
19. The above provisions have to be read together with Section 118 NI Act which sets out various presumptions as to negotiable instruments. The presumption is of consideration, as to date, as to time of acceptance, as to transfer, as to endorsement, as to stamp. The only exception to this is provided in proviso to Section 118 which reads as under:
Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him .
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."
It is therefore, apparent that, a combined reading of Section 20 and Section 87 of the Negotiable Instruments Act, as aforesaid, amply reveals that merely Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 12 of 20 filling in the particulars on a blank signed cheque would not amount to material alteration, and a person giving blank cheque can be attributed with the intention of having given implied consent to the payee to fill in that cheque. The accused could not adduce any evidence or elicit anything in the cross examination of the complainant to detract from such implied authority given to the complainant or the fact that cheque has been filled by the complainant in the first place. Therefore, this defence does not advance the case of the accused in any manner.
14. Ld.Counsel for the Accused has strenuously argued that the complainant is a Money Lender, and is, therefore, debarred from recovering his loan, in absence of a money lending license.
This argument leaves me cold, and fails to persuade for more reasons than one.
Firstly, There is nothing on record to suggest that the complainant has been giving loans to other people on interest earlier. In any event, in order for the complainant to be a money lender, it needs to be proved that he is engaged in the business of grant of loans to several people in a commercial manner. No evidence has been brought on record to demonstrate that he is a money lender. The allegation therefore has remained unsubstantiated.
Secondly, even assuming the complainant to be a money lender for an instant, the same would not render the present complaint non-maintainable. In this regard, a recent decision of the Hon'ble Delhi High Court is apposite to be referred to.
In Kajal v. Marwah (Crl. A. 870/2003 - Date of Decision : 27.03.2014), the court, under similar facts, held :-
Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 13 of 20"In my view, even if the appellant/complainant was engaged in lending money, that would not debar her from filing a complaint under Section 138 of the Negotiable Instruments Act, if a cheque issued to her towards repayment of the loan advanced by her is dishonoured by the bank for want of funds and the drawer of the cheques fails to make payment within the prescribed time, after receipt of legal notice from the lender. Section 3 of the Punjab Registration of Money Lenders' Act, 1938, which applies to Delhi, to the extent it is relevant provides that notwithstanding anything contained in any other enactment for the time being in force, a suit by a money lender for the recovery of a loan shall, after the commencement of the Act, be dismissed unless the money lender at the time of institution of the suit is registered and holds a valid license or holds a certificate from the Commissioner granted under Section 11 of the Act, specifying the loan in respect of which the suit is instituted or if he is not already a registered or licensed money lender, he satisfies the court that he has applied for such registration or license but the application is pending. The aforesaid provision does not debar a money lender from instituting a complaint under Section 138 of the Negotiable Instruments Act, 1881, which is a remedy enforceable before a criminal court, and totally independent of a civil suit. The criminal liability is incurred only in case a cheque is issued in discharge of a debt or other liability, the said cheque is dishonoured for want of funds and the borrower fails to make payment of the amount of the cheque even after receipt of a notice from the lender."
It is, therefore, apparent therefore that the embargo is with respect to filing of suit for recovery of money or simply the recovery of that money. This fails to have a bearing on the present case, since what is at hand is a complaint case u/s 138 of the NI Act, which is not a recovery proceeding, but are proceedings to punish a person who after issuing a cheque fails to honour the same and also commits a default in paying the said amount on receipt of the notice.
Hence the argument of amount being irrecoverable and therefore not a legally Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 14 of 20 enforceable debt, is misconceived in the facts of the case and in view of the legal position as enunciated above.
15. Ld.Counsel for the Accused has also argued that the alleged loan has not been disclosed in the Income Tax Returns by the complainant and therefore, cannot be termed to be legally enforceable liability in view of the bar of Section 269SS of the Income Tax Act.
I hasten to add, that even if it is assumed for the sake of argument that the loan was not disclosed in the IT returns (although there is nothing to record to bring home that point) the same would be inconsequential. It is now fairly settled that the mandate of Section 269SS of the Income Tax Act, extends only to the taker or receiver of the loan and not the giver. Section 269SS of the Income Tax Act, reads as under :-
Section 269SS: Section 269SS provides that any loan or deposit shall not be taken or accepted from any other person otherwise than by an account payee cheque or account payee bank draft if,
(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or (b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid and the amount or the aggregate amount remaining unpaid ; or
(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more.."
Thus, it is clear that no person can accept any loan or deposit of Rs 20000 or more otherwise than by way of an account payee cheque or an account payee draft.
Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 15 of 20Consequences of contravention of Section 269SS have been provided in Section 271D of Income Tax Act 1961, which provides, that if a loan or deposit is accepted in contravention of the provisions of section 269SS then a penalty equivalent to the amount of such loan or deposit may be levied by the Joint commissioner.
Hence even on a bare reading of these provisions it is manifest that the bar pertains to the receiving or taking of loan and not giving the same.
This aspect is very succinctly highlighted by the Hon'ble High Court of Bombay in the relatively recent decision of Krishna P.Morajkar v. Joe Ferraro, 2013 SCC Online Bom 862, which reads as follows :-
"..
18. The learned Counsel for the respondent submitted that the observations of the Supreme Court in para 14 of the judgment in Rangappa (supra) show that the Supreme Court had not in any way cast any doubt on the correctness of the decision in Krishna Janardhan Bhat (supra), as it was based on specific facts and cir- cumstances therein. Therefore, he submitted that obser- vations in Krishna Janardhan Bhat (supra) about non- compliance of provisions of Section 269SS and the im- plications of Section 271D of the Income Tax Act would still stand as good law. The learned Counsel for the ap- pellant submitted that even these observations would stand impliedly overruled. He pointed out that what was held in Krishna Janardhan Bhat (supra) was that advance taken by way of loan of more than Rs. 20,000/- was only to be made by way of an account payee cheque. He submitted that in Rangappa (supra) the Supreme Court was specifically considering the case of an advance of Rs. 45,000/- made in cash and yet the Supreme Court had upheld the conviction recorded. Thus even those observations based on the provisions of Section 269SS and 271D of the Income Tax Act made in Krishna Janardhan Bhat (supra) would stand impliedly overruled. I am entirely in agreement with the learned Counsel for the appellant because the Supreme court in Rangappa (supra) had specifically noted the judgment in Krishna Janardhan Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 16 of 20 Bhat (supra). The Supreme Court had obviously not- ed the observations in para 26 in Krishna Janardhan Bhat (supra) that advance of more than Rs. 20,000/- was to be made only by way of an account payee cheque, and yet the Supreme Court accepted case of a complainant who claimed to have made an advance of Rs. 45,000/- in cash and proceeded to uphold the conviction, even though the case rested on the fact that cash advance of a sum more than Rs. 20,000/- was made. Thus, on this aspect also Krishna Janard han Bhat (supra) stood impliedly overruled by Ran gapaa (supra), and the judgment is to be held ren- dered on the facts of that case, not laying down any law. Therefore, judgments which follow Krishna Ja nardhan Bhat (supra) can be safely ignored.
19. There is another aspect of the matter. The learned Counsel for the respondent pointed out that inKrish na Janardhan Bhat (supra) attention of the Supreme Court was possibly not drawn to the actual wording of Section 269SS of the Income Tax Act. He submitted that Section 269SS of the Income Tax Act, in fact, does not cast any burden upon a person making ad- vance in cash to record it in his returns and does not prevent any such cash advance from being made. It may be useful to quote provisions of Section 269SS and 271D of the Income Tax Act as under:
Section 269SS: No person shall, after the 30th day of June, 1984, take or accept from any other person (here- after in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,-
(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit; or
(b) on the date of taking or accepting such loan or de-
posit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or
(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand ru- pees or more:
Provided that the provisions of this section shall not ap- ply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by-Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 17 of 20
(a) Government;
(b) any banking company, post office savings bank or co-operative bank;
(c) any corporation established by a Central, State or Provincial Act;
(d) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);
(e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette:
[Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them had any income chargeable to tax under this Act.] Section 271D - (1) If a person takes or accepts any loan or deposit in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted.
(2) any penalty imposable under sub-section (1) shall be imposed by the joint Commissioner.
(emphasis supplied).
A plain reading of Section 269SS shows that no per- son can accept any loan or deposit of a sum of Rs.
20,000/- or more otherwise than by an account payee cheque or account payee bank draft. It does not say that a person cannot advance more than Rs. 20,000/- in cash to another person. It is clear that the restric- tion on cash advances was in fact on the taker and not the person who makes the advance. The penalty for taking such advance or deposit in contravention of provisions of Section 269SS was to be suffered by one who takes the advance. Therefore, it was obvious- ly impermissible to invoke these provisions for pre- venting a person from recovering the advance which he has made..."
It is clear from the above that, non disclosure of an advance would not make the same non recoverable as it is incumbent on the person taking the Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 18 of 20 advance to disclose the loan and not the person giving the same.
What further fortifies this conclusion is the decision of the Hon'ble High Court of Delhi in Mukesh Gupta v. P.K.Bajaj (CS(OS) No. 1615/2003, DOD : 20.11.2006,wherein the court, in a civil suit for recovery, quite categorically held, that even assuming a non disclosure in tax returns, merely that, would not render the contract of loan void and loan irrecoverable. Relevant excerpts from the decision are as follows :-
"36. On issue No.2 framed vide order dated 2.2.2006, suffice would it be to note that as held in the report published as 2002 (8) SCC 31, Nutan Kumar &Ors. vs. IInd Additional District Judge &Ors., unless a statute specifically provides that a contract contrary to the provision of the statue would be void, the contract would remain binding between the parties and can be enforced between the parties themselves. Consequences, if any other in law, would follow.
37. Learned counsel for the defendants could not show any statutory provision under the Income Tax Act 1961 or any other law which stipulates that a loan transaction not recorded in the Income Tax Return or a loan transaction which is in violation of Section 69-A, 69-B or Section 269SS of the Income Tax Act would be void.
38. I accordingly hold that the suit is not barred under Sections 69-A, 69-B or Sections 269SS of the Income Tax Act..."
It is therefore clear that the claim does not become irrecoverable on account of alleged violation of Section 269SS of the IT Act and this is not a ground that would save the day for the accused and earn him an exoneration.
16. All factors cumulatively seen, go on to show that the accused has Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 19 of 20 miserably failed to probablise lack of legal liability with respect to the cheque in question. The presumption of legal liability therefore has gone unrebutted. The complainant has successfully proved the basic ingredients of offence u/s 138 of the N.I.Act. Resultantly, the accused Mukund Mohan Jha stands convicted of offence u/s 138 of the N.I.Act.
Let a copy of this judgment be provided forthwith to the convict, free of cost.
Let the convicts be heard now on the quantum of sentence separately.
A copy of this judgment be placed on the official website of the District Court.
Announced in the open court today on 26.08.2015.
(Bharat Chugh) MM (NI Act)-01, Central District, Delhi 26.08.2015 * Judgment contains 20 signed pages.
Mahesh Kumar Aggarwal v. Mukund Mohan Jha Page 20 of 20