Delhi District Court
CT CASES/625522/2016 on 19 August, 2023
Intec Capital Ltd. v. Deepak Goyal
CC No.625522/2016
IN THE COURT OF SH. NISHAT BANGARH: MM, NI ACT-02, SOUTH-
EAST DISTRICT, SAKET COURTS COMPLEX: NEW DELHI
Intec Capital Ltd. v. Deepak Goyal
CC No.625522/2016
U/s 138 Negotiable Instruments Act, 1881
1. CIS number : DLSE02-006719-2015
2. Name of the Complainant : Intec Capital Ltd.
3. Name of the Accused, : Sh. Deepak Goyal, R/o H. No. G-13 A,
parentage & residential Naveen, Shahdara, New Delhi - 110032.
address
4. Offence complained of or : U/s 138 of Negotiable Instruments Act, i
proved 1881
5. Plea of the Accused : Pleaded not guilty and claimed trial
6. Final Judgment/order : ACQUITTED
7. Date of judgment/order : 19.08.2023
JUDGMENT
1. The Complainant has filed the present complaint under Section 138/142 of Negotiable Instruments Act, 1881 ("NI Act") against the accused on the averments that the accused had availed corporate finance/loan under loan account no. LNNHP00113-140003072 and loan agreement no. 1626 from the complainant company for a sum of Rs. 35,00,000/- and the same was to be repaid within 60 Page No. 1 of 15 Intec Capital Ltd. v. Deepak Goyal CC No.625522/2016 months and also executed the loan agreement.
2. As per the complainant, the accused in discharge of his liability, issued a cheque bearing No. 128237, dt. 03.08.2015, amounting to Rs. 32,62,790/-, drawn on YES Bank, Shakarpur, Delhi - 110092 in favour of the complainant ('Cheque in question').
3. Upon presentment, the cheque in question was returned unpaid on the ground of funds insufficient dated 07.08.2015.
4. The Complainant sent the legal demand notice dated 05.09.2015 through speed post on 07.09.2015 at the address of the Accused. Hence, despite the service of the legal demand notice, the accused failed to make the payment within the stipulated period and the Complainant filed the present complaint.
5. After taking pre-summoning evidence, Accused was ordered to be summoned in this case for commission of offence under Section 138 of NI Act vide order dated 14.10.2015.
6. Accused appeared and was released on bail on 16.09.2016. On finding a prima facie case, notice U/s 251 of the Criminal Procedure Code, 1973 ("CrPC") was served upon the Accused on 05.07.2017 to which he pleaded not guilty and opted to contest after disclosing the following defence:
" I do not plead guilty and claim trial. I was the guarantor of Shree Radha Krishna Sales Corporation and also the signatory of impugned cheque. The impugned cheque was given blank after only signing the same to the complainant but only for the purpose of guarantee. It was not given towards discharge of legal debt. I did not receive the legal notice."
7. Vide order dated 05.05.2018, opportunity was granted to the Accused to cross examine the Complainant. The AR of the Complainant/CW1 tendered his post-
Page No. 2 of 15Intec Capital Ltd. v. Deepak Goyal CC No.625522/2016 summoning evidence affidavit, Ex. CW1/X and also proved following documents:
Ex. Copy of the letter of authority dt.
CW1/A(OSR): 17.09.2024.
Ex. CW1/B: Complaint u/s 138 NI Act.
Ex. CW1/C: Original cheque bearing No. 128237
amounting to Rs. 32,62,790/- dt.
03.08.2015.
Ex. CW1/D: Original return memo dt. 07.08.2015.
Ex. CW1/E: Copy of legal demand notice dt.
05.09.2015.
Ex. CW1/F: Postal receipt in respect of legal demand
notice.
Ex. CW1/G: Internet generated tracking report in
respect of legal demand notice.
8. Complainant Evidence was closed by way of separate statement of AR of complainant on 04.09.2019.
9. Thereafter, Accused was examined under Section 313 of CrPC on 05.12.2019 for explaining the circumstances appearing against him in the Complainant's evidence. He denied the Complainant's case and pleaded false implication in the present case and opted to lead evidence in his defence.
10.Thereafter, an opportunity to examine Accounts officer was granted u/s 311 CrPC to the complainant vide order dated 02.11.2021. Sh. Sandeep Kumar, substituted AR of the complainant/CW2 tendered his post-summoning evidence affidavit, Ex. CW2/Y and also proved following documents:
CW2/1 (OSR) Letter of authority dated 21.06.2022
CW2/2 (OSR) Board Resolution
CW2/3 Statement of Account
CW2/4 The Certificate U/s 65 B of the Indian
Evidence Act.
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CC No.625522/2016
11.Complainant Evidence was closed by way of separate statement of the Ld. Counsel for the Complainant on 16.11.2022.
12.Thereafter, an additional statement of accused as per Section 313 of CrPC was recorded on 22.02.2023 for explaining the circumstances appearing against him in the Complainant's evidence. He denied the Complainant's case and pleaded false implication in the present case and opted to lead evidence in his defence.
13. Further, Ld. Counsel for the Accused has submitted that accused wish to close DE and DE was closed by way of separate statement of the Ld. Counsel for the Accused on 29.03.2023.
14.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
15.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.
16.Per contra, Ld. Counsel for the Accused has submitted that the Accused deserves to be acquitted as the Accused was the guarantor of the borrower i.e. M/S Shree Radha Krishna Sales Corporation, the cheque in question was given as security cheque, and same was a blank signed cheque. Also, the borrower had already repaid 11-12 installments to the complainant, and the amount of Rs. 10,50,000/- was already lying with the complainant, due to which there is no legally enforceable liability of accused amounting to Rs. 32,62,70/- as mentioned in the cheque in question. Hence, as per the Ld. Counsel for the Accused, the Accused has rebutted the presumption by way of preponderance of probabilities.
Page No. 4 of 15Intec Capital Ltd. v. Deepak Goyal CC No.625522/2016 Legal Framework Ingredients of Section 138 NI Act:
17.The Hon'ble Supreme Court of India 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;
(i) that cheque has been presented to the bank within a period of six months 1 from the date on which it is drawn or within the period of its validity whichever is earlier;
(ii) 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;
(iii) 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 152 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(iv) 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;
If the aforementioned ingredients are satisfied then the person who has 1 Reduced to three months vide RBI circular dated 4.11.2011. 2 The same is now enhanced to 30 days.
Page No. 5 of 15Intec Capital Ltd. v. Deepak Goyal CC No.625522/2016 drawn the cheque shall be deemed to have committed an offence."
18.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:
19.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"
20.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.
21.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 accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;"
22.The Hon'ble Supreme Court of India has in a number of judgments dealt with the combined effect of the presumptions raised under Section 139 and Section 118(a) NI Act.
23.The following proposition can be summarized on a perusal of the judgments of the Hon'ble Supreme Court of India in Sunil Todi & Ors v. State of Gujarat, LL 2021 SC 706, Kalamani Tex v. P. Balasubramanian, 2021 SCC OnLine SC 75; APS Page No. 6 of 15 Intec Capital Ltd. v. Deepak Goyal CC No.625522/2016 Forex Services Pvt. Ltd. v. Shakti International Fashion Linkers and Ors., AIR 2020 SC 945; Rohitbhai Jivanlal Patel v. State of Gujarat and Ors., AIR 2019 SC 1876; 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:
(a) 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;
(b) 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;
(c) 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 probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist;
(d) 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;Page No. 7 of 15
Intec Capital Ltd. v. Deepak Goyal CC No.625522/2016
(e) 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;
(f) 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
24.In the case at hand, it is not in dispute that the cheque in question was drawn by the Accused from his own bank account. Further, it is also not in dispute that the Accused is the signatory of the cheque in question as he has admitted the same in notice u/s 251 CrPC. Presentation of the cheque in question by the Complainant and its dishonor on grounds of funds insufficient, is also not in dispute, having been admitted by the accused in statement U/s. 313 CrPC. The receipt of the legal demand notice has also been denied by the accused in notice u/s 251 CrPC and admitted by the Accused in statement U/s. 313 CrPC. In any event, it is seen that the address mentioned in the legal demand notice is the same address as mentioned by the accused in his bail bonds. Accordingly, a presumption of due service is drawn U/s. 27 of the General Clauses Act.
25.Thus, the legal demand notice Ex. CW1/E is held to have been duly served upon the Accused. Finally, the complaint has been filed within the limitation period. Therefore, essential ingredients (i) to (v) as stipulated by the Hon'ble Supreme Court 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 Page No. 8 of 15 Intec Capital Ltd. v. Deepak Goyal CC No.625522/2016 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 the NI Act 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. 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.
27.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 material produced by the Complainant for dislodging the presumption which meets the standard of preponderance of probabilities.
28.The Accused in the present case, has taken the following line of defence with a view to rebut the presumption:
a) The cheque in question was given as security cheque.
29.Accused has taken defence in notice u/s 251 CrPC that the impugned cheque was given blank after only signing the same to the complainant but only for the purpose of guarantee. It was not given towards discharge of legal debt
30.However, under the Indian contract Act, the liability of the guarantor is co- extensive with that of the principal debtor unless it is otherwise provided by the contract. In the present case, accused has not made any effort at any stage of the trial to prove that the liability of the accused was not co-extensive with the principal debtor i.e., M/s Shree Radha Krishna Sales Corporation.
Page No. 9 of 15Intec Capital Ltd. v. Deepak Goyal CC No.625522/2016
31.Further, it is a settled law that the blank signed cheque given as security also attracts the liability u/s 138 NI Act.
32.Reliance can be placed on the judgement of Hon'ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197; where in was held that:
"It is immaterial that the cheque may have been filled in by any person other 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."
33. Also, reliance can be placed on judgment of Hon'ble Supreme Court in Sripati Singh v. State of Jharkhand, 2021 SCC OnLine Sc 1002; wherein it was held that;
"A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfillment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the Page No. 10 of 15 Intec Capital Ltd. v. Deepak Goyal CC No.625522/2016 amount in a specified time frame and issues a cheque as security to secure such repayment; if the amount in a specified time frame and issues a cheque as security to secure such repayment: if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonored, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow."
34.Further, accused has stated that in cross examination of CW-1, he has admitted that the cheque in question is filled with two inks.
35.At this stage reliance can be placed on the observations of Hon'ble High Court of Delhi in Ravi Chopra v. State, CRL.M.C. 5211/2006, wherein it was held that:
"20.... even under the scheme of the NI Act it is possible for the drawer of a cheque to give a blank 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 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 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.
36. Hence, in view of such clear stipulation by the Hon'ble Supreme Court and Hon'ble Delhi High Court, it is immaterial that the cheque in question was given Page No. 11 of 15 Intec Capital Ltd. v. Deepak Goyal CC No.625522/2016 by the accused as blank signed security cheque it will still attract the liability u/s 138 N.I. Act. Hence, the defence taken by accused do not rebut the presumption u/s 139 N.I. Act.
b) Demand of an amount greater than the legally enforceable debt has been made by the Complainant:
37. Second defence raised by the accused was that M/s Shree Radha Krishna Sales Corporation had already repaid 11-12 installments to the complainant, further, the amount of Rs. 10,50,000/- was already lying with the complainant as collateral security, which was to be adjusted by the complainant in case of default, hence the complainant has demanded more than the legally enforceable debt.
38.To prove this defence, accused relied upon admissions of CW-1 in his cross-
examination, which are;
i. The borrower M/s Shree Radha Krishna Sales Corporation has repaid Rs. 9,44,000/- approximately from the loan amount. The said amount was repaid before filing of the present case.
ii. The entire amount of Rs. 35,00,000/- was not disbursed as Rs. 10,50,000/- was retained as collateral security.
39.Further, CW-2, Deputy Manager, Operation, has also admitted in cross examination that the borrower has cleared 11 installments.
40.As per the admissions of the complainant witnesses, it is evident that the borrower has repaid certain installments to the complainant and the amount of Rs. 10,50,000/- was lying with the complainant as collateral security, which was never disbursed to the borrower.
41.Further, Perusal of statement of account, Ex. CW2/3, reveals that the total loan amount transferred to the borrower was of Rs. 22,62,503/-. Further, Rs. 10,50,000/- were kept as collateral security out of the total loan amount of Rs.
Page No. 12 of 15Intec Capital Ltd. v. Deepak Goyal CC No.625522/2016 35,00,000/-, and this amount has never been transferred to the borrower.
42.Further, when CW-1 was asked during his cross examination that in execution petition filed against borrower on 2307.206 before the court of District Judge, Shahadra, the amount due was shown as Rs. 23,00,380/-, then how the liability of Rs. 32,62,790/- was due on 03.08.2015, he replied, "It is because at the time of filing execution proceedings, collateral amount of Rs. 10,50,000/- was adjusted, however, in the present complaint, the said amount was not adjusted.
43.Perusal of statement of account, Ex. CW2/3, reveals that before deducting the collateral security amount the remaining liability before presenting the cheque in question for encashment on 31/07/2015 is shown as Rs. 33,85,211.58. Further, the amount of Rs. 10,50,000/- was deducted from the total remaining liability on 01.11.2015, and after the said deduction the remaining liability was reduced to Rs. 28,70,680.58.
44.Hence, it is evident that the present cheque in question was presented before the reducing the amount of Rs. 10,50,000/- which was already lying with the complainant and was never transferred to the borrower.
45.If the amount of Rs. 10,50,000/- is reduced from the remaining liability shown in statement of account, Ex. CW2/3, on 31.07.2015, then the remaining liability of borrower before the date of presentment of impugned cheque comes out to be Rs. 25,23,893 (Rs. 35,73,893.58 - Rs. 10,50,000/- = Rs. 25,23,893), which less than the amount for which the impugned cheque was presented for encashment.
46.Ld. Counsel for the complainant has argued that as per the clauses of copy of loan agreement, Mark Y, the complainant company is having of set off against the collateral amount for the recovery of the obligations and to enforce the same amount in any manner. However, the complainant has failed to prove the said document (copy of loan agreement, Mark Y) as per the provisions of law. Hence, it cannot be read in evidence. Further, both the witnesses examined by the Page No. 13 of 15 Intec Capital Ltd. v. Deepak Goyal CC No.625522/2016 complainant have failed to clarify that how the liability of accused was amounting to Rs. 32,62,790/- on the date when the impugned cheque was presented in the bank.
47.Here, in this case reference can be made to Section 56 in The Negotiable Instruments Act,1881, read as under:
"Indorsement for part of sum due. No writing on a negotiable instrument is valid for the purpose of negotiation if such writing purports to transfer only a part of the amount appearing to be due on the instrument; but where such amount has been partly paid a note to that effect may be indorsed on the instrument, which may then be negotiated for the balance."
48.The Hon'ble Supreme Court in the "Dashrathbhai Trikambhai Patel v. Mahendrabhai Patel, 2022 SCC OnLine SC 1376, " has held as follows:
"For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation, if the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque - When a part or whole of the sum represented on the cheque is paid by the drawer
49.The present case squarely fall within the scope of observations of Hon'ble Supreme court in Dashrathbahi Trikambhai Patel v. Hitesh Mahendrabhai Patel 2022 SCC OnLine SC 1376.
50. In sum and substance, the accused has been able to successfully punch holes in the case of the complainant and he has been able to raise a reasonable and probable defence. Therefore, the accused has successfully rebutted the presumption u/s 139 N.I. Act.
Page No. 14 of 15Intec Capital Ltd. v. Deepak Goyal CC No.625522/2016 Conclusion
51.In these circumstances and in view of the above detailed discussion, this court is of the considered opinion that the Accused has rebutted the presumption under Section 139 of Negotiable Instruments Act, 1881 and ingredients of Section 138 of Negotiable Instruments Act, 1881 have not been fully proved. Therefore, Accused is held not guilty and is acquitted of the offence punishable under Section 138 of the Negotiable Instrument Act, 1881.
ORDER: ACQUITTED Announced in Open Court (Nishat Bangarh) MM (NI-Act 02), South East Saket Court, New Delhi/19.08.2023 Note: This judgment contains 15 pages and each page has been signed by me.
(Nishat Bangarh) MM (NI-Act 02), South East Saket Court, New Delhi/19.08.2023 Page No. 15 of 15