Delhi District Court
Deepak Gulati vs Mahesh Saimwal on 9 December, 2024
IN THE COURT OF MS. ARADHANA,
JUDICIAL MAGISTRATE FIRST CLASS (N.I. ACT 01),
CENTRAL, TIS HAZARI COURTS: NEW DELHI
Case No: 13245/2017
Sh. Deepak Gulati
R/O 23, Hanuman Road, Cannaught Place,
New Delhi 110001
Through his Attorney
Shri Satish Kumar Dikshit
...... Complainant
::Versus::
Sh. Mahesh Saimwal
Proprietor of M/S Anup Credit Company
R/O 8C/6, Second Floor, W.E.A. Abdul
Aziz Road, Karol Bagh,
New Delhi110005
........Accused
Offence Complained of: 138 of the NI Act
Plea of the Accused: Not guilty
Date of Institution: 30.10.2017
Arguments Heard On: 22.11.2024
Date of Judgment: 09.12.2024
Decision: Convicted Digitally
signed by
ARADHANA
ARADHANA Date:
2024.12.09
16:48:04
Deepak Gulati Vs. Mahesh Saimwal Page 1 of 12 +0530
JUDGMENT
1. Vide this judgment, I shall decide the present complaint filed u/s 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the NI Act') bearing CC No. 13245/2017, against the dishonor of cheque bearing No. 000083 dated 23.05.2017 for a sum of Rs 4,00,000/, drawn on Kotak Mahindra Bank, Arya Samaj Road, Karol Bagh, New Delhi branch (hereinafter referred to as 'the cheque in question').
BRIEF FACTS OF THE CASE
2. The brief facts of the case put forth by the complainant are that the complainant provided professional services as a Chartered Accountant to the accused. It is then stated that in discharge of his liability, towards the payment of the professional services availed, accused had issued the cheque in question, which was dishonored with the remarks "funds insufficient"
vide cheque returning memo dated 18.08.2017 which is on record. Legal demand notice dated 12.09.2017 was sent to the accused. However, no payment was made within 15 days and hence, the present complaint.
3. The complainant examined himself as CW1 in presummoning evidence, and relied upon his evidence by way of affidavit along with the following documents: S. No. Documents relied upon Exhibited as:
1. Evidence by way of affidavit Ex. CW1/A
2. Power of Attorney Ex. CW1/1
3. Office copy of bill dated Ex. CW1/2 01.03.2017
4. Cheque in question Ex. CW1/3 Digitally signed by ARADHANA ARADHANA Date:
2024.12.09 16:57:47Deepak Gulati Vs. Mahesh Saimwal Page 2 of 12 +0530
5. Return Memo Ex. CW1/4
6. Legal demand notice Ex. CW1/5
7. Postal dispatch receipt Ex. CW1/6
8. Tracking report Ex. CW1/7 PROCEEDINGS OF THE CASE
4. On appearance of accused, notice of accusation u/s 251 of Cr.P.C. was served upon the accused on 21.08.2019, to which the accused pleaded not guilty and claimed trial. Accused stated that he had is sued the cheque in question as security for payment of rent of the shop to the complainant. He also stated that he did not receive the le gal notice demanding payment of cheque amount and he has no lia bility towards the complainant. Furthermore, the accused admitted the signature on the cheque in question. Thereafter, accused was granted opportunity to crossexamine the complainant and matter was fixed for complainant evidence.
5. Complainant stepped in witness box as CW1 and adopted his affi davit of presummoning as his evidence reiterating almost all facts of complaint, stating all exhibits. Thereafter, vide his separate statement dated 01.07.2022 complainant closed his evidence. CE stood closed and matter was fixed for recording of statement of accused.
6. All the incriminating evidence was put before the accused and the statement of accused u/s 313 of Cr.P.C. was recorded in which accused reiterated his defence as at the stage of framing of notice.
7. Thereafter, DW1 accused was examined in chief, crossexamined and discharged. Thereafter, DE was closed vide separate statement of accused dated 07.06.2024 and the matter was fixed for final arguments.
Digitally signed by ARADHANAARADHANA Date:
2024.12.09 16:57:54Deepak Gulati Vs. Mahesh Saimwal Page 3 of 12 +0530
8.Thereafter, final arguments were heard on behalf of both the parties.
Learned Counsel for the complainant has submitted that the accused should be convicted of offence U/s 138 NI Act because the complainant has proved the original cheque, which the accused has not disputed as being drawn on the account of the accused. He has further submitted that the cheque in question was returned unpaid vide cheque returning memo which is on record. He has further submitted that the legal demand notice was sent to accused on his admitted address and is proved by postal receipt and tracking report. He has further submitted that the fact that the payment was not made within 15 days of the receipt of the legal notice is also not disputed.
Per Contra, it is submitted by Ld. Counsel for accused that cheque in question was given as a security for rent by the accused. It is further submitted that the legal demand notice has not been received by the accused. Furthermore, one bill is raised by the complainant for five years of professional service which seems impractical in general practice. Moreover, it has been admitted by the complainant that he continued to provide the services to accused even after filing the present complaint. In addition to that, Ld. Counsel for accused has further stated that no professional fee is due upon the accused. This casts a doubt on the story of the complainant. Therefore, it is submitted that no prima facie case has been established by the complainant and in view of the same, accused is entitled to be acquitted. Reliance is placed on as Crl. Appeal no. 636 of 2019, in case Basalingappa Vs. Mudibasappa, Supreme Court of India and Rakesh Manocha Vs. Sh. Rajinder Kumar,.
9. I have heard the counsels for both parties at length, considered the evidence led by them carefully and have perused the Court records thoroughly.
LAW UNDER CONSIDERATION
10. Before adverting to the facts of the present case, it would be apposite to discuss the legal standards required to be met by both sides. In order to establish the offence under Section 138 of the NI Act, the complainant must Digitally signed by ARADHANA Deepak Gulati Vs. Mahesh Saimwal Page 4 of 12 ARADHANA Date: 2024.12.09 16:58:01 +0530 fulfill all the essential ingredients of the offence, as highlighted below:
1st Ingredient: The cheque was drawn by a person on an account maintained by him/her for payment of money and the same is presented for payment within a period of three months from the date on which it is drawn or within the period of its validity;
2nd Ingredient: The cheque was drawn by the drawer for discharge of any legally enforceable debt or other liability;
3rd Ingredient: The cheque was returned unpaid by the bank due to either insufficiency of funds in the account to honour the cheque or that it exceeds the amount arranged to be paid from that account on an agreement made with that bank;
4th Ingredient: A demand of the said amount has been made by the payee or holder in due course of the cheque by a notice in writing given to the drawer within thirty days of the receipt of information of the dishonour of cheque from the bank;
5th Ingredient: The drawer fails to make payment of the said amount of money within fifteen days from the date of receipt of notice.
APPRECIATION OF EVIDENCE
11. The accused can be held guilty of the offence under Section 138 NI Act only if the abovementioned ingredients are proved by the complainant co extensively. Moreover, conditions stipulated under Section 142 NI Act have to be fulfilled in addition to abovementioned ingredients.
With Respect to First and Third Ingredient:
12. It is pertinent from the pleadings and evidence adduced by the par ties that there is no dispute qua the proof of first and third ingredient. The complainant has proved the original cheque vide ExCW1/3, which the accused had not disputed as being drawn on the account of the accused and is duly signed by the accused. Accused, during framing of notice under Section 251 CrPC has admitted that cheque in question ExCW1/ 3 bears his signature. It was not disputed that Digitally signed Deepak Gulati Vs. Mahesh Saimwal Page 5 of 12 by ARADHANA ARADHANA Date:
2024.12.09 16:58:09 +0530 the cheque in question was presented within period of validity. The cheque in question was returned unpaid vide return memo Ex CW1/4 with the remark "funds insufficient". The said reason is duly covered within the scheme of NI Act. Therefore, requirement of first and third ingredients stand fulfilled in the present matter.
With Respect to Fourth and Fifth and Ingredient:
13. As far as proof of fourth and fifth ingredient is concerned, the com plainant sent a legal demand notice ExCW1/5 to the accused on 12.09.2017. Postal dispatch receipt is EXCW1/6. Accused during the stage of notice under Section 251 Cr.P.C. and his statement un der Section 313 Cr.P.C. submitted that "I have not received the le gal demand notice from the complainant". The Hon'ble Supreme Court in the case of C.C Alavi Haji vs. Palapetty Muhammed. & Anr. held that:
"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 of the Act, make pay ment 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 of the Act, cannot obvi ously 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."
14. Furthermore, it is also clear from the record that accused had failed to make the payment within 15 days of receipt of summons as well. Hence, fourth and fifth ingredient also stand fulfilled.
With respect to second ingredient:
15. Before examining the defences of accused, it is pertinent to note that the accused has admitted his signature on the impugned cheque at the stage of notice u/s 251 Cr.P.C.. Accordingly, this Court raises presumption under Digitally signed by ARADHANA Deepak Gulati Vs. Mahesh Saimwal Page 6 of 12 ARADHANA Date:
2024.12.09 16:58:14 +0530section Section 118(a) and 139 of the NI Act that the impugned cheque was issued by the accused to the complainant in discharge of legally enforceable debt or liability. The standard of proof for rebutting the presumption is that of preponderance of probabilities. Therefore, in the present matter, the onus of proof is now upon the accused to raise a probable defence to rebut the presumption of existence of a legally recoverable debt or liability arisen in favour of the complainant.
16. In order to rebut the presumption under Section 139 NI Act, the first defence taken by accused is that the complainant has raised only one bill for five years of professional service and he has continued to provide the same 2007 Supreme Court cases 555 (decided on May 18, 2007) after the filing of present complaint. In addition to this, it is also so stated that there is no receiving of the accused on the bill ExCW1/2. Hence, the complainant has failed to prove that accused has any legal liability towards the complainant.
16. However, it is pertinent to mention that apart from the plea that only one bill was raised, accused has not challenged the validity of the said bill in any manner. At the stage of framing of notice under Section 251 CrPC, the accused has not raised any defence qua the said bill and his only defence was that the cheque in question was given as security for payment of rent. In his statement under Section 313 CrPC, the accused has stated that he has already paid all the fees for the services provided by the complainant. Here also, it is not denied that accused had not taken any services from the complainant. Hence, in view of accused's own statement, it is an admitted fact that accused has taken services from the complainant.
17. It is also pertinent to mention that during his examinationinchief, accused has stated that "From 2012 lately, I took the services for filing ITR yearly". It is also stated by accused in his examinationinchief that "After he filed ITR annually without any delay, when he raised invoices which contains dual signatures that is of complainant and mine to avoid any discrepancies in the invoices....". It is further stated that "I received ITR filing invoices from the financial period 201213 to 201415".
18. From the abovementioned extracts of examinationinchief of the Digitally signed by ARADHANA Deepak Gulati Vs. Mahesh Saimwal Page 7 of 12 ARADHANA Date:
2024.12.09 16:58:18 +0530 accused, it is clear that there is no dispute qua receiving of invoices with respect to the services provided by the complainant to accused till 2015. Moreover, no question as to the genuineness of the said bill, other than the receiving by the accused, was put to the complainant during the cross examination.
19. When it comes to the cross examination of the accused, certain contradictions as to the duration of the professional services provided by the complainant do come up. It was stated that "The firm of the complainant had filed my ITRs till 2018 as the firm was having my ID and password for the purpose of filing ITR. The firm of the complainant was also my auditor till 2016 and after 2016 I had my own accountant." Hence, when the accused himself has stated that the complainant firm has filed his ITR till 2018, it cannot be assumed otherwise that these services were not rendered on professional terms.
20. Now, coming to the generation of one bill for a period of 5 years. It has been the plea of accused that the complainant has regularly raised the invoices for the services rendered by him and the same were paid by the accused without any delay. The same is reflected in the examination in chief of the accused as, "I paid the service expense charges to the complainant through cash and sometimes online.... After he filed ITR annually without any delay, when he raised invoices which contains dual signatures i.e. of complainant and mine to avoid any discrepancies in the invoices." It is further stated that, "There was never any delay in paying the rental amount to the complainant and the complainant never complaint about the receiving the rent amount and his little services amount/expenses he charged for filing the ITR annually."
21. But none of this invoice has been produced by accused, neither he has furnished any payment receipt for the same. Therefore, nonproduction of Digitally signed by ARADHANA Deepak Gulati Vs. Mahesh Saimwal Page 8 of 12 ARADHANA Date:
2024.12.09 16:58:23 +0530these invoices and payment details creates suspicion on the above said plea of the accused. It also casts a doubt on the point that the professional services were provided till the year 201415 only, as alleged by the accused.
22. On the other side, the explanation from complainant's end as to the generation of a single bill is stated to be the existence of friendly relations between them, post TDS receipts and the fact that the complainant was receiving regular rent from the accused, which granted him assurance as to the payment for his professional services as well. The relevant extract of cross examination of the complainant is reproduced below:
"In our profession, the relations are more important and it happens sometimes that the client is unable to pay still we carry on to give services as there is no additional cost to us in rendering services. Further, later or sooner every client pays. My HUF was getting rent which was also a revenue for my family..... His receipts for post TDS and hence no further income tax was required to be paid. Usually, refund was given to him by Income Tax Department."
23. It can thus be culled out from the above discussion that the accused failed to raise a doubt on the invoice Ex. CW1/2 raised by the complainant against the professional services rendered by him.
24. The second defence of the accused side is that the impugned cheque was given as security for rent to the complainant. At the foremost, it is to be stated here that law regarding security cheque is no more resintegra. In case of Sripati Singh (since deceased) through his son Gaurav Singh Vs. State of Jharkhand and Another1, Hon'ble Supreme Court has 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 1 (2023) 1 SCC 578 Digitally signed by ARADHANA ARADHANA Date:
Deepak Gulati Vs. Mahesh Saimwal Page 9 of 12 2024.12.09 16:58:28 +0530 to make certain the fulfilment 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 amount in a specified timeframe 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 dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow."
It was further noted in the abovementioned case that "When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as 'security' cannot be presented prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in a proceeding initiated under Section 138 of the N.I. Act.
25. It can be culled out from the above discussion that it is only when accused pays the amount within the time frame fixed by the parties, cheque given as a security cannot be presented. However, once, accused doesn't pay within stipulated time and the said time period is not extended by the parties, cheques given for security can be presented for encashment. In the present factual matrix, the question that needs consideration is whether the accused has paid the due amount within the time frame.
Digitally signed by ARADHANA ARADHANA Date:
2024.12.09 16:58:31 +0530 Deepak Gulati Vs. Mahesh Saimwal Page 10 of 12
26. Accused during his plea of defence has stated that he does not owe any liability towards the complainant. However, in the present case. Accused has not even furnished his bank details showing that any amount was paid to the complainant for the professional services availed. Neither any other documentary evidence has been placed on record to show the same as alleged.
27. Complainant has categorically denied receiving any payment from the accused. It has been suggested to the complainant in his crossexamination that the cheque in question was issued as a security for rent and the complainant has misused the cheque in question. These suggestions were denied by the complainant.
28.Nothing significant has been brought in the crossexamination of the complainant to raise any suspicion in the case set up by the complainant.
The case of the complainant has been consistent throughout as can be noticed from a perusal of the complaint, demand notice and evidence by way of affidavit.
29.It is a trite principle that mere assertion is not sufficient to prove a particular fact. In the present case, accused has not even mentioned any detail as to the payment of the said amount to the complainant. In absence of any clear, cogent or convincing evidence to show that accused paid the amount in question, his mere plea cannot be accepted. Therefore, this court is unable to believe the version of accused that he has no liability towards the complainant.
30. Hence, even though the said cheque was given for security, the same could be presented for encashment, once accused failed to make the payment within the time frame. On the date of presentation of cheque in question, accused had an outstanding liability towards the complainant. Hence, defence of the accused that cheque in question was given as a security cannot be accepted. In absence of Deepak Gulati Vs. Mahesh Saimwal Page 11 of 12 Digitally signed by ARADHANA ARADHANA Date:
2024.12.09 16:58:36 +0530 any clinching evidence to show that accused has repaid the entire amount, the same cannot be accepted.
31.Thus, on the appreciation of entire gamut of evidence placed before the court and the totality of circumstances obtaining in the case, it is apparent that the accused has been unable to set up a probable defence, which can rebut the presumption u/s 139 N.I.Act, that has been raised in favour of the complainant nor has he been able to punch holes through the case of the complainant.
CONCLUSION
1. The accused has, thereby, failed to prove that the cheque was not given in discharge of existing legal debt or liability. In the result of the analy sis of the present case, accused Sh. Mahesh Saimwal, S/o Sh. Laxmi Prasad, is hereby convicted of the offence punishable under Section 138, Negotiable Instruments Act, 1881.
2. This judgment contains 12 pages and each page bears the signature of the undersigned.
3. Copy of the judgment be uploaded as per rules.
4. Copy of this judgment be given to the convict free of cost as per rules. Convict be now heard on the quantum of sentence.
Digitally signed Pronounced in an open court today. by ARADHANA ARADHANA Date: 2024.12.09 16:58:41 +0530 ARADHANA (JMFC NI Act - 01) Central/ THC/ Delhi December 9th, 2024 Deepak Gulati Vs. Mahesh Saimwal Page 12 of 12