Delhi District Court
Deep Chand Garg vs Harjeet Singh Talwar on 1 July, 2015
IN THE COURT OF BHARAT CHUGH,
METROPOLITAN MAGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.275, TIS HAZARI COURT COMPLEX, DELHI
Deep Chand Garg
VERSUS
Harjeet Singh Talwar
JUDGMENT
Part A - The lis at a glance A. Serial No. of the Case 7565/13 B. Date of Commission of the offence 05.03.2015 C. Name of the Complainant Deep Chand Garg D. Name of Accused person & his Harjeet Singh Talwar parentage & residence 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. Admitted having issued examination in brief.
the cheque to the complainant, albeit as security and signed in blank. Alternatively argued that the loan amount was Rs.
2,00,000/- and not Rs. 3,00,000/- as claimed by the complainant and the liability stood partially reduced as the accused had repaid an amount of Rs. 1,00,000/- in cash to the complainant, which has not been accounted for. Pithily put, the two fold defence of the accused is that of cheque not having been in issued in discharge of a legal liability but as security, and secondly of mitigation of liability in part on account of repayment.
G. Final Order Conviction
H. Judgment reserved on 25.06.2015
I. Judgment pronounced on 01.07.2015
Deep Chand Garg v. Harjeet Singh Talwar Page 1 of 20
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. Pithily put, this is a classic case of an alleged 'friendly loan', where the 'friendly' relations went sour, but the 'loan' remained, constraining the parties to come to the present court in this hotly contested matter. Let us now, without further ado, delve straight into complainant's case.
2. Shorn of unnecessary details, the complainant claims to have advanced two friendly loans to the accused of Rs. 1,00,000/- and Rs.2,00,000/- each on 5 th December, 2012 and 20th December, 2012 respectively, on account of long standing friendly relations with the accused, with the understanding that the accused would return the amount within a period of 15-20 days. Thereafter the accused is stated to have issued a cheque of Rs. 3,00,000/- drawn on Indian Bank, Desh Bandhu Gupta Road, Delhi [hereinafter 'cheque in question'] to the complainant, post dated to 11.02.2013. Much to the dismay of the complainant, the said cheque got dishonored on presentation with the remarks 'Exceeds arrangement' vide memo dated 12.02.2013, constraining the complainant to send a legal demand notice to the accused, which when remained unheeded, led to the filing of the present complaint.
The Defence.
3. The accused entered appearance and pleaded not guilty. The accused admitted having issued the cheque to the complainant, albeit as security and signed in blank. The accused stated that he had taken a loan of Rs. 2,00,000/- from the complainant, out of which he has already repaid Rs. 1,00,000/-, however the cheque in question was not returned to him. The accused has denied filling in the rest of the particulars like the name of the payee, amount and the date on the body of the cheque, and argues that the complainant has filled in the same arbitrarily to foist this false charge upon him.
Deep Chand Garg v. Harjeet Singh Talwar Page 2 of 20As regards the service of legal notice, the accused has denied the service of legal notice, however has admitted his address appearing on the same to be correct.
This, in sum and substance, is the factual exposé.
The Law
4. 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 :-
(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 Deep Chand Garg v. Harjeet Singh Talwar Page 3 of 20 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.
Appreciation of Evidence and Application of law to the facts of the case.
5. Let us examine, the clichéd defence of non service of legal notice. The accused while denying the service of legal notice, notably has not denied his address as appearing on the legal demand notice. When the substance of accusation was explained to the accused (within the meaning of Section 251 of the Cr.P.C) the accused in his plea of defence recorded on 15.01.2015, admitted that the address appearing on the legal notice is his address. The address on the legal notice once having been admitted by the accused 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. It is pertintent to note that the accused has been served in this case on the very address on the legal notice, and that is exactly the same address as furnished by him even while executing the vakalatnama. Therefore in light of the admission as to address and confirmation by subsequent facts (like service of summons/vakalatnamas) there is no reason to believe that the accused would not have been served with the legal notice. The denial as to service of legal notice, therefore in these circumstances, does not hold water at all.
In any event, in view of the authoritative pronouncement of the Hon'ble Deep Chand Garg v. Harjeet Singh Talwar Page 4 of 20 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."
6. 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 ?'
7. In that, let us again briefly recapitulate that the accused has admitted having drawn the cheque on a bank account maintained in his name, having signed the same Deep Chand Garg v. Harjeet Singh Talwar Page 5 of 20 and having handed over the same to the complainant. 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 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 Deep Chand Garg v. Harjeet Singh Talwar Page 6 of 20 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 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.
8. In my opinion, the accused has not succeeded in rebutting the presumption of legal liability. The intrinsic weakness of the defence is amply clear the accused's plea of defence recorded on 15.01.2015, which is reproduced as follows :-
"I know the complainant since the last 15-20 years. The cheque in question bears only my signatures. Other particulars have not been filled in by me. The cheque in question was given signed in blank for the loan of Rs. 2,00,000/- from the complainant out of which Rs.
1,00,000/- has been repaid to the complainant and the outstanding liability towards the complainant is only of Rs.1,00,000/-. The cheque was not given in discharge of debt or liability but as security at the time of taking of loan. My liability is only of Rs. 1,00,000/- which I am ready to repay but as of now I am in financial crisis. I accept the dishonor of the cheque in question for insufficiency of funds."Deep Chand Garg v. Harjeet Singh Talwar Page 7 of 20
It is apparent that the accused has admitted being in friendly relations with the accused for a long time. He has also admitted having taken a loan of Rs. 2,00,000/- from the complainant. Though, the admission is not to the extent of the entire claim of the complainant which is Rs.3,00,000/-, however even this admission by itself puts at rest two things, firstly, that the relationship between the parties was such as to enable the accused to procure a loan from the complainant, secondly - it establishes, quite conclusively, the financial prowess of the complainant by an admission from the horse's mouth itself. This greatly probablises the version of the complainant.
9. During the course of arguments Ld.Counsel for the Accused had argued with great eloquence that the complainant has failed to establish his financial capacity for the grant of loan. In my opinion, this argument does not hold good as the accused has accepted the financial capability of the complainant by admitting receipt of Rs. 2,00,000/-. The argument that the complainant has not produced his ITRs despite having deposed whilst under cross examination that he has declared the loan in question in his ITR, is also of no help to the accused. Ld.Counsel for the Accused has argued that non production of ITRs after having mentioned the same in his cross examination, should entail an adverse inference against the complainant for suppression of best evidence. He further argues that in the absence of the loan being declared in the IT returns, the loan becomes irrecoverable. To buttress his plea he places reliance on Section 269SS of the Income Tax Act and the judgment in Krishna Janardhan Bhat v. Dattatraya G. Hegde (2008) 4 SCC 54, to which we shall shortly turn.
A closer scrutiny of the law in this regard reveals that neither of the above arguments hold any merit. Firstly, the complainant is fully entitled to rely on the statutory presumption in his favour regarding the cheque having been issued for an existing liability as engrafted in Sections 118 & 139 of the NI Act. The complainant is not under an obligation to bring on record his IT returns, when the accused has himself admitted the receipt of Rs.2,00,000/- (out of the alleged loan of Rs. 3,00,000). The financial capability being clear, the IT returns would have had limited probative worth in these circumstances. It is clear that when the complainant is in a position to Deep Chand Garg v. Harjeet Singh Talwar Page 8 of 20 advance a loan of Rs. 2,00,000/-, a sum of Rs.3,00,000/- cannot be stated to be beyond his means. Even otherwise, if the accused challenged the financial capability of the accused, the accused could have led the complainant's income tax returns in his defence evidence by seeking their production. The accused notably has not led any defence evidence in this case despite opportunity.
Coming back to the issue of non disclosure of the loan in IT returns and itse legal effect. Even assuming for an instant, that the complainant had not disclosed this loan in his income tax returns, even then, the loan does not become irrecoverable. There is no law that mandates the lender to declare the amount of loan in his Income Tax Returns. The reliance of the Ld.Counsel for the Accused on Section 269SS of the Income Tax Act, fails to further his case.
Section 269 SS reads as follows :-
Section 269SS:
No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter 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 deposit, 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 rupees or more:
Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by- (a) Deep Chand Garg v. Harjeet Singh Talwar Page 9 of 20 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).
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. Consequences 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.
Deep Chand Garg v. Harjeet Singh Talwar Page 10 of 20Similarly reliance on Krishna Janardhan Bhat v. Dattatraya G. Hegde (2008) 4 SCC 54, is also misplaced. Reliance on the judgment is placed to buttress the submission that a non disclosure of loan in IT returns is sufficient to rebut the presumption u/s 139 of the NI Act as in that case the court acquitted the accused on account of non disclosure of the loan in income tax returns. I am afraid, the said decision does not hold ground anymore. The judgment on this aspect stands impliedly overruled by the three judge bench decision of the Hon'ble Supreme Court in Rangappa v. Sri Mohan (2010) 11 SCC.
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 circumstances therein. Therefore, he submitted that observations in Krishna Janardhan Bhat (supra) about noncompliance of provisions of Section 269SS and the implications of Section 271D of the Income Tax Act would still stand as good law. The learned Counsel for the appellant 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 Bhat Deep Chand Garg v. Harjeet Singh Talwar Page 11 of 20 (supra). The Supreme Court had obviously noted 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 Janardhan Bhat (supra) stood impliedly overruled by Rangapaa (supra), and the judgment is to be held rendered on the facts of that case, not laying down any law. Therefore, judgments which follow Krishna Janardhan Bhat (supra) can be safely ignored.
19. There is another aspect of the matter. The learned Counsel for the respondent pointed out that in Krishna 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 advance 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 (hereafter 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 deposit, 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 rupees or more:
Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by- (a) Deep Chand Garg v. Harjeet Singh Talwar Page 12 of 20 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 person 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 restriction 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 obviously impermissible to invoke these provisions for preventing a person from recovering the advance which he has made..."
Deep Chand Garg v. Harjeet Singh Talwar Page 13 of 20This renders it clear that Krishna Janardhan (supra) fails to advance the case of the accused.
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..."
I need not dilate on this much, since in the instant case, receipt of part of loan and financial capacity of the complainant is not in doubt.
10. What further discredits the hypothesis advanced by the accused is the intrinsic weakness of his defence. He has argued that he had returned the amount in part. If the accused took a loan of Rs. 2,00,000/- and returned Rs.1,00,000/-, out of the same, it does not stand to reason as to why the accused would not seek a receipt as to the amount that had been paid by him or seek return of his cheque. The accused has not led even an iota of evidence with respect to payment of this amount. The accused Deep Chand Garg v. Harjeet Singh Talwar Page 14 of 20 having taken the defence of repayment ought to have proved the same. He has not discharged this onus on him. The accused has led no defence evidence in this case. Nothing could be elicited from the complainant in his cross examination either that would probablise the repayment of Rs. 1,00,000/- and consequent mitigation of liability. It is notable that the accused, neither in his examination u/s 313 of the Cr.P.C nor in the plea of defence disclosed at the stage of Section 251 of the Cr.P.C has given any details as to repayment of the amount, like date of repayment, source of funds etc. In these circumstances the defence of repayment has gone completely unsubstantiated and is a vague and generic one. Furthermore the accused has not disputed the dishonor of the cheque on grounds of insufficiency of funds, and the service of legal notice has also not been disproved in this case. If it was really a case of misuse of cheques, as the accused claims it to be, it is beyond fathom as to what kept the accused from filing a complaint against this alleged misuse of cheques, or to reply to the complainant's legal notice protesting against the misuse of the cheque. Nothing rankles the human heart as strongly as injustice, that too when an old friend turns foe, as alleged by the accused. The silence of the accused in these circumstances, raises an inference of liability. His conduct in no way matches up to what a reasonable man would have done in the circumstances. The defence of misuse of cheque appears to be a sham and is disregarded as such.
11. As what can be termed as a last ditch effort, Learned Counsel for the accused has argued, with great vehemence, that the cheque in question was given in blank, which was subsequently filled in by the complainant. He states that this subsequent filling on of the cheque by the complainant invalidates the instrument as it constitutes material alteration. He argues that the complainant in his cross examination has conceded that the handwriting on the cheque is in different hands. He also relies on cross examination of the complainant conducted on 10.04.2015 and in particular on the following excerpts :-
"It is wrong to suggest that the cheque in question was given in blank to me. Vol. "Cheque bhar ke diya tha"
The cheque was already filled in at the time when it was handed over to me and the same was not (filled) written in my presence and had already been filled before giving Deep Chand Garg v. Harjeet Singh Talwar Page 15 of 20 to me"
Ld.Counsel for the Accused argues that this statement is in contradiction to para 3 of the complaint, wherein he argues, the complainant has claimed that the cheque was filled in his presence.
This contention does not hold good at all for the simple reason that there is no contradiction between the above cross examination of the complainant and the contents of para 3, leave alone a fatal one. To facilitate an appreciation, a juxtaposition of the said para with the aforesaid deposition is necessary. Para 3 of the complaint is reproduced as follows :-
"3. That thereafter on 12.1.2013 the accused issued a post dated cheque of Rs. 3,00,000/- vide cheque No. 711640 drawn on Indian Bank, Desh Bandhu Gupta Road, by putting the date on the cheque as 11-2-2013. The said cheque was issued by accused in favour of the complainant with the assurances that the said Cheque would be enchased on due date. Hence on good faith the complainant accepted the said cheque from the accused on 12-1-2013"
It is apparent from a bare reading of the above, that the same does not in any way amount to a statement that the cheque was filled in the presence of the complainant. Merely stating that the date was put as 11.2.2013, doesn't necessarily imply that it was so put in the presence of the complainant. It merely reflects that a certain future date was filled on the cheque making it a post dated one. There is no incongruity between the two statements sufficient to dislodge the case of the complainant. There is no reason to disbelieve the complainant's statement in cross examination to the effect that the accused had handed over the cheque to him after having duly filled-in the same. Seen in this light, the argument of the accused (which is also admitted by the complainant) that the particulars on the cheque (like name of payee etc) are in a different handwriting and in a different pen from the signatures, also becomes inconsequential. The accused has led no evidence on record to prove that the cheque was filled in by the complainant or at his orders and not by him.
Deep Chand Garg v. Harjeet Singh Talwar Page 16 of 20Taking the accused's argument a little further, even if it is assumed for an instant - that the body of the cheque was filled-in by the complainant. 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 rendered virtually immaterial after 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 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 Deep Chand Garg v. Harjeet Singh Talwar Page 17 of 20 wholly blank or have written thereon an incomplete negotiable instrument" such person thereby gives prima facie authority to the holder thereof "to make or complete as the case may be upon it, a negotiable instrument for any amount specified therein and not exceeding the amount covered by the stamp." Section 49 permits the holder of a negotiable instrument endorsed in blank to fill up the said instrument "by writing upon the endorsement, a direction to pay any other person as endorsee and to complete the endorsement into a blank cheque, it makes it clear that by doing that the holder does not thereby incurred the responsibility of an endorser." Likewise Section 86 states that where the holder acquiesces in a qualified acceptance, or one limited to part of the sum mentioned in the bill, or which substitutes a different place or time for payment, or which, where the drawees are not partners, is not signed by all the drawees, all previous parties whose consent has not been obtained to such acceptance would stand discharged as against the holder and those claiming under him, unless on notice given by the holder they assent to such acceptance. Section 125 NI Act permits the holder of an uncrossed cheque to cross it and that would not render the cheque invalid for the purposes of presentation for payment. These provisions indicate that under the scheme of the NI Act an incomplete cheque which is subsequently filled up as to the name, date and amount is not rendered void only because it was so done after the cheque was signed and delivered to the holder in due course.
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 Deep Chand Garg v. Harjeet Singh Talwar Page 18 of 20 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 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. Therefore this defence does not advance the case of the accused in any manner.
12. In the ultimate analysis :-
a) The admission of friendly relations and receipt of loan to the extent of Rs.
2,00,000/- by the accused;
b) The total absence of evidence as regards the alleged repayment of Rs.1,00,000/-
by the accused;
c) The non demur on the dishonor of the cheque and;
d) Non reply to the legal notice all cumulatively seen, go on to show that the accused has 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.Deep Chand Garg v. Harjeet Singh Talwar Page 19 of 20
Resultantly, the accused Harmeet Singh Talwar 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 01.07.2015 (Bharat Chugh) MM (NI Act)-01, Central District, Delhi 01.07.2015 * Judgment contains 20 signed pages Deep Chand Garg v. Harjeet Singh Talwar Page 20 of 20