Delhi District Court
Sanjay Singh vs . Sahibjeet Singh on 12 April, 2023
IN THE COURT OF METROPOLITAN MAGISTRATE (NI ACT) DIGITAL
COURT-06
(SOUTH-WEST), DWARKA COURTS, NEW DELHI
PRESIDED BY : SH. MANUJ KAUSHAL
CNR No. DLSW02-016987-2021
CC No. 7451/2021
SANJAY SINGH
VS. SAHIBJEET SINGH
Under Section: 138 NI Act
Date of reserving : 09.02.2023
Date of pronouncement : 12.04.2023
JUDGMENT
a) Date of Institution of Complaint 27.03.2021
b) Name, parentage and address of the Harmohan Singh accused S/o Sh. Chanan Singh R/o H.No. 15/215, First Floor, Malviya Nagar, New Delhi-110017
c) Offence complained of U/s 138 NI Act.
d) Plea of the accused Pleaded not guilty
e) Final order Acquitted
f) Date of final order 12.04.2023
CC NI ACT 7451/2021 SANJAY SINGH Page no.1of16
VS. SAHIBJEET SINGH
MANUJ Digitally signed by
MANUJ KAUSHAL
KAUSHAL Date: 2023.04.12
16:54:53 +05'30'
BRIEF REASONS FOR THE JUDGMENT
1. Complainant' s Case
1.1 Briefly stated, it is the complainant's case that the complainant and the
accused are well known to each other. It is stated that the accused Harmohan Singh alongwith Mr. Sahibjeet Singh approached the complainant for a friendly loan of Rs 4,00,000/- and agreed to repay the same within 6 months along with interest. It is stated that the complainant advanced a loan of Rs 4,00,000/- to the complainant on 25/06/2020. It is further stated that in order to repay the said loan of Rs 4,00,000/- the accused issued a cheque bearing number 719131 dated 20/12/2021for an amount of Rs 4,00,000/- drawn on Corporation Bank, Green Park Branch, New Delhi. 1.2 Upon presentment, the said cheque bearing number 719131 dated 20/12/2021for an amount of Rs 4,00,000/- drawn on Corporation Bank, Green Park Branch, New Delhi was dishonoured with remarks "Funds Insufficient" vide memo dated 04.01.2021.
1.3 In light of the above, the complainant was constrained to issue a legal demand notice dated 01.02.2021 to the accused, calling upon the accused to repay the amount due under the cheque in question. Since the accused failed to repay the amount within the statutory period therefore, the present complaint U/s 138 of The Negotiable Instruments Act, 1881 (hereinafter NI Act) has come to be filed. Digitally signed
MANUJ by MANUJ
KAUSHAL
CC NI ACT 7451/2021 SANJAY SINGH
KAUSHAL Date: 2023.04.12
Page no.2of16
16:55:25 +05'30'
VS. SAHIBJEET SINGH
2. Accused's Defence
2.1 On finding a prima facie case, the accused was summoned to face the
trial. The accused entered appearance and a notice u/s 251 of Criminal Procedure Code, 1973 (hereinafter Cr.P.C) was served upon the accused. The accused pleaded not guilty and claimed trial. The plea of the defence of the accused was also recorded. 2.2 In his defence recorded U/s 251 Cr.P.C, the accused had stated that the complainant had joined his company and since the company was facing financial difficulties the complainant agreed to financially help me and gave Rs 2,90,000/- to him. It is further stated that the cheque in question was given as a security cheque. It is further stated that due to lockdown the company of the accused went into losses due to which he could not repay the amount.
The accused had admitted his signatures on the cheque in question however, the accused had stated that he did not fill any particulars on the cheque in question. The accused had further stated that he had received the legal demand notice.
Admission and denial of the accused U/s 294 Cr.P.C was also conducted wherein the accused had admitted the genuineness and correctness of the cheque in question. The accused had further admitted the return memo and the receipt of legal demand notice.
2.3 The accused was examined under Section 313 Cr.P.C r/w Section 281 Cr.P.C by putting all the incriminating evidence and circumstances to him. His statement was recorded. The accused had denied having taken any loan from the CC NI ACT 7451/2021 SANJAY SINGH Page no.3of16 VS. SAHIBJEET SINGH MANUJ Digitally signed by MANUJ KAUSHA KAUSHAL Date: 2023.04.12 L 16:56:00 +05'30' complainant. The accused had further stated that the cheque in question was given as a security cheque. It was further stated that the accused has no liaiblity towards the complainant. It was further further stated that dishnonour of the cheque is matter of record. The accused had admitted to having received the legal demand notice.
3. ARGUMENTS 3.1 It has been argued by the Ld. counsel for the complainant that all the ingredients of the offence are fulfilled in the present case and the complainant has duly proved his case. Ld. Counsel submits that the accused has admitted his signatures on the cheque in question therefore, presumptions enshrined under Section 139 and Section 118 of the Negotiable Instruments Act, 1881 arise against the accused which the accused has miserably failed to rebut. As such, it is prayed that the accused be punished for the said offence.
3.2 Per contra, Ld. counsel for the accused has argued that the cheque in question was handed over as a security cheque which has been misused by the complainant. Ld. Counsel for the accused has further argued that the accused side has been able to bring forth material contradictions in the testimony of the complainant and has been able to rebut the statutory presumption raised against the accused. In view of the above submissions, Ld. Counsel for the accused prays that the accused be acquitted.
CC NI ACT 7451/2021 SANJAY SINGH Page no.4of16 VS. SAHIBJEET SINGH MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.04.12 16:56:28 +05'30'
4. Applicable Legal Provisions:
4.1 The ingredients which are required to be satisfied for bringing home the culpability under Sec. 138 of Negotiable Instrument Act has been expounded by the Hon'ble Apex court in the case of Kusum Ingots & Alloys Ltd. vs. Pennar Peterson Securities Ltd. And Others (2000) 2 SCC 745; the same is reproduced below:
"(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;
(ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn of within the period of its validity whichever is earlier;
(iii) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
(iv) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
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(v) 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;"
The accused can only be held guilty of the offence under Section 138 NI Act if the above-mentioned ingredients are proved by the complainant co-extensively. This being the legal position, let us proceed to examine the factual matrix on the aforesaid legal touchstone.
5. Appreciation of Evidence and Marshalling of the Facts:
5.1 Issuance of Cheque The burden of proving the issuance of the cheque in the favour of the complainant from an account maintained by the accused rests upon the complainant.
In order to prove this, the complainant as CW-1 has stated in his affidavit (Ex. CW- 1/A) that the cheque in question was given by the accused for repayment of loan amount. The accused in the notice put to him U/s 251 Cr.P.C as well as in the statement U/s 313 R/w 281 Cr.P.C has admitted to having given the cheque in question as a security cheque to the complainant. Accused has further admitted his signatures on the cheque in question. In the admission and denial U/s 294 Cr.P.C accused has not disputed the genuineness and correctness of the cheque in question. It has no where been disputed by the accused that the cheque in question has not been issued from an account maintained by him. Thus, the complainant has been able to CC NI ACT 7451/2021 SANJAY SINGH Page no.6of16 VS. SAHIBJEET SINGH Digitally signed MANUJ by MANUJ KAUSHAL KAUSHAL Date: 2023.04.12 16:56:57 +05'30' discharge the initial burden of proving that the cheque in question has been issued on an account maintained by the accused.
5.2 Presentment and dishonour of the cheque After having discharged the burden of proving the issuance of cheque the complainant was required to prove that the cheque was presented within the statutory period and was returned unpaid by the banker. To this effect, Complainant as CW-1 through his affidavit (Ex. CW-1/A) has deposed that cheque in dispute was presented for encashment but the same was dishonoured due to reasons "funds insufficient". In order to evince the veracity of his deposition CW-1 has brought on record Original cheque (Ex. CW-1/1) and return memo dated 04-01-2021 showing the dishonour of cheque due to funds insufficient (Ex. CW-1/2). The accused has admitted the dishonour memo in the statement recorded U/s 294 Cr.P.C. Thus, the presentment and the subsequent dishonour of cheque stands established. Further, the cheque (Ex. CW- 1/1) is dated 20.12.2020 and is returned unpaid on 04.01.2021, which is well within the statutorily period prescribed U/s 138 NI Act. Hence, the presentment and dishonour of the cheque stands proved.
5.3 Legal Demand Notice 5.3.1 The next ingredient which the complainant is required to prove in order to bring home the offence U/s 138 N I Act is that a demand notice, in writing, was served upon the accused within 30 days from the date on which the complainant received the information that the cheque was returned unpaid by the banker of the CC NI ACT 7451/2021 SANJAY SINGH Page no.7of16 VS. SAHIBJEET SINGH Digitally signed MANUJ by MANUJ KAUSHAL KAUSHAL Date: 2023.04.12 16:57:36 +05'30' complainant. In this regard, CW-1 deposing through his affidavit (Ex-CW1/A) has brought on record the demand notice dated 01.02.2021 (Ex. CW-1/3) and postal receipts (Ex. -1/4). The complainant has also filed the postal tracking (Ex. CW-1/5). 5.3.2 The accused has admitted the receipt of legal demand notice in the notice put to him U/s 251 Cr.P.C. and admission and denial of documents U/s 294 Cr.P.C. Further, the accused has admitted to receiving the legal demand notice in his statement U/s 313 Cr.P.C R/w 281 Cr.P.C.
In the given circumstances, the complainant has been able to prove that a legal demand notice in writing was sent to the accused within 30 days from the date of receipt of information regarding the dishonour of the cheque in question and the accused has received the same.
5.4 Existence of any debt or other liability 5.4.1 Since the accused has admitted his signatures on the impugned cheque in his plea of defence the only question which is required to be decided is whether the impugned cheque was given in discharge of a legally enforceable debt or liability. 5.4.2 To examine this, let us again recapitulate that the accused has admitted that the cheque is drawn upon a bank account maintained by him. He has also admitted his signatures on the cheque. Under the NI Act, once the accused admits drawing of the cheque, certain presumptions are drawn against him which result in shifting of onus. Section 118(a) of the NI Act lays down the presumption that every negotiable instrument was made or drawn for consideration. Further, Section 139 of CC NI ACT 7451/2021 SANJAY SINGH Page no.8of16 VS. SAHIBJEET SINGH Digitally signed MANUJ by MANUJ KAUSHAL KAUSHAL Date: 2023.04.12 16:58:09 +05'30' NI Act lays down the presumption that the holder of the cheque received it for the discharge, in whole or part, of any debt or other liability. The combined effect of these two provisions is a presumption that the cheque was drawn for consideration and given by the accused for the discharge of debt or other liability. Both the sections use the expression "shall", which makes it imperative for the court to raise the presumptions, once the foundational facts required for the same are proved {Refer Hiten P. Dalal vs. Bratindranath Banerjee (2001) 6 SCC 16}. 5.4.3 Moreover, it has been held by a three-judge bench of the Hon'ble Apex Court in the case of Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The principles pertaining to the presumptions and the onus of proof were recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and139, we now summarise the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. 25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise CC NI ACT 7451/2021 SANJAY SINGH Page no.9of16 VS. SAHIBJEET SINGH MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.04.12 16:58:26 +05'30' probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the 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.
25.4. 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.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
The presumptions raised under Section 118(b) and Section 139 NI Act are rebuttable presumptions. A reverse onus is cast on the accused, who has to establish a probable defence on the standard of preponderance of probabilities to prove that there was no legally enforceable debt or other liability. 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 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. 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.
CC NI ACT 7451/2021 SANJAY SINGH Page no.10of16 VS. SAHIBJEET SINGH MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.04.12 16:58:59 +05'30' 5.4.4 This being the legal position, let us proceed to examine whether the accused has been able to rebut the presumptions raised against him. The accused in his defence to the notice U/s 251 Cr.P.C has stated that he had taken a loan of Rs 2,90,000/- from the complainant and he could not repay the same to the complainant. The accused has further stated that the cheque in question was given as a security cheque to the complainant. In the statement of the accused U/s 313 Cr.P.C R/w 281 Cr.P.C the accused has denied to having taken any loan from the complainant and has again reiterated that the cheque in question was given as a blank security cheque to the complainant. The accused person in his examination-in-chief as DW-1 has again reiterated that the cheque in question was given as a blank security cheque to the complainant after the complainant had invested Rs 2,90,000/- in the company of the accused. In his cross-examination, the accused has stood firm in his defence and has again stated that the cheque in question was given as a security cheque to the complainant. No suggestion has been put by the complainant to the accused to suggest that the cheque in question was not given as a security cheque. 5.4.6 This being the factual position, let us proceed to examine as to whether the cheque in question can be said to be given in discharge of a debt or liability and whether the accused has been able to rebut the presumption. 5.4.9 The observations of Hon'ble Supreme Court in Sripati Singh v. State of Jharkhand, 2021 SCC OnLine SC 1002 has clarified the law related to the security cheques wherein it has been observed as under:
CC NI ACT 7451/2021 SANJAY SINGH Page no.11of16 VS. SAHIBJEET SINGH Digitally signed MANUJ by MANUJ KAUSHAL KAUSHAL Date: 2023.04.12 16:59:26 +05'30'
17. 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 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 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 dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow.
18. 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 proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. If such is the understanding a cheque would also be reduced to an 'on demand promissory note' and in CC NI ACT 7451/2021 SANJAY SINGH Page no.12of16 VS. SAHIBJEET SINGH MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.04.12 16:59:41 +05'30' all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation.
On reading of the aforesaid observations of Hon'ble Supreme Court it is clear that merely because a cheque was given as a security cheque does not by itself absolve the accused from liability for an offence U/s 138 NI Act. In order to be absolved from the liability, the accused is required to show either of the following two things:
a) That the accused has already discharged the liability for which the cheque was given as a security; or
b) That the amount for which the cheque was given as a security had not become due on the date of presentation; or
c) the parties have arrived at some other understanding.
5.4.10 In the present matter the accused has raised the defence that he has only taken Rs 2,90,000/- from the complainant. In order to prove his defence the accused has cross-examined the complainant and has himself stepped into the witness box. In his cross-examination as CW-1, the complainant has stated that he had advanced a friendly loan to the accused by way of following instalments:
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AL 2023.04.12 17:02:28 +05'30' a. Rs 1,12,551/- on 27.12.2018.
b. Rs. 79,712/- on 11.12.2019.
c. Rs 70,000/- on 10.12.2019 d. Rs. 19,471/- and Rs. 14,603/- on 17.12.2019 However, the complainant in his complaint as well as in his evidence by way of affidavit i.e. Ex. CW-1/A has stated that the accused person had approached the complainant for a friendly loan of Rs 4,00,000/- on 25.06.2020 which is materially contradictory with the testimony of the complainant as CW-1.
5.4.10 Nothing has been placed on record by the complainant to show that an amount of Rs 4,00,000/- was advanced by the complainant to the accused. The complainant in his cross-examination as CW-1 has stated that the accused had agreed to repay the loan amount alongwith the interest charged by the credit card companies which were used by the complainant to pay a sum of Rs 2,96,337/- to the accused however, nothing has been mentioned in this regard in the complaint or evidence by way of affidavit.
Further, the complainant has failed to disclose the rate of interest at which the accused had taken the loan from the complainant. 5.4.11 In addition, the complainant in the cross-examination of accused as DW-1 has put a suggestion that the complainant has advanced a sum of Rs 2,90,000/- to the accused by credit cards which has been admitted by the accused. The aforesaid suggestion is also contrary to the case of the complainant. Moreover, no suggestion has been put by the complainant to the effect that the accused had taken a loan of Rs 4,00,000/- from the complainant. In addition, no suggestion has been put by the CC NI ACT 7451/2021 SANJAY SINGH Page no.14of16 VS. SAHIBJEET SINGH MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.04.12 17:00:43 +05'30' complainant to the accused to suggest that the accused had taken the amount on an interest.
5.4.12 In the given circumstances, this Court is of the opinion that the accused has been able to establish his defence on the basis of preponderance of probabilities that he had only taken a loan of Rs 2,90,000/- from the accused.
5.4.13 Once the accused has rebutted the presumption, the onus again shifts back to the complainant to prove his case beyond the reasonable doubt. In order to prove his case the complaint had put an agreement dated 25.06.2020 (Ex. DW-1/C-1) to the accused in his cross- examination. The accused has admitted the execution of the aforesaid document however, he has stated that he does not remember the contents of the aforesaid agreement. No further questions have been put by the complainant to the accused regarding the said agreement. As per the contents of the agreement, the complainant is stated to have given Rs 4,00,000/- to the accused and Sahibjeet Singh on 25.06.2020. However, the aforesaid fact is itself contrary to the testimony of the complainant as CW- 1 wherein he has admitted that he had given the loan amount of Rs 2,96,337/- to the accused in several instalments the last of which was paid on 11.12.2019.
5.4.14 In the given circumstances, this Court is of the opinion that the complainant has failed to establish that the accused had a liability to pay Rs 4,00,000 on the date when the cheque in question was presented for the payment therefore, the cheque in question cannot be said to be given in discharge of the liability. In the given circumstances, this Court is of the opinion that the complainant has not been able to prove his case beyond reasonable doubt.
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6. Conclusion 6.1 Hence, in the light of above discussion it comes out that the complainant has failed to prove his case beyond all the reasonable doubts. Accordingly, accused stands acquitted for the offence under Section 138 of Negotiable Instruments Act. 6.3 Copy of the judgment be supplied to accused or his counsel free of cost.
MANUJ Digitally by MANUJ signed KAUSHA KAUSHAL Date: 2023.04.12 Announced in the open L 17:01:53 +05'30' Court on 12.04.2023 (MANUJ KAUSHAL) MM (NI ACT)/DIGITAL COURT-06, SOUTH WEST, DWARKA COURT, NEW DELHI/ 12.04.2023 Certified that this judgment contains 16 pages and each page bears my digital signature.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.04.12 17:02:07 +05'30' (MANUJ KAUSHAL) MM (NI ACT)/DIGITAL COURT-06, SOUTH WEST, DWARKA COURT, NEW DELHI/ 12.04.2023 CC NI ACT 7451/2021 SANJAY SINGH Page no.16of16 VS. SAHIBJEET SINGH