Delhi District Court
Birender Kumar vs Arun Kumar on 16 August, 2024
IN THE COURT OF MS. AAKANKSHA, JUDICIAL
MAGISTRATE FIRST CLASS, (NI ACT)-07
SOUTH-WEST DISTRICT, DWARKA COURTS, NEW DELHI
Ct. Case No.4994570/2016
CNR No. DLSW02-004608-2015
Birender Kumar
.........Complainant
Through: Mr. Randeep Pundir, Advocate
Versus
Arun Kumar
............Accused
Through: Mr. Jatin Sharma, Advocate
(1) Name of the Birendra Kumar
complainant
S/o Sh. Sewa Ram
R/o H.No. 299, Madhu
Vihar, Dwarka, New Delhi
-110059.
(2) Name of the accused Arun Kumar
S/o Late Sh. Mohar Singh,
C/o Sh. Pritam Singh, S/o
Late Sh. Dharamvir Man,
Near Chandan Market,
Ct. Case No. 4994570/2016
Birender Kumar v. Arun Kumar
Page 1 of 27
Behind Rahul Computers
House, Main Narela Road,
Alipur, New Delhi-110036.
Also at:- M.S.R Tyres,
Khasra no.595, Seed Farm
Road, Pulia Ke Pass,
Alipur, Delhi-110036.
(3) Offence complained of Section 138 Negotiable
or proved Instruments Act, 1881
(4) Plea of accused persons Pleaded not guilty
(5) Date of institution of 16.12.2015
case
(6) Date of conclusion of 29.07.2024
arguments
(7) Date of Final Order 16.08.2024
(8) Final Order CONVICTION
JUDGMENT
1. The complainant Birender Kumar has instituted this complaint u/s 138 Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act') against accused Arun Kumar on 24.07.2012.
Ct. Case No. 4994570/2016Birender Kumar v. Arun Kumar Page 2 of 27
2. The factual matrix as can be culled out from the complaint is that having friendly relations and visiting terms with the complainant, accused borrowed Rs.3,50,000/- from the complainant as a friendly loan in 2-3 instalments and undertook that the said loan amount would be repaid within eight months. In January 2012, the complainant approached the accused and requested to pay back the loan amount, however, the accused showed his inability to repay the loan requesting the complainant some more time and assured payment in March 2012. Again the accused requested some more time till April 2012. Subsequently upon insistence of the complainant, accused issued two cheques in question, one cheque bearing no. 353043 dated 14.05.2012 for a sum of Rs.2,00,000/- and another cheque bearing no. 353044 dated 14.05.2012 for a sum of Rs.1,50,000/-, both drawn on State Bank of India, Ghonda, Delhi- 110053 in discharge of his liability, with assurance of their encashment upon presentation. However, to the complainant's dismay, the said cheques were returned unpaid with remarks "Insufficient Funds" vide return memos dated 18.05.2012. The complainant then issued a legal notice dated 11.06.2012 calling upon the accused to pay the cheque amount within 15 days from the receipt thereof, the same was duly served upon the accused but the accused failed to make the payment thus constraining the complainant to file this complaint u/s 138 Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act') seeking redress against the dishonour of the cheques in question.
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3. With a view to establish a prima facie case in order to enable the court to summon the accused, complainant led pre- summoning evidence by way of affidavit Ex. CW-1/A. The complainant relied upon following documentary evidence:
(a) Original cheque bearing no.353043 dated 14.05.2012 for a sum of Rs.2,00,000/- drawn on State Bank of India, which is Ex. CW-1/1.
(b) Original cheque bearing no.353044 dated 14.05.2012 for a sum of Rs.1,50,000/-, drawn on State Bank of India, which is Ex. CW-1/2.
(c) Cheque return memo dated 18.05.2012, which is Ex.CW1/3.
(d) Cheque return memo dated 18.05.2012, which is Ex.CW1/4.
(e) Office copy of legal notice dated 11.06.2012, which is Ex. CW1/5.
(f) Postal receipts, which are Ex. CW1/6(colly) and Ex.CW1/7 (colly).
(g) Courier receipts with AD card, which are Ex.CW1/8 (colly) and Ex.CW1/9.
(h) Reply to legal notice dated 29.06.2012, which is Ex.CW1/10.
(i) Present complaint, which is Ex.CW1/X. Complainant closed his pre-summoning evidence on 18.03.2015.
4. On the basis of above material and finding a prima facie case made out against the accused, the accused was summoned vide Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 4 of 27 order dated 18.03.2015. Accused entered his first appearance on 25.04.2016.
5. Notice u/s 251 Cr.P.C. was framed against accused on 14.05.2015 stating out to him the substance of accusation, to which he pleaded not guilty and claimed trial. His defence was recorded at the stage of framing of notice in compliance of directions passed by Hon'ble High Court of Delhi in Rajesh Aggarwal v. State 171 (2010) DLT 51. The accused took defence that he used to give blank signed cheques to his cousin Ram Avtar who wrongly passed them to the complainant and the complainant has misused the said cheques, complainant is brother-in-law of his cousin Ram Avtar's sister, the cheques in question bear his signature but the remaining particulars were not filled by him, he received the legal notice and also sent a reply to the same.
6. Accused was granted right to cross-examine the complainant on oral prayer made u/s 145(2) of NI Act on behalf of accused vide order dated 14.05.2016. The complainant was examined as CW-1 thereby adopting his pre-summoning evidence as post- summoning evidence. CW1 was duly cross-examined and discharged. Vide separate statement of complainant, complainant's evidence was closed on 26.02.2018.
Ct. Case No. 4994570/2016Birender Kumar v. Arun Kumar Page 5 of 27
7. Statement of accused was recorded u/s 313 Cr.P.C. r/w section 281 Cr.P.C. on 23.08.2018 wherein all the incriminating evidence was put to the accused and he was granted an opportunity to explain the circumstances appearing against him at trial. While explaining the circumstances appearing in evidence against him, accused stated without oath that he did not take any loan from complainant nor issue cheques in question to complainant, his cousin Ram Avtar was looking after the trucks, he gave blank signed cheques to Ram Avtar to make the payment due against the credit card, he has received legal notice and also replied to the same. Accused also preferred to lead evidence in his defence.
8. At the stage of defence evidence, accused examined himself as DW1, was partly cross-examined but he partly examined his wife Rekha as DW2. Later accused dropped his wife from the list of witnesses, vide separate statement on 07.12.2023. There being no other witness in the list of witnesses filed by accused, defence evidence stood closed on 18.03.2024.
9. At the stage of final arguments, Ld. counsel for complainant submitted that the question raised is whether complainant was capable of giving loan to accused and complainant has filed documents to prove the same, computation of single person is audited only if turnover crosses Rs. 1 crore, the software of ITR Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 6 of 27 does not show any loan but total income and expenditure, complainant had fixed deposit of Rs. 2.5 lacs at the time when he gave loan to accused, he has also placed on record bank certificates to show the liquidity available with him, but the defence of accused is that he did not require money. All the documents filed by accused are photocopy, even if photocopy documents are taken in to consideration they show that accused was in debt and his cheques were being dishonored as admitted by accused which contradicts the defence of accused that he did not require money, the cheques are drawn on personal account of accused whereas accused pleads that he gave cheques for payment of credit card bills of MSR, accused has failed to prove the story of Ram Avtar, no complaint has bene filed against Ram Avtar, accused has failed to prove how the cheques came in custody of Ram Avtar, accused filed 400 pages of photocopy documents only to create confusion, his own statement of account reflects deduction of charges for dishonor of his cheques and prayed to convict the accused.
Per contra, Ld. counsel for accused submitted that the complainant has failed to show the source of funds in cash for the alleged loan transaction, the cheques in question were part of series of the respective year 2007, the same were misused by the complainant with the aid and assistance of Ram Avtar who was employee of the accused, there are inconsistencies in the statement of the complainant in respect to the source of alleged loan amount, at one instance he testified that money was given from the funds kept at his home and in Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 7 of 27 the other instance he testified that the source of fund was repayment of loan received by him. The accused has also relied on the case of K Subramani vs. K Damodar Naidu, (2015) 1 SCC 99 , Purushottam Manik Lal Gandhi vs. Manohar K Deshmukh and Anr., (2006) 1 Mh.L.J. 210.
10. After hearing the arguments advanced on behalf of both the parties and perusing the record carefully, the appreciation of evidence and findings of the court are as below.
11. It would be apposite to first consider the legal position serving as base to the offence underlying Section 138 NI Act. The following legal requirements need to be satisfied in order to constitute an offence u/s 138 NI Act, as held by Hon'ble Supreme Court in the case titled as Kusum Ingots & Alloys Ltd. v. M/s Pennar Peterson Securities Ltd.: (2000) 2 SCC 745:
(i) that 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 the 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;Ct. Case No. 4994570/2016
Birender Kumar v. Arun Kumar Page 8 of 27
(iii) that the 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) that 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 thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(v) that 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 above legal requirements are cumulative, meaning thereby that only if all the aforementioned ingredients are satisfied can the person who had drawn the cheque be held liable for offence u/s 138 NI Act.
12. Burden of proof: The claim based under the provisions of Negotiable Instruments Act is an exception to the general rule of law that burden of proof lies on the prosecution. The two specific Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 9 of 27 provisions viz. Section 118 (a) and 139 of NI Act contemplates that a presumption is attached in regard to each and every negotiable instrument that the same was drawn and issued against due discharge of the liability and thus, whenever any claim is made on the basis of a negotiable instrument, the presumption has to be drawn in favour of the holder of the cheque (drawee) and the law has put the burden to rebut the presumption on the accused that the cheque was not issued by him against discharge of a debt or a liability. In case, the accused is not able to rebut the presumption and fails to prove his defence, the presumption becomes absolute and it has to be assumed that the cheque was issued by the accused in discharge of debt or liability and consequently, accused is assumed guilty of the offence. It was held by Hon'ble Supreme Court in the case of Rangappa v. Mohan: 2010 (11) SCC 441 that presumption of Section 139 of N.I. Act also includes the existence of legally enforceable debt:
14. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability.
Hon'ble Supreme Court, in the case of Hiten P. Dalal v. Bratindranath Banerjee: 2001 (6) SCC 16 held that the presumption mentioned in the section 139 NI Act is a presumption of law and not a presumption of fact and thus, this presumption has to be drawn in favour of the drawee and the burden to rebut the presumption with the probable defence is on the accused.
Ct. Case No. 4994570/2016Birender Kumar v. Arun Kumar Page 10 of 27 This is indeed an instance of the rule of 'reverse onus', where it is incumbent on the accused to lead what can be called 'negative evidence' i.e. 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 that negative evidence is not easy to be led by its very nature, it is now 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. He can do so either by leading own evidence in his defence or even by punching holes in the case of the complainant in the testing ordeal of cross-examination. This can be deciphered from relevant para no.21 of Hiten P. Dalal (supra):
21. In other words, provided the facts required to form the basis of a presumption of law exist, no discretion is left with the Court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, "after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists". Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the 'prudent man'.Ct. Case No. 4994570/2016
Birender Kumar v. Arun Kumar Page 11 of 27 Further, in Bharat Barrel v. Drum Manufacturing: AIR 1999 SC 1008 Hon'ble Supreme Court held that the accused has to rebut the presumption and mere denial of passing of consideration is no defence.
It is, thus, clear that in cases of Section 138 NI Act, upon proof of foundational facts, law presumes in favour of drawee that the cheque was issued by the accused in discharge, wholly or in part, of legally enforceable debt or liability and the burden to rebut the same is upon the accused. The burden does not have to be conclusively established but the accused has to prove his defence on preponderance of probability.
13. Now applying the above law to the facts of the present case, it has to be adjudged whether the legal requirements laid down hereinabove have been fulfilled in the instant case.
13.1. The first legal requirement is:
"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."
At the outset, it has to be proved that the accused had issued the cheques in question on his account maintained with a bank for discharge of any debt or other liability. In the instant case, accused Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 12 of 27 has admitted his signature on the cheques in question in his statement recorded u/s 313 Cr.P.C. and in notice framed u/s 251 Cr.P.C. The cheques in question have also been drawn on the account maintained by him with State Bank of India. The said fact has not been denied by accused at any stage of proceeding.
It was held in the case of Kalamani Tex & anr. v. P. Balasubramanian : 2021 SCC Online SC 75 Hon'ble Supreme Court held that:
"14. Adverting to the case in hand, we find on a plain reading of its judgment that the trial court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NI Act. The statute mandates that once the signature(s) of an accused on the cheque/negotiable instrument are established, then these 'reverse onus' clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him."
The above said principle has also been crystallized by Hon'ble Supreme Court in the case of Basalingappa v. Mudibasappa:
(2019) 5 SCC 418, by observing that:
"25. We having noticed the ratio laid down by this Court in above cases on Sections 118(a) and 139, we now summarize the principles enumerated by this Court in following manner:
(i) 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.
(ii) 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.
(iii) 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 Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 13 of 27 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.
(iv) 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.
(v) It is not necessary for the accused to come in the witness box to support his defence."
13.2. In the instant case, the accused having admitted his signature on the cheques in question and the said cheques being drawn on his bank account, a mandatory presumption automatically arises in favour of complainant by virtue of Section 118(a) r/w 139 NI Act that the cheques in question were issued by him in discharge of, whole or part of, legally enforceable debt or liability.
13.3. Now the burden shifts upon accused to rebut the above presumption by raising a probable defence, by leading evidence or bringing such facts on record in the cross-examination of the complainant that could make the latter's case improbable. If, in such a case, the accused is proved to have discharged the initial onus of proof placed on him by showing that the existence of consideration was improbable or doubtful or illegal, then the onus will again shift back to the complainant who will then be under an obligation to prove it as a matter of fact and failure to do so will disentitle him to any relief on the basis of the negotiable instrument (as held in Satish Sharma v. State NCT of Delhi & anr.: (2013) 204 DLT 289).
Ct. Case No. 4994570/2016Birender Kumar v. Arun Kumar Page 14 of 27 13.4. The accused has chosen to do so by cross examining CW1 and leading evidence in his defence. During cross-examination, CW1 deposed, in brief, that the accused is cousin of his sister-in-law Pavitra Devi, that at the relevant time of giving the loan he used to earn Rs. 7 lakhs per annum approximately, no paperwork or a document was executed pursuant to the said loan transaction as the accused is his relative, the money was sought by the accused for his business, the loan transaction in question was not reflected in his ITR, however the same was shown in his balance sheet, the money was given to the accused in cash without interest, the money was given from the funds kept at his house, the cheques in question were not signed by the accused in his presence, he knows all the family members of the accused, Ram Avtar has a transport business and he does not work with the accused, he did not prepare profit and loss account as he is a salaried person, he entered into loan transaction of Rs. 7 lakhs with Pavitra Devi in July 2011 however same is not disclosed in the balance sheet as the transaction was already complete, the loan amount was disbursed at his home and was for a period of 8 months, he worked with Sushil Kumar Singla and Company, a C.A. Firm on commission basis, at the relevant time he used to earn Rs. 60,000/- per month, he was saving his salary income and family income at home and also he received certain repayment of loan given by him and that is how he was able to give a loan of Rs. 3.5 lakhs to the accused, the balance sheet Ex.CW1/A1 is not audited as the audit is required only where the turnover exceeds Rs. 1 crore, there is a difference in his balance sheet and ITR because of some Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 15 of 27 exempted entries, loan of Rs. 36 lakhs approximately has been given by him, the said loan was given out of his own funds and out of money taken from his father.
13.5. In defence, accused chose to examine himself as DW-1. He deposed, in brief, that his cousin Ram Avatar was looking after the transport business of his wife, in February 2008 his wife took agency of MRF company, during the year 2006-2009 he and his wife used to give blank signed cheques to Ram Avtar for making the payment of the overdue amount of credit cards, the cheques in question pertain to the year 2007 and he used the cheque of similar series in the year 2007, Ram Avtar stole the cheque in question during the year 2006- 2009, Ram Avtar left the job on 17.03.2011, Pavitra and Birender have misused the cheques in question and are of same series as the cheques in question, Pavitra, Ram Avtar and Virender are residing at the same house, he did not need financial assistance since he took VRS in September 2011 and received approximately Rs. 10 lakhs, he and his wife were also utilizing credit cards upto the limit of Rs. 2.5 lakhs. During cross-examination, the accused deposed, in brief, that he did not file any complaint against Ram Avtar, Pavitra Devi and the complainant for the alleged misuse of his cheques in question, there was no agreement between him, Ram Avtar and his wife Poonam for depositing instalments of truck purchased by them, there was no agreement between him, Ram Avtar and his wife that the payment of instalments by him would be treated as the salary of Ram Avtar, there Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 16 of 27 was no agreement between him and Ram Avtar that blank cheques would be given by him to Ram Avtar, the ITR of MSR Tyre reflects loan upon the firm, MSR Tyre used to provide tyre to customers on credit basis, the cheques of MSR Tyre used to get dishonoured due to insufficient funds.
13.6. The accused has admitted his signature on the cheques in question, however, he has chosen to defend the case against him. In brief, the defence as raised by accused is that he did not issue the cheques in question to complainant, rather it were handed over in blank signed manner to his relative Ram Avtar who was employed at M/s MSR Tyre in the year 2007 alongwith other few cheques for payment of credit card bills which were later misused by complainant in connivance with Ram Avtar. Accused has denied availing any financial credit from complainant. From the testimonies of both the parties, the relationship between the complainant and accused is admitted. Although no documentary proof of lending of Rs. 3.5 lakhs was adduced by the complainant in the case at hand. However, in view of the legal presumption which already stood in favour of complainant by virtue of the section 139 NI Act, the burden was in fact upon the accused to rebut such presumption and prove that he did not borrow any such amount. However, no positive evidence has been led by the accused nor has the accused been able to disprove the same by cross-examining the complainant.
Ct. Case No. 4994570/2016Birender Kumar v. Arun Kumar Page 17 of 27 13.7. To begin with, accused has failed to prove the story of handing over the custody of cheques in question to Ram Avtar. Accused has alleged that his relative Ram Avtar was employed with his wife Rekha Devi's firm MSR Tyres. Rekha Devi was partly examined as DW-2, however, later accused dropped her as a witness vide his statement recorded on 07.12.2024 without assigning any specific reason. In absence of Ram Avtar being cited as a witness, testimony of Rekha Devi would have been instrumental in establishing a connection of Ram Avtar with the cheques in question. However, in the absence of her testimony and in absence of testimony of Ram Avtar, the defence revolving around issuance of blank signed cheques to Ram Avtar who was handling the business run by wife of accused, can be said to be none other than one hanging in the air and devoid of any substance.
13.8. Further, the plea raised by accused in his defence that he handed over blank signed cheques to Ram Avtar for payment of credit card bills, is in itself questionable. There appears no reason for a person to hand over blank signed cheques for payment of credit card dues, as usually credit card bill is generated within a specified period, let's say a month of utilizing the credit, thus enabling the credit card user to be in full knowledge of the bill raised. Thus, the story of issuing blank signed cheque for payment of a definite amount of credit card bill seems improbable. Admittedly neither the accused nor his wife has filed any complaint against said Ram Avtar for alleged Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 18 of 27 misuse of the cheques in question. Accused admitted the said fact during his cross-examination. The same is not expected of a prudent person, who would have at least reported the incident after gaining knowledge of the alleged misuse, more so in light of the fact of alleged misuse of few other cheques by complainant and his family which resulted into filing of more cases against accused and his wife. This fact challenges the probability of the defence raised by the accused. Accused has admitted the fact that many other cases were filed against him and his wife by complainant and his family members misusing his blank signed cheques. Copies of such few cases are also placed on record. Accused has further admitted that he has also been convicted in one such case by Ld. Trial Court. In such circumstances, the reason for not taking any action against said Ram Avtar and the plea of issuing blank signed cheque for payment of credit card bill goes to the root of the defence pleaded in the present case and mere fact that accused promptly replied to the legal notice raising his defence is not sufficient.
13.9. It is settled law that mere passing of consideration is not sufficient and accused ought to bring on record some factual circumstance to raise a probable defence that cheque was not issued in discharge of legal debt or liability or that the consideration did not exist at all. However, apart from failure of accused to take any action against complainant or Ram Avtar, both of whom have been alleged to have misused the cheques of accused; there are also inconsistencies Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 19 of 27 in the defence of the accused. The purpose of handing over of blank signed cheques to Ram Avtar has been testified by the defence towards making credit card payments. However, contrary to the same, accused pleads in his written arguments that the cheques were given in a blank signed manner for unpredictable and uncertain emergencies to Ram Avtar. This inconsistency further challenges the probability of the defence raised by the accused. In regard to the defence raised pertaining to the misuse of the cheques the accused has relied upon the case of Purushottam Manik Lal Gandhi vs. Manohar K Deshmukh and Anr., (2006) 1 Mh.L.J. 210., wherein it was held that whenever blank cheque is given, automatically, there is a trust and if it is shown that there is a breach of the trust and evidence of misuse of the blank cheque, then the court may not allow abuse of process and may refuse to entertain criminal proceedings which was necessarily for recovery of the amount. The above-mentioned authority is not applicable to the facts of the present case, since the accused has not led any evidence to show the alleged misuse of the cheques in question. Merely stating that same were misused without proving the creation of trust and breach of trust due to the alleged misuse, is not a tenable defence in the eyes of the law.
13.10. The accused has also argued that the cheques in question are a part of the series of cheques which were utilized in the year 2007 and were handed over to Ram Avtar for payment of the credit card dues. The above contention does not hold water as a person may Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 20 of 27 utilize the cheques in any manner he desires. Law does not compel a person to issue cheques belonging to similar series one after the other. However, in case accused was able to establish a probable defence in his favor, his argument of issuance of cheques of similar series in close proximity to one another might have been helpful to his defence. Further, it is also not essential that the cheques in question were also issued only for credit card payment for the mere reason that they belong to the same series of cheques issued to Ram Avtar for credit card payment. The oral testimony of accused that other cheques belonging to the series to which cheques in question belong, were all utilized by Ram Avtar for payment of credit card bills is not supported by any documentary evidence. His bank account statement Mark DW1/3 pertaining to the said alleged period of 2007 does not prove that other cheques belonging to same series were utilized only for credit card payment. Mere oral testimony that the cheques are of the same series does not raise ground for probable misuse of the cheques in question. Hence, this defence is untenable in the eyes of the law.
13.11. Accused has also tried to prove non-existence of consideration by testifying that he was not in requirement of finance and thus no question arose for him to borrow loan from complainant. To prove the same, accused placed on record his proof of retirement in the form of Mark Ex. DW-1/2. He testified that he received a sum of Rs. 10 lacs approximately upon his retirement in September 2011 and that he and his wife were also utilizing credit cards. However, Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 21 of 27 being subjected to cross-examination DW-1 admitted the fact that ITR of M/s MSR Tyres reflects loan upon the said firm and that cheques of MSR Tyres used to get dishonored. His own statement of account does not reflect any substantial balance maintained by accused in order to refute the need of any financial credit. Thus, accused has been unable to prove his defence.
13.12. In order to defend his case, the accused has further argued that the complainant has not been able to prove the source of funds. Accused has also sought to challenge the balance sheet and ITR filed by complainant. Although there are serious inconsistencies in the balance sheet and ITR of complainant on record, the balance sheet being of an individual which is not supported by any evidence. But in light of the presumption u/s 139 NI Act as raised in the favour of the complainant, such financial capacity of complainant could have been challenged only once the accused has been able to raise a probable defence in his favour. Even otherwise, the complainant has filed on record copy of fixed deposits and bank account statements to prove his financial capacity to advance the alleged loan. The accused has also relied upon the case of K Subramani vs. K Damodar Naidu, (2015) 1 SCC 99, wherein it was held that the complainant could not prove the source of the funds and hence the presumption in favour of the holder of the cheque stand rebutted. The above-mentioned case is related to the set of facts that are different from the present case. In the above-mentioned case, the wife of the complainant had testified that Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 22 of 27 no loan was taken by the accused in some other case, the complainant had himself taken a loan in the same year from LIC, these facts along with the lack of demonstration of source of funds on behalf of the complainant led to the rebuttal of the presumption. Thus, the present case is based on the set of facts that are peculiar from the case discussed above. Hence, the authority cited above does not apply to the present case and the defence of the accused challenging the source of funds with the complainant also fails.
13.13. The accused has further argued that the loan amount was advanced in cash and the same is not reflected in his ITR as per provisions of the Income Tax Act. The law with respect to interplay of provision of Income Tax Act and the offence u/s 138 NI Act, is well settled. It was held in the case of Sheela Sharma v. Mahendra Pal 2016 SCC OnLine Del 4696 that "Mere advancement of loan in cash, may entail consequences for the party acting in breach of Section 269 SS of Income Tax Act. That is not the concern of this Court. Whether, or not, the appellant reflected the availability of the said amount in her income tax return, is also not a matter of concern of this Court. That would again be aspect to be considered by the income tax authorities. The advancement of loan, in cash, to the tune of Rs. 10 lakhs is not prohibited in law. The transaction of advancement of loan of Rs. 10 lakhs, in cash, is not illegal. Such a transaction is enforceable at law." Thus, the argument advanced by Ld. counsel for the accused challenging the legality of advancement of loan of Rs. 3.5 Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 23 of 27 lakhs in cash and non-reflection in the ITR, does not sustain in view of the above-mentioned authoritative pronouncement. Thus, the defence of the accused challenging the cash source of funds with the complainant also fails.
13.14. In view of the above, it can be safely concluded that accused has failed to rebut the presumption of law and raise any probable defence that the cheques in question were not issued in discharge of his liability.
The first legal requirement is, thus, proved in favour of the complainant.
14. The second legal requirement is:
"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."
The cheques in question Ex. CW-1/1 and Ex. CW-1/2 are dated 28.04.2012 and 14.05.2012. The cheque returning memos Ex. CW-1/3 and Ex. Ex.CW-1/4 are dated 18.05.2012, which proves that the cheques in question were presented within the period of their validity. Further, defence has failed to controvert the said fact.
Thus, the second legal requirement is adjudicated in favour of complainant.
Ct. Case No. 4994570/2016Birender Kumar v. Arun Kumar Page 24 of 27
15. The third legal requirement is:
"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."
Section 146 NI Act presumes the fact of dishonour of cheque upon production of bank's slip or memo having the official mark denoting that the cheque in question has been dishonoured. This is also a rebuttable presumption and upon production of such bank memo, the burden shifts upon accused to disprove the same. In the instant case, a presumption has been raised in favour of complainant by virtue of Section 146 NI Act that the cheques in question were dishonored for the reason stated therein viz. funds insufficient and therefore, the burden now shifts upon the accused to rebut this presumption by establishing some reasonable justification for the same. But the accused has failed to disprove the same.
Thus, the third legal requirement is adjudicated in favour of complainant.
16. The fourth legal requirement is:
"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 thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid."Ct. Case No. 4994570/2016
Birender Kumar v. Arun Kumar Page 25 of 27 In the instant case, the cheques in issue were returned dishonored on 18.05.2012. The complainant sent a legal notice dated 11.06.2012 (Ex.CW-1/5) addressed to the accused. Speed post receipts dated 11.06.2012 are Ex. CW-1/6(colly.). The date of postal receipt proves that the legal notice was sent to accused within thirty days of receipt of information of dishonour of cheques in issue. Accused has also admitted receiving of legal notice.
The fourth legal requirement is, thus, adjudicated in favour of complainant.
17. The fifth legal requirement is:
"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."
Accused has admitted receiving of legal notice. But it is undisputed fact and a matter of record that the accused has failed to make the payment till date let alone making payment within 15 days of receipt of notice.
Thus, the fifth legal requirement is adjudicated in favour of complainant.
18. All the legal requirements constituting an offence u/s 138 NI Act have been proved in favour of the complainant and against Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 26 of 27 the accused. Accordingly, accused Arun Kumar is held guilty for the alleged offence u/s 138 NI Act.
19. Now to come up for arguments on quantum of sentence.
Copy of this judgment be given Dasti to the convict free of cost as per rules.
Digitally signedAnnounced in the open by AAKANKSHA AAKANKSHA court on 16th August, 2024. Date: 2024.08.16 14:46:38 +0530 (Aakanksha) Judicial Magistrate First Class (NI Act)-07 South West District, Dwarka Courts, New Delhi Ct. Case No. 4994570/2016 Birender Kumar v. Arun Kumar Page 27 of 27