Delhi District Court
Ld. Counsel For The Complainant Relied ... vs Dalmia on 23 December, 2021
IN THE COURT OF METROPOLITAN MAGISTRATE (NI-03),
CENTRAL, TIS HAZARI COURTS, DELHI
Presided over by: Ms. Isha Singh
Case no. : 513100/2016
Unique Case ID no. : DLCT02-001070-2015
In the matter of :
Sh. Rajiv Thukral
S/o Shri K.M Thukral
R/o H.No. 30,
Road no. 6, East Punjabi Bagh,
Delhi- 110026 ............ COMPLAINANT
Versus
1. M/s Vision Glasses Pvt. Ltd. ............ACCUSED No.1
2. Sh. Mohammad Ekhlak ............ACCUSED No. 2
Director of M/s Vision Glasses Pvt. Ltd.
At:
Property no. 2367, Ward no. III,
Gali Nawab wali,
Tilak Bazar, Khari Baoli,
Delhi-110006
Also at:
292, First Floor,
Najafgarh, Delhi
Also at:
1246, Katra Hussain Mirza,
Faras Khana,
Chandni Chowk, Delhi-110006
1. Name of the Complainant : Rajiv Thukral
2. Name of the Accused : 1. M/s Vision Glasses Pvt. Ltd.
CC No.513100/16 Rajiv Thukral v. Shri Vision Glasses Pvt. Ltd. Page 1 of 19
2. Mohammad Ekhlak
3. Offence complained of or proved : Section 138, Negotiable Instruments
Act, 1881
4. Plea of the Accused : Not Guilty
5. Date of Filing : 09.01.2015
6. Date of Reserving Order : 21.12.2021
7. Date of Pronouncement : 23.12.2021
8. Final Order : CONVICTED
BRIEF STATEMENT OF REASONS OF DECISION
FACTUAL MATRIX
1. At the inception, the present complaint was filed by Sh. Rajiv Thukral (hereinafter
"complainant") against M/s Vision Glasses Pvt. Ltd. (hereinafter "accused no.1"), Sh.
Mohammad Ekhlak (hereinafter "accused no.2") and Sh. Mohammad Babar under
Section 138 of the Negotiable Instruments Act, 1881 (hereinafter "NI Act").{Hereinafter,
accused no.1 and 2 are collectively referred to as "accused"}.
1. The substance of allegations, as contained in the complaint, are as follows:
(a) That Mohammad Ekhlak and Mohammad Babar were directors of accused no.1
company, M/s Vision Glasses Pvt. Ltd. who had requested the complainant for a
friendly loan of Rs. 21,00,000/- on 30.04.2014 and as asked, the complainant
advanced the loan to the accused persons.
(b) That the accused persons, in discharge of the aforementioned liability, issued and
delivered cheque bearing no. 813303 dated 12.10.2014 amounting to
Rs.21,00,000/- drawn on Punjab National Bank, Najafgarh Village, New Delhi-
110043 in favour of the complainant in discharge of their legally enforceable debt.
(c) The aforesaid cheque was presented by the complainant for payment through his
banker -Punjab National Bank, Bank Street, Karol Bagh for its encashment,
however the same was returned as dishonoured vide cheque returning memo dated
28.10.2014 with the remarks "Account is NPA with insufficient O/S".
(d) Thereafter, the complainant sent a legal notice dated 25.11.2014 by way of speed
post. It is the case of the complainant that despite service/deemed service of legal
notice, the accused persons failed to repay the cheque amount within the
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stipulated period and hence, the present complaint was filed on 09.01.2015 under
section 138 of the NI Act.
APPEARANCE OF THE ACCUSED
2. At the stage of leading pre-summoning evidence, Mohammad Babar was dropped by
the complainant. Thereafter, pre-summoning evidence was led by the complainant and
upon finding a prima facie case against the accused, accused no.1 and accused no.2
were summoned to face trial vide order dated 12.01.2015, and after their appearance,
notice of accusation under Sec. 251, The Code of Criminal Procedure, 1973
(hereinafter "CrPC") was served upon accused no.2 and accused no.1 through accused
no.2 on 21.02.2015 to which they pleaded not guilty and claimed trial. Although
accused no. 2 admitted his signature on the cheque in question, however he denied the
receipt of legal notice. At the time of framing of notice under Sec. 251 CrPC, the
accused took the following plea of defence:
"The cheque of company was misused from its office. The same has
been misused by the complainant."
3. Considering the plea of defence raised and in view of the application filed by the
accused under Sec.145(2), NI Act, accused was allowed the opportunity under Sec.
145(2) NI Act, to cross-examine the complainant vide order dated 24.03.2015.
4. During the course of trial, the complainant led the following oral and documentary
evidence in order to prove his case beyond reasonable doubt:
Oral Evidence
CW1 Sh. Rajiv Thukral (Complainant)
Documentary Evidence
Ex. CW 1/1 Cheque in question bearing no.
813303 dated 12.10.2014 in the
sum of Rs. 21,00,000/-
Ex. CW 1/2 Return Memo dated 28.10.2014
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with the remarks "Account is NPA
with insufficient O/S". with
respect to cheque bearing no.
380137
Ex. CW 1/3 Legal Demand Notice dated
25.11.2014
Ex. CW 1/4 Postal Receipt for legal demand
notice
Ex. CW 1/5 Postal Receipt for legal demand
notice
Ex. CW 1/6 Postal Receipt for legal demand
notice
Ex. CW 1/7 Internet generated tracking report
Ex. CW 1/8 Internet generated tracking report
Ex. CW 1/9 Internet generated tracking report
Ex. CW1/10 Returned Envelope with AD Card
Ex.CW1/11 Information report which was got
registered by the complainant
reporting the loss of balance sheet
for the assessment year 2014-15 at
PS Crime branch dated 21.09.2017
Ex. CW1/12 (Colly.) ITR acknowledgment along with
audited balance sheet for the
Assessment year 2015-16 and ITR
acknowledgment along with
audited balance sheet for the
Assessment year 2016-17.
Once the aforesaid evidence was led, the accused persons were given due opportunity
to cross-examine the complainant. Vide separate statement of the complainant
recorded on 06.11.2017, Cross-examination of complainant's witnesses was closed.
STATEMENT OF THE ACCUSED
5. After the completion of complainant evidence and before the start of defence
evidence, in order to enable the accused no.2 to personally explain the circumstances
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appearing in evidence against him, his statement under Sec. 313, CrPC was recorded
without oath. In his statement under Sec. 313 CrPC, the accused no.2 reiterated that
the cheque in question although bears his signature however the same was misused by
the complainant from his office and the same was never issued to the complainant. As
regards the legal demand notice, he admitted the receipt thereof and stated that he also
replied to the same.
6. Pursuant thereto, the accused entered the witness box himself and examined himself as
a witness after moving an application under Sec. 315 CrPC. He led the following
defence:
Oral Evidence
DW1 Mohammad Akhlaq (Accused)
DW1 (II) Alok Ranjan, Income Tax Inspector,
DW 2 Sunil Kumar
DW 3 Ajay Sehwal, Tax Assistant, Income Tax
office.
Documentary Evidence
Ex.DW1/1 ITR of the complainant for the financial
(colly) year 2012-2013 (AY 2013-2014), 2013-
2014 (AY 2014-15), 2014-2015 (AY
2015-16) and 2015-2016 (AY 2016-17)
Ex. DW3/1 ITR of the accused no.2 for the year 2012-
13 (AY 2013-14)
Ex. DW3/2 Letter issued by Mr. Harish Chandra,
Income Tax officer, qua ITR of accused
no.2 for the period of AY 2013 to 2016.
7. At the stage of defence evidence, the accused got examined himself first and was
accordingly named as DW-1, however inadvertently, Mr. Alok Ranjan was also named
as DW-1 on the file. For the sake of convenience and for the purposes of this
judgment, Mr. Alok Ranjan is being renamed as DW-1(II) Thereafter, DE was closed
via separate statement of the accused dated 07.05.2019 and the matter was fixed for
final arguments. At the stage of final arguments, it was observed that statement of
accused no.1 was inadvertently not recorded earlier. As a matter of abundant caution
and in the interest of justice, statement under Sec.313 CrPC of accused no. 1 company
was recorded on 16.12.2021 wherein accused no.2 answered on behalf of accused
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no.1 and reiterated that the cheque in question although bears his signature however
the same was misused by the complainant from his office and the same was never
issued to the complainant. As regards the legal demand notice, he admitted the receipt
thereof and stated that he also replied to the same. Vide separate statement of even
date, his statement on behalf of accused no.1 was also recorded where he stated that
he did not wish to lead any other defence evidence from what was already on record
and that the same defence evidence already led be also read for accused no.1.
8. Pursuant thereto, final arguments were heard in the present case. I have heard the
learned counsels on both sides and given my thoughtful consideration to the material
appearing on record.
ARGUMENTS
9. It has been argued by the Ld. Counsel for the complainant that all ingredients of Sec.
138 NI Act, have been fulfilled in the present case and that the complainant has duly
proved his case. It was argued that accused no.2 admitted his signatures on the cheque.
He argued that the defence of the accused that the cheque was stolen by the
complainant and misused to file the present complaint is false and mere storytelling
without any proof. It was contended that the testimony of DW-2 does not support the
case of the accused in any manner. He argued that the complainant has sufficiently
proved his financial capacity to advance loan worth Rs.21,00,000 to the accused. It
was argued that accused failed to raise the probable defence to disprove the case of
complainant and to rebut the presumptions under Section 118 and Section 139 NI Act.
Ld. Counsel for the complainant relied upon P.S.A. Thamotharan versus Dalmia
Cements (B) Ltd. {Crl Revision No. 11 of 2004 and Crl. M.P. No. 19 of 2004 Madras
HC} ; Gorantla Venkateswara Rao versus Kolla Veera Raghava Rao and Anr.2006
Cri. L. J. 1 (AP HC); V.S. Yadav versus Reena 172 (2010) DLT 561; Deelip Apte
versus Nilesh P. Salgaonkar 2007 (1) DCR 293 (Bom); S. Parameshwarappa & Anr.
Versus S. Choodappa 2007 Cri. L. J. 586 (Kar); Hiten P. Dalal versus Bratindranath
Banerjee AIR 2001 SC 3897; ICDS Ltd. Versus Beena Shabeer and Anr. 2002 (6)
SCC 426; Sripati Singh (since deceased) through his son Gaurav Singh versus The
State of Jharkhand & Anr. 2021 SCC OnLine SC 1002; Guddo Devi @ Guddi
CC No.513100/16 Rajiv Thukral v. Shri Vision Glasses Pvt. Ltd. Page 6 of 19
versus Bhupender Kumar {Crl. Rev. P. 1246/2019 & Crl. M. (Bail) 2090/2019 Delhi
HC} As such, it is prayed that the accused be punished for the said offence.
10. Per contra, Ld. Counsel for the accused has argued that the complainant has failed to
establish his case beyond reasonable doubt. Ld. Counsel for the accused has argued
that the cheque was stolen from his office of the accused no.1, which was later
misused by the complainant. He further argued that the complainant did not have the
financial capacity to advance a loan of Rs.21,00,000/- to the accused persons. He also
argued that the advancement of loan in itself is doubtful as Section 269 SS of Income
Tax Act prohibits a loan of more than INR 20,000 in cash which makes the present
loan transaction illegal per se and the same cannot be recovered as a legally
enforceable debt. He also argued that there is no documentary evidence on record to
prove the factum of loan and that no agreement was executed between the parties. He
further argued that complainant is into a business of money-lending as it is admitted
fact that the complainant is separately prosecuting a complaint under Section 138, NI
Act against his brother. In order to buttress his submissions, ld. Counsel for the
accused has relied upon Avon Organics Ltd., Hyd versus Pioneer Products Ltd., New
Delhi and Others 2003 (2) DCR 273 (AP HC); Shri Taher N. Khambati versus M/s.
Vinayak Enterprises, Secunderabad and others 1995 Cri. L. J 560 (AP HC); K.
Subramani versus K. Damodara Naidu (2015) 1 SCC 99 (SC); Laxminivas Agarwal
versus Andhra Semi Conductors Pvt. Ltd., Hyderabad & Ors. 2006 Cri. L. J. 2643
(AP HC). As such, it is prayed that the accused be acquitted.
INGREDIENTS OF THE OFFENCE
11. Before dwelling into the facts of the present case, it would be apposite to discuss the
legal standards required to be met by both sides. In order to establish the offence under
Section 138 of NI Act, the prosecution must fulfil all the essential ingredients of the
offence. Perusal of the bare provision reveals the following necessary ingredients of
the offence: -
First Ingredient: The cheque was drawn by a person on an account maintained
by him for payment of money and the same is presented for payment within a
period of 3 months from the date on which it is drawn or within the period of its
validity;
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Second Ingredient: The cheque was drawn by the drawer for discharge of any
legally enforceable debt or other liability;
Third Ingredient: The cheque was returned unpaid by the bank due to either
insufficiency of funds in the account to honour the cheque or that it exceeds the
amount arranged to be paid from that account on an agreement made with that
bank;
Fourth Ingredient: A demand of the said amount has been made by the payee or
holder in due course of the cheque by a notice in writing given to the drawer
within thirty days of the receipt of information of the dishonour of cheque from the
bank;
Fifth Ingredient: The drawer fails to make payment of the said amount of money
within fifteen days from the date of receipt of notice.
12. 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.
Additionally, the conditions stipulated under Section 142 NI Act have to be fulfilled.
13. Notably, the first, third, fourth and fifth ingredient have been duly proved without
there being any real controversy regarding the same.
(a) The complainant has proved the original cheque in question, Ex. CW1/1 which the
accused no.2 on behalf of accused no.1 has not disputed as being drawn on the
account of the accused. It is not disputed that the cheques in question was
presented within its validity period.
(b) The cheque in question was returned unpaid vide return memo dated 28.10.2014
Ex. CW1/2 due to the reason, "Account is NPA with insufficient O/S".
(c) The complainant has proved on record the legal notice vide Ex. CW1/3 dated
25.11.2014, postal receipts vide Ex. CW1/4, Ex.CW1/5, Ex.CW1/6 and tracking
reports Ex. CW1/7, Ex. CW1/8, Ex.CW1/9 and returned AD Card Ex. CW1/10 to
prove the fact of sending legal notice. Even the accused at the stage of recording of
statement under Sec. 313 CrPC, has admitted the receipt of legal notice.
14. On analysis of the facts and legal position stated above, the Court finds the parties to
be at variance on the primary issue i.e. whether the cheque in question were issued in
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favour of the complainant in order to discharge the legal liability of the accused which
forms the second ingredient in the Section 138, NI Act.
15. As regards the second ingredient, it has to be proved that the cheques in question were
drawn by the drawer for discharging a legally enforceable debt. In the present case, the
signatures of the accused on the cheques in question are not denied. Under the NI Act,
once the accused admits his signatures on the cheque, certain presumptions are drawn,
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.
The second presumption is contained under Section 139 of NI Act. The provision 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 word
"shall", which makes raising the presumption imperative for the court, once the
foundational facts required to raise the presumption are proved {Reliance is placed
upon Hiten P. Dalal vs. Bratindranath Banerjee (2001) 6 SCC 16}.
16. Further, 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) and 139, 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 theAct
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 probable defence. The standard of proof for
rebutting the presumption is that of preponderance of probabilities.
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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."
17. The presumptions raised under Section 118(b) and Section 139 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 either there
was no legally enforceable debt or other liability. In the present case, Ld. LAC for the
accused has raised many defences to rebut the presumption, which are discussed
hereinbelow:
THAT THE CHEQUES IN QUESTION WAS STOLEN AND MISUSED
18. The accused have taken the plea that the cheque in question was stolen and hence,
misused by the complainant from the office of the accused company. The accused no.2
entered the witness box and examined himself as Defence Witness, DW1. In his
examination-in-chief, the accused no.2 states that the cheque was stolen by the
complainant from his office.
19. This defence of the accused does not inspire confidence of the court as it fails to stand
the test of cross-examination. The accused no.2 states in his examination-in-chief that,
one of his friends, Mr. Sunil Kumar had seen the complainant stealing the cheque from
his office. However, during his cross-examination, the accused no.2 states that he was
alone at his office when the complainant had stolen the cheque in question. Although
he states that his friend, Sunil was the one who saw the complainant stealing his
cheque, however he himself admits that Sunil did not inform him about the stealing of
the cheque at that time and it was only through the legal demand notice sent to the
accused by the complainant, that he came to know about the misuse of the cheque.
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20. In order to prove that cheque in question was stolen by the complainant, the accused
no.2 got examined Sunil Kumar as DW-2. DW-2, Sunil Kumar failed to corroborate
the version of the accused no.2 qua stealing of cheque by the complainant. He stated in
his examination-in chief that the complainant in the present case is known to him since
2011 and that he along with the complainant used to visit the office of the accused
where on several occasions the complainant was left alone in the office. He further
stated that on one such occasion, the complainant was left alone in the office of the
accused as DW-2 Sunil had gone to meet the accused no.2 at his residence, which was
near to his office. This goes contrary to the version of the accused no.2 at the stage of
his examination where he had stated that he was alone in the office at the time of
stealing of cheque. The versions put forward by the accused no.2 and DW-2 as regards
the supposed stealing of the cheque by the complainant are inconsistent and lack
corroboration, thus highlighting the falsity of this defence. Even otherwise, this court
is not inclined to believe the version of DW-2 as his disposition is inimical towards the
complainant as admittedly another complaint has been filed against him by the
complainant u/s 138 NI Act. Thus DW-2 has every reason to depose falsely in favor of
accused and against the complainant.
21. This Court is unable to accept the plea of misuse of cheque when the signatures on the
cheque have been admitted by the accused during the course of trial. If the version of
the accused as to misuse of cheque has to be taken to be true, then it must also be
assumed that accused no.2 leaves his blank signed cheques in his office, within the
access of one and all, while they remain under the possibility of being stolen and
misused. This must also be seen together with the nonchalant approach of the accused
towards taking action against the complainant or reporting the factum of stealing of
the cheque by the complainant. In fact, he himself admits in his cross-examination that
he neither lodged any police complaint nor did he file any civil or criminal case
against the complainant at the time when he came to know about the stealing of that
cheque. From these circumstances, it becomes clear that the conduct of the accused
no.2 is not that of a prudent person and is unworthy of credence.
22. Further, Ld. Counsel for the accused relies on Avon Organics Ltd., Hyd versus
Pioneer Products Ltd., New Delhi and Others 2003 (2) DCR 273 (AP HC); Shri
Taher N. Khambati versus M/s. Vinayak Enterprises, Secunderabad and others
CC No.513100/16 Rajiv Thukral v. Shri Vision Glasses Pvt. Ltd. Page 11 of 19
1995 Cri. L. J 560 (AP HC);to state that filling up of a cheque amounts to alteration
which cannot be done without the consent of the party who issued the cheque. Ld.
Counsel highlights that complainant in his cross-examination has admitted having
filled up the particulars of the cheque himself and the same amounts to admission by
the complainant as to having misused the cheque. This contention of the accused lacks
merit. The law has been well-settled by the Hon'ble Supreme Court in the case of Bir
Singh vs. Mukesh Kumar Crl. Appeal no. 230-231 of 2019 decided on 06.02.2019
(Supreme Court) where the Court has held that if a signed blank cheque is voluntarily
presented to a payee, towards some payment, the payee may fill up the amount and
other particulars at a later date. The same would not dispel the presumption under
Section 139 of Negotiable Instruments Act, 1881. This aspect has also been
incorporated in Section 20 of the Negotiable Instruments Act, which empowers the
holder of an Inchoate Stamped Instrument to complete the negotiable Instrument.
23. In view of the discussion above, this defence of cheque being stolen and misused, does
not inspire confidence of the court and the same is hence rejected.
THAT THE COMPLAINANT DID NOT HAVE THE FINANCIAL CAPACITY TO
ADVANCE LOAN OF RS.21,00,000/-
24. Now coming to the argument of the ld. counsel for the accused that the complainant
did not possess sufficient financial means to advance a huge loan of Rs.21,00,000/- as
claimed in the complaint. Ld. Counsel argues that the alleged loan transaction of
Rs.21,00,000/- has not been reflected in the ITR furnished by the complainant which
makes the case of the complainant highly doubtful. On the other hand, Ld. counsel for
the complainant has relied upon the judgment of the Hon'ble Delhi High Court in the
case of Guddo Devi @ Guddi versus Bhupender Kumar {Crl. Rev. P. 1246/2019 &
Crl. M. (Bail) 2090/2019 Delhi HC to contend that the ITRs are not relevant for
adjudication of a case under Section 138 NI Act. He has further argued once the
accused has admitted the issuance of cheque, then the presumptions operate against
him and the onus to rebut the presumption is upon him and the complainant cannot be
asked to furnish proof in support of his case once presumption is drawn against the
accused.
25. It is a settled position of law that showcasing that complainant did not have adequate
financial capacity to lend money to the accused amounts to a probable defence and can
help in rebutting the presumption that is accrued to the benefit of the complainant in
CC No.513100/16 Rajiv Thukral v. Shri Vision Glasses Pvt. Ltd. Page 12 of 19
NI Cases {Basalingappa v. Mudibasappa, (2019) 5 SCC 418; K. Subramani v. K.
Damodara Naidu, (2015) 1 SCC 99}
26. To prove his financial capacity, the complainant has produced his ITR
acknowledgment along with audited balance sheets for the financial year 2014-15 (AY
2015-16) and 2015-16 (AY 2016-17) which is Ex.CW1/12. As regards ITR for the
financial year 2013-14 (AY 2014-15), the complainant submitted that the same was
reported misplaced/lost vide FIR dated 21.09.2017, PS Crime Branch Delhi vide
Ex.CW 1/11. Apart therefrom, DW-1 (II), Mr. Alok Ranjan, Income Tax Inpector,
Civil Centre, defence witness has also brought on record, ITR of the complainant for
the financial year 2012-2013 (AY 2013-2014), 2013-2014 (AY 2014-15), 2014-2015
(AY 2015-16) and 2015-2016 (AY 2016-17) which is Ex DW1/1 (colly). Thus, in
totality, the Income tax returns of the complainant firm from 2013-2016 have been
brought on record for the perusal of the court.
27. Financial Capacity of an individual or a business ought not be judged from isolated
transactions and must be gauged over a period of time. In the present case, the loan is
stated to have been given to the accused on 30.04.2014, therefore the ITR for the
financial year 2012-13 and 2013-14 becomes relevant. Page 4 of the Ex.DW1/1 shows
sales/gross receipts of business of complainant for the financial year 2012-13 (AY
2013-14) to be at Rs. 9,48,50,568. Page 28 of Ex.DW1/1 shows sales/gross receipts of
business of complainant for the financial year 2013-14 (AY 2014-15) to be at Rs.
14,80,03,259. Page 55 of Ex.DW1/1 shows sales/gross receipts of business of the
complainant for the financial year 2014-15 (AY 2015-16) to be at Rs. 6,40,92,183/-.
Thus, it becomes clear that the turnover for the firm of the complainant for three
consecutive financial years ran into crores of rupees, building a strong case of
adequate financial capacity of the complainant to be able to have lent a loan of
Rs.21,00,000/- to the accused.
28. Ld. Counsel for the accused has argued that the 'cash in hand' for the complainant
firm as on 31.03.2015 stood at Rs.725/- making it a case of lack of financial capacity
of the complainant to advance the loan in question. This argument of the counsel of
the accused lacks merit. 'Cash in hand' worth Rs.725/- is the amount remaining with
the complainant as on 31.03.2015, i.e., the end of financial year and the same cannot
be a yardstick to determine the financial capacity of an individual. Alternatively, 'Cash
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in hand' with the complainant firm as on 31.03.2014, i.e., one month prior to the
advancement of loan to the accused was Rs.54,36,634/- as is evident from ITR return
for the financial year 2013-14 (AY 2014-15), at page 27 of Ex.DW 1/1 (Colly.)
29. It is the case of the complainant that he runs a footwear business since the last 35 years
and averagely in the year 2012-2014, the turnover of the firm of the complainant ran
into crores, thus making huge amount of money. Therefore, financial capacity of the
complainant has been duly proved.
THAT THERE IS NO PROOF ON RECORD TO SUGGEST THAT LOAN WAS
GRANTED BY THE COMPLAINANT TO THE ACCUSED
30. Ld. Counsel for the accused has argued that there is no documentary evidence to
establish the factum of grant of loan. He submits that no agreement or document has
been executed between the parties as regards the advancement of loan. It was further
argued on behalf of the accused that Section 269 SS of Income Tax Act prohibits a
loan of more than INR 20,000 in cash, and accordingly, the existence of the said
provision creates a doubt that an amount of Rs.21 Lacs would have been given in cash
as loan. He submitted that since the said loan was in violation to the provisions of the
Income Tax Act, 1961, therefore, the same was not an enforceable debt.
31. This Court is unable to accept the arguments of the accused. The contention that the
debt owed by the complainant was rendered unenforceable by virtue of the provisions
of the Income Tax Act, 1961 is unmerited. Section 269SS of the Income Tax Act, 1961
prohibits making of any payment in cash above a sum of ₹20,000/-. It is a settled
position of law that the breach of Section 269 SS of the Income Tax Act does not make
such a transaction null & void (Sheela Sharma v. Mahendra Pal, 2016 SCC OnLine
Del 4696; Dilip Chawla v. Ravinder Kumar, 2017 SCC OnLine Del 9753; Guddo
Devi @ Guddi versus Bhupender Kumar {Crl. Rev. P. 1246/2019 & Crl. M. (Bail)
2090/2019 Delhi HC). Thus, any person violating the same would attract imposition
of penalties under the said Act. However, the same does not render the said debt un-
enforceable or precludes the lender from recovering the same.
32. Ld. counsel for the accused also drew attention to the cross-examination of the
complainant where he admits having lent loan to the brother of the accused no.2 other
than the accused no.2 and also admits having lent money to other persons as well. He
also pointed out the testimony of DW-2 who also admits having lent money from the
CC No.513100/16 Rajiv Thukral v. Shri Vision Glasses Pvt. Ltd. Page 14 of 19
complainant. After entering the witness box, the accused also stated that the
complainant had filed 5-6 cases against other persons namely Sunil Kumar, Ashok
Kumar. He argued that these circumstances clearly established that the complainant
was a money lender and he operated this business regardless of any regulations. This
contention of the accused is unmerited. In the present case, there is no material to
conclude that the respondent was carrying on the business of advancing loans. Merely
because the respondent had lent money to three or four persons, did not lead to the
inference that the respondent had been carrying out the activity of money lending as a
business.
33. In order to prove the present loan transaction, the complainant has brought on record
ITR acknowledgement for the financial year 2014-15 (AY 2015-16) along with
audited balance sheet certified by his chartered accountant which is Ex. CW1/12
(colly). Balance sheet for the complainant company as on 31.03.2015 is shown on
page 2 of Ex.CW1/12(Colly), and under the column of Assets, an entry of
Rs.13,305,319 is shown against the category "loans and advances". The details of
loans and advances is provided in Annexure D of the audited balance sheet which is
shown on page 7 of Ex.CW1/12(Colly). In the list of loans and advances for the
financial year 2014-15 (AY 2015-16), an entry of Rs.22,50,000/- is reflected as against
Vision Glasses which is Accused no.1 in the present case, similarly an entry of
Rs.21,00,000/- is reflected as against Diamond Opticals.
34. Perusal of the ITR acknowledgment for the next financial year 2015-16 (AY 2016-17)
along with audited balance sheet of the complainant firm certified by chartered
accountant, which is a part of Ex.CW1/12 (Colly) at page 10 reveals an entry of
Rs.13,305,319 against the category "loans and advances". Annexure D to the balance
sheet for 2015-16 (AY 2016-17) at page 15 of Ex.CW1/12(Colly) reveals a similar
entry of Rs.22,50,000/- against Vision Glasses which is accused no.1 in the present
case and a similar entry of Rs.21,00,000/- against Diamond Opticals.
35. At the stage of final arguments, specific query was put to the complainant as to the
abovesaid figures to which the complainant stated that 'Diamond Opticals' is the firm
of the brother of the accused, Mr. Sarfaraz to whom a loan of Rs.22,50,000/- was
granted and similarly, a loan of Rs.21,00,000/- was granted to the accused firm 'Vision
Glasses'. The complainant however stated that inadvertently, the entry of loan of
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Rs.21,00,000/- has been shown against 'Diamond Opticals', whereas the entry of loan
advancement worth Rs.22,50,000/- has been shown against the accused firm 'Vision
Glasses' when infact, the truth is vice-versa. The complainant described the
interchange of figures as an inadvertent error as he stated that both were firms of
brothers, both of whom had taken loan from him, so it was possible that their loan
amounts got interchanged. Upon specific query put by the court at the stage of final
arguments, it was confirmed by the accused that 'Diamond Opticals' was infact the
name of the firm of the brother of the accused, Mr. Sarfaraz.
36. Although the court cannot base its judgement on surmises and conjectures but some
circumstances do point towards the possibility of there being an interchange of loan
entries against 'Diamond Opticals' and 'Vision Glasses'. One such circumstance being
specific suggestion put by the accused to the complainant in his cross-examination
dated 02.03.2017, as to whether he has filed another case against the brother of the
accused, Mr. Sarfaraz, to which he had replied in affirmative and he stated alleged
amount of the said case is about Rs.22,50,000/-. Even in his examination-in-chief as
DW-1, the accused stated that another case has been filed by the complainant against
his brother, Sarfaraz.
37. Even otherwise, if it is to be believed that there was no interchange of loan entries
between Vision Glasses and Diamond Opticals, even then the loan shown in the
audited balance sheet to have been paid to the firm of the accused stands at
Rs.22,50,000/- whereas the cheque in question is of a deficit amount, i.e.,
Rs.21,00,000/-. May be, if the total cheque amount exceeded the alleged amount of
loan, a slender doubt might have arisen, but, in the present matter, the cheque amount
is lesser than the amount of loan said to have been shown against the entry 'Vision
Glasses' in the audited balance sheet of the complainant firm Ex. CW1/12 (Colly).
38. In order to further prove his defence, the accused has gotten examined DW-3, Mr.
Ajay Sehwal, Tax Assistant, income Tax Office who brought on record the ITR of
Mohd. Ekhlak for the financial year 2012-2013 (AY 2013-14) which is Ex.DW3/1, to
prove that the ITR of the accused no.2 is silent upon receiving friendly loan worth
Rs.21 Lakhs by the complainant on 30.04.2014, as alleged in the complaint. This
contention of the accused is unmerited. Ordinarily, any prudent business person would
prefer to transact by cheque while lending money, but it is quite often noticed that the
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cash transactions in the business would allow huge sum of money as cash, which
sometimes are shown in the books of account as cash on hands or otherwise as amount
available on books. Assuming that cheque transaction of lending of amount is absent
and income-tax returns also do not reflect such amount, that at the best would hold the
assessee or lender liable for action under the Income-tax laws, however, if the
complainant succeeds in showing the lending of amount, the existence of legally
enforceable debt cannot be denied. (Rohitbhai Jivanlal Patel versus State of Gujarat
and another (2019) 18 SCC 106 Supreme Court)
39. In the case of Rohitbhai Jivanlal Patel (supra), it has been held by the Hon'ble
Supreme Court that once the presumption under Section 139, NI Act has been drawn
against the accused, then onus shifts to the accused and unless the accused discharges
the onus by bringing on record such facts and circumstances as to show the
preponderance of probabilities tilting in his favour, any doubt on the complainant's
case cannot be raised for want of evidence regarding the source of funds for advancing
loan to the accused-appellant. The aspect relevant for consideration has to be as to
whether the accused-appellant has brought on record such
facts/material/circumstances which could be of a reasonably probable defence.
40. Law is trite that Section 139, NI Act is a reverse onus clause where the accused ought
to disprove the presumption raised against him by showing cogent and convincing
evidence. (Bharath Barrel and Drum Manufacturing Company v. Amin Chand
Pyarelal (1999) 3 SCC 35; Rangappa v. Sri Mohan, 2010 (11) SCC 441). Even
Section 102, Indian Evidence Act places onus of proof upon the accused, in a situation
where presumptions already stand in favour of the complainant and against the
accused.
41. While rejecting the finding of acquittal passed by the Trial court in a case under
Section 138 NI Act, the Hon'ble Supreme Court in the case of Rohitbhai Jivanlal
Patel (supra) held as follows:
"19. ...The observations of the Trial Court that there was no
documentary evidence to show the source of funds with the respondent
to advance the loan, or that the respondent did not record the
transaction in the form of receipt of even kachcha notes, or that there
were inconsistencies in the statement of the complainant and his
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witness, or that the witness of the complaint was more in know of facts
etc. would have been relevant if the matter was to be examined with
reference to the onus on the complaint to prove his case beyond
reasonable doubt. These considerations and observations do not stand
in conformity with the presumption existing in favour of the
complainant by virtue of Sections 118 and 139 of the NI Act. Needless
to reiterate that the result of such presumption is that existence of a
legally enforceable debt is to be presumed in favour of the
complainant. When such a presumption is drawn, the factors relating
to the want of documentary evidence in the form of receipts or
accounts or want of evidence as regards source of funds were not of
relevant consideration while examining if the accused has been able
to rebut the presumption or not..."
42. Thus, Section 138, NI Act does not prescribe a mandatory requirement that loan
transactions must be reduced into writing and therefore, absence of the same does not
falsify the case of the complainant. It is an admitted fact that the complainant visited
the the office of the accused from December 2013 to April 2014, atleast 20 times. It is
further the case of the complainant that the loan was friendly. In such circumstances,
the absence of a written loan agreement does not rebut the presumption against the
accused, especially when the complainant despite having given the loan amount in
cash, has been able to prove adequate financial capacity to advance loan worth Rs.21
lacs to the accused.
CONCLUSION
43. The present complaint case has been prosecuted against accused no. 1 M/s Vision
Glasses Pvt. Ltd. and accused no.2 Mohammad Ekhlak. Section 141 of the NI Act lays
down that when the person committing an offence under section 138 is a company,
then every person who, at the time the offence was committed, was in charge of, and
was responsible to the company for the conduct of the business of the company, as
well as the company, shall be deemed to be guilty of the offence and shall be liable to
be proceeded against and punished accordingly.
44. In the present case, the cheque has been drawn by accused no.1 company upon its
account and accused no. 2 has signed the cheque in question for and on behalf of
accused no. 1 company. In his statement under Section 313 CrPC, accused no.2 admits
that accused no.1 is company and he also admits having signed the cheque in question
CC No.513100/16 Rajiv Thukral v. Shri Vision Glasses Pvt. Ltd. Page 18 of 19
as authorized signatory as well as Director of accused no.1 company. Even otherwise,
it has not been denied, whether expressly or impliedly by accused no.2 that he was not
a director of accused no.1 company. Infact vide order dated 21.02.2015, the specific
submission that accused no.2 shall represent accused no.1 has been recorded. Further,
it has been admitted by accused no.2 during the span of the case that he has signed the
cheque in question for and on behalf of accused no.1 company, which makes him
prima facie vicariously liable in view of the law laid down in National Small
Industries Corp. Ltd. v. Harmeet Singh Paintal, 2010 (2) SCALE 372.
45. The above discussion cumulatively leads this Court to conclude that, the complainant
succeeded in proving that the accused no.2 had issued the cheques in question for and
on behalf of accused no.1 company in discharge of legally enforceable liability and no
probable defence for rebutting the presumptions raised under Sec. 118 and Sec.139 NI
Act could be raised by the accused.
46. Resultantly, the complaint of the complainant Sh. Rajiv Thukral is allowed and the
accused no.1 M/s Vision Glasses Pvt. Ltd. and accused no.2, Mr. Mohammad Ekhlak
are hereby convicted of the offence under Section 138 of the Negotiable Instruments
Act, 1881. Let the convict be heard separately on quantum of sentence.
47. A copy of this judgment be given free of cost to the convict.
ISHA Digitally signed
by ISHA SINGH
ORDER:CONVICTED SINGH Date: 2021.12.23 17:34:19 +05'30' (Isha Singh) Announced in open court MM / NI Act -03 / Central on 23.12.2021 Delhi /23.12.2021 Note: This judgement contains 19 pages and each page has been signed by me.
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