Delhi District Court
Icici Bank Ltd. vs . Geeta Enterprises. on 19 December, 2011
1
IN THE COURT OF SHRI KISHOR KUMAR, METROPOLITAN
MAGISTRATE, DWARKA COURTS, NEW DELHI
In Re: C.C No. 249/11
U/s 138 Negotiable Instrument Act.
1. C.C No. : 249/11
2. Date of Institution : 04.03.2011
3. Name of the complainant : ICICI Bank Ltd.
is parentage and residence: S.D.Tower, 2nd Floor,
Rohini, Sector8, New Delhi.
4. Name of the accused
his parentage and residence: M/sGeeta Enterprises,
through Proprietor
Sh.Sanjeev Suri
G26,327328, 3rd floor,
Sector3, Rohini, New
Delhi110085, through
5. Date when judgement : Not reserved.
was reserved
6. Date when Judgment : 19.12.2011
was pronounced
7. Offence Complained of : U/s 138 N.I.Act.
8. Plea of accused : He pleaded not guilty
& claimed trial.
9. Final Judgment : Convicted
JUDGEMENT
1. The complainant ICICI bank Ltd. has filed the present CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
2
complaint U/s 138 r/w Section 141 of the Negotiable Instrument Act against the accused M/s Geeta Enterprises through its sole proprietor Sh. Sanjeev Suri on the allegations that the accused had approached the complainant bank and requested for over draft facility. The complainant bank on the request of the accused sanctioned the overdraft facility under the scheme of overdraft facility (small business loan) vide loan/facility account No. 629205028553 and accordingly disbursed the said overdraft facility to the accused.
2. At the time of grant of overdraft facility, the accused had promised to make timely and regular payment of the said overdraft facility without any default. However, the accused miserably failed to abide by the terms and conditions of the overdraft facility by not making regular repayment. The accused in discharge of his liability/debt had issued cheque bearing No. 839112 dated 07.12.2010 for Rs. 9,07,000/ drawn on Bank of Baroda in favour of complainant bank. The aforesaid cheque was presented to the banker of the accused for encashment but the same was returned unpaid with the remarks "exceeds arrangements" vide cheque returned memo dated 18.12.2010. Thereupon the complainant bank had issued a legal demand notice u/s 138(b) dated 05.01.2011 through speed post on 06/01/2011 to the accused demanding sum of Rs. 9,07,000/ (amount of the dishonored cheque). However, the CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
3
accused failed to make the payment of the dishonored cheque within the mandatory period of 15 days from receipt of demand notice. Hence, the present complaint having been filed against the accused by the complainant bank u/s 138 of N.I.Act for summoning, prosecuting and punishing the accused in accordance with law as well as for passing further appropriate orders u/s 357 .P.C.
3. Finding prima facie case against the accused, summons were issued to him who had appeared as proprietor of M/s Geeta Enterprises and chosen to contest the present complaint. Notice u/s 251 .P.C for the offence punishable u/s 138 of N.I Act was framed against the accused to which he pleaded not guilty and claimed trial. The accused disclosed his defence that he took business loan from the complainant bank. However, he suffered heavy loss in his business and, therefore could not repay the loan amount. He further urged that he did not receive any legal notice in the present case.
4. The accused has cross examined CW1 i.e the GPA appearing on behalf of the complainant bank. After cross examination of the complainant witness, statement of the accused was recorded u/s 313 .P.C wherein initially the accused declined to lead any defence evidence and submitted that he had given blank CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
4
cheque as security though it was signed by him. Number of cheques were given by him. The cheque was given about four years ago. Later on, the accused on 30.7.11 had moved an application u/s 315 and 91 Cr.P.C wanting himself to be examined as his own defence witness u/s 315 Cr.P.C. The said application was allowed subject to cost of Rs.500/. Consequently, the accused has examined himself as his own witness as DW1 on S.A u/s 315 Cr.P.C.
5. During the course of proceedings, the accused had moved an application u/s 340 Cr.P.C for prosecuting CW1 i.e the AR for the complainant for allegedly giving false evidence/affidavit in the court to seek conviction of the accused. Arguments on the said application along with the final arguments on the present case has also been heard simultaneously and the application of the accused u/s 340 Cr.P.C shall also be decided through the present judgment.
6. Subsequently, vide order dated 28.9.11, the request of the accused for recalling of CW1 was allowed on his application u/s 311 Cr.P.C and CW1 has further been subjected to cross examination by Ld.Counsel for the accused.
7. CW1 in his examination in chief by affidavit has deposed on the same wave and length as written in the complaint u/s 138 N.I CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
5
Act. The power of attorney has been exhibited is Ex.CW1/A. The cheque issued by the accused in favour of the complainant bank has been proved on record as Ex.CW1/B, statement of account of the accused is Ex.CW1/C, the cheque return memo dated 18.12.10 is Ex.CW1/D. The legal demand notice dated 5.1.11 sent on 6.1.11 is Ex.CW1/E, the postal receipt is Ex.CW1/F. The affidavit in evidence has been exhibited as Ex.CW1/G.
8. I have heard Ld.counsel for the complainant, Ld.counsel for the accused and have carefully gone through the record.
9. It is submitted by Ld.counsel for the complainant that as per the evidence oral as well as documentary brought and proved on record, the complainant bank has been successful in proving its case against the accused that the accused had availed the loan facility from the complainant bank and the accused in discharge of his liability/debt had issued the present cheque in question in favour of the complainant bank which on its presentation to the banker of the accused stood dishonored for the reasons "Exceed Arrangements". Therefore, the present case stands proved against the accused beyond reasonable doubt.
10. On the application u/s 340 Cr.P.C moved by the accused, it has been argued by Ld.counsel for the complainant that CW1 has CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
6
not deposed falsely in any manner whatsoever. The CW1 has deposed as per record. The application u/s 340 Cr.P.C has been moved by the accused to drag on the proceedings and to mislead the court. It is further argued by Ld. Counsel for the complainant that defence of the accused is sham one baseless, concocted and deserves to be dismissed. Not only this, the accused in his cross examination as DW1, in his examination u/s 313 Cr.P.C has admitted his liability towards the complainant bank when he had stated that he could not repay the installments to the complainant bank since he suffered heavy losses in his business. No where the accused has stated that the cheque was given as security.
Ld.counsel for the complainant has relied upon 2008(2) JCC (NI) 169, Ravi Chopra Vs. State and Anr., Vijender Singh Vs. Eicher Motors Limited and Anr., 172 (2010) DLT 561 in support of its case.
11. Per Contra, it is argued by Ld.counsel for the accused that the cheques (34 cheques) were given by the accused to the complainant bank at the time of disbursement of over draft facility in 2007 to the complainant bank as security cheques which were only signed by the accused. At the time of handing over of the cheque in question, there was no liability/debt upon the accused qua the complainant bank. The cheque in question has been CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
7
misappropriated by the complainant bank in the present case. The CW1 has filed a false, fabricated and wrong affidavit in evidence before the court and, hence, he deserves to be prosecuted under the provisions of Section 340 Cr.P.C. It is further argued by Ld.counsel for the accused that case of the complainant bank is belied from their own conduct and manner as the complainant bank had also filed a civil suit against the accused subsequent to filing of the present complaint, claiming lessor amount than the amount of the cheque in question. The documents placed on record by the complainant bank are false and manipulated , therefore cannot be relied upon for any purpose whatsoever. The deposition of CW1 can not be relied upon for any purpose as there are material in consistencies and contradictions in the examinationinchief of CW1 as also his cross examination. As per the loan agreement executed between the complainant bank and the accused, no amount is due from the accused to the complainant bank. No legal demand notice u/s 138 N.I Act was ever served upon the accused. The CW1 being the employee and interested witness for the complainant bank cannot be relied upon. There is straight and consistent defence having been taken by the accused. The power of attorney is not a proper and valid document as no resolution preceding the GPA has been passed and proved on record; that the contents of the cheque in question have been filled in by the complainant bank later on as per their whims CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
8
& fancies which is apparent from the naked eyes as there are different inks thereon. Ld.counsel for the accused has referred various clauses of the master facility agreement submitting that according to those clauses the accused is not liable to make any amount/sum to the complainant bank. Ld.counsel for the accused has relied upon 2008 (2) DCR 622, Manjit Singh Obhan Vs. State of Maharashtra & Ors. and 2010, Crl. L.J 1971, Adarsh Gramin Sahakari Pat Sanstha Maryadit, Wadi, Nagpur Vs. Dattu Ramdasji Paithankar , submitting that if the cheque is filled in with different writings which shows doubt over the truthfulness/ integrity of the complainant who failed to explain when and how the cheque in question reached to its hand and whereas, the accused firmly stands that the cheque in question was given in blank at the time of granting over draft loan facility 4 and 41/2 years back , the complaint deserves to be dismissed. Ld.counsel for the accused has further relied upon 2009 (1) DCR 403, Karnatka High court as also 2008 (1) DCR 65, Madras High Court in support of its case that blank cheque having been filled in later on by the complainant at the back of the accused, the case being bad deserves to be dismissed. At last, it is argued by Ld.counsel for the accused that the present complaint deserves to be dismissed resulting in acquittal of the accused. In support of its CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
9
application u/s 340 Cr.P.C, Ld.counsuytrwqqqwel for the accused has relied upon 174 (2010) DLT 214.
12. In rebuttal to the argument of Ld.counsel for the accused, it has been argued by Ld.counsel for the complainant that as per Section 85 of the Indian Evidence Act, the GPA Ex.CW1/A is admissible in evidence. The accused has not taken the plea either in his examination in chief as DW1 when deposed on oath, or during the course of cross examination of CW1, that the CW1 was not the authorized person on behalf of the complainant bank; that there is deemed service of the notice u/s 27 of the General Clauses Act ; that there was no need to send recall notice to the accused; that there is admission on the part of the accused that he owes the liability/debt towards the complainant bank.
13. To appreciate the contentions of both the sides , it is very much pertinent to refer to the deposition of respective witnesses and their conjoint reading with the documentary evidence.
14. The CW1 in his affidavit in evidence has deposed that he is authorized representative of the complainant bank and is duly authorized for and on behalf of the complainant bank to do acts and things as may be required by virtue of power of attorney. He is fully conversant with the facts of the present case and the CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
10
submissions made in the complaint on the basis of information received and derived from the record of the complainant bank maintained in usual and ordinary course of business. The CW1 has further deposed that accused had approached the complainant and requested for over draft facility. At the request of the accused, the complainant bank had sanctioned the over draft facility to the complainant vide account No.629205028553. The accused had promised to make timely and regular repayment of the said over draft facility without default but the accused miserably failed to abide by the terms and conditions of the over draft facility. The accused in discharge of his liability/debt had issued the present cheque in question No.839112 dated 7.12.10 for Rs.9,07000/ drawn on Bank of Baroda in favour of the complainant bank. The said cheque was presented to the banker of the accused which stood dishonored for the reasons "Exceed Arrangements" . Thereafter, the complainant bank had sent legal notice dated 05.01.11 to the accused demanding amount of the dishonored cheque but the accused failed to pay the same within the stipulated time.
15. CW1 has been cross examined by Ld.counsel for the accused. CW1 has deposed that he is an employee of the complainant bank and further admitted that original power of attorney has not been filed on record. The General Power of CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
11
Attorney Ex.CW1/A is signed by Sh.Sandeep Bakshi, Dy.Manger Director, Mr. Shanthi Venkatesan, Asstt.General Manager. The CW1 denied the suggestion that power of attorney Ex.CW1/A is not granted in his favour for prosecuting the present particular conditions. Ld.counsel for the accused had put a question to CW1. In answer thereto, CW1 has deposed that request made by the accused for availing the loan facility from the complainant bank as submitted in part No.3 of the complaint is not filed on record. The over draft facility sanctioned to the accused was of 7.5 lacs. CW1 has denied the suggestion of the accused that the cheque in question Ex.CW1/B was given by the accused in blank, though signed . CW1 has further deposed that the legal notice Ex.CW1/E was sent to the accused by speed post Ex.CW1/F. CW1 has further deposed that in respect of the loan transaction/account only the present case u/s 138 NI Act has been filed. He has further admitted that AD card is not filed on record. CW1 deposed that after checking the record, then only he can say as to when the cheque Ex.CW1/B was received from the accused. He did not know whether the accused at his own had given the cheque to the complainant bank or the bank had called him to do so. CW1 has further deposed that while granting over draft facility to the customer, the cheques are not procured from him. He did not know whether is it a general practice or it had happened in the CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
12
present case that cheques are not taken from the customers in case of grant of over draft facility. CW1 further confirmed that in the present case no cheques were taken from the accused.
16. Another further opportunity was extended to the accused to cross examine CW1 on his application u/s 311 Cr.P.C. During that cross examination CW1 has admitted that it is correct that a civil suit has also been filed by the complainant bank. The copy of the said civil suit is on the record as mark A. The loan agreement Ex.DX1 bears the signatures of only Sanjeev Suri, Proprietor of M/s Geeta Enterprises. A question had been put to CW1 as and when did he first notice the default in making the installments . Answering the said question, CW1 has deposed that he first noticed about the default in making the installments when he received bounced cheque. However, CW1 did not know the date but the notice had been sent to the accused. The said default notice is not on record. CW1 further admitted that agreement mark DX1 does not bear any loan agreement number.
17. The accused has examined himself as his own witness u/s 315 Cr.P.C on oath. The accused while deposing as DW1 on SA has deposed in examination in chief that the agents of the complainant bank reached him for bank loan facilities and that he had not applied for the same. Some of the documents were signed CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
13
by him which were brought by the agents of the complainant bank. The agent of the complainant bank had asked the accused to give 34 cheques duly signed by him without date, amount and payee.
18. The accused has further deposed that he had given 34 blank cheques to the agent of the complainant bank on his demand. The accused had asked the said agent as to why they are taking the blank cheques. On this, the agent had disclosed to the accused that it is the formality . The accused has further deposed that bank had also got his signatures on some stamp papers. It is almost 4 and 41/2 years ago, the complainant bank has also filed the recovery suit against the accused. In his evidence, the accused has brought on record the complaint filed by the complainant bank for recovery against the accused and the same is mark A on record. Accused has also filed on record the statement of account pertaining to him and the same is mark B.
19. The accused as DW1 has been subjected to the cross examination by Ld.counsel for the complainant. During the course of cross examination of DW1, the accused has admitted that he had taken loan in the form of O.D facility from the complainant bank. The O.D facility sanctioned to the accused was of Rs.6 lacs. CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
14
During the course of further cross examination of DW1, the accused (DW1) was shown the loan agreement dated 06.06.07 but the accused deposed that he do not remember if it is the same one which was executed by him with the complainant bank. The certified copy of the loan agreement dated 0.6.06.07 has been marked on record as Ex.DX1 bearing the signature of accused and seal on each page. During further cross examination , DW1 deposed that he do not remember as to how many cheques were given by him to the agent of the complainant bank. The accused did not remember the number of the said 34 cheques given by him. DW1 again deposed that he do not know how to read, write and understand English. During further cross examination another statement of account pertaining to the accused has been brought on record and marked as mark B1. Mark B1 does not contain any entry pertaining to the cheque No.839112 i.e the cheque in question Ex.CW1/B. Interestingly, the DW1 has corrected that he had liability towards the complainant bank with respect to the O.D account in question. DW1 (accused) in the same breath has further admitted that if his financial condition improves and an opportunity is given to him to pay his debt/liability, he would like to do so. The accused has further admitted that statement of account Ex.CW1/C pertains to his O.D account in question.
20. The Negotiable Instrument Act 1881 was passed with a view CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
15
to streamline the banking business through negotiable instruments. Sometime it is seen that certain miscreants to cheat or deceit, issue instruments to gain and to cause losses to the genuine person and thus dishonor of cheque made an offence. At the same time, the legislature made the offence compoundable. The N.I Act being a special statute, the offence primarily based on documents, where the defaulting party would like to avoid his liability towards the bank/complainant, hence, the legislature in its wisdom had incorporated certain presumptions in favour of holder in due course of the cheque. The relevant provisions are section 118 (a) and 139 of the Act which reads as under:
118. Presumptions as to negotiable instrumentsUntil the contrary is proved, the following presumptions shall be made:
(a) of consideration ; that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration."
139. Presumption in favour of holderIt shall be presumed, unless the contrary is proved, that the holder of a CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
16
cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability".
21. Presumptions both under Sections 118(a) and 139 of the Act are rebuttable in nature.
What would be the effect of the expressions "May Presume", 'Shall Presume" and 'Conclusive Proof has been considered by this Court in Union of India (UOI) v. Pramod Gupta (D) by L.Rs and Ors., (2005) 12 SCC in the following terms:
"It is true that the legislature used two different phraseologies "shall be presumed" and "may be presumed" in Section 42 of the Punjab Land Revenue Act and furthermore although provided for the mode and manner of rebuttal of such presumption as regards the right to mines and minerals said to be vested in the Government visvis the absence thereof in relation to the lands presumed to be retained by the landowners but the same would not mean that the words "shall presume" would be conclusive. The meaning of the expressions "may presume" and "shall presume" have been explained in Section 4 of the Evidence Act,1872, from a perusal whereof it would CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.17
be evident that whenever it is directed that the court shall presume a fact it shall regard such fact as proved unless disproved. In terms of the said provision, thus, the expression "shall presume"
cannot be held to be synonymous with "conclusive proof".
In terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words 'proved' and 'disproved' have been defined in Section 3 of the Evidence Act (the interpretation clause) to mean: Proved 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 does not exist."
Applying the said definitions of 'proved' or 'disproved' to principle behind Section 118(a) of the Act, the Court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
18
existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist . For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.
22. In the present case, from the perusal of the deposition of DW1 (accused) on oath, his examination u/s 313 Cr.P.C, his defence disclosed to the notice u/s 251 Cr.P.C, the accused has not been able to put a probable defence. In other words the accused has not been able to rebut the presumption as raised against him u/s 118 (a) and 139 of the Act. The defence of the accused is not consistent and otherwise also the accused has admitted his liability/debt towards the complainant bank. 23 A cursor look of the above provision mandates that under section 139 of N.I Act a presumption is drawn against the drawer and in favour of the holder that unless the contrary is proved that the holder of a cheque received the cheque for the discharge, in whole, or in part , of any debt or any other liability.
Here I referred to the decision of the Hon'ble Apex Court in K.Bhaskaran V. Sankaran Vaidhyan Balan and Ors. AIR 1999, CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
19
Supreme Court, 3762 where almost a similar observation was held that the complainant has discharged his initial burden the onus shifted on the accused to produce rebuttal evidence against the presumption laid down in favour of the complainant.
Here the accused has not produced any evidence to discard the testimony of CW1. Therefore, the presumption is to be drawn in favour of holder of the cheque who has received it for discharge of liability. Again in view of the decision of the Supreme Court in case of Adalat Prasad Vs. Roop Lal Jindal and Ors., once the cheque has been issued and the same has been presented and upon its dishonor , the procedure prescribed for issuance of the notice had been followed, the presumption u/s 139 NI Act arises immediately.
24. In the present case, the accused has taken the plea/defence that he had given the cheque in question in blank signed by him about four years ago at the time of disbursement of the OD facility. In support of his contention, the accused has brought on record the statement of account pertaining to him mark B and alleged that the cheque in question bearing NO.839112 had been given to the agents of complainant bank at the time of availing of OD facility in the year 2007 as there is no entry of the cheque in question in exhibit mark B1 along with certain other cheques which do reflect that cheque in question along with couple CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
20
more cheques were given to the agent of the complainant bank in 2007 as security cheque. Further submitting that at that particular point of time in 2007 the accused did not owe any debt/liability towards the complainant bank of whatever nature. However, I am not convinced of the plea/defence taken by the accused in view of section 20 of N.I Act which empowers the holder to fill in the cheque on subsequent date on the accrual of the liability/debt against the payee. For the sake of convenience section 20 of the N.I Act is reproduced hereunder: Section 20. Inchoate stamped instrumentswhere one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank of having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount".
25. A bare perusal of section 20 of the N.I Act explicits that where a simple signature on blank stamp paper is delivered by CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
21
the signer in order that it may be converted into a bill, it operates as a prima facie authority to fill it up as a complete bill for any amount the stamp will cover, using the signature for that of the drawer or the acceptor or an endorser, and on like manner, when a bill is wanting in any material particular, the person in possession of it has a prima facie authority to fill up the omission in any way he thinks fit. So even if the cheque in question was given by the accused to the complainant bank in blank but signed, the accused had given prima facie authority to the complainant bank to fill the cheque in any way he thinks fit. So even if the cheque in question was given by the accused to the complainant bank in blank but signed the accused had given prima facie authority to the complainant bank to fill the cheque .
26. Coming to the another aspect of plea of the accused that he had given the cheque in question blank though signed as security. In the notice framed u/s 251 Cr.P.C, the accused has stated that he had taken business loan from the complainant bank. However he suffered heavy losses in his business and, therefore could not repay the loan amount when the above contention of the accused is read along with his deposition during cross examination as DW1 on oath, the accused has deposed that it is correct that he had liability towards the complainant bank with respect to the CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
22
OD account in question. The accused has further deposed on oath as DW1 that it is correct that if his financial condition improves and an opportunity is given to him to pay his debt/liability, he would like to do so. Accused has further endorsed on the statement of account Ex.CW1/C that the same pertains to his O.D account in question. Therefore, in view of above submissions of the accused it is established that accused had availed of OD facility from the complainant bank and owed debt/liability towards it. The plea taken by the accused that the cheque in question was given as security does not instill confidence and seems to be an after thought. This court is of the considered view that whenever a person avails any loan facility/OD facility from any financial institution, the cheques are taken from the customers for the purpose of securing their loan in the event of default from the side of customer because if such a precaution is not taken by the banks, the banks will never be able to catch hold of the defaulters.
27. It is argued by the counsel for the accused that the accused had given the blank signed cheque in favour of the complaint bank as security and complainant bank has after making material alteration in the cheque has presented the same and since there are material alterations in the cheque in question on account of amount , date etc the cheque in question should be deemed void CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
23
and should not have been presented for payment to the bank. On the other hand, it has been argued by ld. Counsel for the complainant that for the purpose of section 138 NI Act all that is to be seen is that the cheque was validly signed by the drawer.
28. For the sake of appreciation of arguments of Ld. Counsel from both the sides, section 138 NI Act is reproduced hereunder:
138. Dishonor of cheque for insufficiency etc. of funds in the account "Where any cheque drawn by a person on an account maintained by him with a banker for payment of amount of money to another person from out of that account for the discharge, in whole or in part of any debt or other liability, is returned by the bank unpaid, either because of the amount of many standing to the credit of that account is insufficient to dishonor the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
24
which may be extended to two years , or with fine which may extend to twice the amount of the cheque or with both".
29. The first part of section 138 NI Act indicates that there are two essential ingredients that have to be present in order to attract the offence u/s 138 NI Act. The first is that the cheque ought to have been drawn by the drawer in favour of the payee on account with a bank. As regards this ingredient, it has been submitted by the accused that the cheque was signed by him but it was incomplete instrument since it did not contain the material particulars. In fact, in the form the cheque was handed over to the complainant bank, it was not the cheque in the sense of term as contemplated by the NI Act. The second ingredient is that the issue of the cheque must be in total or partial discharge of the liability owed by the drawer to the payee. The argument of Ld.counsel for the accused has to be seen in the light of section 139 of NI Act which states that it shall be presumed unless the contrary is proved that the holder of a cheque received the cheque for the discharge in whole or in part of any debt or other liability.
30. The word 'cheque' has been inclusively defined under section 6 of the Act to include a bill of exchange drawn on a CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
25
specified banker and not expressed to be payable otherwise then on demand. The word 'bill of exchange ' have been defined in section 5 of the Act as an instrument in writing containing an unconditional order, signed by the maker directing a certain person to pay a certain sum of money only to , or to the order of , a certain person over to the bearer of the instrument. The expression "Negotiable Instrument " has been defined in section 13 NI Act as meaning a promissory noted, bill of exchange or cheque payable either to order or bearer.
31. From the above definitions, the essential feature of a cheque is that it has to be signed by the maker. This signing of the cheque need not be by hand alone. After the amendment to section 6 in 2002, the NI Act acknowledges that there can be an electronic cheque which can be generated, written and signed in a secure system. Nevertheless, the signing of the cheque is indeed an essential feature. But what about the other material particulars ? Can the word cheque occurring in section 138 NI Act include a blank cheque which is signed by the drawer but the material particulars of which are left unfilled at the time it was handed over to the payee? While on the one hand section 138 NI Act which contemplates a no fault liability has to be strictly construed as regard the basic ingredients which have to be shown to exist, it requires examination of the other provisions of the NI CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
26
Act in order to ascertain if a cheque that was signed but left blank can, if the material particulars are subsequently filled up and presented for payment, still attract the same liability.
32. Section 87 Effect of material alteration. Any material alteration of a negotiable Instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto unless it was made in order to carry out the common intention of the original parties. The provisions of section 87 of the NI Act are subject to sections 20 , 49, 86 and 125 .
33. While it is correct that in terms of the above provision, any material alteration to a cheque without the consent of the drawer unless it is made to carry out the common intention of the original parties thereto renders the cheque void, the expression "material alteration" has not been defined. Significantly, section 87 has been made subject to Sections 20,49, 86 and 125 NI Act. These provisions help us to understand what are not considered 'material alterations' for the purpose of Section 87.
34. Section 20 NI Act talks of "inchoate stamped instruments"
and states that if a person signs and delivers a paper stamped in accordance with the law and "either wholly blank or have written CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.27
thereon an incomplete negotiable instrument" such person thereby gives prima facie authority to the holder thereof "to make or complete as the case may be upon it, a negotiable instrument for any amount specified therein and no exceeding the amount covered by the stamp." Section 49 permits the holder of a negotiable instrument endorsed in blank to fill up the said instrument "by writing upon the endorsement, a direction to pay any other person as endorsee and to complete the endorsement into a blank cheque, it makes it clear that by doing that the holder does not thereby incurred the responsibility of an endorder."
Likewise Section 86 states that where the holder acquiesces in a qualified acceptance, or one limited to part of the sum mentioned in the bill, or which substitutes a different place or time for payment, or which, where the drawees are not partners, is not signed by all the drawees, all previous parties whose consent has not been obtained to such acceptance would stand discharged as against the holder and those claiming under him, unless on notice given by the holder they assent to such acceptance. Section 125 NI Act permits the holder of an uncrossed cheque to cross it and that would not render the cheque invalid for the purposes of presentation for payment. These provisions indicate that under the scheme of the NI Act an incomplete cheque which is subsequently filled up as to the name, date and amount is not CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
28
rendered void only because it was so done after the cheque was signed and delivered to the holder in due court.
35. The above provisions have to be read together with Section 118 NI Act which sets out various presumptions as to negotiable instruments. The presumption is of consideration, as to date, as to time of acceptance, as to transfer , as to endorsement, as to stamp. The only exception to this is provided in proviso to Section 118 which reads as under:
Provided that , where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
36. A collective reading of the above provisions shows that even under the scheme of the NI Act it is possible for the drawer of a cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up a subsequent point in time and presented for payment by the drawee. There is no provision in the NI Act which either defines the difference in the handwriting or the ink pertaining to the material particulars filled up in comparison with the signature thereon as constituting a ' material alteration' for the CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.29
purposes of Section 87 NI Act. What however is essential is that the cheque must have been signed by the drawer. If the signature is altered or does not tally with the normal signature of the maker, that would be a material alteration. Therefore as long as the cheque has been signed by the drawer, the fact that the ink in which the name and figures are written or the date is filled upon is different from the ink of the signature is not a material alteration for the purposes of Section 87 NI Act.
37. The position in law has been explained in the judgment of the Division Bench of the Kerala High Court in Lillykutty v. Lawrance 2003 (20) DCR 610 in the following words:
38. In the instant case, signature is admitted. According to the drawer of the cheque, amount and the name has been written not by the drawer but by somebody else or by the payee and tried to get it encashed. We are of the view, by putting the amount and the name there is not material alteration on the cheque under Section 87 of the Negotiable Instrument Act. In fact, there is no alteration but only adding the amount and the date. There is no rule in banking business that payee's name as well as the amount should be written by drawer himself. In the instant case Bank has never found that the cheque was tempered with or forged or there is material alteration or that the handwriting by which the CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
30
payee's name and the amount was written was differed. The Bank was willing to honour the cheques if sufficient funds were there in the account of the drawer even if the payee's name and the amount was written by somebody else other than the holder of the account or the drawer of the cheque. The mere fact that the payee's name and the amount shown are not in the handwriting of the drawer does not invalidate the cheque. No law provides in the case of cheques the entire body has to be written by the drawer only. What is material is the signature of the drawer and not the body of the instrument. Therefore when the drawer has issued the cheque whether the entire body was written by the drawer written beyond the instructions of the drawer, whether the amount is due or not, those and such matters are defenses which drawer has to raise and prove it. Therefore the mere fact that the payee's name and the amount shown in the cheque are in different handwriting is not a reasons for not honoring the cheque by the Bank. Banks would normally see whether the instrument is that of the drawer and the cheque has been signed by the drawer himself. The burden is therefore entirely on the drawer of the cheque to establish that the date, amount and the payee's name are written by somebody else without the knowledge and consent of the drawer. In the instant case, the drawer of the cheque has not discharged any burden. CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
31
Apart from the interested testimony of the drawer, no independent evidence was adduced to discharge the burden.
39. Ld.counsel for the accused during the course of arguments had taken the court through mark DX1 which is the master facility agreement emphasizing on clause 2.4 (iv), clause 2.6 as also clause 2.8. I have gone through the above referred three clauses of mark DX1 and I find them to be of no help to the accused. So far as clause 2.6 of Master facility agreement is concerned that unless otherwise specified in schedule I thereof, borrower shall repay the facilities on demand to the bank. In a general practical scenario ,it is the person who had taken loan from the bank/person that he should be much worried of repaying the same to the lender, but unfortunately, the position is reversed, and it is the person much and more worried who feels harassed and cheated who has to get repaid of his given loan amount. From the whole case, facts and circumstances, it cannot be said that accused was not aware of the fact that he had to repay the amount availed by him under the OD facility extended to him by the complainant bank.
40. Ld.counsel for the accused has further taken this court to schedule I of mark DX1 and its clause No.6, clause No.14(d) that the validity period of ODF shall expire on 24.5.08. So far as CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
32
clause No.6 of schedule I of mark DX1 is concerned, it is of no help to the case of the accused. However, commenting on clause 14(d) of schedule I, it does not mean that with the expiry of validity period of ODF on 24.5.08, the complainant will not at all be entitled to recover money from the defaulter/accused.
41. The accused has further taken the plea that the complainant bank after institution of the present complaint u/s 138 N.I Act, has filed a civil suit against the accused for recovery of Rs. 8,92,340.17. It is argued by Ld.counsel for the accused that the cheque in question is in the sum of Rs.9,07000/. Further submitting how can it be possible that a cheque will have a greater amount in case u/s 138 N.I Act and lesser amount against the same accused in a civil suit filed against him on the same set of statement of account. I am not convinced of the argument of Ld.counsel for the accused because first of all both the remedies are available to an aggrieved party to either avail of civil proceedings or criminal proceedings or both as advised. So far as there being a lesser amount in the civil suit filed against the accused, it is the choice of the complainant bank/plaintiff to claim whatever amount they like because in civil proceedings, it is the wish of the plaintiff to claim whatever sum he wants, after paying the requisite court fees.
CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
33
45. Ld.counsel for the accused has further argued that they have not received any demand notice after the dishonor of the cheque in question. The notice sent u/s 138(b) of the N.I Act is proved on record as Ex.CW1/E. It bears the name of the proprietor as Sh.Sanjeev Suri, of M/s Geeta Enterprises, G26, 327328, IIIrd floor, Sector3, Rohini, New Delhi110085. At the time of framing of notice u/s 251 Cr.P.C for the offence punishable u/s 138 N.I Act, the accused had given his address as G26, 327328, IIIrd floor, Sector3, Rohini. Not only this when the accused has examined himself as DW1 u/s 315 Cr.P.C the accused has given the above said address on record. Not only this, when the examination of the accused was conducted u/s 313 Cr.P.C, he had given the same very above mentioned address on record. The legal notice Ex.CW1/E has been sent to the accused through registered post A.D Ex.CW1/F. Ex.CW1/F bears the name of the accused as Rajeev Suri, proprietor, M/s Geeta Enterprises, G26, 327328, IIIrd floor, Sector3, Rohini.
42. There is a provision u/s 27 of the General Clauses Act which relates to the deemed service which reads as under: Sec.27Meaning of Service by post. Where any (Central Act) or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
34
expression"serve" or either of the expressions "give" or "send" or any other expression is used, then unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post".
44. No doubt section 138 of the Act does not require that the notice should be given only by post. Nonetheless, the principle incorporated in section 27 of the General Clauses Act,1897 can profitably be imported in a case where the sender has dispatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sender unless he proves that it was not really served and that he was not responsible for such non service. Any other interpretation can lead to a very tenuous position as the drawer of the cheque who is liable to pay the amount would resort to the strategy of subterfuge by successfully avoiding the notice.
45. In the present case the accused has taken a very meek and bald defence that he did not receive any legal notice from the side of the complainant bank after dishonor of the cheque in question CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
35
under 138 (b) of the Act. Contrary to the same, the accused has not been able to rebut the presumption that he is not residing and /or working for gains on the same very address as given on the notice Ex.CW1/E. The accused has everywhere given the same address as mentioned on the notice Ex.CW1/E. I have no reason to disbelieve the document Ex.CW1/F which is the receipt of bulk register for dispatch mode registered post AD, Ex.CW1/F bears the stamp of MBC Vashi, Navi Mumbai dated 6.1.11. Therefore, present case is a fit case to presume the deemed service of the notice Ex.CW1/E.
46. To curb the practice on the part of the accused persons of alleging of not having received notice of demand u/s 138 (b) of the Act as is generally in every case is taken by the accused persons in cheque bounce cases, the Hon'ble Supreme Court India in Damodar S. Prabhu Vs. Sayed Baba Lal H has held that the trial court while issuing summons to the accused persons in cheque bounce cases shall inform the accused that he can make an application for compounding of the offence at the first or second hearing of the case and in that case compounding may be allowed by the court without imposing any cost.
47. I find that the logic and the rationale behind the above referred judgement of the Hon'ble Supreme court is that when an CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
36
accused takes the plea that he did not receive any legal demand notice, still he can pay the amount of the dishonored cheque to the complainant by way of compounding before the court. Looking from another angle , it can safely be said that in the notice u/s 138(b) of the Act the complainant also demands the amount of the dishonored cheque. Therefore, through the evolution of law particularly for the cases u/s 138 NI Act, the accused persons are afforded two opportunities to make the payment of dishonored cheque to the complainant. Therefore, the saying on the part of the accused that he did not receive any notice u/s 138 (b) of the Act does not sound appalling.
48. Ld. counsel for the accused has objected to the power of attorney of the authorized representative of complainant bank contending that the resolution by virtue of which the attorney in favour of the AR has been passed , has not been brought on record, hence, the power of attorney of AR for the complainant cannot be relied upon.
49. I do not find substance in the argument of Ld. counsel for the accused addressed on GPA of AR for the complainant. The law casts a presumption to be drawn on to the power of attorney u/s 85 of the Indian Evidence Act, 1872. For the sake of ready reference, section 85 of Indian Evidence Act is reduced hereinafter CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
37
Sec. 85. Presumption as as to powerofattorney,The court shall presume that every document purporting to be a power ofattorney, and to have been executed before, and authenticated by, a Notary Public, or any court, judge, Magistrate (Indian) Consul or viceConsul, or representative (***) of the Central Government, was so executed and authenticated.
50. In view of above provision of law there is presumption of genuineness and authenticity of the GPA, executed in favour of the AR for the complainant bank. Further, I do not find any reason to doubt or not to believe the GPA Ex,CW1/ A executed in favour of AR for the complainant.
51. In AIR 1976 Delhi 263 National and Grindlays Bank Ltd. Vs. M/s World Science News and Ors., the Hon'ble Delhi High court had held that "In view of section 85 of the Evidence Act, the Court has to presume that it was so executed and authenticated. Once the original document is produced purporting to be a power of attorney so executed and attested as stated in Section 85 of the Evidence Act, the Court has to presume that it was so executed and authenticated. The provision is mandatory, and it is open to be Court to presume CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
38
that all the necessary requirements for the proper execution of the power of attorney have been duly fulfilled. There is no doubt that the section is exhaustive and there are different legal modes of executing a power of attorney, but, once the power of attorney on its face shows to have been executed before, and authenticated by, a notary public, the Court has to do presume that it was so executed and authenticated. The authentication by a Notary Public of a document, purporting to be a power of attorney and to have been executed before him is to be treated as the equivalent of an affidavit of identity. The object of the section is to avoid the necessity of such affidavit of identity".
52. Further again the Hon'ble High Court of Delhi in National and Grindlays Bank Ltd Vs. Radio Electronic Corporation Pvt. Ltd. 1978 RLR 217 had held that " A plain reading of this section shows that it makes no distinction whether the power of attorney has been executed by an individual or some one on behalf of a company. The section prescribes in clear and unequivocal terms that a power of attorney duly authenticated by a Notary Public shall raise the presumption about its execution and authentication. Authentication is not merely attestation but something more. It means that the person authenticating has assured himself of CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
39
the identity of the person who has signed the instrument as well as the act of execution. It is for this reason that the presumption under section 85, unless rebutted , stands and the document can be admitted in evidence as a document executed by the person alleged to have executed it without any further proof".
53. In AIR 1939 Bombay 347 the power of attorney in favour of one Mr.C.M.Easley was authenticated by a Notary Public, was admitted in evidence as duly executed and attested. It was held therein that : " under section 85 of the Evidence Act, the court shall presume that a power of attorney executed before and authenticated by, a Notary Public, was so executed and authenticated. The provision is mandatory, and it is open to the court to presume that all the necessary requirements for the proper execution of the power of attorney have been duly fulfilled. I may further point out that under Section 57(6), Evidence Act, the Court shall take judicial notice of, inter alia, all seals of notaries Public. It has also been held in 21 Mad 492 that there are different legal modes of executing a power of attorney, and that the provision 85 was not exhaustive".
CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
40
54. In the present case the power of attorney Ex. CW1/A had been executed on behalf of the complainant bank which has been duly authenticated by the Notary Public. In such circumstances, no further evidence was required to be produced for deriving the legal presumption pertaining to its execution and authentication.
55. So far as application of the accused u/s 340 Cr.P.C is concerned, the accused has to fulfill the conditions like that the person has given false affidavit or false evidence in proceedings before a court and that in the opinion of the court, it is expedient in the interest of justice to make inquiry against such person in relation of the offence committed by him. However, in the present case, this court is of the opinion that no such elements as mentioned herein above are fulfilled. In AIR 1973 Supreme Court 2190 the court had held that: "it is not every incorrect or false statement that makes it incumbent on the court to order prosecution. It is only in glaring cases of deliberate falsehood where conviction is highly likely that the court should direct prosecution. The court should remember that too frequent prosecution for such offenses tend to CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
41
defeat its very object and the prosecution would be resorted to only in the larger interest of the administration of justice and not to gratify feelings of personal revenge or vindictiveness or to serve the ends of a private party".
Again, in AIR 2005 Supreme court 2119 the court had held that : " where a complaint is lodged before the court complaining about commission of an offence, the court is not bound to make the complaint. The complaint would be made only if it is expedient in the interest of justice to do so. The expediency would be judged by the court by weighing not by the magnitude of the injury suffered by the person effected by such offence but having regard to the effect or impact of that offence upon administration of justice".
Therefore, the application of the accused u/s 340 Cr.P.C being without merits is hereby dismissed. The case law relied upon by Ld.counsel for the accused is not applicable to the facts and circumstances of the present case.
56.In view of the above discussions, and the law laid down by the Superior Court, the complainant ICICI Bank Ltd. has been successful in proving its case against the accused CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
42
beyond reasonable doubt that the accused availed of overdraft facility (smart business loan) and accused in discharge of his liability/debt had issued cheque Ex.CW1/B bearing No.839112 dated 7.12.10 for a sum of Rs.9,07000/ ( Nine lac seven thousand) drawn on Bank of Baroda, Chandni Chowk Branch in favour of complainant bank and the said cheque on its presentation was dishonored with the remarks "Exceed Arrangement" vide cheque return memo Ex.CW1/D and further that the accused failed to make the payment of the dishonored cheque within 15 days from the date of receipt of legal demand notice Ex.CW1/E. Accordingly, the accused is held guilty of the offence punishable u/s 138 of the Negotiable Instrument Act .
57. Put up the case for argument and order on the point of sentence on 21.12.2011, at 2.00 p.m. Announced in the open court on 19.12.11.
(Kishor Kumar) Metropolitan Magistrate02 (Municipal) Dwarka Court, Dwarka, New Delhi.
CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.
43CC No. 249/11 ICICI BANK LTD. VS. GEETA ENTERPRISES.