Delhi District Court
M/S S. E. Investment vs . M/S Angel Project Pvt. Ltd on 26 April, 2022
IN THE COURT OF MS. RENU CHAUDHARY
METROPOLITAN MAGISTRATE04, EAST DISTRICT,
KARKARDOOMA COURTS, DELHI
M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd
CNR No.DLET020000982012
(a) Sr. No. of the case 45714/2016
(b) Date of offence 28.12.2011
(c) Complainant M/s S. E. Investments Ltd.
Now M/s PAISALO Digital Limited
(v.o.d. 21.08.2018).
(d) Accused, parentage and 1. M/s Angel Projects Pvt. Ltd. Add:
address GF, Angel Apartments, 619/21,
Chhhatrpur, New Delhi
2. Ishwar Verma W/o Sh. Ved
Prakash Gola.
3. Ved Prakash Gola S/o Sh. Munish
Ram R/o H. 252, Chhatarpur Village,
New Delhi.
(e) Offence complained of Section 138 of N. I. Act
(f) Plea of accused Pleaded not guilty
(g) Final Order Conviction
(h) Date of institution 14.02.2012
(i) Date when judgment was 20.04.2022
reserved
(j) Date of judgment 26.04.2022
M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.1 of 17
JUDGMENT
BRIEF FACTS:
1) Vide this judgment, this Court shall dispose of the present complaint case instituted by the complainant under the provisions of Section 138 of Negotiable Instruments Act, 1881 (as amended todate).
2) The factual matrix of the matter, as culled out from the bare perusal of the complaint is as follows: The complainant company works under the name & style M/s S. E. Investments Ltd having its registered office at S547, 2 nd Floor, School Block, Main Road, Shakarpur, Delhi carrying on financing business & Sh. Umesh Chand Gupta is the authorized signatory of the complainant company. It is stated that accused no.1 M/s Angel Projects Pvt. Ltd. took loans from the complainant company & assured the repayments thereof together with interest as per the terms & conditions of agreement dated, 31.07.2008 & 21.08.2008. In discharge of the said liability, accused no.1 issued a cheque bearing No.257251, dated 26.12.2011 for an amount of Rs.24,70,000/, drawn on Federal Bank Ltd., 6 & 7, Convenient Shopping Centre, Westend Colony, New Delhi, in favor of complainant company. The complainant company accordingly, presented the aforesaid cheque but the same was returned unpaid by the banker for the reasons M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.2 of 17 'Account closed' vide return memo dated 28.12.2011. Thereafter, Legal demand notice dated 03.01.2012 was served upon the accused no.1 to accused no.3 (accused no.2 & 3 being Director of accused no.1) upon the failure of the accused persons to pay the amount of cheque in question within the stipulated period, the complainant has filed the present complaint case u/s 138 r/w 142 of the Negotiable Instruments Act, 1881 (in short NI Act) on 14.02.2012.
3) The complainant filed its evidence by way of affidavit and led pre summoning evidence. Hence, cognizance of offence U/Sec. 138 NI Act was taken and summons were issued against accused no.1 to 3 by Ld. Predecessor v.o.d. 04.04.2012.
4) Upon appearance, notice of accusation u/s 251 Cr.P.C. was framed and served upon the accused no.2 & 3 on 23.07.2013 and plea of defence of the accused persons were also recorded on the same day in which they pleaded "not guilty" and claimed trial. The accused Ved Prakash admitted his signature on the cheque in question denying filling in the other particulars thereupon. However, the accused took the plea that although he had taken a loan of Rs. 1 crore from complainant but has already repaid the said amount to the complainant. Accused Ishwar Verma also admitted the issuance of the cheque in M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.3 of 17 question and that they had given the same to the complainant as security for a loan of Rs.1 crore taken by accused No.3 from complainant. Accused persons have admitted that they had received the legal notice dated 03.01.2012 (referred from notice of accusation u/s 251 Cr.P.C).
5) Thereafter, an application u/s 145(2) NI Act filed by the accused (s) seeking permission to crossexamine the complainant was allowed by the Ld. Predecessor vide order dated 12.11.2013 & the permission was granted to the accused persons to crossexamine the Complainant as well as his witnesses, if any.
6) In postsummoning evidence, Complainant company examined its authorized representative as CW1. CW1 adopted the presummoning evidence and reiterated the contents of the complaint. CW1 was crossexamined at length by the Ld. Counsel for the accused. During the course of his examination, CW1 categorically deposed that the complainant company has in possession the title documents of the property bearing No.257 & 260/3, Chattarpur Village, Delhi.
7) Thereafter, upon the statement of the AR of the complainant, complainant's evidence was closed v.o.d. 28.02.2019 & subsequent thereto, memorandum of M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.4 of 17 Statement of Accused U/Sec. 313 r/w 281 Cr.P.C. was recorded on 13.03.2019 wherein the accused (s) denied all the allegations levelled against them stating that being the directors of the company, they had given the cheque in question in blank signed condition to the complainant as security & they did not make payment as they were not liable to pay. The accused (s) also admitted to have received the Legal demand notice & the accused (s) wished to lead defence evidence in their favor.
8). Thereafter, DE was not led by the accused (s) & upon the Statement of Ld. Counsel for accused (s), defence evidence was closed vide order dated 17.12.2021 and the matter was listed for final arguments.
9) During final arguments, it is contented by the Ld. Counsel for complainant that the accused (s) have admitted the issuance of the cheque to the complainant & that the cheque in question bears signature of accused No.3, therefore, legal presumption of consideration U/Sec.139 N.I. Act would act against the accused (s). It is further argued that the accused (s) does not have any valid defence in the present case and they have taken false plea to avoid their liability towards the complainant.
M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.5 of 17
10) Per contra, Ld. Counsel for accused (s) argued that the complainant has failed to fulfill the basic ingredients of Section 138 N.I. Act and the complainant has further failed to prove its case even in the light of presumption of Section 139 N.I. Act, as the complainant has not proved the existence of legally recoverable debt. Written arguments were also placed on record by the accused (s).
11) I have heard the arguments advanced by both parties & gone through the case file carefully & throughly. I have considered the testimony of witnesses & perused the evidence on record.
12) This is the factual matrix of this case. In this backdrop, let us now examine the legal benchmark which is to be satisfied in order to constitute an offence under section 138 NI Act,1881.
13) In order to bring home the guilt of a person accused for the commission of an offence u/s 138 NI Act, following ingredients must be satisfied:
(i) That the impugned cheque must have been drawn by the accused on an account maintained by him;
(ii) That impugned cheque must have been issued in favor of the complainant, unless the complainant became its holder in due course M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.6 of 17 in terms of Section 9 of the Negotiable Instruments Act, 1881;
(iii) That the person must have drawn a cheque on an account maintained by him in a bank for payment of certain amount of money to another person out of that account.
(iv) That the cheque should have been issued in discharge of whole or in part of any debt or other liability.
(v) That the cheque has been presented to a bank within a period of three months from the date on which it was drawn.
(vi) That cheque is returned by the bank unpaid because of the amount of money standing to the credit of account is insufficient to honour the cheque or that it exceeds the amount arranged to to be paid from that account or any other reason.
(vii) That the payee or the holder in due course of the cheque makes a demand for the payment of said amount by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of the information by him from the bank regarding the return of cheque as unpaid.
(viii) That the drawer of the said cheque fails to make payment of the said amount to the payee or the holder in due course of the cheque within M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.7 of 17 15 days of the receipt of the said notice.
Therefore, it is only when all the abovementioned ingredients are satisfied that the offence U/Sec. 138 N.I. Act is deemed to have been committed.
14) Further, Section 139 N.I. Act provides a statutory presumption in favour of the drawer that the cheque was issued to him in discharge of a debt or other liability of a legally enforceable nature. Also the said provision must be read alongwith Section 118 of N.I. Act as per which a presumption is raised in favour of the drawer that every negotiable instrument was drawn for consideration & that every such instrument, when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration.
15) Applying the foregoing legal provisions to the facts of the instant case, it is manifest that a right has been created in the holder of the cheque. Primafacie, the holder thereof is authorized to complete the incomplete negotiable instrument. Therefore, an undated cheque or even a blank signed cheque is a valid one & it is deemed that authority is given to the due holder to fill up the details & prosecution is not always bad if it is issued against debt & not as a security.
16) Hence, in the present case, admission of issuance of the cheque to the complainant & the signature itself creates the presumption u/s 139 of NI act in favor of the complainant. Now the burden of proof shifts upon the accused (s) to M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.8 of 17 rebut the presumption that such liability does not exist. The presumption raised U/Sec. 139 of N.I.A is of legally enforceable debt or liability and it is for the accused to raise the probable defence to rebut the presumption. The standard of proof for doing so is that of "preponderance of probabilities". A trial U/Sec 138 N.I.A is structured on the premise of the reverse onus of proof theory.
17) In the case of Rangappa Vs. Srimohan, (2010) 11 SCC 441, the Hon'ble Apex Court has held that:
"keeping this in view, it is a settled position that when an accused has to rebut the presumption U/Sec.139 N. I. Act, the standard of proof for doing so is that of preponderance of probabilities.
Therefore, if the accused is able to raise a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence & it is conceivable that in some cases the accused may not need to address evidence of his/her own."
18) In this context, it is profitable to refer to the following reproduced excerpts extracted from the judgment of the Hon'ble Apex Court of India in the case of ' M/s Kumar Exports Vs. Sharma Carpets, (2009) 2 SCC 513,wherein it was held as under:
"The accused in a trial under Section 138 of the Act has two options. He M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.9 of 17 can either show that consideration and debt did not exist or that under the particular circumstances of the case the nonexistence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the Court need not insist in every case that the accused should disprove the nonexistence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the Court may either believe that the consideration and debt did not exist or their nonexistence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act."
M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.10 of 17
19) In M. S. Narayana Menon Vs. State of Kerala, (2006) 6 SCC 39, the Apex Court dealing with the statutory presumption under Sections 118(a) and 139 of the N. I. Act inter alia held as under:
"29. 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 "dis proved" have been defined in Section 3 of the Evidence Act (the interpretation clause)......
30. Applying the said definitions of "proved" or "disproved" to the 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 nonexistence 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 defense. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defense that the Court must either believe the defense to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the 'prudent man'."
M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.11 of 17
20) In the present case, the accused (s) have not disputed the factum of taking loan from the complainant. Further, the issuance of the cheque in question by the accused persons is also not disputed. The accused persons have also admitted signature of accused no.3 on the cheque in question in notice u/s 251 of Cr.P.C. Since the issuance of cheque in question by the accused (s) is not disputed, hence, presumption U/Sec.139 N. I. Act is raised and onus shifts upon the accused (s) to rebut the presumption. The standard of proof for doing so is that of "preponderance of probabilities".
21) Accused no.3 admitted his signature upon the cheque in question but denied filling in the other details thereupon. The accused persons also admitted in notice U/Sec.251 Cr.P.C. that cheque in question was given to the complainant towards security for a loan of Rs.1 crore taken from the complainant. Accused persons could not produce any document on record nor any other witness was examined by them to support their contentions. The document placed on record by the accused persons could not be read in evidence as they were not duly proved as per the provisions of the Indian Evidence Act.
M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.12 of 17
22). Reliance can safely be placed on the judgment of the Hon'ble High Court of Delhi in V. S. Yadav Vs. Reena, CRL A. No.1136 of 2010 wherein it was held that:
"Mere pleading not guilty & stating that the cheques were issued as security would not amount to rebutting the presumption raised U/Sec. 139 N.I. Act. If mere statement U/Sec. 313 Cr.P.C or U/Sec. 281 Cr.P.C of accused of pleading not guilty was sufficient to rebut the entire evidence produced by the complainant/prosecution, then every accused has to be acquitted. But, it is not the law. In order to rebut the presumption U/Sec. 139 of N.I. Act, the accused, by cogent evidence, has to prove the circumstance under which cheques were issued. It was for the accused to prove if no loan was taken, why he did not write a letter to the complainant for return of the cheque. Unless the accused had proved that he acted like a normal businessman/prudent person entering into a contract, he would not have rebutted the presumption U/Sec. 139 N. I. Act. If no loan was given, but cheque were retained, he immediately would have protested & asked the cheques to be returned and if still cheques were not returned, he would have served a notice as complainant. Nothing was proved in this case.".
23) Section 103 of the Indian Evidence Act, 1872 enunciates that the person who asserts a fact must prove the same, unless the law otherwise provides. In the present case, the onus to prove that the cheque in question was not issued to the complainant in discharge of legally enforceable liability & was misused by the M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.13 of 17 complainant was upon the accused (s), but the accused (s) failed to do so. The accused persons neither placed on record any document nor examined any witness to prove the said assertion. For the sake of arguments, even if it is assumed that the defence of the accused (s) is true, then two pertinent questions arise that why did the accused (s) not send a written notice to complainant to demand the cheque & title documents of the property back from it and why did the accused (s) not file any complaint to ensure that the cheque & title documents were not misused. The accused persons have not even placed on record anything to prove that any request was made to complainant for the return of the said cheque as well as title documents nor have proved that any complaint was made against it for return of the said cheque/documents. Therefore, mere assertions/allegations would not serve the purpose of the accused persons and something probable had to be brought on record for getting the burden of proof shifted to the complainant. The accused persons did not mention anything about the course they took to procure back the said cheque & title documents from complainant. No course was ever taken by the accused persons in support of their assertions. It is highly improbable that any prudent man who had given his property documents on security for a loan would pay back the loan without asking for return of the said documents. It does not seem plausible that if the complainant has refused to return back the property documents M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.14 of 17 even after the repayment of the loan amount, no course was taken by the accused persons to procure the documents back from the complainant. It is further hard to comprehend that the accused persons have received the Legal demand notice from the complainant but they chose not to send any rely to the same despite of the fact that they had repaid the loan amount to the complainant and their property title documents were lying with complainant. Nothing concrete against the complainant could be extracted in the crossexamination of its SPA holder as no suggestions were put to him to strengthen the defence of the accused (s) or falsify the case of the complainant. Hence, in the absence of any credible evidence the story of the accused (s) cannot be taken as a gospel truth.
24). It is noteworthy that the accused persons have stated in notice framed upon them U/Sec.251 Cr.P.C that they had taken a loan of Rs.1 crore from the complainant but has already returned the same. However, accused persons have not filed on record any document in support of the said contentions. Hence, it diminishes the credibility of the version and the defence put forth by the accused
(s).
25) As regards the defence of the accused (s) that cheque in question was a security cheque & thus complaint U/Sec.138 N.I. Act is not maintainable, is without any merits in view of the decision of the Hon'ble Apex Court in ICDS Ltd. M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.15 of 17 V. Beena Shabeer 2002 (2) SCC 426 & Credential Leasing & Credits Ltd. V. Shruti Investments & Anr. of Hon'ble High Court of Delhi decided on 29.06.2015 in Crl LP No.558/2014 wherein it was held that security cheque fall within the preview of Section 138 N.I. Act. In Credential Leasing & Credits Ltd. V. Shruti Investments & Anr., it was held that the scope of Section 138 N.I. Act would cover cases where ascertained & crystallized debt or other liability exists on the date when the cheque is presented & not only to the cases where ascertained & crystallized debt or other liability exists on the date on which it was delivered to the seller as a post dated cheque or as a current cheque with a credit period.
26) Further, the fact that the cheque was dishonoured upon presentation for the reasons "Funds insufficient" proves that the accused (s) had the knowledge of its presentment for encashment by the complainant but strangely, the accused persons never took any steps to stop the misuse of the cheque. Hence, an adverse inference can safely be drawn against the accused (s).
Conclusion
27) Having considered the entirety of circumstances, since the accused has failed to rebut the presumption raised U/Sec. 139 of N.I. Act, he is held liable for the commission of offence U/Sec.138 N.I. Act. On the other hand, the complainant has successfully discharged its burden to prove his case against the accused persons M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.16 of 17 and has proved all the necessary ingredients of Section 138 of N.I.Act.
28) Therefore, in upshot of aforesaid discussion, I return finding of conviction of accused Smt. Ishwar Verma and Ved Prakash Gola for commission of offence U/Sec. 138 of NI Act in this case.
Copy of this order be given dasti to the convict free of cost. Let the convict be heard on the quantum of sentence separately. Digitally signed by
Renu Renu Chaudhary
Chaudhary Date: 2022.04.26
16:58:39 +0530
Pronounced in the open court ( RENU CHAUDHARY)
on 26th Day of April 2022 MM04/East/KKD/Delhi
It is certified that this judgment contains 17 pages & each page is Digitally signed checked & signed by me. Renu by Renu Chaudhary Chaudhary Date: 2022.04.26 16:58:52 +0530 ( RENU CHAUDHARY) MM04/East/KKD/Delhi 26.04.2022 M/s S. E. Investment Vs. M/s Angel Project Pvt. Ltd. & Ors Page No.17 of 17