Delhi District Court
Cc Ni Act. 1109 Of 2021 Neelima Rana vs . Vinus Kumar Page No. 1 on 22 December, 2022
CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 1
IN THE COURT OF MS. AISHWARYA SHARMA,
METROPOLITAN MAGISTRATE (NI ACT) DIGITAL COURT02,
SOUTHEAST DISTRICT, SAKET COURT COMPLEX, NEW DELHI
Criminal Complaint No: CC NI ACT No.1109/2021
NEELIMA RANA ... Complainant
Versus
VINUS KUMAR ... Accused
1. Name & address of the complainant: Smt. Neelima Rana
W/o Sh. Yashpal Rana
R/o H No. 351, Gali No.8,
Lakhpat Colony, Part I,
Meethapur, Extension,
Badarpur, New Delhi110044
2. Name & address of the accused : Sh. Vinus Kumar @Vishal
R/o RZH12, H Block, Harijan
Basti, West Sagar Pur,
New Delhi 110046
3. Offence complained of : U/S 138 of The Negotiable
Instruments Act,1881.
4. Plea of accused : Pleaded not guilty.
5. Final Arguments : 16.12.2022
6. Date of Institution of case : 18.01.2021
7. Date of decision of the case : 22.12.2022
JUDGMENT
1. Vide this judgment, I shall dispose of the aforementioned complaint Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.12.22 16:59:14 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 2 case filed by the complainant Neelima Rana (hereinafter referred to as the 'complainant') against accused, Vinus Kumar (hereinafter referred to as the 'accused').
2. Factual Matrix: The complainant's case is that she had put one advertisement on OLX to sell her Hyundai Excent Car bearing No. HR 38W 8379 and after seeing that advertisement on OLX, the accused approached her in December 2018, for purchase of her vehicle. The accused visited her house in January, 2019 with request to sell said car to him, pursuant to which both the parties have executed one agreement dated 27.01.2019, for sale & purchase of car in presence of friends of accused namely Sh. Sandeep Sharma and Sh. Sagar Singh. As per the agreement the accused agreed to purchase this vehicle for consideration of Rs. 5,01,764/, out of which the accused paid Rs. 95,000/ in cash and agreed to pay balance amount in 36 Installments due with HDFC Bank and then accused also obtained possession of the vehicle. However, after payment of few installments, accused stopped making payment and when the complainant approached him for making payment and for getting the car transferred in his name, the accused has showed his inability to make further payment and requested the complainant to take possession of vehicle back upon receipt of amount of Rs. 95,000/ from the complainant pursuant to which parties executed another agreement dated 11.09.2019 repudiating the earlier agreement and accused received Rs.95,000/ from the complainant and handed over possession of the car to the complainant. On 12.11.2019, the accused again approached the complainant and requested to purchase the vehicle with a promise to pay all the pending installments as per original agreement dated 27.01.2019 along with Rs. 1,15,000/ for which, the accused affixed his signatures below his Aadhar Card annexed with the agreement to sell and also issued two postdated cheques in question i.e. bearing No. 000003 for sum of Rs.
Digitally signed AISHWARYA by AISHWARYA SHARMA SHARMA Date: 2022.12.22 16:59:22 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 3
1,15,000/ dated 21.09.2020 and cheque bearing NO. 000005 Rs. 86,000/ dated 28.09.2020, drawn on Punjab & Sindh Bank, Sadh Nagar, Branch, New Delhi 110045 (hereinafter referred to as cheques in question). When the said cheques were presented by the complainant i.e. YES BANK, Mohan Estate, Delhi, the same were dishonored vide returning memo dated 10.11.2020 for the reason "Funds Insufficient". The complainant then issued one legal demand notice dated 01.12.2020, through registered post at the address of the accused requiring him to make the payment of cheque amount within 15 days of the receipt of the notice. However, the accused did not come forward to repay this amount within the prescribed period. Hence, being aggrieved, the complainant filed the present complaint under section 138 of The Negotiable Instruments Act, 1881 on 18.01.2021 and prayed that the accused be tried and punished under section 138 of The Negotiable Instruments Act, 1881 and he be also directed to pay cost of litigation.
3. Summoning of accused: Ld. Predecessor of this court summoned the accused after hearing the arguments at the stage of presummoning vide order dated 17.03.2021 and the accused entered appearance in the present case on 28.09.2021 and he was admitted to bail vide same order.
4. Notice: The court has framed notice of accusation under Section 251 Cr.P.C. against the accused on 18.01.2022. The substance of accusation was read over and explained to the accused and after being satisfied that the accused comprehended the same, the court recorded his plea. The accused pleaded not guilty and claimed trial. He admitted his signatures on the cheques in question, however, denied filling particulars of the same. He also admitted that the legal demand notice has been sent at his correct address and stated that he received the same. In his defence, the accused stated that he had purchased the vehicle in question from the husband of the complainant for Rs. 95,000/ and had given the cheques in question as Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.12.22 16:59:35 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 4 security for payment. However, he made payment of Rs. 95,000/ in cash after 3 days of the transaction and demanded return of his cheques from the husband of the complainant who assured to return the same after 2 days citing that the complainant is out of station. He made video recording of this entire conversation. He further stated that he returned the vehicle to the husband of the complainant as the same was defective and in lieu of the same, the husband of the complainant returned him Rs. 95,000/ to him in cash. On the same date, the statement of accused U/S 294 Cr. P.C regarding admission/denial of documents was also recorded wherein he admitted the correctness of dishonor memo and postal receipts.
5. Evidence on behalf of complainant: To prove his case prima facie, the complainant has examined himself as CW1 and has filed his evidence under Section 200 of the Cr.P.C. by way of an affidavit which is EX. CW1/1 wherein the complainant averred the same facts as are averred in the complaint. To prove the above claims, the complainant has also filed, EX. CW1/A (CollY) original Cheques in question dated 21.09.2020 and 28.09.2020 respectively, EX. CW1/B (Colly), original Return Memos dated 10.11.2020, Ex. CW1/C the agreement to sell dated 27.01.2019, EX. CW1/D the legal demand notice along with it's postal receipts EX. CW1/E and tracking report EX. CW1/F. Thereafter, CW1 was subjected to cross examination by Ld. Counsel for accused.
6. During her crossexamination, the complainant stated that she had given advertisement for sale of her vehicle Accent Car on OLX in the year 2019 and thereafter, the accused came to her house for seeing the vehicle for the first time and thereafter, second time for purchase of car and before that she did not know the accused. She stated that when the accused came to her house for purchase of car for the second time, he was being accompanied by his friend namely Sh. Sagar. She also stated that her husband was also involved in the entire deal. She stated that the Digitally signed by AISHWARYA SHARMA AISHWARYA Date: SHARMA 2022.12.22 16:59:39 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 5 agreement to sell EX. CW1/C dated 27.01.2019 was executed in her presence at Badarpur where she was residing uptill 20182019. She denied the suggestion that the agreement to sell Ex. CW1/C was not executed in her presence. She also stated that Accused had affixed his signatures at point A in first page, Circle B at 2 nd Page and Circle C at 3rd page, in her presence on agreement EX. CW1/C and his friend namely Mr. Sagar had also signed at point D on 3rd page of this agreement EX. CW1/C, as a witness. She stated that the handwriting below the Aadhar card annexed with this agreement to sale is of her husband and thereafter, stated that the hand writing is of accused. Thereafter, again stated that the hand writing is of my husband and the signatures are of accused at point E and the accused had affixed his signatures after reading the contents. She denied the suggestion that she along with her husband had obtained the signatures of accused on blank paper and thereafter, converted the same into agreement EX. CW1/C. She stated that they had taken two postdated cheques from the accused, one for Rs. 1,15,000/ and the other is for Rs. 86,000/. She denied suggestion that accused had given 4 cheques to her or her husband. She also denied the suggestion that the accused has already made the entire payment and they are intentionally not returning his remaining cheques, so that they can use the same for further litigation against the accused. She admitted that the accused has returned their car. She denied the suggestion that her husband has promised the accused to return all his cheques upon receiving his car back from the accused. She also denied the suggestion that the accused kept on calling her husband demanding return of his cheques, but her husband deferred the same on the pretext that she had gone to village and assured him to return his cheques upon arrival of the complainant from the village. She also denied the suggestion that they have filed this false case against the accused and stated that the accused had returned their vehicle in a very bad condition. She also denied the suggestion that she has filed several other cheque Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2022.12.22 16:59:43 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 6 bouncing cases against different persons.
7. In support of her case, the complainant has also examined her husband Sh. Yash Pal Rana as CW2 who stated that in the year 2019, they had given advertisement on OLX for sale of their Hyundai Excent Car and thereafter, he received call from the accused who made request to visit their house to see their car. He stated that after test drive of the vehicle on his first visit after 45 days, accused again called this witness and expressed his intention to visit his house for purchase of car. Then the accused came along with his friend Sh. Sagar to the house of this witness, whose signatures are also there in the agreement to sell as witness and it was agreed that the car will be sold for total consideration of approximately Rs. 5,01,700/, out of which the accused had given him Rs.95,000/ in cash and it was agreed that the remaining amount shall be paid in 36 monthly installments of Rs. 11,299/, then the possession of vehicle was given to the accused. This witness further deposed that since, February, 2019 till August, 2019, the accused paid monthly installments, however, he never made payment in time. Thereafter, the accused expressed his intention to return the vehicle and sought return of his amount of Rs. 95,000/, which this witness had returned through cash transfer, account transfer, UPI, PAYTM on various occasions and this witness received the possession of the vehicle. He stated that thereafter, in September October, 2019, the accused expressed his intention to purchase the vehicle again and somewhere around 1315 November, 2019, the accused came to house of this witness and requested to take back the vehicle pursuant to which, this witness had written their agreement below aadhar card of accused annexed at page No.4 with the agreement to sell and the accused had affixed his signatures on the same. He stated that in view of this agreement, the accused gave him cheque bearing No. 000003 for a sum of Rs. 1,15,000/ as security and assured to make payment of Rs. 1,15,000/ within 6090 Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2022.12.22 16:59:52 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 7 days failing which the accused authorized this witness to present the cheque bearing No.000003 with the bank. He stated that it was also agreed that the remaining amount shall be paid in installment as per their original agreement executed in the year 2019 EX. CW1/C. He further deposed that after delivering the possession of vehicle second time, the accused did not make payment of EMI for the month of December, 2019 and he paid the same to the HDFC bank as the vehicle was hypothecated. The accused paid the EMI for the month of January, 2020 in first week of February, 2020. Thereafter, the accused had again called this witness and told him to purchase one mobile from him and to adjust the amount of EMI and this witness bought mobile from him after adjusting Rs. 5000/ or Rs. 7,000/ and remaining amount for the mobile was paid by this witness to the accused in cash. Thereafter, the accused never paid the EMI's. He stated that thereafter, they sent the legal demand notice to the accused. At that time, the pending amount of EMI's was Rs. 86,000/. He also deposed that after service of Legal demand notice upon the accused, the accused called him several times and thereafter, the accused returned the vehicle in August, 2021 in a very bad condition so that cannot be driven at all. Thereafter, they filed this complaint against the accused.
8. During crossexamination, this witness stated that he got to know the accused after he had given advertisement given in OLX regarding the sale of his vehicle. He denied the suggestion that he took the signatures of the accused on the blank paper below the aadhar card of accused annexed at page No.4 with the agreement to sell. He admitted the suggestion that the accused had given him the cheques in question on 12.11.2019 when he had affixed his signatures below aadhar card at page No.4 and stated that he would not have given the vehicle to the accused without receiving cheques from him. He stated that the accused had given him total 3 cheques on 12.11.2019 at his house. He stated that the agreement to sell EX. CW1/C Digitally signed AISHWARYA by AISHWARYA SHARMA SHARMA Date: 2022.12.22 17:00:03 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 8 was executed with one notary nearby his house. He denied the suggestion that he had acquaintance with the person who notarized this agreement to sell. He admitted that for the first time, when they had given the vehicle to the accused, the accused paid the installments in time and he stated that the accused never paid the installments in time due to which they had to pay penalty to HDFC Bank. He denied the suggestion that after 2 days of execution of agreement EX. CW1/C, the accused expressed his intention to return the vehicle due to the reason that the car was in bad condition/ defective. He also denied the suggestion that when he had given the possession of the vehicle to the accused the second time, the accused had spent Rs. 60,000/ to Rs.70,000/ for repair of the said vehicle. He stated that the accused never used to call him after receiving delivery of vehicle for the second time and he used to call the accused asking him to make payment of EMIs in time. He also denied the suggestion that after receiving delivery of vehicle second time, the accused again told him that he wants to return the vehicle and in lieu of the same, he should return his cheques. He denied the suggestion that he did not return the cheques of the accused despite his demand on the pretext that his wife had gone to village assured to return the same upon her arrival from the village. He admitted the suggestion that the accused had given him blank cheque without filling it's particulars and also stated the particulars in the cheques in question were filled at his instructions by his staff. He also stated that he did not present the third cheque as the same was spoiled while it's particulars were being filled. He denied the suggestion that they have filed this false case against the accused as the accused was regularly paying the EMI's and that the accused has no legally enforceable liability towards them and security cheques of the accused have been misused as has already returned the vehicle.
9. Examination of the accused under section 313 Cr.P.C.: The accused was examined under section 313 Cr.P.C. on 28.09.2022, wherein, the accused Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.12.22 17:00:10 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 9 admitted that he approached the complainant for purchase of her Hyundai Excent Car bearing No. HR 38W 8379 in December, 2018 after seeing advertisement on OLX. He also admitted that for purchase of this vehicle, he visited the house of the complainant in January, 2019 and executed an agreement dated 27.01.2019 EX. CW1/C in presence of his friend Sh. Sagar Singh who has also been cited as one of the witness in this agreement. He admitted that his friend Sh. Sagar had affixed signature on EX. CW1/C in his presence. He also admitted that as per the agreement EX. CW1/C, he agreed to purchase this vehicle for consideration of Rs. 5,01,764/ out of which he paid Rs. 95,000/ in cash and he agreed to pay balance amount in 36 Installments. He also admitted that he defaulted in payment of EMI's and requested the complainant to take possession of vehicle back upon receipt of amount of Rs. 95,000/ from the complainant and executed another agreement dated 11.09.2019 repudiating the earlier agreement and received Rs.95,000/ from the complainant and handed over possession of the car to the complainant. He also admitted that on 12.11.2019, he again approached the complainant for purchase of the vehicle with a promise to pay all the pending installments as per their original agreement dated 27.01.2019 EX. CW1/C. He admitted that regarding this transaction, he affixed his signature below Aadhar Card at Page No. 4 annexed with the agreement to sell. However, he denied that he affixed his signatures after reading contents and he stated that when he affixed his signatures below his aadhar card, nothing was written over it. He further stated that he had given the cheques in question only as security to the complainant. He admitted that the cheques in question were dishonoured upon presentation with remarks "FUNDS INSUFFICIENT" vide return memo dated 09.11.2020 i.e. EX. CW1/B (Colly). He admitted receiving of legal demand notice dated 02.12.2020 U/S 138 of the N.I. Act i.e. EX.CW1/D. He admitted his signatures on the cheques in question, however, denied filling particulars of the same. He Digitally signed by AISHWARYA SHARMA AISHWARYA Date: SHARMA 2022.12.22 17:00:15 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 10 further stated that the complainant has filed this case against him as he could not make payment of EMI's regularly but stated that he did not give the cheques in question for any payment but as security. He admitted that he got to know the complainant after seeing their advertisement through OLX. He further stated that when he had taken the possession of the vehicle for the first time, though there was delay in payment of EMI's however, he had given penalty for the same. He stated that when he returned the possession of the vehicle to the complainant, the complainant returned him Rs. 95,000/ and when he got the possession of the vehicle for the second time, he gave 4 cheques to the husband of complainant including the cheques in question. However, the vehicle was not in driving condition, so he complained about the same to the husband of the complainant who informed him that the vehicle was being driven by his Sala. Accused further stated that he was told by one mechanic that though it has been shown that the vehicle was driven up to 60000 or 80000 KM but it was being driven over 1 Lakh Km. He also stated that he could not pay installments due to lockdown, though he paid the same initially, so he asked the husband of the complainant to receive the possession of the vehicle and he delivered him the possession of the vehicle. He stated that he demanded return of his cheques and written documents regarding receiving possession of the vehicle but the husband of complainant did not return the same stating that his wife had gone to village and the husband of the complainant did not return his cheques despite his assurance and has filed this case. He stated that he intends to lead defence evidence.
10. Defence Evidence: The accused got himself examined as DW1 and he stated that he had taken one car from the husband of complainant, however, while plying the vehicle with the passenger, he realized that the vehicle was not in a good condition and thereafter, he informed the husband of the complainant that he has manipulated the reading in the meter of the vehicle as it has been driven for more kilo Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.12.22 17:00:30 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 11 meters then what is reflected in the meter. Then the husband of the complainant told him that the vehicle was driven by his brotherinlaw. He stated that he then got the vehicle repaired but despite repair, it was not functioning properly and this witness was told by mechanic that it's engine is required to be changed and for that, he will have to incur expenses of Rs.1.5 lacs and he had already incurred expenses of Rs.50,000/ to Rs.60,000/ within one month for repair the vehicle and then he made several calls to husband of the complainant but he did not give any response so he again started plying the vehicle. He stated that he kept on paying instalments to the husband of the complainant, though there was some delay in payment of instalment for which he also used to pay the penalty. He further stated that at times, he was not able to pay the instalments and he had given some articles in lieu of payment of the instalment. He stated that when he could not make payment of 23 instalments, the husband of the complainant called him and informed him that due to nonpayment of instalments, his wife was receiving calls from the bank official, then he handed over the vehicle to the husband of the complainant and received amount of Rs.95,000/. He deposed that after two months, he again talked to the husband of the complainant who informed this witness that the vehicle is lying unused then he told him that he can give the vehicle back to this witness and the husband of the complainant, agreed and gave possession of the vehicle to this witness and as security of the same, he had given the cheques in question along with two other cheques to the husband of the complainant only after affixing signature without filling any particulars. He stated that the husband of the complainant demanded payment of instalments for 45 months when the vehicle was lying unused with the complainant when he had returned the vehicle to the complainant for the first time but he did not make payment of instalments for this period pursuant to which the complainant presented cheques in question. He further stated that he could not make payment of further instalments Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.12.22 17:00:37 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 12 due to lock down as he had no business during lock down, so he told the complainant's husband that he wants to return the vehicle. Then after much persuasion, the husband of the complainant agreed to receive back the vehicle and settle all claims after receiving Rs.10,000/ to Rs.15,000/. Then he handed over the possession to the complainant's husband at house of her relative. After handing over the possession, he asked the husband of the complainant to give him something in writing so that they shall have no claims against each other in future and also demanded return of his cheques but he told this witness that the complainant will return the cheques and she will only give the document in writing. Then he made a video of entire transaction from the phone of husband of the complainant and forwarded the same to himself, the CD of the same along with certificate U/S 65B IEA vide EX.DW1/A. This CD is not admissible in evidence as admittedly, the CD contains a forwarded video which was made from the phone of the husband of the complainant, even as per the version of the accused and it does not contain certificate U/S 65 B of Indian Evidence Act from original source. He stated that thereafter, he again demanded return of cheques several times but the complainant and her husband never returned the same and thus, he has no liability towards the complainant or her husband.
11. During his crossexamination, this witness stated that he is in transport business and as of now, he is jobless. He stated that he had taken the vehicle from the complainant to have some earning from the same. He stated that when he obtained the possession of the vehicle for the first time, he had paid Rs.95,000/ in cash and till the time, he had possession of the vehicle, he had paid all the instalments along with penalty interest, though many times he could not make payment of the instalments in agreed time. He further stated that when he took the vehicle for the second time, an agreement was executed between him and the complainant but he Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2022.12.22 17:00:42 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 13 cannot produce such agreement before the Court. He denied the suggestion that no fresh agreement was executed between the parties when he took the vehicle for the second time. He stated that he did not give any amount to the complainant while taking the possession of the vehicle for the second time as per the January 2019 agreement. He admitted that he was supposed to make payment of consideration amount for purchase of car as per the agreement executed between the parties in January 2019. He stated he returned the vehicle to the complainant's husband during second Lockdown but he does not remember the date or month when he had returned the vehicle. He admitted that he might have returned the vehicle in August 2021 and that he had voluntarily taken the vehicle for the second time from the complainant. After conclusion of defence evidence, the matter was fixed for final arguments.
12. Final Arguments: Ld. Counsel for the complainant argued that the complainant has proved her case as it is proved that the accused entered into the agreement to sale qua the vehicle in question with the complainant and he also obtained possession of the vehicle in pursuance of the said agreement. Further, the accused has also admitted issuance of cheque in question in favour of complainant towards payment of the consideration amount and EMI's qua purchase of vehicle in question and thus, the complainant has proved that the accused had issued the cheque in question to discharge his legal liability. It has also been proved that the cheque was dishonoured. Service of legal notice is also admitted by accused. The accused was liable to make the payment, however, he did not make the payment within stipulated time despite service of legal notice. It is also proved that all the steps were taken by the complainant within the time provided by the law. The accused has failed to rebut the presumption provided in the law. Hence, the accused may be convicted for the offence punishable under Section 138, NI Act.
13. Per contra, Ld. LAC for the accused argued that the accused has no Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.12.22 17:00:46 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 14 liability for payment of the cheque amount as the vehicle in question was returned to the husband of the complainant and till the time, the accused was in possession, the accused paid regular EMI's. It has also been argued since the accused had already returned the possession of the vehicle, the complainant was liable to return the cheque but admittedly the complainant did not return the cheques, thus, it is established that the complainant has misused the cheques in question. It has also been argued that the accused cannot be held liable for making any payment as the vehicle given by the complainant was defective and rather than having income from the same, the accused had to incur expenses in repair of the vehicle. Hence, the accused cannot be convicted for the offence punishable under Section 138 N I Act. With these submissions, Ld. Counsel for accused has prayed that he may be acquitted.
14. I have heard the rival submissions of the Ld. Counsels of the parties and carefully perused the material available on record. I have also perused written submissions filed on behalf of accused by Ld. LAC.
15. Appreciation of evidence and finding: Coming to the merits of the case, I first deem it pertinent to enunciate the law relating to dishonour of cheque.
16. To bring home the liability under section 138 of The Negotiable Instruments Act, 1881, following elements must spring out from the averments in the complaint and the evidence adduced by the complainant, viz,
a) A person must have drawn a cheque on an account maintained by him in a bank for payment of a certain sum of money to another person from out of that account for the discharge of any legally enforceable debt or liability;
b) cheque has been presented to the bank within a period of three months from the date on which it is drawn or within the period of its validity whichever is earlier;
c) That cheque has been returned by the bank unpaid, either because of the amount of money standing to the credit Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2022.12.22 17:00:51 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 15 of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
d) The payee or the holder in due course of the cheque has made a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
e) The drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability.
17. Thus, for securing conviction under section 138 of NIA following points are required to be proved:
a) The cheque was issued by the drawer in discharge of any debt or other liability.
b) It must be legally enforceable debt or liability.
c) The cheque must be presented by payee within period of 3 months or
it's validity, whichever is earlier.
d) The cheque is dishonoured because of insufficient funds or it exceeds
the arrangement.
e) A legal notice in writing demanding the payment of cheque is issued
within 30 days of the receipt of information from the bank.
f) There is default by the drawer to make the payment within 15 days from the date of the receipt of notice.
g) The complaint is filed within 30 days from the date of cause of
Digitally signed
by AISHWARYA
AISHWARYA SHARMA
SHARMA Date: 2022.12.22
17:00:56 +0530
CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 16
action.
Being cumulative, it goes without saying that it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act.
18. The law as laid down in relation to the Negotiable Instruments Act is discussed in various judgments. It is settled position of law that there is a presumption in favour of the complainant and against the accused. However, the presumption is rebuttable. Hon'ble Supreme Court of India in Rangappa v Sri Mohan (2010) 11 SCC 441 has discussed the law in detail. The Hon'ble Supreme Court has held as under:
"...15. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2022.12.22 17:01:01 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 17 be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden.
Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, 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 doubts 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 and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own..."
19. Thus, it has been settled that there is a presumption in favour of the complainant and against the accused, that the cheque was issued for consideration. However, the presumption is rebuttable. The accused can prove that the cheque was not issued for consideration and that the accused did not have any liability to pay the amount. It has also been held that the accused need not lead evidence in support of his defence. He can prove it on the balance of probabilities by showing the contradictions in the material produced by the complainant.
20. Since criminal liability can be attached by proving each element of the Section under which liability is sought to be enforced, I shall now go on to appreciate the evidence documentary and oral, in light of how compellingly it satisfies each of such ingredient, if at all.
21. In the present case, the accused has admitted his signatures on the cheques in question. It is admitted that the cheques are drawn on account of the complainant. It is also not in dispute that the cheque has been presented by payee within period of 3 months. Further, it is also an admitted fact that accused has not made payment of the cheque amount within 15 days of receipt of legal demand notice. It is also proved Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.12.22 17:01:05 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 18 that the cheques were presented for encashment and that the same were dishonored due to insufficient funds in the account of the accused as the accused has admitted this fact in his statement U/S 313 Cr. P.C as well as during his statement of admission/ denial recorded U/S 294 Cr. P.C. Further, Section 146 of The Negotiable Instruments Act, 1881, in this regard also comes into play which raises a presumption that the court shall presume the fact of dishonour of the cheque in case the cheque is returned vide a return memo having thereon the official mark denoting that the cheque has been dishonoured. Such bank slip or memo is a prima facie proof of dishonor. In view of such presumption and keeping in view the fact that the accused has not led any evidence to prove the contrary, it is established that the cheques in question were dishonoured due to insufficient funds. Though, as per the tracking report EX.CW1/F of the speed post filed on record, the legal demand notice dated 02.12.2020 EX. CW1/D was received back with remarks "addressee left without instructions", however, throughout the trial the accused has admitted that the legal demand notice was sent at his correct address and he stated that he has received the same. Since, the accused has admitted that the legal demand notice was sent at his correct address through post, service of legal demand notice is established as per section 27 of the General Clauses Act. On this point, it is relevant to refer to the decision of Hon'ble Supreme Court in Raja Kumari v. Subbarama Naidu, 2004 (3) KLT 799 (SC). In this case, while referring to Section 27 of the General Clauses Act, 1897 and also after analyzing the several aspects involved in the issue, the Supreme Court held that:
"...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 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 sendee unless he proves that Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.12.22 17:01:09 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 19 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..."
22. Further, once it is shown by the complainant that he had posted the legal notice at the correct address of the accused, the requirement of law stands satisfied. No further proof of service of legal notice is required. The duty of the complainant was to give a legal notice. He has proved that he had given a legal notice to the accused under Section 138 N. I. Act. Hence, he has discharged the burden. It has been proved that complainant had issued a legal notice under Section 138 N.I. Act within limitation period after dishonouring of the cheque. The complaint is therefore maintainable on this aspect.
23. Now the only question left to be determined is whether the cheques in question were issued by the accused in discharge of legally enforceable debt or liability. The version of the complainant is that the accused approached her for purchase of her Hyundai Accent car bearing No. HR 38 W 8379, after seeing advertisement on OLX, pursuant to which both the parties entered into one agreement to sale EX. CW1/C dated 27.01.2019 and the accused has claimed the possession of the vehicle upon payment of consideration amount of Rs. 95,000/ and further agreed to pay 36 instalments with the HDFC Bank. The accused made payment of EMI as per this agreement and after some time, expressed his intention to return his vehicle, pursuant to which both the parties executed another agreement on 11.09.2019 repudiating the previous agreement, pursuant to which the complainant returned Rs. 95,000/ to the accused and the accused returned possession of the vehicle to the complainant. All these facts are undisputed as the accused himself has admitted these facts and he admitted execution of agreement dated 27.01.2019 i.e. EX. CW1/C and it's contents. Though, the agreement dated 11.09.2019 is not part of record, however, Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2022.12.22 17:03:06 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 20 the accused during his statement recorded U/S 313 Cr. P.C while answering question No.4, has admitted the execution of this agreement for repudiating the previous agreement EX. CW1/C.
24. It is the case of the complainant that the accused again approached the complainant on 12.11.2019 for purchase of same vehicle promising that he will pay all pending instalments, as per agreement EX. CW1/C along with Rs. 1,05,000/ and to ensure this payment, the accused issued two postdated cheques i.e. cheques in question bearing NO. 000003 for a sum of Rs. 1,15,000/ and cheque bearing NO. 000005 for a sum of Rs. 86,000/, both drawn on Punjab & Sindh Bank. However, both these cheques were dishonoured, which lead the complainant to file this present complaint. With respect to the transaction on 12.11.2019, both CW1 and CW2 deposed that no fresh agreement was executed when the possession of the vehicle was handed over to the accused for the 2 nd time and stated that the accused gave his undertaking to make payment of Rs. 1,15,000/ within next 6090 days and further to pay all the instalments as per agreement EX. CW1/C by giving undertaking below his aadhar card annexed at Page No.4 of the original agreement to sell and he also affixed his signatures on the same. Both CW1 and CW2 have admitted that the hand writing below the aadhar card of the accused is of CW2 namely Sh. Yash Pal Rana, who is the husband of the complainant and the signatures on this document have been affixed by the accused. Though, the accused has admitted his signatures on the same, however, he stated that when he affixed his signatures below his aadhar Card, it was blank and it's contents were written later on. During his cross examination, the accused stated that when he took the possession of the vehicle for the 2 nd time, another agreement was executed between the parties, but he failed to produce any such agreement on record. He also admitted that he did not hand over any amount to the complainant, when he took possession of the vehicle for the 2 nd time. Since, the Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2022.12.22 17:04:11 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 21 accused has admitted his signatures below his aadhar card, the complainant is not required to lead further evidence to prove it's contents as per Section 67 of the Indian Evidence Act. Though, the accused has claimed that he affixed his signatures on blank papers and another agreement was executed between the parties when he got the possession of the vehicle for the 2nd time, however, he failed to produce any such agreement on record and he also admitted that he did not hand over any consideration amount to the complainant while obtaining possession of the vehicle for the second time, which supports the case of the complainant that the accused has issued one of the cheque in question as PDC, i.e. cheque bearing No. 000003 for a sum of Rs. 1,15,000/ for payment of consideration amount for purchase of the vehicle, which also proves the contents written below the aadhar Card of the accused which is annexed at Page No. 4 along with agreement to sell EX. CW1/C.
25. The case of the complainant is that the accused has issued cheque bearing No. 000005 for a sum of Rs. 86,000/ for payment of EMI's, however, the accused has denied this fact and stated that he has paid all the EMI's. The accused has even given suggestion to both CW1 & CW2 regarding the same, however, both CW1 & CW2 have denied the fact that the accused was regularly paying the EMI's. Further, the accused himself controverted his story by stating in answer to question No. 12 in his statement U/S 313 Cr. P.C that he could not make payment of EMIs regularly due to lockdown. Even during his examination in chief as DW1, he stated that he could not make payment of instalments after receiving of the vehicle for the second time.
26. The accused had tried to take defence that the vehicle was defective and it was not in good condition, by claiming that even the readings of the meter was manipulated, however, there is nothing on record to prove this fact except the bare submissions made by the accused. If the vehicle would not have been in good Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.12.22 17:04:16 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 22 condition, there was no occasion /reason for the accused to take possession of the same from the complainant. The accused has not given any explanation regarding this fact, thus, merely on bare statement of the accused, it cannot be relied upon that the vehicle was defective specifically when the accused admittedly obtained possession of the vehicle voluntarily from the complainant for the second time.
27. The accused has also disputed his liability by claiming that he has given the cheques in question as security without filling it's particulars and the same have been misused by the complainant. Admittedly, the particulars in the cheque in question were filled at the instructions of the husband of the complainant by his staff. In view of such admission, it is pertinent to see as to how the amount was calculated in both the cheques. Qua cheque bearing NO. 000003, it is stated by CW's that amount of Rs. 1,15,000/ was filled as it was the agreed consideration amount to be paid by the accused while obtaining possession of the vehicle for the 2 nd time and amount of Rs. 86,000/ has been calculated qua cheque bearing No. 000005 towards pending EMIs as per agreement dated 12.11.2019 between the parties which is mentioned at page No. 4 below the aadhar Card of the accused. This fact is not in dispute that when the accused obtained possession of the vehicle from the complainant both times, the vehicle was hypothecated with HDFC Bank. Even as per the version of the complainant, while obtaining possession of the vehicle, the accused agreed to pay EMIs to HDFC Bank, as per agreement arrived between the parties, as mentioned in Page No.2 of agreement EX. CW1/C dated 27.01.2019 and also in 2 nd agreement dated 12.11.2019 written below the aadhar card of the accused annexed at Page No.4 with agreement EX. CW1/C. Thus, it is not in dispute that both the cheques in question have been issued pursuant to agreement EX. CW1/C and 2 nd agreement dated 12.11.2019 and at the time of execution of both these agreements, the vehicle in question was hypothecated with HDFC Bank. In view of such facts, the Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.12.22 17:04:22 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 23 main issue before this Court is to determine the legality of the agreement, in pursuance of which the cheques in question were issued as it is not enough for the cheques to have been issued and the same to have been dishonoured, but it is also necessary to establish that the cheques were issued for the discharge, in whole or in part, of any debt or other liability. To determine the legality of this agreement, it is necessary to discuss the concept of hypothecation.
28. In Black's Law Dictionary, Sixth Edn., at page 742 the word 'Hypothecate' has been given meaning as under :
"To pledge property as security or collateral for a debt. Generally, there is no physical transfer of the pledged property to the lender, nor is the lender given title to the property; though he has the right to sell the pledged property upon default."
In Webster's Encyclopedic Unabridged Dictionary of the English Language, 1989 Edn., at page 702, the meaning of the word 'hypothecate' is given that "to pledge to a creditor as security without delivering over."
In Corpus Juris Secundum, Vol. XLII, page 370 the word 'hypothecation' is defined as under:
"A term borrowed from the civil law, and in so far as it is naturalised in English and American law, it means a contract of mortgage or pledge in which the subject matter is not delivered into the possession of the pledge or pawnee; or, conversely, a right which a creditor has over a thing belonging to another, and which consists in a power to cause it to be sold in order to be paid as claim out of the proceeds."
29. Hypothecation is understood in mercantile world as creation of charge on moveables in favour of hypothecatee by hypothecator where possession of goods will remain with the hypothecator. Thus, the hypothecator can be in possession of goods hypothecated and enjoy the same without causing any damage to the rights of the hypothecate. Hypothecation is not a statutory creation but it is in usage in Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.12.22 17:04:27 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 24 mercantile field since times immemorial. The hypothecation is neither governed by any statute nor there is any law governing the same directly or indirectly. Therefore, it has to be understood purely on general conditions of the contract as per the terms of the hypothecation agreement. There is no provision in the Contract Act regarding hypothecation nor in the Sale of Goods Act. To understand the concept of hypothecation, it is also relevant to know what is the difference between 'pledge' and 'hypothecation'. To understand the same, it is relevant to refer to judgment of Hon'ble Orissa High Court in Bhabani Shankar Patra v State Bank of India, AIR 1986 Ori 247, wherein it was held that:
"11. ......Hypothecation is an extended form of pledge which has not been expressly dealt with in the law of contract. The distinction between hypothecation of goods and pledge of goods is well known. In case of pledged goods, the goods are stored in the godown under the lock and key of the Bank under the Bank's supervision. Thus, the pledged goods remain under the physical possession of the Bank and no withdrawals or additions of the stocks in the godown are permissible without the Bank's permission. The position with regard to the hypothecated goods is, however, different because these goods are, strictly speaking, not under the lock and key of the Bank but allowed to be kept at the premises of the borrower without any lock and key of the Bank as such but are supposed to be under the constructive possession of the Bank by virtue of deed of hypothecation under which the borrower is obliged to submit regular returns to the Bank indicating the increase and decrease of the value of the said goods to enable the Bank from time to time to determine the drawing of the borrower with regard to it. In law, however, there is no difference with regard to the legal possession of the Bank. In both the cases, the goods are under the constructive possession of the Bank, while in the case of pledge they are also in the actual physical possession of the Bank, but in the case of hypothecated goods they are in actual possession of the borrower subject to the restrictions mentioned above. It is, therefore, said that hypothecation is only an extended idea of a pledge, the creditor permitting the debtor to retain possession either on behalf of or in trust Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.12.22 17:04:32 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 25 for himself..."
30. In Simla Banking and Industrial Co. v. Pritams, AIR 1960 PH 42 while making a distinction between pledge and hypothecation, a Division Bench of the Punjab High Court held that:
"8...The civil law recognises two kinds of pledges, viz., the "pignus"
(pawn) in which the possession of the thing is actually delivered to the person for whose benefit the pledge was made, and "hypotheca" (hypothecation) in which the possession of the thing pledged remained with the debtor, the obligation resting in mere contract without delivery. In one case possession was actually delivered to the creditor or pawnee, in the other it remained with the debtor. Hypothecation has been defined as a right which a creditor has over a thing belonging to another, and which consists in the power to cause it to be sold in order to be paid his claims out of the proceeds. It is an act of pledging a thing as security for a debt or demand without parting with the possession. It follows as a consequence that although the property remains in the possession of the debtor, it cannot be transferred to a third party without the express consent or permission of the creditor...''
31. From the aforesaid decisions, it emerges that since the vehicle was hypothecated with the HDFC bank on 27.01.2019 as well as 12.11.2019, the complainant though was in actual physical possession but the constructive possession was still with the hypothecator i.e. bank. It is abundantly clear from the evidence on record that the vehicle which was hypothecated by the complainant to the Bank remained in the possession of the complainant being debtor. It is equally clear that this vehicle was being held by the debtor i.e. complainant on behalf of the creditor i.e bank and the ownership or possession thereof could not have been transferred to a third party without the express consent or permission of the creditor i.e. bank. This conclusion flows from the meaning which is assigned to the expression "hypothecation" by legal compilers and commentators. However, the debtor i.e. complainant entered into agreement qua sell of the hypothecated vehicle with accused Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.12.22 17:04:58 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 26 without permission/ intimation to the creditor i.e. bank and the complainant even parted with the possession of the vehicle upon execution of the agreement EX. CW1/C dated 27.01.2019 and 2nd agreement dated 12.11.2019 and received the cheques in question for payment of consideration amount and EMI's, which he could not have done legally. According to law of Contract, it would not be possible to enforce any agreement or consideration, the object of which is unlawful, within the meaning of Section 23 of the Indian Contract Act, 1872, which is couched in the following terms : "23. What considerations and objects are unlawful, and what not The consideration or object of an agreement is lawful, unless it is forbidden by law, or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to be unlawful, Every agreement of which the object or consideration is unlawful, is void."
Thus, pithily put, the transaction in question, is also hit by the provisions of Section 23 of the Indian Contract Act, 1872, as the complainant could not have entered into the agreement to cause injury to the property i.e. vehicle of bank, as she was only in constructive possession of the vehicle on behalf of bank and she could not have transferred possession of the vehicle to the accused. Since both the agreements in question in pursuance of which the cheques in question have been issued are void, the cheques in question can not be said to have been issued in discharge of a legally enforceable liability.
32. In view of discussion made above, this Court is of the considered view Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2022.12.22 17:05:04 +0530 CC NI Act. 1109 of 2021 Neelima Rana Vs. Vinus Kumar Page No. 27 that the complainant could not establish her case against the accused so as to bring home the guilt on the part of the accused. The cheques in question were not issued in discharge of legally enforceable liability, therefore, notwithstanding that cheques were dishonoured by nonpayment of consideration/EMIs despite demand notice in writing, it cannot come within the purview of section 138 of the NI Act. Accordingly, the accused VINUS KUMAR is hereby acquitted of offence U/S 138 of NI Act.Digitally signed by AISHWARYA
AISHWARYA SHARMA
SHARMA Date:
2022.12.22
17:05:10 +0530
Announced in the open court on (Aishwarya Sharma)
this day i.e. 22.12.2022 MM (N.I. ACT)Digital Court02/SED,
Saket Courts, New Delhi