Delhi District Court
Shiv Avtar Tyagi vs Mahinder Kapoor on 29 August, 2024
UNIQUE QR CODE:
IN THE COURT OF JUDICIAL MAGISTRATE FIRST CLASS
N.I. ACT, (DIGITAL COURT NO. 03) (CENTRAL)
TIS HAZARI COURTS : DELHI
Presiding Officer: Ms. Meena Chauhan, DJS
CC NI ACT No. 2269/2021
Shiv Avtar Tyagi vs. Mahender Kapoor
U/s 138 Negotiable Instruments Act
PS: Subzi Mandi
JUDGMENT
a Case Number Record(CNR) : DLCT020051122021
b Date of dishonour of cheque : 12.01.2021
c Date of institution of case 09.03.2021
Shiv Avtar Tyagi S/o Late O.P. Tyagi R/o
d Name of the Complainant : Flat No. 15A, New Qutab Road, Near Pul
Mithai, Sadar Bazar, Delhi-110006
Mahender Kapoor S/o Late B.R. Kapoor
e Name of Accused : R/o House no. M-3/1, Model Town-III,
Delhi-110009
f Offences complained of : U/s 138 Negotiable Instruments Act
g Plea of the Accused : Pleaded not guilty.
h Arguments concluded on: 12.08.2024
i Final Order : Conviction
j Date of Final Order : 29.08.2024
CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 1 of 24
Brief statement of reasons for the decision
1. Vide this judgment, I shall dispose off the present complaint filed by the complainant alleging the commission of offence punishable U/s 138 of Negotiable Instrument Act, 1881 (hereinafter referred to as the "NI Act").
The Facts:
2. Succinctly, the present complaint U/s 200 of The Code of Criminal Procedure (hereinafter referred as "Cr.P.C.") is filed by Mr. Shiv Avtar Tyagi (hereinafter referred as "complainant") alleging that the accused Mr. Mahender Kapoor (hereinafter referred as "accused") had issued five post-
dated cheques in favour of the complainant for discharge of his legal liability. Out of the said cheque, one cheque bearing No. 178871 dated 11.12.2020 drawn on Corporation Bank, Model Town, Delhi (hereinafter referred as "impugned cheque") was presentented for encashment and the same got dishonoured with the remark "Insufficient Funds" vide return memo dated 12.01.2021. Legal notice dated 22.01.2021 was served upon the accused, however, he failed to make payment within the stipulated time. Hence, the present complainant for offence punishable under section 138 NI Act is filed.
The Summoning and Appearance:
3. Ld. Predecessor of this court took cognizance of the offence and summoned the accused vide order dated 19.03.2021. Consequent upon the appearance of the accused before the court, he was admitted to bail and Notice U/s 251 CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 2 of 24 Cr.P.C was given to the accused on 02.12.2021 to which he pleaded not guilty. As per the procedure laid down in Rajesh Agarwal Vs. State (Judgment of Hon'ble High Court of Delhi), defence plea was recorded.
Accused revealed his defence wherein he stated that:
"The complainant has asked me to advance his money on interest basis to third parties, with respect to which he had taken security cheques from me. I used to advance that money on behalf of the complainant and the complainant used to receive the interest from the money advanced directly from the third parties. When the complainant had stopped receiving interest, he used the security cheques given by me and filed this complaint against me. The cheque in question is one of the securities which were given to the complainant by me in 2019 and 2020. I do not owe any liability towards the complainant."
4. Upon an application U/s 145(2) NI Act moved on behalf of the accused to cross-examine the complainant and considering the ground of defence, the accused was allowed to cross-examine the complainant and the trial was converted from summary to a summons case.
The Complainant Evidence:
5. The complainant was examined as CW1 and an affidavit of pre-summoning evidence was tendered and adopted by him in post-summoning evidence also. Complainant has examined himself as CW1 and has relied upon his evidence by way of an affidavit of evidence Ex. CW1/1, the original cheque in question Ex. CW1/A, original return memo dated 12.01.2021 Ex. CW1/B, Legal demand notice dated 22.01.2021 Ex. CW1/C, Original postal receipt Ex. CW1/D, tracking report is Ex. CW1/E, copy of receipt dated 06.10.2020 CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 3 of 24 Mark-CW1/F (later on Ex. DW2/C1) and copy of receipt dated 17.07.2020 Mark-CW1/G (later on Ex. DW2/C2). Complainant was also examined U/s 311 Cr.P.C read with Section 165 of Indian Evidence Act and he exhibited the copy of complaint made to the police vide DD No. 30A dated 08.12.2023 PS Subzi Mandi Ex. CW1/H(OSR). No other witness was examined on behalf of the complainant. Complainant's evidence was closed.
6. During the cross-examination of CW1, he deposed that he is an advocate and the accused was his class fellow. He deposed that he could not remember the date of investment of money with the accused, however, he relied upon Mark-CW1/F and Mark-CW1/G. During the examination, it came out that he had invested money with the accused in cash and in parts, which used to be collected by the accused from the residence and shop of the complainant. He showed his ignorance for the shop number of the accused. His source of income includes his rental income and income from the legal profession. He affirmed that the money was given to the accused without any interest and he used to collect cheques from the accused for the money advanced by him. He denied the suggestion that the cheques were given in security only. He deposed that he did not remember the date when the impugned cheque was given by the accused and the exact amount advanced to the accused, again he relied upon the two receipts, Mark-CW1/F and Mark-CW1/G.
7. CW-1 deposed that he used to advance money to the accused only and also that he gave interest free loans to the servant Mr. Vishambher Dayal as well brother in law of accused Mr. Shiv Narayan Vohra and Mr. Sanjay at the CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 4 of 24 request of the accused. He accepted that he tendered money to the said person against the cheque issued by them. He could not remember the time period of said loans. He denied being a money lender and having any license for the same. He refused to know any person with the name of Mr. Manoj Mehrotra. He denied the suggestion of giving a loan of Rs. 8.5 lakhs to Mr. Manoj Mehrotra for an interest of Rs.16,500/- per month or collection of interest amount from the shop of the accused. CW-1 deposed that he did not remember giving a notice of Mark-X to Mr. Shiv Narayan Vohra by him, he denied his signature on the said notice. Some suggestions were put to CW1 to the facts contrary to the version of the complainant, and the same were denied.
Statement of Accused U/s 311 Cr.P.C:
8. On 06.02.2024, the accused was examined U/s 313 Cr.P.C read with Section 281 Cr.P.C wherein he pleaded innocence and reiterated his defence as taken as disclosed earlier. Accused opted to lead defence evidence.
The Defence Evidence:
9. After seeking permission from the court, the accused examined himself U/s 315 Cr.P.C as DW2 and one other witness namely Mr. Shiv Narayan Vohra as DW1 in his defence.
10.DW1 Mr. Shiv Narayan Vohra, deposed that he used to take loans on interest in cash from the complainant through the accused, for which blank security cheques were taken by the complainant. He further deposed that sometimes the complainant and other times accused, on behalf of the CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 5 of 24 complainant used to collect interest for the loans given from his shop.
Further, due to his financial difficulties when he failed to pay interest, the complainant pressured him and filed a case against him and his wife in the year 2015, which got settled in mediation. He testified that the complainant threatened him that in case of non-payment of loan amount, he would recover the same from the accused.Tedhi Singh Vs. Narayan Dass Mahant Criminal Appeal No.362 of 2022
11.During cross-examination, DW1 admitted that he met with the complainant through the accused only. He stated that a loan agreement was executed, however, he could not state the date of the same. He denied giving any notice or filing any complaint/case for demanding the security cheques given by him. He showed ignorance as to the advancement of loan to the accused and issuance of cheques by the accused in favour of the complainant.
12.Accused examined himself as DW2, he testified during his examination U/s 315 Cr.P.C that the complainant gave Rs. 8.55 lakhs to him for advancement of loans to the third parties. He advanced loan to Mr. Manoj Mehrotra and interest used to be handed over by him to the complainant after collecting the same from Mr. Manoj. He deposed that as Mr. Manoj s Tedhi Singh Vs. Narayan Dass Mahant Criminal Appeal No.362 of 2022 howed his inability to pay interest, complainant asked for the impugned cheque as a security for he being middleman in the transaction. From 2012 to 2017, he issued four filled and signed cheques for the principle sum plus interest, totalling to Rs. 20 lakhs and in the year 2020, one more cheque of Rs. 5 lakhs. All the cheques were undated. He testified that he had not taken any loan from the CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 6 of 24 complainant.
13. Tedhi Singh Vs. Narayan Dass Mahant Criminal Appeal No.362 of 2022 During cross-examination, DW-1 admitted his signatures at points X, the contents and the execution of two receipts reflecting the transactions with the complainant i.e. Ex. DW2/C1 and Ex. DW2/C2, however, at the instruction of the complainant. He also admitted his handwriting on the impugned cheque except date and receipt of legal demand notice Ex. CW1/C. He denied giving any written notice or filing any case against the complainant or having any written document alleging the amount given to him by the complainant was for investment to a third party as loan. DW2 also admitted the total due amount of Rs. 20,45,520/- as on 01.09.2017 as per receipt Ex. DW2/C1. He denied a legal liability of cheque amount towards the complainant.
14.By giving a separate statement, the accused closed his defence evidence on 25.07.2024.
The Final Submissions:
15.Final arguments were heard from both sides on 06.08.2024 and 12.08.2024 at length.
16.Mr. S.K. Gupta, Ld. counsel on behalf of the complainant submitted that:
a) The relations between the parties is an admitted fact and the two receipts clearly proved the outstanding legal liability of the accused, for which the CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 7 of 24 impugned cheque has been issued. Accused admitted his signature as well as all particulars on the impugned cheque being filled by him and also his signatures and execution of receipts Ex. DW2/C1 and Ex. DW2/C2.
b) All the essential requirements of section 138 NI Act have been fulfilled in the present complaint and statutory presumptions are to be raised in favour of the complainant.
c) The version of the complainant remained unrebutted and unconfronted during his cross-examination as well. On the contrary, the defence of the accused of security cheque being given and investments to the third parties on behalf of the complainant remained unproved.
d) DW-1 is an interested witness for he is brother-in-law of the accused, cannot be relied upon. The accused has not been able to raise any probable defence to rebut the presumptions and thus, the accused is liable to be convicted under Section 138 NI Act. Judgment of the Hon'ble Supreme Court titled as Tedhi Singh Vs. Narayan Dass Mahant Criminal Appeal No.362 of 2022 (Arising out of SLP (Crl) No.1963 OF 2019) relied upon.
17.Ms. Anjali Chauhan, Ld. Legal Aid Counsel on behalf of the accused submitted that:
a) No date and mode of advancement of loan was mentioned in the complainant. Ex. DW2/C1 and Ex. DW2/C2, were filed by the complainant in photocopy and loss of the said receipts was disclosed only at the stage of re-examination U/s 311 Cr.P.C, an afterthought. The said receipts were dictated by the complainant only. Being a photocopy, the said receipts could CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 8 of 24 not be relied upon.
b) Accused has admitted the receiving of the amount by the complainant, however, it was not given as a loan rather it was given for investment to the third party on interest and the interest was received by the complainant.
Defence of the accused remained consistent throughout the trial.
c) Complainant is into money lending business as proved with the testimony of DW1 and admissions by CW1 that he had advanced loan to others. Complainant used to take blank cheques as security and he admitted that he did show the loan in his ITR of the relevant period.
d) Accused has never admitted his liability qua the cheque in question and he has adduced sufficient material and evidences on record to show that he did not have any legal liability towards the complainant and therefore, the accused is not liable under Section 138 NI Act.
Points of Determination:
18.From the evidence put forth by the complainant and the accused, and after giving my anxious consideration to their respective arguments, the following points arise for determination:
A: Whether the receipts Ex. DW2/C1 and Ex. DW2/C2 filed as photocopies(earlier Mark-CW1/F and Mark-CW1/G), by the complainant can be admitted as secondary evidence as per the Indian Evidence Act, 1872?
B: Whether the complainant has been successful in raising the presumptions CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 9 of 24 under Section 118 read with Section 139 of NI Act?
C: If yes, whether the accused can be said to have discharged his 'evidential burden', that the presumption of law supplied by Section 139 has been rebutted?
19.I heard rival submissions of the parties and carefully went through all the available records.
Issue A: Whether receipts filed by the complainant are admissible?
20. Accused assailed the authenticity of documents filed by the complainant on the ground that they could not be read in evidence. It was contended by Counsel for the accused that the complainant deliberately concealed the fact that he was filing the photocopy of Ex. DW2/C1 and Ex. DW2/C2 at the time of filling of the present case. It was further contended that it was only during the examination of complainant U/s 311 Cr.P.C. read with Section 165 of Indian Evidence Act, that the complainant disclosed that it was stolen from his chamber. It was further contended by Ld. Counsel for the complainant that no proof was filed by the accused which could lead the Court to believe that the originals of the aforementioned documents were in the possession of the complainant.
21.On the other hand, Ld. Counsel for the complainant averred that the originals were in the possession of the complainant. The said receipts were in the possession of the complainant, and have admitted to be stolen, the same has been proved by the complainant by showing a police complaint CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 10 of 24 filed by the complainant. He further submits that the execution of the said receipts has also been admitted by the accused.
22.In order to adjudicate upon the issue of admissibility of the aforementioned photocopy receipts, it would be apt to peruse the relevant provisions and case law on this point, before embarking on a quest to ascertain the admissibility of photocopies of each of the receipts.
23.The relevant sections are section 3, 63, 64, 65 of Indian Evidence Act, 1872 and the same are reproduced hereunder:
Section 3 "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 exists".
Section 63. Secondary evidence - Secondary evidence means and includes:
(1) certified copies given under the provisions hereinafter contained;
(2) copies made from the original by mechanical processes which in themselves insure the accuracy of the copy, and copies compared with such copies;
(3) copies made from or compared with the original;
(4) counterparts of documents as against the parties who did not execute them;
(5) oral accounts of the contents of a document given by some person who has himself seen it.
Section 64. Proof of documents by primary evidence.− Documents must be proved by primary evidence except in the cases hereinafter mentioned.
Section 65. Cases in which secondary evidence relating to documents may be given. − Secondary evidence may be given of the existence, condition, or contents of a document in the following cases:−
(a) When the original is shown or appears to be in the possession or power− of the person against whom the document is sought to be proved, or of any person out of reach of, or CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 11 of 24 not subject to, the process of the Court, or of any person legally bound to produce it, and when, after the notice mentioned in section 66, such person does not produce it;
(b) when the existence, condition or contents of the original have been proved to be admitted in writing by the person against whom it is proved or by his representative in interest;
(c) when the original has been destroyed or lost, or when the party offering evidence of its contents cannot, for any other reason not arising from his own default or neglect, produce it in reasonable time;
(d) when the original is of such a nature as not to be easily movable;
(e) when the original is a public document within the meaning of section 74;
(f) when the original is a document of which a certified copy is permitted by this Act, or by any other law in force in to be given in evidence;
(g) when the originals consist of numerous accounts or other documents which cannot conveniently be examined in Court, and the fact to be proved is the general result of the whole collection. In cases (a), (c) and (d), any secondary evidence of the contents of the documents is admissible.
In case (b), the written admission is admissible.
In case (e) or (f), a certified copy of the document but no other kind of secondary evidence, is admissible. In case (g), evidence may be given as to the general result of the documents by any person who has examined them, and who is skilled in the examination of such documents.
Section 67. Proof of signature and handwriting of person alleged to have signed or written document produced.
If a document is alleged to be signed or to have been written wholly or in part by any person, the signature or the handwriting of so much of the document as is alleged to be in that person's handwriting must be proved to be in his handwriting.
24.Relevant extracts of certain judgments are also reproduced below which are germane to the facts in issue:
(a) J. Yashoda vs K. Shobha Rani (2007) 5 Supreme Court Cases 730, wherein it was held that:CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 12 of 24
"Secondary evidence, as a general rule, is admissible only in the absence of primary evidence. In order to enable a party to produce secondary evidence it is necessary for the party to prove the existence and execution of the original document. However, if the original itself is found to be inadmissible through failure of the party who files it to prove it to be valid, the same party is not entitled to introduce secondary evidence of its contents.
...The conditions laid down in Section 65 must be fulfilled before secondary evidence can be admitted. Secondary evidence of the contents of a document cannot be admitted without non-production of the original being first accounted for in such a manner as to bring it within one or other of the cases provided for in Section 65. ...Only when the conditions prescribed in Section 65 are satisfied, can documents be admitted as secondary evidence."
25.Prem Chandra Jain & others vs Sri Ram & others 2009 (113) DRJ 617 wherein it was held that:
"2. A practice appears to have developed in the Trial Courts for moving an application under Section 65 of the Evidence Act seeking permission of the courts to adduce secondary evidence. There does not appear to be any sanction therefore in law. Neither the Evidence Act nor the CPC nor any other rules & regulations or statute requires the filing of such an application."
"....... Thus a litigant without seeking any permission from the court if satisfies the ingredients of Section 65 of the Evidence Act i.e. of the existence of the contingency or situation when secondary evidence is permitted to be led is entitled to lead such evidence. Such evidence will have to be twofold. Firstly, as to the existence of the contingency or situation in which secondary evidence is permissible, viz that the original document is in possession or power of the person against whom it is sought to be proved etc. or that the existence, condition or contents of original have been proved to be admitted by person against whom it is sought to be proved or that the original has been lost or destroyed or when original is not moveable etc. i.e. of the various situations mentioned in Clause (a) to
(g) of Section 65. Secondly, such evidence will have to be in proof of document as also prescribed in Section 65 r/w Section 63."
26.Coming to the present case, the complainant has relied upon the photocopy of receipt dated 06.10.2020 Mark-CW1/F (later on Ex. DW2/C1) and photocopy of receipt dated 17.07.2020 Mark-CW1/G (later on Ex. DW2/C2) in his pre-summoning evidence as well as post-summoning evidence. It is pertinent to observe here that the accused has not raised any objection as to CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 13 of 24 the mode of proof of the said receipts at the time of framing of Notice against accused U/s 251 Cr.P.C. nor during the examination of CW1 or during his statements U/s 313 Cr.P.C. Since, there was no objection on behalf of the accused, no occasion arose for the complainant to explain the loss of original receipts as neither veracit Tedhi Singh Vs. Narayan Dass Mahant Criminal Appeal No.362 of 2022 y of the receipts nor mode of proof of such receipts were ever assailed by the accused.
27.It was only when this court deemed it fit to examine the complainant U/s 311 Cr.P.C. read with Section 165 of Indian Evidence Act on 03.05.2024, the complainant was called upon again for examination qua the said receipts. At that time, CW1 disclosed that the original receipts had been stolen and thus, he could not produce the original receipts. He also deposed that a written police complaint was lodged qua this vide DD No. 30A dated 08.12.2023 PS Subzi Mandi, i.e. Ex.CW1/H(OSR). The said complaint mentions the theft of the said receipts in clear and specific words. Now, even if it can be said that the complainant has not mentioned in his complaint that he has not filed the original of the said receipts, however, when questioned about the original documents, the complainant offered a reasonable explanation with supporting documentation. Thus, the loss of originals has sufficiently been proved by the complainant and both the receipts can be relied upon as secondary evidence of the original receipts.
28.Furthermore, during the cross-examination of accused/DW2, when the said two receipts were shown to the accused, he not only admitted his signatures CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 14 of 24 on the said receipts, but also admitted the execution of said receipts in his own handwriting. Here, section 67 of Indian Evidence Act kicks in as the person, here accused, who has written the original is admitting his handwriting and signatures on the receipts. DW2 also admitted that the said receipts were written by him in presence of the complainant and he gave it to the complainant. The only defence the accused has taken is that the said receipts were written on the instructions of the complainant, which shall be dealt with later on.
29.In summation, as loss of original receipts has been prima facie proved and there are explicit admissions as to the execution as well as contents of the receipts, the receipt dated 06.10.2020 Ex. DW2/C1 and receipt dated 17.07.2020 Ex. DW2/C2 are admissible in evidence.
Issue B & C: Existence of legally enforceable debt and rebuttal
30.To bring home conviction for offence punishable under Section 138 of The Negotiable Instruments Act, 1881, the complainant is obliged to prove :-
(a) The cheque was issued by the accused to the complainant on an account maintained by him with the bank for discharge, in whole or in part, of any debt or liability.
(b) The cheque was presented to the bank within a period of six months or within the period of its validity.
(c) The cheque presented for encashment was dishonored.
(d) The payee/complainant of the cheque issued a Legal Demand Notice CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 15 of 24 within 30 days from the receipt of information from the bank regarding dishonour of the cheque.
(e) The drawer of the cheque failed to make the payment within 15 days of receipt of aforesaid Legal Demand Notice.
(f) The complaint was presented within 30 days after the expiry of above 15 days.
31.At the outset, it is pertinent to mention herein that it is not in dispute that the complainant and accused are known to each other since their college days, further the cheque in question belong to the accused, it bears his signature and it is filled by him except the date, it was drawn on an account maintained by the accused with a bank, cheque in question was dishonored as alleged, and accused failed to make the payment of cheque in question till date. The accused also does not dispute the receipt of legal demand notice Ex.CW1/C. So, there is no need for discussion qua said ingredients and the same can be regarded as being duly proved on record and being non- controverted.
32.The only contentious issue here is whether the accused is able to demonstrate by way of his defence that the impugned cheque was not issued by the accused for discharge of legal liability towards the complainant. For the consideration of the said issue, two presumptions of NI Act are mandated.
33.Section 139 of the Negotiable Instruments Act reads as under:-
CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 16 of 24"It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in section 138, for the discharge, in whole or in part, or any debt or other liability."
34.Section 118(a) of the Negotiable Instruments Act reads as under:
"(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;"
35.The combined effect of Section 118(a) and Section 139 of NI Act is that it raises a presumption in favour of the holder of the cheque that he has received the same for discharge in whole or in part of any debt or other liability.
36.In Kali Ram Vs. State of Himachal Pradesh, (1973) 2 SCC 808 laid down following:-
"23. ........................One of the cardinal principles which has always to be kept in view in our system of administration of justice for criminal cases is that a person arraigned as an accused is presumed to be innocent unless that presumption is rebutted by the prosecution by production of evidence as may show him to be guilty of the offence with which he is charged. The burden of proving the guilt of the accused is upon the prosecution and unless it relieves itself of that burden, the courts cannot record a finding of the guilt of the accused. There are certain cases in which statutory presumptions arise regarding the guilt of the accused, but the burden even in those cases is upon the prosecution to prove the existence of facts which have to be present before the presumption can be drawn. Once those facts are shown by the prosecution to exist, the Court can raise the statutory presumption and it would, in such an event, be for the accused to rebut the presumption. The onus even in such cases upon the accused is not as heavy as is normally upon the prosecution to prove the guilt of the accused. If some material is brought on the record consistent with the innocence of the accused which may reasonably be true, even though it is not positively proved to be true, the accused would be entitled to acquittal."
37.In Hiten P. Dalal Vs. Bratindranath Banerjee AIR 2010 SC 1898 it was held as under: − CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 17 of 24 "The words 'unless the contrary is proved' which occur in this provision (Section 139) make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted......"
38.It is a well settled legal principle that in cases under section 138 NI Act, the complainant has to prove his case beyond a pale of reasonable doubt and the accused has to raise a defence on the yardstick of "preponderance of possibility". In other words, the 'legal burden' to prove the case always is on the shoulders of prosecution, however, the 'evidentiary burden' keeps on shifting during the trial.
39.Although, there is presumption in favour of the complainant that the promissory note is with consideration and the holder of the note received it for debt or liability, however, the 'existence' of such legally enforceable debt or liability is not presumed. Further, the said presumptions are also rebuttable either by way of direct evidence or by finding cavities in complainant evidence. The presumptions shall cease to exist when the contrary is proved by the accused. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists. [Kumar Exports Vs. Sharma Carpets, (2009) 2 SCC 513 relied upon]
40.In order to rebut the presumption, it is open to the accused to raise a probable defence wherein the existence of a legally enforceable debt or liability can be contested. The words 'until the contrary is proved' in Section CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 18 of 24 139 do not mean that accused must necessarily prove the negative that the promissory note is not issued in discharge of any debt/liability but the accused has the option to ask the Court to consider the non-existence of debt/liability so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist. [Basalingappa Vs. Mudibasappa (AIR 2019 SC 1983) and Kumar Exports Vs. Sharma Carpets (2009) 2 SCC 513 relied upon]
41.In the instant case, the accused has admitted his signature on the impugned cheque and the receipt of legal demand notice. The statutory presumptions as mandated under the law are raised in favour of the complainant and the onus is now upon the accused to disprove the liability as well as issuance of cheque to the complainant. [Judgment of The Hon'ble Supreme Court of India in M/s. Kalamani Tex vs. P. Balasubramanian (2021) 5 SCC 283 is relied upon]
42.To rebut the statutory presumptions operating against the accused, accused has raised the following defences:
Firstly, the case of the complainant lacks the exact details of giving the alleged loan to the accused Secondly, the alleged loan was not mentioned in the Income Tax Return of the complainant.
Thirdly, the cheque was not given in discharge of any debt or legal liability.
Fourthly, the cheque in question was given as security.CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 19 of 24
43.As far as the first ground of defence is concerned, the complainant's evidence reflects that the cheque in question has been issued by the accused for the discharge of legal liability towards the complainant. The case of the complainant is bolstered by the filing of two receipts, Ex. DW2/C1 and Ex. DW2/C2, of acknowledgment given by the accused, which appears to be crucial. As per the contents of the receipts, the accused acknowledged a friendly loan of Rs. 8.55 lakhs granted by the complainant as well as the interest on the said loan, for a total of Rs. 20,45,520/-. It is also recorded that the accused issued several cheques, including the impugned cheque towards repayment of said liability. The accused has admitted the contents and execution of the said receipts. Thus, the alleged advancement of a loan of Rs. 8.55 lakhs and the liability of the accused towards the complainant qua said loan stand established. That being so, the first ground of defence does not hold water.
44.On the ground of the complainant's failure to show the alleged loan amount in the ITR, the complainant testified he was unable to recall if he had filed the ITR at the time the funds were invested with the accused. The accused had a burden to raise a probable defence, and the accused could have called the ITR record of the complainant for a relevant period, which the accused failed to do. Suffice it to say that simply failing to disclose the loan amount in ITR may entail the negative consequences for a person for committing the breach of statutory provisions of the Income Tax Act; nonetheless, the same would not render the transaction itself void, illegal, void, and unenforceable. As a result, the contention of the accused cannot be sustained.
CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 20 of 2445.Next, a bare denial on the part of the accused that the said amount of Rs. 8.55 lakhs was being invested with other parties on behalf of the complainant and the complainant used to receive interest on the said amount is not helping the accused. This kind of arrangement between the complainant and the accused has not been evinced by any oral or documentary proof and cannot be believed to have taken place. It was held in the case of Mallavarapu Kasivisweswara Rao vs. Thadikonda Ramulu Firm and Others, AIR 2008 SC 2898 :
"The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non− existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist...."
46.As far as the deposition of DW1 was also found not relevant to the defence of the accused, he was neither the witness to the transaction between the complainant and the accused nor he deposed qua such transaction or issuance of cheque in question. DW1 deposed only qua the multiple other monetary transactions of the complainant with him and other parties through the accsued. The accused disclosed the name of Mr. Manoj Mehrotra, who he claimed advanced a loan on behalf of the complainant; nevertheless, the said witness was also not examined by the accused. On the contrary, the version of the complainant is corroborated by written receipts given by the accused, which the accused has admitted to. Hence, there is no iota of doubt that there existed a legal liability upon the accused and he issued the cheque CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 21 of 24 in question in order to discharge the said liability.
47.Lastly, it was contended that the aforesaid cheque was issued as a security cheque and it does not absolve the accused of liability U/s 138 of the NI Act. It is a clear legal position, that at the time of presentation of cheque, a debt must exist. The expression 'any debt or other liability' is unqualified in Section 138 NI Act, and it includes any future debt or liability that may arise after the issuance of the cheque. There could be any arrangement between the parties regarding the mode and manner of repayment. Merely because the debt may have been repayable subsequently in installments, it cannot be said that on the date of issuance of the cheque, the debt did not exist. [Case of Suresh Chandra Goyal v. Amit Singh, Crl LP No. 706/2014 decided on 14.05.2015 by the Hon'ble High Court of Delhi relied upon]
48.It is now a settled law that there is no appeal in the phrase 'security cheque' and that the cheque issued for security for a loan would mature for presentation if the loan is not paid by the borrower by any other means. In this regard the observations made by Hon'ble Supreme Court in the case of Sripati Singh v. State of Jharkand (2021 SCC OnLine SC 1002) is relevant which is reproduced as under:
"17. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 22 of 24 to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow. When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as 'security' cannot be presented prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in a proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. If such is the understanding a cheque would also be reduced to an 'on demand promissory note' and in all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation."
49.Thus, mere averment that the cheque in question was issued as a security cheque or that it was not issued in respect of an outstanding debt or liability, cannot be sustained and is set aside. The accused must show that there was no legal debt or liability outstanding towards the complainant, which the accused failed to do in the present case.
The Decision:
50.After marshaling the accused's evidence, all the ingredients of the offence U/s 138 NI Act are squarely made out in the present case. It cannot be said that the accused has been able to prove on preponderance of probabilities that he had no debt or liability towards the complainant. The complainant CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 23 of 24 has successfully discharged its burden of proving its case whereas the accused has not been able to refute the presumption that there was an outstanding debt owed by the accused to the complainant of Rs. 20,45,520/-, and a cheque was issued towards repayment thereof. Consequently, the dishonour of the said cheque, and non-payment of the amount despite service of statutory notice under Section 138, resulted in the commission of offence under Section 138 of the NI Act.
51.Resultantly, the accused Mahender Kapoor S/o Late B.R. Kapoor R/o House no. M-3/1, Model Town-III, Delhi-110009 is held guilty of commission of offence under Section 138 of the Negotiable Instruments Act.
Copy of this judgment free of cost be given to the convict.
Announced in the open court
today i.e. 29.08.2024
Digitally signed
by MEENA
MEENA CHAUHAN
CHAUHAN Date: 2024.08.29
15:35:42 +0530
(Meena Chauhan)
JMFC (NI Act), Digital Court-03,
Central, THC, Delhi/29.08.2024
CC No. 2269/2021 Shiv Avtar Tyagi Vs. Mahinder Kapoor Page 24 of 24