Delhi District Court
CT CASES/620977/2016 on 1 September, 2021
Harsh Mohan v. Ravinder Kumar; CC No. 630541/16
IN THE COURT OF MS. TWINKLE CHAWLA: MM, NI
ACT-02, SOUTH-EAST DISTRICT, SAKET COURTS
COMPLEX: NEW DELHI
Harsh Mohan v. Ravinder Kumar @ Ravinder Singh
CC No. 620977/16
U/s 138 Negotiable Instruments Act, 1881
1. CIS number : DLSE020035362015
CT CASES/620977/2016
2. Name of the : Harsh Mohan Dhaundiyal, S/o R. B
complainant Dhaundiyal, R/o C-14-A, Railway
Colony, Lajpat Nagar, Delhi -110024
3. Name of the accused, : Ravinder Kumar @ Ravinder Singh,
parentage & residential R/o H.No. F-43, Lajpat Nagar-2, Near
address Model Hospital, Top Floor,
New Delhi.
4. Offence complained of : U/s 138 of Negotiable Instruments Act,
or proved 1881
5. Plea of the accused : Pleaded not guilty and claimed trial
6. Final Judgment/order : ACQUITTED
7. Date of judgment/order : 01.09.2021
JUDGMENT
1. Complainant has filed the present complaint under Section 138 /142 of Negotiable Instruments Act, 1881 ("NI Act") on the averments that, being in friendly relations with the Accused, he Page 1 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 extended a friendly loan of Rs. 6,20,000/- from time to time. As repayment of the said loan, the accused issued two cheques, first bearing no. 185278 dated 18.04.2015 drawn on IDBI Bank, for Rs. 2,20,000; and second bearing no. 509214 dated 18.04.2015 drawn on Bank of Baroda for Rs. 4,00,000; in favour of the Complainant (hereinafter referred as "cheques in question"). However, when the Complainant presented the cheques in question; both were returned unpaid. The first cheque bearing no. 185278 dated 18.04.2015 drawn on IDBI Bank, for Rs. 2,20,000 was returned unpaid vide return memo dated 20.04.2015, for the reason "payment stopped by drawer". The second cheque bearing no. 509214 dated 18.04.2015 drawn on Bank of Baroda for Rs. 4,00,000 was returned unpaid vide return memo dated 21.04.2015, for the reason "funds insufficient".
2. The Complainant sent the legal demand notice dated 15.05.2015 through his counsel by registered AD as well as through speed post. Hence, despite the service of the legal demand notice accused failed to make the payment and hence the present complaint.
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Harsh Mohan v. Ravinder Kumar; CC No. 630541/16
3. After taking pre-summoning evidence, Accused was ordered to be summoned in this case for commission of offence under Section 138 of NI Act, vide order dated 26.06.2015.
4. Accused appeared and was granted bail on 21.03.2016. On finding a prima facie case, notice U/s 251 Code of Criminal Procedure, 1973 ("CrPC") was served upon the accused on 27.10.2016 to which he pleaded not guilty and opted to contest after disclosing the following defence:
"I do not plead guilty and claim trial. The cheques are not filled in my handwriting but are only signed by me. The cheque amount is not legally recoverable debt. I have taken a loan of Rs. 2,20,000/- from the complainant in the month of May-June 2013 and complainant has taken two blank cheques from me towards the principal amount and future interest which was at the rate of 12%. I had paid interest till November-December 2014. I did not receive the legal notice. My address on the legal notice and Page 3 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 complaint is incorrect. The complainant has misused the cheques in question. I am willing to pay Rs. 220000/- to the complainant."
5. Vide order dated 20.12.2016, opportunity was granted to the accused to cross examine the complainant. As part of the complainant evidence, the Complainant relied upon the pre- summoning evidence affidavit, Ex. CW1/1:
Ex. CW1/A Cheque bearing no. 185278 dated 18.04.2015 of Rs. 2,20,000.
Ex. CW1/B Bank returning memo dated 20.04.2015 in respect of cheque bearing no. 185278.
Ex. CW1/C Cheque bearing no. 509214 dated 18.04.2015 of Rs.4,00,000.
Ex. CW1/D Bank returning memo dated 21.04.2015 in respect of cheque bearing no. 509214.
Ex. CW1/E Legal demand notice dated 15.05.2015. Ex. CW1/F Postal receipts dated 15.05.2015. Complainant Evidence was closed vide separate statement on 27.06.2017.
6. Thereafter, the accused was examined under Section 313 of CrPC for explaining the circumstances appearing against him in complainant's evidence. He denied the complainant's case and pleaded false implication in the present case and opted to Page 4 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 lead evidence in his defence.
7. The accused moved an application under Section 315 CrPC to examine himself, which was allowed vide order dated 22.06.2018. However, since the accused failed to appear successively on repeated dates and failed to get himself examined; the opportunity to lead Defence Evidence was closed vide order of the Court dated 17.09.2019.
8. I have heard perused the case file carefully and meticulously. I have also heard arguments advanced by Ld. Counsel for the Accused. Despite several opportunities, none has appeared on behalf of the Complainant at the stage of final arguments. Hence, the right to advance arguments on part of the Complainant was closed vide order dated 17.02.2021. Submissions of the Complainant and Accused
9. Perusal of the complaint indicates that the case of the Complainant is that all ingredients of Section 138 NI Act are fulfilled in the present case and hence, the presumption under Section 139 NI Act arises in the favour of the complainant, which has not been successfully rebutted by the accused.
10.Ld. Counsel for the accused has submitted that the ingredients Page 5 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 of Section 138 NI Act have not been fulfilled in the present case as the Complainant had not sent the legal demand notice to the correct address of the Accused. Reliance has been placed on the decision of the Hon'ble High Court of Delhi in R.L. Varma & Sons (HUF) v. P.C. Sharma, Crl. Rev. Pet. No. 438/2017, decided on 01.07.2019 (hereinafter referred to as "R.L. Varma Case"). Further, it has been submitted that the Complainant has not tendered his evidence affidavit at the stage of post summoning evidence and hence, there is no legally admissible evidence against the Accused. In the alternative, Ld. Counsel for the Accused has submitted that the presumption under Section 139 NI Act is rebutted in the present case as there are contradictions in the Complainant's case, as on the one hand, the Complainant has stated that the loan was given to the accused time to time, spanning from October 2013 to February 2015; and the Accused was to repay after 1/1.5 years; and then on the other hand, the cheques in question were presented within 2 months of the advancement of the loan.
11.Further, the Ld. Counsel for the Accused has submitted that the Accused has in his defence at the time of framing of notice u/s Page 6 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 251 NI Act and statement u/s 313 CrPC; consistently stated that he had not received the legal demand notice, as the address in the legal demand notice as well as the complaint was incorrect. He has also argued that the Accused has been successfully served in this case only after the Complainant filed fresh address of the Accused.
Legal Framework Ingredients of Section 138 NI Act:
12. The Hon'ble Supreme Court of India ("Hon'ble SC") in Kusum Ingots & Alloys Ltd and Ors v. K Pennar Peterson Securities Ltd and Ors., (2000) 2 SCC 745 ("Kusum Ingots Case"), has clearly stipulated that "the ingredients which are to be satisfied for making out a case under the provision are:
(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;
(ii) that cheque has been presented to the bank within a Page 7 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 period of six months1 from the date on which it is drawn or within the period of its validity whichever is earlier;
(iii) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit 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;
(iv) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(v) 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;
If the aforementioned ingredients are satisfied then the 1 Reduced to three months vide RBI circular dated 4.11.2011. Page 8 of 18
Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 person who has drawn the cheque shall be deemed to have committed an offence." (emphasis supplied)
13.Therefore, if the aforesaid ingredients are made out, the accused is deemed to have committed an offence under Section 138 NI Act.
Presumption under Section 139 NI Act/Section 118 NI Act:
14.Section 139 NI Act states that:
"Presumption in favour of holder: 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, of any debt or other liability" (emphasis supplied)
15.Section 139 NI Act is a type of reverse onus clause, which stipulates a presumption in the favour of the Complainant as to fact of a cheque being received in discharge of a legal debt or liability.
16.Further, Section 118(a) of the NI Act, states as follows:
"Presumptions as to negotiable instruments. -- Until the contrary is proved, the following presumptions shall be Page 9 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 made:
(a) of consideration --that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;"
17.The Hon'ble SC has in a number of judgments dealt with the combined effect of the presumptions raised under Section 139 and Section 118(a) NI Act.
18.The following proposition can be summarized on a perusal of the judgments of the Hon'ble SC in APS Forex Services Pvt. Ltd. v. Shakti International Fashion Linkers and Ors., AIR 2020 SC 945; Rohitbhai Jivanlal Patel v. State of Gujarat and Ors., AIR 2019 SC 1876; Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513; K.N. Beena v. Muniyappan and Anr., (2001) 8 SCC 458; and Dhanvantrai Balwantrai Desai v. State of Maharashtra, 1964 Cri. LJ 437:
(i) Once the execution of cheque is admitted; Section 139 of Page 10 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 the NI Act mandates a presumption that the cheque was for the discharge of any debt or other liability;
(ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities;
(iii) To rebut the presumption, the accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. While direct evidence cannot be insisted upon in any every case; bare denial of the passing of the consideration and existence of debt, would not serve the purpose of the accused;
(iv) Something which is probable has to be brought on record by the accused for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and Page 11 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist;
(v) The words "unless the contrary is proved" which occur in 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 Section 139 NI Act cannot be said to be rebutted;
(vi) To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials Page 12 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 brought on record by the parties but also by reference to the circumstances upon which they rely;
(vii) That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
Analysis
19.It is trite law that while deciding a complaint U/s 138 NI Act, the Court has to firstly see whether the Complainant has successfully established the facts constituting the offence under the said section.
20.The ingredients of Section 138 NI Act which are required to be established by the Complainant have been set out by the Hon'ble SC in Kusum Ingots Case. These ingredients have already been set out at paragraph 12 above. Once these ingredients are established by the Complainant; and the Accused admits the issuance of the cheque/his signatures; the presumption U/s 118 (a) and 139 of the NI Act arise. One of Page 13 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 the key ingredients as set out at point (iv) of paragraph 12 is that the "payee or holder in due course of the cheque makes a demand for the payment of said amount of money by giving a notice in writing, to the drawer of the cheque". It is trite law that when the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issuance of notice in terms of clause (b) of proviso to Section 138 of the NI Act stands complied with. (Reliance placed on the judgment of the Hon'ble SC in C.C. Alavi Haji v. Palapetty Muhammed (2007) 6 SCC 555 ("CC Alavi Haji Case")). In the CC Alavi Haji Case, the Hon'ble SC has further held that:
"It is well settled that at the time of taking cognizance of the complaint under Section 138 of the Act, the Court is required to be prima facie satisfied that a case under the said section is made out and the above noted mandatory statutory procedural requirements have been complied with. It is then for the drawer to rebut the presumption about the service of notice and show that he had no Page 14 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 knowledge that the notice was brought to his address or that the address mentioned on the cover was incorrect or that the letter was never tendered or that the report of the postman was incorrect." (emphasis added)
21.Further, the Hon'ble High Court of Delhi in R.L. Varma Case has observed that the legal presumption of notice can only arise in case the notice is correctly addressed; "if the notice is incorrectly addressed, no legal presumption can arise". Further, it was also observed that in paragraph 24 of the aforementioned judgment that:
"Section 138 of Negotiable Instruments Act mandates the issuance of the statutory notice as a pre-condition to filing of a complaint. The cause of action to file a complaint under Section 138 of the Negotiable Instruments Act arises only on issuance and service of statutory notice and failure of the accused to comply with the statutory notice. In the absence of service of statutory notice; the cause of action would not accrue. Service of statutory notice would also include legal presumption of service if circumstances Page 15 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 so warrant." (emphasis added)
22.Accordingly, if the legal demand notice bears the incorrect address of the Accused, no presumption under Section 27 of the General Clause Act, 1897 can be drawn and the requirement of sending a legal demand notice will stand unfulfilled.
23.In the present case, the Accused at the stage of framing of notice under Section 251 CrPC as well as in his statement under Section 313 CrPC had submitted that he had not received the legal demand notice and that his address on the legal demand notice was incorrect. Further, in the cross examination of the Complainant dt. 27.06.2017, upon a specific question being put to the Complainant about the address on the legal demand notice; the Complainant replied that: "it is correct that the legal demand notice was sent at the wrong address of Accused. Vol. it was inadvertent mistake and in fact the Accused resided in the adjoining building only. It is also correct that in the memo of parties filed with the complaint, the address of the Accused is incorrect." Accordingly, the Complainant has himself admitted to the fact of sending the legal demand notice at an Page 16 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 incorrect address, i.e., an address at which the Accused did not reside. Hence, the Accused has proved on trial by way of this question put to the Complainant that the legal demand notice was not sent to him, as the legal demand notice bore an incorrect address. Accordingly, an essential requirement of Section 138 NI Act has not been fulfilled in the present case. The Ld. Counsel for the Accused has submitted that the Accused is accordingly absolved of the criminal liability under Section 138 NI Act. This Court is of the view that the contention of the Accused is in accordance with the settled principle of law set out in the aforesaid cases.
24.Further, since Section 138 NI Act is a technical offence, all ingredients mentioned in paragraph 12 above must be established for the accrual of cause of action in favour of the Complainant. In view of the above detailed discussion, the Complainant has failed to establish the essential ingredients of Section 138 of NI Act, hence no presumption under Section 139 is attracted in the present case. Since the Complainant has failed to discharge his initial burden under Section 138 NI Act, Page 17 of 18 Harsh Mohan v. Ravinder Kumar; CC No. 630541/16 there is no requirement to delve into further evidence in the present case. Accordingly, the ingredients of Section 138 of NI Act, are not proved. Therefore, the Accused is held not guilty and is acquitted of the offence punishable under Section 138 of NI Act.
ORDER: ACQUITTAL Announced in Open Court (Twinkle Chawla) 01.09.2021 MM (NI-Act 02), South East Saket Court, New Delhi Note: This judgment contains 18 pages and each page has been signed by me.
(Twinkle Chawla) MM (NI-Act 02), South East Saket Court, New Delhi Page 18 of 18