Delhi District Court
Syed Ahmer vs Mahmood Malik on 26 October, 2023
IN THE COURT OF METROPOLITAN
MAGISTRATE (NI ACT) DIGITAL COURT NO.-01,
SOUTH EAST DISTRICT, SAKET DISTRICT COURT,
DELHI
Presided by: Ms. SHEETAL RANI
CC. No.2450/2021
CNR No. DLSE02-005261-2021
In the matter of:
Mr. Syed Ahmer
S/o Mr. Syed Abdullah
R/o H No.- 180, Gali No. 22, Zakir Nagar,
Okhla, New Delhi-110025
......Complainant
Versus
Mr. Mahmood Malik
S/o Mr. Akhlaq Malik
R/o 14 A, Bharat Nagar, New Friends Colony
New Delhi- 110065
....... Accused
Date of Institution : 23.02.2021
Offence complained of
or proved : Section 138 Negotiable Instrument
Act, 1881
Plea of Accused : Not guilty
Date of Decision : 26.10.2023
Final Order : Convicted
Argued by : Mr. Arif Shakeel, Ld. Counsel
for complainant.
: Mr. Vijendra Kumar, Ld. Counsel
for accused. Digitally
signed by
SHEETAL
SHEETAL RANI
RANI Date:
CC. No.2450/2021
2023.10.26
17:12:42
+0530
Syed Ahmer Vs. Mahmood Malik Page 1 of 26
JUDGMENT
BRIEF FACTS AND REASONS FOR DECISION OF THE CASE FACTUAL MATRIX-
1. The present complaint has been filed by the complainant, Mr. Syed Ahmer against the accused person Mr. Mahmood Malik under Section138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as"NI Act"). The substance of allegations and assertions of the complainant is that the accused alongwith his brother Mr. Mansoor Malik had approached the complainant at his residence somewhere in May/June 2017 and informed the complainant that he is doing business of Meat Export to Middle East Countries. It is the case of the complainant that he was lured by the accused and informed that if he invests Rs. 50 lakhs in the meat export business he will get return of Rs. 3.5 to 4 Lakhs per month. The complainant based upon the promises and allurement agreed to invest Rs. 25 Lakh. He met the accused and Mr. Mansoor Malik at their residence at Bharat Nagar and paid a sum of Rs. 5 Lakh in cash to the accused on 10.06.2017. Subsequently, the complainant transferred Rs. 10 Lakh on 12.06.2017 and 10 Lakh on 13.06.2017 in the bank account of the accused. The complainant further averred in his complaint that upon the insistence of the accused and his brother to invest more amount to get return of Rs. 3.5 to 4 lakh he collected money from his relatives/friends and further paid Rs. 25 Lakh to the accused for investment in the meat export business. It was initially agreed between the complainant and accused that the document in writing will be executed on completion of the payment of Rs. 50 Lakh.
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Accordingly, after completion of the payment, a written agreement was executed by the complainant and accused on 14.02.2018 and two cheques bearing no. 768773 and 768774 for a sum of Rs. 25 Lakh each drawn on Yes Bank, New Friends Colony Branch, New Delhi (hereinafter referred to as "Cheques in question") were handed over on the same day. It is also stated by the complainant that a sum of Rs. 30 Lakh was invested in the said business by Mr. Aslam Khan (brother-in-law of the complainant). When the accused failed to pay in accordance with the terms and conditions, the complainant visited Dubai and demanded the entire amount of investment and the interest. The accused sought some time to make the payment and executed a written document dated 30.04.2019 at Dubai. According to the complainant, the accused had paid only a sum of Rs. 10 Lakh on different occasions towards the part profit. The said cheques in question dated 28.12.2020 were returned dishonoured on presenting with the remarks "funds insufficient"
vide return memo dated 01.01.2021. The complainant thereafter issued a legal demand notice dated 14.01.2021 for the cheques in question which were duly served upon the accused. Despite service, the accused failed to repay the cheque amount within the stipulated period and hence, the present complaint has been filed under section 138 of the NI Act.
APPEARANCE OF ACCUSED AND TRIAL
2. On finding a prima facie case against the accused, the accused person was summoned to face trial and after his appearance, notice of accusation under Section 251, Code of Criminal Procedure, 1973(hereinafter referred to as "Cr.P.C.") was framed against the Digitally signed by SHEETAL SHEETAL RANI RANI Date:
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accused person on 27.10.2021. In reply to the notice of accusation, the accused pleaded not guilty and claimed trial. The accused further stated that the allegations as per the complaint are false as he is liable to pay only Rs. 5 Lakh. He admitted the signatures on the cheques and stated that the cheques were handed over by him to a middleman and not to the complainant. Further stated that the cheques were given as security.
3. The Ld. Counsel on behalf of the accused has orally requested under section 145(2) of NI Act for cross examining the complainant which was allowed vide order dated 27.10.2021 and the cross examination of the complainant was closed vide order dated 05.07.2022.
4. During the trial, the complainant has led the following oral and documentary evidence against the accused to prove his case beyond reasonable doubt:
ORAL EVIDENCE CW 1 :Mr. Syed Ahmer (Complainant) DOCUMENTARY EVIDENCE Ex. CW1/A : Pre-Summoning Evidence by way of affidavit of complainant.
Ex. CW1/1(OSR) : Agreement dated 14.02.2018 between the complainant and the accused Ex. CW1/2 (OSR) : Agreement dated 14.02.2018 between Mohd. Aslam and the accused Digitally signed by SHEETAL SHEETAL RANI Date: RANI 2023.10.26 17:12:56 CC. No.2450/2021 +0530 Syed Ahmer Vs. Mahmood Malik Page 4 of 26 Ex.CW1/3(OSR) : Letter dated 30.04.2019 Ex.CW1/4(Colly) : True transcript of voice messages along with Whatsapp chat between the complainant and the accused along with the pendrive and CD and certificate u/s 65 B of the Indian Evidence Act.
Ex. CW1/5(Colly) : Letter dated 24.12.2020 addressed to the accused alongwith the postal receipt and tracking consignment.
Ex.CW1/6 & Ex. CW1/7 : Original Cheques bearing no.
768773 and 768774 both dated
28.12.2020 for a sum of
Rs.25,00,000/-(Twenty-five Lakh)
each drawn on Yes Bank, New
Friends Colony Branch, New Delhi.
Ex. CW1/8 & Ex.CW1/9 : Return Memos dated 01.01.2021.
Ex. CW1/10(Colly) : Legal demand notice addressed to
the accused along with the postal
receipts and tracking report.
Ex. CW1/11 : Reply dated 29.01.2021 of accused
to the legal demand notice.
5. Before the start of defence evidence, in order to allow the accused person to personally explain the incriminating circumstances appearing in evidence against him, the statement of the accused was recorded without oath under Section 313(1)(b) of the CrPC on 18.07.2022. In reply, the accused stated that he had given a blank Digitally signed SHEETAL by SHEETAL RANI CC. No.2450/2021 RANI Date: 2023.10.26 17:13:01 +0530 Syed Ahmer Vs. Mahmood Malik Page 5 of 26 signed security cheque to the complainant and that he had signed three blank papers and gave them to the complainant when the complainant visited Dubai. He further stated that the legal demand notice dated 14.01.2021 was not received by him, however, the address mentioned in the legal demand notice is his correct address.
It is also stated that he had only signed the cheques in question and other particulars were not filled by him in the cheque.
Further, it is stated by the accused that he had taken a loan of Rs. 20 Lakh from the complainant in the year 2017-18. When the complainant visited Dubai in year 2018, he had given the cheque in question to the complainant along with the signed blank papers as security. The accused also stated that he had made the entire payment to the complainant when the complainant again visited Dubai in December 2018 and the complainant told him to return the cheques in question and the signed papers in Delhi but the same were not returned.
6. The final arguments were addressed by the Ld. Counsels for complainant and the accused. I have heard the Ld. counsels appearing for the both the parties and have given my thoughtful consideration to the material appearing on record.
ARGUMENTS
7. The Ld. Counsel on behalf of the complainant has argued that the ingredients of the offence under section 138 NI Act are fulfilled and the complainant has duly proved its case. He had argued that once the signature on the cheque in question is admitted by the accused, a presumption of a legally enforceable debt has arisen in favour of the complainant and now it is for the accused to rebut the said Digitally signed by SHEETAL SHEETAL RANI Date: CC. No.2450/2021 RANI 2023.10.26 17:13:08 +0530 Syed Ahmer Vs. Mahmood Malik Page 6 of 26 presumption. He has placed reliance upon the following judgments Sheela Sharma vs Mahendra Pal CRL.L.P 559/2015, Rohit Bhai Jivanlal Patel vs State of Gujarat &AnrCrl Apl 508/2019 SLP(Crl)1883/2019, M/S Kalamani Tex &Anr vs P. Balasubramanian Crl Apl 123/2021 SLP(Crl)1876/2018, P. Rasiya vs Abdul Nazer & Anr Crl Apl 1233-1235/2022 SLP(Crl)7430- 7432/2022, Tedhi Singh vs Narayan Dass Mahant Crl Apl 362/2022 SLP(Crl)1963/2019, Sumeti Vij vs M/S Paramount Tech Fab Industries Crl Apl 293/2021 SLP(Crl)8564/2021, Guruprasad S/o DaulataBhalavi vs State of Maharashtra Crl Apl 88/2019, Kundan S/o Nanji Pendorvs State of Maharashtra Crl Apl 313/2014.
8. The Ld. Counsel for the complainant had argued that the onus to discharge the said presumption is upon the accused. He further argued that the complainant invested a total sum of Rs. 50 Lakh in the meat export business of the accused on which the accused promised to provide good returns, for which he has placed on record the agreement vide Ex. CW1/1(OSR) and in discharge of the legal liability, the accused had issued the cheques in question. It is also argued that the accused has taken contradictory defence at different stages and has not disputed the documents placed on record by the complainant. He further argued that the accused has failed to rebut the presumption raised under section 139 of the NI Act by adducing any evidence.
9. As such, the Ld. Counsel for the complainant prays that the accused be convicted for the offence under section 138 of NI Act.
10. Per contra, the Ld. Counsel for the accused had argued that there exists no legal liability towards the complainant as the accused took Digitally signed by SHEETAL SHEETAL RANI RANI Date:
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a friendly loan of Rs. 20 Lakh from the complainant in June 2017 as he was in need of money. The said amount was transferred through RTGS in the bank account of the accused in two instalments of Rs. 10 Lakh each. It is argued that the accused had given three blank, unfilled and signed cheques including the cheques in question and some blank signed papers as security to the complainant. Further, argued that the said amount of Rs. 20 Lakh was returned by the accused in the first quarter of the year 2018, also the complainant has admitted the receipt of Rs. 10 Lakh. It is also argued that the complainant has not filed any documentary evidence to show that an amount of Rs. 50 lakh was given to the accused, no proof has been placed on record that an amount of Rs. 25 lakh was borrowed by the complainant from his friends/relatives and handed over to the accused as alleged in the complaint. Also, the complainant has not examined any of the persons as mentioned in the complaint from whom he has borrowed the said amount of Rs. 25 Lakh to give an amount of Rs. 50 Lakh to the accused to prove his case. He further argued that the complainant does not have the financial capacity to give Rs. 50 Lakh to the accused.
11. As such, it is prayed that the accused be acquitted for the offence punishable under section 138 of the Negotiable Instruments Act.
INGREDIENTS OF OFFENCE AND DISCUSSION
12. Before dwelling into the facts of the present case, it would be apposite to discuss the legal standards required to be met by both sides. In order to establish the offence under Section 138 of NI Act, the prosecution must fulfil all the essential ingredients of the Digitally signed by SHEETAL SHEETAL RANI CC. No.2450/2021 RANI Date:
2023.10.26 17:13:17 +0530 Syed Ahmer Vs. Mahmood Malik Page 8 of 26 offence. Perusal of the bare provision reveals the following necessary ingredients of the offence:
First Ingredient: The cheque was drawn by a person on an account maintained by him for payment of money and the same is presented for payment within a period of 3 months from the date on which it is drawn or within the period of its validity;
Second Ingredient: The cheque was drawn by the drawer for discharge of any legally enforceable debt or other liability;
Third Ingredient: The cheque was returned unpaid by the bank due to either insufficiency of funds in the account to honour the cheque or that it exceeds the amount arranged to be paid from that account on an agreement made with that bank;
Fourth Ingredient: A demand of the said amount has been made by the payee or holder in due course of the cheque by a notice in writing given to the drawer within thirty days of the receipt of information of the dishonour of cheque from the bank;
Fifth Ingredient: The drawer fails to make payment of the said amount of money within fifteen days from the date of receipt of notice.
APPRECIATION OF EVIDENCE
13. The accused can only be held guilty of the offence under Section 138 NI Act if the abovementioned ingredients are proved by the complainant coextensively. Additionally, the conditions stipulated Digitally signed by SHEETAL SHEETAL RANI RANI Date:
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under Section 142 NI Act have to be fulfilled. Notably, there is no dispute about the proof of first, third, fourth and fifth ingredient. The complainant had proved the original cheques vide Ex. CW1/6 and Ex. CW1/7 which the accused had not disputed as being drawn on the account of the accused. It was not disputed that the cheques in question were presented within its validity period. The cheques in question were returned unpaid vide return memos dated 01.01.2021 vide Ex. CW1/8 and Ex. CW1/9 due to the reason, "funds insufficient".The complainant had proved on record the legal demand notice dated14.01.2021 postal receipts and tracking reports vide Ex. CW1/10(Colly), As such, only first, third,fourth and fifth ingredient of the offence under section 138 of the NI Act stands proved.
14. As far as the proof of second ingredient is concerned, the complainant has to prove that the cheque in question was drawn by the drawer for discharging a legally enforceable debt. In the present case, the issuance of the cheque in question is not denied. As per the scheme of the NI Act, once the accused admits signature on the cheque in question, certain presumptions are drawn, which result in shifting of onus. Section 118(a) of the NI Act lays down the presumption that every negotiable instrument was made or drawn for consideration. Another presumption is enumerated in Section 139 of NI Act. The provision lays down the presumption that the holder of the cheque received it for the discharge, in whole or part, of any debt or other liability.
15. The combined effect of these two provisions is a presumption that the cheque was drawn for consideration and given by the accused for the discharge of debt or other liability. Both the sections use the Digitally signed SHEETAL by SHEETAL CC. No.2450/2021 RANI RANI Date: 2023.10.26 17:13:27 +0530 Syed Ahmer Vs. Mahmood Malik Page 10 of 26 expression "shall", which makes it imperative for the court to raise the presumptions once the foundational facts required for the same are proved. Reliance is placed upon the judgment of the Hon'ble Supreme Court, Hiten P. Dalal vs. Bratindranath Banerjee (2001) 6 SCC 16.
16. Further, it has been held by a three-judge bench of the Hon'ble Apex Court in the case of Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The principles pertaining to the presumptions and the onus of proof were recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under: -
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarise the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the 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 Digitally signed SHEETAL by SHEETAL RANI RANI CC. No.2450/2021 Date: 2023.10.26 17:13:31 +0530 Syed Ahmer Vs. Mahmood Malik Page 11 of 26 not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. 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.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
17. The presumptions raised under Section 118(b) and Section 139 NI Act are rebuttable presumptions. A reverse onus is cast on the accused, who has to establish a probable defence on the standard of preponderance of probabilities to prove that either there was no legally enforceable debt or other liability. In this case, the arguments raised by the Ld. counsel for the accused to rebut the presumption are discussed below:
I. DEFENCE THAT THERE IS NO EXISTING LEGAL
LIABILTY
18. Ld. Counsel for the complainant has submitted that the complainant had invested an amount of Rs. 50 Lakh in the meat export business of the accused and the accused promised to pay Rs.3.5 to 4 lakh as return on the said investment. He further submitted that accused in discharge of his legal liability had issued the cheques in question and that the complainant had also placed on record the agreement dated 14.02.2018, regarding the investment of Rs. 50 Lakh, amount of return to be paid and handing over of the cheques in question by the accused to the complainant. The only defence under section 251 CrPC is that the accused had admitted the liability of Rs. 5 Lakh Digitally signed SHEETAL by SHEETAL RANI CC. No.2450/2021 RANI Date: 2023.10.26 17:13:38 +0530 Syed Ahmer Vs. Mahmood Malik Page 12 of 26 towards the complainant, the accused had stated that the signature on the cheques in question is his but the cheques in question were handed over to a middleman and not to the complainant. Further, the same were security cheques. In the statement recorded under section 313 CrPC accused stated that he took a friendly loan of Rs. 20 Lakh from the complainant in the year 2017-2018. It is stated that cheques in question alongwith blank signed papers were given to the complainant when he visited Dubai in the year 2018. Accused also stated that the amount of Rs. 20 lakh was returned to the complainant when he again visited Dubai in December 2018. He had further replied under section 313 CrPC that the agreement dated 14.02.2018 Ex. CW1/1 was not executed by him and he had only signed three blank papers and the cheque in question, however, particulars of the cheque were not filled by him. However, the accused has not placed on record any documentary or oral evidence to substantiate his claim.
19. In order to prove that there was no legally recoverable debt the accused has raised three points which are discussed below:
Firstly, that the amount of Rs.50 lakh was not given by the complainant to the accused. Apt to mention here that the complainant has relied upon Ex.CW1/1(OSR) agreement dated 14.02.2018 wherein it is mentioned that an amount of Rs. 50 lakh was invested by the complainant in the meat export business of the accused. Moreso, the complainant has relied upon Ex.
CW1/3(OSR) the written note dated 30.04.2019 and averred that the accused has admitted his liability in that note and the same is in the handwriting of the accused.
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It is submitted on behalf of the accused that the agreement dated 14.02.2018 was not executed by him and he had handed over blank signed papers and blank signed cheques. Perusal of Ex. CW1/11 reply to the legal demand notice dated 29.01.2021 sent by the accused to the complainant reveals that the accused had admitted that three signed, blank and unfilled cheques including the cheques in question alongwith two blank signed papers were handed over to the complainant at the time of transfer of first instalment of Rs. 10 Lakh i.e. on 12.06.2017. The accused has replied in his statement under section 313 CrPC that the cheques in question alongwith signed blank security papers were handed over to the complainant by the accused when the complainant visited Dubai in the year 2018. However, in his plea of defence under section 251 CrPC the accused has stated that the cheques in question were given to a middleman and not to the complainant. The accused has attempted to disprove the agreement dated 14.02.2018 merely by stating that the same was not executed by him and he had only given the blank signed papers to the complainant as security. However, by glancing through the reply of the accused to the legal demand notice, his plea of defence and the statement under section 313 CrPC it can be seen that the accused has taken contradictory stand at each stage regarding the number of blank signed papers given by him, place and time of their handing over. The accused has not produced any convincing evidence to prove that the agreement dated 14.02.2018 was not executed by him, mere denial of execution is not sufficient to substantiate the claim of accused regarding the non-execution of the same when the signature on the papers containing the agreement is not disputed by the accused. Further, it is averred by the Digitally signed by SHEETAL SHEETAL RANI RANI Date:
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complainant in his complaint that Ex. CW1/3 (OSR) i.e. note acknowledging the fact that an amount of Rs. 80 lakh was invested by the complainant in the meat export business of the accused and he undertook to pay the same with profit, is in the handwriting of the accused. The accused has not disputed the said note and had not produced any evidence to prove that the same was not in his handwriting. Considering the contradictory defence of the accused and his failure to produce any cogent evidence the fact that an amount of Rs. 50 lakh was invested by the complainant in the meat export business of the accused stands proved.
Secondly, that only an amount of Rs. 20 lakh was taken by the accused from the complainant as friendly loan and the same was retuned by the accused. Pertinent to mention here that the accused in his reply to the legal demand notice has admitted that the amount of Rs. 20 lakh was given by the complainant through bank transfer in two instalments of Rs. 10 lakh each on 12.06.2017 and 13.06.2017. It is also stated by the accused that the said amount was returned to the complainant in parts during the first quarter of the year 2018 whereas in his statement under section 313 CrPC he has stated that the said amount was returned to the complainant in December 2018 when the complainant visited Dubai. Interestingly, the accused has not mentioned anything about the return of the said amount in his plea of defence at the time of framing of notice under section 251 CrPC.
To substantiate his claim the accused had examined one witness DW1/Mr. Mansoor Malik, who has stated in his evidence affidavit Ex. DW1/A that the accused told him in the mid of 2018 that he took a friendly loan of Rs. 20 Lakh from the complainant Digitally signed SHEETAL by SHEETAL RANI CC. No.2450/2021 RANI Date: 2023.10.26 17:13:51 +0530 Syed Ahmer Vs. Mahmood Malik Page 15 of 26 and now the same has been returned to the complainant, during his cross examination he deposed that the said amount was not returned in his presence. Evidently, the testimony of DW1 is not reliable as he is not a witness to the transaction of returning of an amount of Rs. 20 Lakh to the complainant by the accused and merely a hearsay witness. The accused has only made bald assertion that Rs. 20 lakh was returned to the complainant, even that assertion regarding the time of payment is inconsistent and unreliable in absence of any credible proof. The accused has failed to place on record any cogent and convincing evidence to prove his defence that an amount of Rs. 20 lakh was paid by him to the complainant. The witness produced by the accused does not support his defence, hence, the accused has miserably failed to prove that Rs. 20 lakh was returned to the complainant.
Thirdly, that the complainant in his complaint has admitted that an amount of Rs. 10 lakh was paid by the accused. It relevant to note that the complainant has stated in his complaint that an amount of Rs. 10 lakh was paid by the accused towards the part profit on three occasions. The accused has neither denied nor has bring on record any evidence to prove that said amount was not paid towards part profit. Hence, the accused has failed to prove that the said amount was paid towards the amount of investment.
20. To put it briefly the defence of the accused is based upon mere denial and assertions devoid of any convincing evidence and insufficient to rebut the presumption as to the existence of legal liability.
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21. The Hon'ble Supreme Court in the case of M.S. Narayana Menon @ Mani v. State of Kerala (2006) 6 SCC 39 has observed as under, "32. A Division Bench of this Court in Bharat Barrel & Drum Manufacturing Company v. Amin Chand Payrelal [(1999) 3 SCC 35] albeit in a civil case laid down the law in the following terms:
"Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the nonexistence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the nonexistence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the nonexistence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as Digitally signed SHEETAL by SHEETAL RANI RANI Date: 2023.10.26 CC. No.2450/2021 17:14:01 +0530 Syed Ahmer Vs. Mahmood Malik Page 17 of 26 the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt"
In the present case, the accused has failed to adduce sufficient evidence to rebut the presumption laid down under section 139 of the NI Act. A statutory presumption has an evidentiary value. The question as whether the presumption stood rebutted or not, must, therefore, determined keeping in view the other evidence on record. In the instant case, the accused has miserably failed to prove that an amount of Rs. 50 lakh was not invested by the complainant in the meat export business of the accused as the complainant had placed on record the agreement vide Ex.CW1/1(OSR) which stands proved. Further, the accused has failed to prove that an amount of Rs. 20 lakh was returned by the accused to the complainant.
Consequently, it can be said that legal liability exists in favour of the complainant, thus, the second ingredient to the offence under section 138of NI Act stands proved.
II. DEFENCE THAT THE COMPLAINANT DOES NOT HAVE THE FINANCIAL CAPACITY
22. The Ld. Counsel for the accused had contended that the complainant did not possess the sufficient financial means to give an amount of Rs. 50 lakhs. It is submitted that the complainant in his cross examination has himself admitted his income of Rs. 6-7 lakh per annum and it is highly improbable that that he will lend a huge amount of Rs. 50 lakhs to the accused. Further, it is argued on behalf of the accused that the complainant has mentioned in his complaint that an amount of Rs. 20 lakh was transferred through RTGS and Rs. 5 lakh was given in cash by the complainant to the accused and an Digitally signed by SHEETAL SHEETAL RANI CC. No.2450/2021 RANI Date:
2023.10.26 17:14:07 +0530 Syed Ahmer Vs. Mahmood Malik Page 18 of 26 amount of Rs. 25 lakh was borrowed from the relatives/friends of the complainant to hand over Rs. 50 Lakh to the accused. However, the complainant has not produced any documentary proof to substantiate the fact that an amount of Rs. 25 lakh was borrowed by him from his friends and relatives.
It is also argued that the source of income has to be seen by the Court while deciding a complaint under section 138 NI Act. Reliance has been placed upon K. Subramani vs KDamodara Naidu Criminal Appeal No. 2402 of 2014.
It is pertinent to mention here that CW1/Complainant in his cross- examination had stated that he is doing the construction business for last 25 years, the complainant has also admitted his income of approximately Rs. 7-8 lakhs in the year 2016-2017.The Ld. Counsel for the accused had also submitted that it is admitted by the complainant that an amount of Rs. 5 Lakh which is stated to be given by the complainant to the accused in cash has not been shown in the ITR. The complainant during his cross examination has admitted that the said amount was not mentioned in the ITR, however, it is submitted voluntarily that the said amount of Rs. 5 lakh was not shown in the ITR as the same was borrowed from his friends and relatives. Further, the complainant has stated that the amount of Rs. 20 lakhs have been mentioned in the ITR of 2017- 2018. It is also stated by the complainant in his cross examination that he has not produced any documentary proof regarding the amount of Rs. 25 Lakh borrowed by him from his friends and relatives.
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23. At this juncture, a reference be made to a few decisions of the Hon'ble Supreme Court on the issue of financial capacity of the complainant. The Hon'ble Supreme Court of India in Rohitbhai JivanlalPatel v. State of Gujarat &Anr. [(2019) 18 SCC 106] has held that, " The observations of the Trial Court that there was no documentary evidence to show the source of funds with the respondent to advance the loan, or that the respondent did not record the transaction in the form of receipt of even kachcha notes, or that there were inconsistencies in the statement of the complainant and his witness, or that the witness of the complaint was more in know of facts etc. would have been relevant if the matter was to be examined with reference to the onus on the complaint to prove his case beyond reasonable doubt. These considerations and observations do not stand in conformity with the presumption existing in favour of the complainant by virtue of Sections 118and 139 of the NI Act. Needless to reiterate that the result of such presumption is that existence of a legally enforceable debt is to be presumed in favour of the complainant. When such a presumption is drawn, the factors relating to the want of documentary evidence in the form of receipts or accounts or want of evidence as regards source of funds were not of relevant consideration while examining if the accused has been able to rebut the presumption or not."
The Apex Court in the case of Basalingappa vs. Mudibasappa(2019) 5 SCC 418, observed as under:
"During his cross-examination, when financial capacity to pay Rs.6 lakhs to the accused was questioned, there was no Digitally signed by SHEETAL SHEETAL RANI RANI Date:
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satisfactory reply given by the complainant. The evidence on record, thus, is a probable defence on behalf of the accused, which shifted the burden on the complainant to prove his financial capacity and other facts."
Thus, in order to raise a probable defence, it is open for the accused to challenge the financial means of the complainant, after which the onus shifts on the complainant to prove the same. Also, in APS Forex ServicesPvt. Ltd. vs. Shakti International Fashion Linkers &Ors. 2020 SCC OnLine SC 193, it was observed by the Hon'ble Apex Court, inter alia, asunder:
"20. In the present case, the accused never questioned the financial capacity of the complainant. We are of the view that whenever the accused has questioned the financial capacity of the complainant in support of his probable defence, despite the presumption under Section 139 of the N.I. Act about the presumption of legally enforceable debt and such presumption is rebuttable, thereafter the onus shifts again on the complainant to prove his financial capacity and at that stage the complainant is required to lead the evidence to prove his financial capacity, more particularly when it is a case of giving loan by cash and thereafter issuance of a cheque. That is not a case here."
After considering the aforesaid decisions of the Apex Court, this court is of the considered view that the complainant has no obligation to prove his financial capacity in all the cases under section 138, NI Act. However, when the case of the complainant is that he lent money to the accused by way of cash and the accused issued the cheque in discharge of his liability, and if the accused challenges the financial capacity of the complainant to advance the Digitally signed by SHEETAL SHEETAL RANI Date: RANI 2023.10.26 CC. No.2450/2021 17:14:21 +0530 Syed Ahmer Vs. Mahmood Malik Page 21 of 26 amount, despite the presumption under section 139of the Act, the complaint has the obligation to prove his financial capacity or the source of money allegedly lent by him to the accused. It is clear that the complainant has no initial burden to prove his financial capacity or the source of money. Thus, the obligation in that regard would arise only when his capacity or capability to advance the money is questioned by the accused.
24. The complainant has admitted that the alleged amount of Rs. 5 Lakh has not been reflected in the ITR as the amount was paid in cash to the accused. The importance of highlighting amounts of loan in the ITRs becomes relevant where there is no other evidence on record regarding the transaction. A reliance be placed upon the judgment of the Hon'ble Delhi High Court in the case of Sheela Sharma v. Mahendra Pal 2016 SCC online Del 4696 has been observed, "In cases where the complainant claims to have advanced a friendly loan in cash, and where the transaction of loan is not evidenced by any other documentary or other reliable evidence, no doubt, the aspect whether the availability of funds in cash with the complainant/ lender, and its advancement as loan to the accused have been reflected in the income tax returns of the complainant/lender, or not, become relevant. If, the availability of funds, and the loan transaction itself is not so reflected, that factor is taken note of by the Court as relevant to hold that the presumption under Section 118 and 139 of the NI Act stands rebutted. However, these considerations would not be relevant, where loan transaction itself is otherwise established, either through documentary evidence such as, a receipt or a loan agreement, or acknowledgement Digitally signed by SHEETAL SHEETAL RANI RANI Date:
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executed by the accused, or by oral evidence of an independent witness who is found to be credible."
25. In the present case, while the complainant has not been able to bring cogent evidence regarding source of funds, it is to be noted that it is not a case where there is no documentary evidence with respect to the transaction involved. On the contrary, the agreement Ex.CW1/1(OSR) between the complainant and the accused mentioning the investment of Rs. 50 lakh and the details of the cheques issued, note dated 30.04.2019 Ex. CW1/3 (OSR) acknowledging investment of Rs. 80 Lakh by the complainant in the meat export business of the accused are on record. The accused has not been able to impeach the genuineness of the said documents. No evidence was led by the accused to show that the document was invalid/forged, however, the accused had stated that he had given the blank signed papers to the complainant and the agreement dated 14.02.2018 Ex. CW1/1(OSR) was not executed by him, in absence of any cogent evidence the claim of the accused merely remains an assertion and does not invalidate the documentary proof produced by the complainant which bears the signature of the accused.
In light of the above discussion and overall circumstances, the defence put forward by the accused cannot be accepted as probable defence so as to reverse the statutory presumptions.
26. The defence raised by the accused that the cheque in question was issued as security does not absolve him from the liability. It was held in ICDS v. Beena Shabir &Anr. (2002) 6 SCC 426 that security Digitally signed by SHEETAL SHEETAL RANI RANI CC. No.2450/2021 Date:
2023.10.26 17:14:30 +0530 Syed Ahmer Vs. Mahmood Malik Page 23 of 26 cheque would also fall within the purview of the Section 138 NI Act and a person cannot escape his liability unless he proves that debt or liability for which the cheque was issued as security is satisfied otherwise. Recently, Hon'ble Supreme Court in Sripati Singh v. State of Jharkhand 2021 SCC Online Sc 1002 has held that a cheque issued as security, pursuant to a financial transaction, cannot be considered as a worthless piece of paper. It is given to ensure the fulfilment of an obligation undertaken. The Court explained that if a cheque is issued to secure repayment of a loan advanced and if the loan is not repaid on or before the due date, the drawee would be entitled to present the cheque for payment, and if such a cheque is dishonoured, the consequences contemplated under section 138 NI Act would follow. In the case in hand, the accused has taken the defence that the cheque in question was given as security. Even if the cheque in question was given as security by the accused to the complainant as stated in his defence and the same got dishonoured the accused is still liable for the cheque drawn by him as the accused has failed to bring on record any cogent evidence to prove that the debt for which the cheque in question was given as security was otherwise paid by him to the complainant.
27. The accused has taken the defence that the cheque in question in the present case was blank signed cheque which was misused by the complainant. However, this story of the accused is not supported by any credible evidence on record and does not inspire the confidence of the Court and hence cannot be considered. So far as it relates to the fact that cheque was blank signed cheque, once accused had admitted his signatures on the cheque, he cannot escape his Digitally signed by SHEETAL SHEETAL RANI CC. No.2450/2021 RANI Date:
2023.10.26 17:14:34 +0530 Syed Ahmer Vs. Mahmood Malik Page 24 of 26 liability on the ground that particulars have not been filled by him, or the signature on the cheque and the contents are filled in different writing and ink. When such a cheque containing blank is signed and handed over, it means that person signing it, has given implied authority to the holder of the cheque, to fill up the blank which he has left. It has been clearly laid down in section 20 of Negotiable Instrument Act,1881 that where one person signs and delivers to another a Negotiable Instrument either wholly blank or having written thereon incomplete Negotiable Instrument, he thereby gives, "prima facie" authority to the holder thereof to make or complete, as the case may be, upon it a Negotiable Instrument". In the case of Satish Jayantilal Shah Vs. Pankaj Mashruwala&anr., 1996 Cri.L.J.3099, it has been held that :-
"No law provides that in case of any Negotiable Instruments, entire body has to be written by maker or drawer only."
In the case of Moideen vs Johny, 2006 (2) DCR 421, it has been held that when a blank cheque is issued, the drawer gives an authority to a person to whom it is issued, to fill it at appropriate stage with necessary entries and to present it to the bank. Since, the accused has admitted that she has signed the cheques in question, he cannot dispute the contents of the cheque in question. Hence, the accused has failed to rebut the presumption raised against him u/s 139 r/w 118(a)of Negotiable Instrument Act in present case.
CONCLUSION
28. In view of the foregoing discussion, this court holds that complainant has established his case beyond reasonable doubt by proving all the ingredients under Section 138 NI Act by leading Digitally signed SHEETAL by SHEETAL RANI RANI Date: 2023.10.26 CC. No.2450/2021 17:14:39 +0530 Syed Ahmer Vs. Mahmood Malik Page 25 of 26 cogent evidence and the accused has failed to raise a probable defence.
29. Accused Mahmood Malik is hereby convicted for offence punishable under Section 138 NI Act qua the cheque in question in the present case.
30. Let the convict be heard separately on quantum of sentence. Copy of this judgment be given free of cost to the convict.
Announced in the Open Court on this 26thOctober 2023. This Judgment consists of 26 pages and each page bears my signature.
Digitally signed by SHEETAL RANI SHEETAL Date:
RANI 2023.10.26
17:14:44
+0530
(SHEETAL RANI)
MM (NI Act) DIGITAL COURT-01,
SOUTH-EAST/NEW DELHI/26.10.2023
CC. No.2450/2021
Syed Ahmer Vs. Mahmood Malik Page 26 of 26