Delhi District Court
Religare Finvest Ltd vs Ranjeet Singh on 23 March, 2011
IN THE COURT OF SH.NAVJEET BUDHIRAJA, METROPOLITAN MAGISTRATE,
SPECIAL COURT06, DWARKA COURTS, NEW DELHI.
RELIGARE FINVEST LTD
VERSUS
RANJEET SINGH
P.S.: KALKAJI
U/S: 138 NEGOTIABLE INSTRUMENTS ACT
1.Serial No./CC No. of the case : 25746/10
2. Name of the complainant : Religare Finvest Ltd.
19 Nehru Place, New Delhi - 110019 .
3. Date of institution : 29.01.2010
4. Name of the accused, his : Ranjeet Singh parentage and residence At : F106, Kirti Nagar, New Delhi - 110 015 Also At : 789, Samrat Bhawan Ranjit Nagar, Commercial Complex, New Delhi - 110 008.
5. Date when judgment was : 28.02.2011 reserved
6. Date when judgment was : 23.03.2011 pronounced CC No. 25746/10 1 of 28
7. Offence complained of and : Section 138 Negotiable Instruments Act proved
8. Plea of accused : Pleaded not guilty and claimed trial
9. Final Judgment : Accused not found guilty of offence under Section 138 Negotiable Instrument Act and acquitted for the same.
:J U D G M E N T: 1 Vide this judgment, I shall decide the present complaint filed by the complainant Religare Finvest Ltd. under Section 138 of Negotiable Instruments Act (hereinafter referred to as NI Act) against the accused Ranjeet Singh.
2 Factual matrix of the case is that Complainant is a public limited company having its registered and corporate office at New Delhi and is dealing with business of providing its customers various types of loan facilities. It is averred that accused, Ranjeet Singh has availed a loan facility vide loan account number 6689 and in this regard an agreement was executed between the complainant and accused in Delhi. Accused has issued cheque bearing number 323182 dt. 28.11.2009 amounting to Rs. 1,76,580/ drawn on Punjab and Sind Bank towards the discharge of the part debts against the accused on account of dues towards the complainant company. The said cheque when presented for encashment by the complainant with its banker HDFC Bank Ltd. was returned unpaid by the drawers bank vide returning memo dt. 21.11.2009 with the endorsement "Account Closed". Thereafter, complainant served a legal demand notice to the accused on 16th December, 2009 through UPC/Post/Speed Post and CC No. 25746/10 2 of 28 Courier services. It is therefore, averred that despite service of the said notice accused failed to make the payment of the cheque amount demanded through the legal notice thereby committing offence punishable under Section 138 of NI Act, hence the present complaint. 3 After taking cognizance of the offence under Section 138 Negotiable Instruments Act, summons were issued to the accused post which accused entered appearance on 03.04.2010 and was admitted to bail. Thereafter, notice under Section 251 Cr.P.C was served upon the accused encompassing all the accusations against him to which accused pleaded not guilty and claimed trial.
4 In complainant's evidence the complainant got examined CW1 Ravi Kumar, AR for the complainant and CW2 Mukesh Kumar Chaudhary, Executive of the complainant company. Both the witnesses tendered their evidence by way of affidavit which is Ex.CW1/2 and Ex. CW2/1 respectively. The documents relied upon by CW1 are cheque Ex.CW1/C, returning memo Ex.CW1/D, legal notice Ex.CW1/E and UPC Post, Speed Post and courier receipts Ex.CW1/F to Ex.CW1/F6 and internet generated speed post/courier delivery report which is Ex.CW1/G1 to Ex.CW1/G4. In cross examination CW1 has stated that loan of Rs. 1,25,000/ was sanctioned in favour of the accused in 2007 which was to be repaid in 36 EMI's of Rs. 4,661/ starting from 25th September, 2007 and ending on 01st September, 2010. CW1 was oblivious of the number of blank cheques given at the time of sanctioning of the loan. It is admitted by CW1 that no document stating the liability of the accused as on 20th November, 2009 has been filed. CW1 further, stated that he is oblivious to the fact whether the account of the accused was transferred on 19th September, 2008 from Punjab and Sind Bank, Ranjeet Nagar Branch to Sadar Bazar Branch, Delhi. Document dt. 8th January, 2010 addressed to the CC No. 25746/10 3 of 28 complainant was shown to CW1 who admitted that the addresses mentioned in the document is of the complainant. The said document is Ex.CW1/D1. CW1 further stated that he did not know whether any document Ex.CW1/D1 alongwith certificate dt. 08th January, 2010 showing account transfer details has been received by the complainant or not. CW1 further showed ignorance, whether any reply of the legal notice dt. 15th December, 2009 was received by the complainant or the advocate of the complainant. CW1 further admitted to have taken blank signed cheques from the accused.
5 CW2 relied upon following documents Copy of the power of attorney Ex.CW2/A, certified copy of the statement of account of the accused for the period of 28th August, 2007 to 9th August, 2010 is Ex.CW2/C. In cross examination CW2, admitted that accused has paid 10 EMI's amounting to Rs. 48,644/ including other charges. Certified copy of the loan agreement Ex.CW2/D was placed on record. It is stated by CW2 that till 9th August, 2010 the total outstanding amount against the accused was Rs. 1,83,534.23 and as on 20th November, 2009 the outstanding was Rs. 1,76,580.03. It is further stated that total outstanding amount comprising of principle amount, interest, late payment charges, cheque bouncing charges, foreclosure charges, pending installments and current monthly interest and the installments due as on 17.11.2009 was Rs.87,542/. CW2 further stated that the exact amount of outstanding against the accused could be retrieved from the foreclosure sheet and that the month wise total balance amount due is not reflecting in the account statement. Certified copy of the foreclosure sheet Ex.CW2/E was placed on record and as per Ex.CW2/E, LPP charges were Rs.29,686.23, cheque bouncing charges were Rs.14,052 and foreclosure charges were Rs.2,349.70. Complainant evidence stood closed on 02.11.2010.
CC No. 25746/10 4 of 28 6 Complainant's evidence was followed by statement of accused under Section 313
Cr.P.C read with 281 Cr.P.C wherein accused admitted to have received a loan of Rs.1,25,000/ in August, 2007 from the complainant company vide loan account number 6689. Regarding the issuance of the cheque Ex.CW1/C is concerned, accused stated that the cheque bears his signature only and body of the cheque was not filled by him. Regarding the returning memo Ex.CW1/D with remarks account closed, accused stated that on 19.09.2008 his bank account was transferred from Ranjit Nagar to Sadar Bazar bank due to transfer of his job and therefore the reason of dishonour cannot be account closed and that the returning memo is false and manipulated. Accused further admitted to have received legal demand notice to which he sent the reply dt. 02.01.2010. Regarding his liability towards the cheque in question, accused stated that his liability was not to the extent of the amount mentioned in the cheque as he had already paid approximately Rs. 58,000/ to the complainant. Accused further stated that he had given 11 cheques to the complainant at the time of availing the loan and out of the 11 cheques 6 cheques have been misused by the complainant by presenting those 6 cheques for encashment on the same date that is on 13.02.2009.
7 In his defence evidence accused got examined DW1 that is the officer of Punjab and Sind Bank, Ranjeet Nagar, New Delhi who deposed that he has brought the certified copy of the offer of promotion letter dt. 26.07.2008 issued by the Zonal Office - 2, Naraina, New Delhi showing transfer of the accused Ranjeet Singh w.e.f., 01.09.2008. The said certified copy is Ex.DW1/1. He further deposed that he has got certified copy of bank certificate dt. 08.01.2010 issued by the Branch Office, Branch Incharge, Ranjeet Nagar, New Delhi showing that the account of the accused was transferred to the Sadar Bazar Branch, Delhi and that the reason of the dishonour of the cheque in question was not account closed as shown in the returning CC No. 25746/10 5 of 28 memo on 21.11.2009. The said certificate is Ex.DW1/2. In his cross examination he stated that the document Ex.DW1/2 pertaining to the cheque in question bearing no. 323182. Thereafter, DW1 produced document Ex.DW1/C1 that is IBR pertaining to the account of Ranjeet Singh. The said document is Ex.DW1/C1 showed that the bank transferred the amount in the account of the accused to some other branch i.e, Sadar Bazar Branch. DW1 further deposed that document Ex.DW1/C1 does not prove that on 19.09.2008 Ranjeet Singh was posed at Sadar Bazar, New Delhi. DE stood closed vide order dt. 19.01.2011.
8 After adducing defence evidence, Learned counsels for complainant and accused addressed their respective final arguments at length. Before appreciating the evidences and arguments of both the parties, it would be appropriate to advert to the relevant provisions of N.I Act.
Section 138 of N.I Act reads as under
Section 138 of NI Act reads as under: S. 138 Dishonour of cheque for insufficiency, etc., of funds in the account
- where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement make with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to twice the amount of the cheque or with both. Provided that nothing contained in this section shall apply unless
(a) The cheque has been presented to the bank within a period of six months CC No. 25746/10 6 of 28 from the bank within a period of six months from the date on which it was drawn or within the period of its validity, whichever is earlier.
(b) The payee or the holder in due course of the cheque, as the case may be, 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 thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque, within 15 days of the receipt of the said notice.
Explanation- For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
9 Section 138 of the NI Act has three ingredients, viz., (i) that there is a legally enforeceable debt; (ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which pre supposes a legally enforeceable debt; and (iii) that the cheque so issued had been returned due to insufficiency of funds. The proviso appended to the said section provides for compliance of legal requirements before a compliant petition can be acted upon by a court of law.
10 I would now embark upon the evidences adduced and the arguments advanced by both the parties.
Learned counsel for complainant has relied upon following Judgments:
1. MOJJ Engineering Systems Ltd and others v. A.B Sugars Ltd 154(2008) DLT 579.
2. Dr Sampathkumar B.V v. Ms Dr. K.G.V Lakshmi (2006) BC 209.
3. S.T.P Ltd, reptd. by its branch Executive v. Usha Paints and CC No. 25746/10 7 of 28 Decorators 2006 (5) Kar LJ 323.
4. General Auto Sales v. Vijayalakshmi 2005 (1) ALD (Cri) 42.
5. Balaji Agencies Pvt Ltd v. Vilas Bagi and another 2010 BC 147.
6. Rajat Pharmachem Ltd. v. State Trading Corporation of India Ltd. 2009(3) JCC 221 7 V.S Yadav v. Reena CRL 1136 of 2010.
Learned counsel for accused has relied upon :
1. Shri Taher N. Khambati v. M/s Vinayak Enterprises 1995 Crl L.J 560. 11 First limb of argument advanced by learned counsel for accused is that the accused was not liable to the extent of the amount of the cheque in question i.e 1,76,580/ on the date mentioned in the cheque i.e 20.11.2009 as accused had availed loan from the complainant for a sum of Rs 1,25,000/ for a period of three years and out of that sum , accused had repaid 10 installments amounting to Rs 48,644/ which has been admitted by CW2 in his cross examination. It is further contended that complainant had taken blank cheques from the accused at the time of the loan which fact has also been admitted by CW1 in his cross examination and that complainant had misused one of those cheques by inserting exorbitant amount of Rs 1,76,580/ without the consent of the accused and statement of account Ex.CW2/C filed by the complainant also does not show the liability of the accused as on 20.11.2009 i.e the date of the cheque in question. It is also contended that even if we add the charges alleged to be due towards the accused as reflected in the cross examination of CW2 i.e amount of pending installments Rs 87,582/, LPP charges Rs 29,686.23/, cheque bouncing charges Rs 14,052/, foreclosure charges Rs 2,349.70/, still the total amount does not match the amount of the cheque in question, therefore accused is not liable for the offence under CC No. 25746/10 8 of 28 Section 138 of N.I Act. On the other hand, learned counsel for complainant has contended that accused is liable to pay the cheque amount as is reflected in the foreclosure sheet Ex.CW2/E and regarding issuance of blank cheque by the accused, learned counsel for the complainant has averred that in view of Section 20 of N.I Act, it is a settled proposition that blank cheque can be filled by the holder of the cheque and therefore accused cannot evade his liability. To bolster his contention learned counsel relied upon Mojj Engineering (supra). It is further averred that once the signature on the cheque is admitted by the accused then presumption under section 139 of N.I Act in favour of the complainant also comes into picture which needs to be rebutted by the accused.
12 Before embarking upon the aforesaid contentions of both the counsels, let me reproduce Section 20 of N.I Act 20 Inchoate stamped instruments - Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in [India], and either wholly blank of having written thereon an 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, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder. 13 No doubt, it is a settled law that the particulars of the cheque need not be in the handwriting of the drawer. It can be filled by any person having the possession of the cheque but there is something more to Section 20 of N.I Act then what meets the eye.
CC No. 25746/10 9 of 28 14 As per section 20, no doubt whenever an incomplete negotiable instrument is
handed over, the drawer prima facie gives authority to the holder thereof to complete the negotiable instrument but then the holder is to specify amount not exceeding the amount covered by the stamp and the person signing shall be liable upon such instrument in the capacity in which he signed the same, to any holder in due course for such amount. However the proviso is important. Proviso makes it clear that no person other than holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder. So, prima facie so far as original holder is concerned, drawer is liable to the only amount intended by him to be paid thereunder. 15 Now coming back to the facts of the present complaint, it is nowhere mentioned in the complaint as well as in the evidence of the complainant that when did the cheque in question was issued and handed over by the accused. It merely says that cheque was given by the accused in partial discharge of his liability towards the loan. On the contrary CW1 in his cross examination has admitted that blank cheques were taken from the accused although he could not say how many cheques were handed over and about their serial numbers. This admission of CW1 and also the absence of averments in the complaint as well as in the evidence about the specific details of the issuance and delivery of the cheque by the accused seem to probablise the stand of the accused that cheque in question was given as blank at the time of loan and although section 20 of N.I Act gives authority to the holder to fill the amount therein but then it should not be more than the amount intended to be paid by the drawer. There is no averment in the complaint and no evidence on record which could evince that accused intended to pay the amount of the cheque in question and therefore consented to the filling up CC No. 25746/10 10 of 28 of the cheque to that amount. Also perusal of the loan agreement entered into between the parties shows that in case of any default in paying the EMIs by the accused, complainant shall have the right to forthwith terminate the the loan agreement and be entitled to recall all the balance EMIs on the said loan amount. Clause 9 of the agreement reads as under: Termination - on the occurrence of any of the events of default as detailed hereinabove or otherwise, RFL shall have the right to forthwith terminate the Loan Agreement and be entitled to recall all balance EMIs on the said loan amount (principal+interest) as immediately payable to RFL from the borrower. On any delay in such payment of the balance unpaid loan amount (principal +interest) RFL shall be entitled to claim interest @ 30 % per annum from the date of such notice of recall/ payment till payment/realization.
16 This clause of sending notice of recall is inserted to give one opportunity to the borrower calling upon him either to make the payment due towards loan or face the music. No such loan recall notice has been placed on record by the complainant. CW1 in his cross examination has stated that he did not know if any demand notice was issued before the cheque was presented for encashment. So is highly improbable that accused would issue the cheque for such a humongous amount without any loan recall notice being sent by the complainant. This further bolsters the stand of the accused that the cheque was given blank at the time of the loan and not in the manner as has been alleged by the complainant and as regards the filling up of the amount by the holder in the blank cheque is concerned, there must be an understanding between the parties as regards the amount to be filled therein. To substantiate my view, I would like to refer to paragraph 19 of the Judgment of the Bombay High Court in Pioneer Drip Systems Pvt Ltd. v. Jain Irrigation Systems Ltd, 2010(2) Civil Court Cases 076 (BOMBAY): Para 19 "Thus in my considered opinion , whenever blank cheque or post CC No. 25746/10 11 of 28 dated cheque is issued a trust is reposed that the cheque will be filled in or used as per the understanding or agreement between parties. It there is prima facie reason to believe that said trust is not honoured then continuation of prosecution under section 138 of the N.I Act would be abuse of process of law. It is in the interest of justice that parties in such case are left to civil remedy....."
17 In the present complainant, it has been admitted by CW1 that blank cheques were taken from the accused and cheque in question is probably one of those cheques, there being no evidence of any agreement or understanding between the accused and complainant to fill the amount, complainant was not in its right to fill the cheque without the consent of the accused as regards the amount specified therein.
18 Another contention of learned counsel for complainant is that once the signature on the cheque is admitted by the accused , presumption under section 139 arises in favour of the complainant.
Section 139 of the Act reads as under 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."
19 Before analyzing the scope of section 139 of N.I Act, let me again embark upon section 138 of NI Act. Going by Section 138 of the NI Act, it can be seen that 'a drawing of cheque' by a person on an account maintained by him with the banker for payment of any amount of money to another person from out of that account 'for the discharge', in whole or in part, 'of any debt of other liability' are two important ingredients. In the decision reported in Ch. Birbal Singh v. Harphool Khan (AIR 1976 Allahabad 23), it was held that execution of CC No. 25746/10 12 of 28 documents consists of signing of the document written out, read over and understood and does not consist of merely signing of a blank paper. In another decision reported in Thakurlal v. Ramadhar (1986 ALJ 480), it had been held that mere admission of putting of signature and thumb mark on a blank sheet of paper is not admission of execution of the document. 20 It is pertinent to note that going by the provision namely, Section 138 of the NI Act, it can be seen that the legislature has employed certain words cautiously and not without any meaning. The word employed in Section 138 Viz., "drawn', 'discharge of any debt or other liability' are conveying the message of the legislature, through which we can understand the intention of the legislature. So while interpreting the provisions or the word, the court has to give effect to the intention of legislature. At any stretch of imagination, it cannot be said that putting signature on the blank cheque is equivalent to the word 'drawn' used in Section 138 of the NI Act. Therefore, the word 'drawn' used in Section 138 has to be understood as 'execution of cheque'.
21 Now coming back to Section 139 of N.I Act Section 139 of the Act lays down that it shall be presumed, unless the contrary is proved that the holder of the cheque "received" the cheque of the nature stated in section 138 for the discharge of a debt or liability. Even on a plain reading of the provision, it is clear that the section does not provide for a presumption in respect of "issuance/execution" of a cheque. Neither of the expressions, "issued" nor "executed" is used in the section. Both are significantly absent in the provision. The court cannot therefore, introduce into section 139, any expressions like "issued" thereby meaning "executed" which is not there in the provision.
CC No. 25746/10 13 of 28 22 An accused in any criminal prosecution is ordinarily presumed to be innocent,
unless otherwise expressly provided by any statute or law. A prosecution under Section 138 is not an exception to this. No provision in the Act rebuts such presumption of his innocence. Not even, section 139 of the Act. The said provision does not absolve the prosecution from proving its entire case beyond reasonable doubt. Section 139 of the Act only allows the court to presume just one of the ingredients/conditions/factors which is essentially to be proved by the prosecution in an offence under Section 138 of the Act. By virtue of section 139 of the Act, all what the prosecution is relieved of is, to prove just one limb of the ingredients/requirements of the offence under Section 138 of the Act, provided the holder of the cheque establishes the basis for drawing, the presumption under Section 139 of the Act. But, such limb of the ingredients which can be presumed under Section 139 is not the factum or element of "issuance, execution or drawing" of the cheque by the accused. 23 But then, what exactly is the fact which can be presumed under Section 139 of the Act? What specifically is the nature of presumption available under Section 139 of the Act? On a close reading of the section, I find that the only fact which can be presumed under Section 139 is the 'PURPOSE' for which the cheque is received by the complainant. The court can presume under section 139 of the Act that the purpose for which the cheque is received by the holder is, 'for discharge of a debt or liability". But, the court cannot presume that the cheque is "issued/executed/drawn" by the accused.
24 Two decisions are oftquoted on this aspect. Those are in K.N. Beena vs. Muniyappan, 2001(3) Civil Court Cases 621 (S.C.) : 2001 (2) Apex Court Journal 635 (S.C) : (2001)8 SCC 458, and in Hiten P.Dalal v. Bratindranath Banerjee, (2001(1)Apex CC No. 25746/10 14 of 28 Court Journal 617 (S.C.): (2001) 6 SCC 16). But, in my view, neither of those decisions, the Supreme Court laid down any proposition of law that there is a presumption under Section 139 of the Act in respect of "issuance/execution/drawing" of a cheque. It is held in Beena's case, 2001 (3) Civil court Cases621 (S.C) : 2001(2) Apex Court Journal 635 (S.C.) (referring to Hiten P.Dalal's case, 2001 (1) Apex Court Journal 617 (S.C) as hereunder: "Under Section 139 the court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. Thus in complaints under Section 138, the court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However the burden of proving that a cheque had not been issued for a debt or liability is on the accused. This court in the case of Hiten P.Dalal v. Bratindranath Banerjee, 2001 (1) Apex Court Journal 617 (S.C) has also taken an identical view" (emphasis supplied).
25 The Supreme Court, in Beena's case, 2001 (3) Civil Court Cases 621 (S.C) :
2001 (2) Apex Court Journal 635 (S.C) held that the court has to presume, under Section 139, unless the contrary was proved, that the holder of the cheque"received" the cheque "for discharge, in whole or in part, of a debt or liability.' The Supreme Court also held that in complaints under Section 138, the court has to presume that the cheque has been "issued"for a debt or liability. Significantly, both expressions, "received" and "issued" are used therein by the Supreme Court. But, it is clear on reading the entire decision that the Supreme Court was giving emphasis to the expression "discharge of a debt or liability" and not to the word, "received" used in section 139 because both the words "received" and "issued" are seen used simultaneously, in the relevant context. At any rate, it cannot be said that the Supreme Court applying both the expressions "received" and "issued" to mean the same act Viz., execution/drawing of the cheque.
CC No. 25746/10 15 of 28 26 The expression "received" is not synonymous with the expression "issued" meaning,
"executed". Those carry totally different meanings. Both these expressions connote different acts by different persons and may be, at different places also, in the context of section 138 and 139 of the Act. The person who "issues" (meaning, "executes") the cheque for the purpose of sections 138 and 139 is the accused/drawer of the cheque, whereas the person who "receives"
the cheque is the complainant/holder of the cheque. So also, the act of "issuance" of the cheque by the accused is an act preceding the act of "receipt" by the complainant, after it is "issued" by the accused. Thus, the latter succeeds the former in point of time. 27 For all the above reasons, the expression "received" which is used in section 139 of the Act, in my view, cannot be equated with the expression "issued", meaning executed. 28 In almost all the Judgments cited by learned counsel for the complainant, it has been held that if the cheque is issued blank then it will be deemed to give implied authority to the holder to fill the cheque and presumption under section 139 of N.I Act also arises in favour of the holder. But according to my point of view, presumption under section 139 of N.I Act arises only if a particular cheque is proved to be of the nature stated in section 138 of N.I Act whether the handwriting in the cheque is of the drawer or not, presumption under Section 139 will certainly apply, if the basis for drawing such presumption exists. But it cannot be further understood to mean that there is a presumption under Section 139 of the Act or any other provision in the Act or other statute that a blank cheque is given with an authority whether implied or express etc., to fill up the cheque as long as there is no provision therein allowing any presumption of law or fact to that extent.
CC No. 25746/10 16 of 28 29 In fact, Section 139 applied only if it is established that the cheque is of the nature
stated to in Section 138 of the Act. Such a cheque must, necessarily be, one which satisfies the definition of "cheque" under section 6 read with section 5 of the Act. It must contain an order in writing to pay to a certain person a certain sum of money only etc. as defined in the Act. There is nothing in Section 139 to show that the prosecution is exonerated from proving that the cheque falls within the definition of the cheque under the Act. The cheques produced in all the cases under section 138, ordinarily contain an order in writing. But, that does not mean that the court shall immediately come to a conclusion that such cheques satisfy the definition under the Act.
30 In case where the accused raises a plea that the cheque was blank signed one when it was handed over or received by another person, the court will have to scan through the evidence and materials placed before it and decide whether the complainant "Proved" that the accused has drawn a cheque of the nature defined under the Act or whether it was only a signed blank cheque, which does not satisfy the definition of a cheque under the Act, when it was handed over. The former has to be proved by the prosecution, just as in any criminal prosecution whereas, the latter need only be probablised as in a defence case. The degree of proof certainly differs.
31 To substantiate my expression, I would like to refer to the Judgment in the case of "Gopal Vs. Tonny Varghese" 2008 (1) Civil Court Cases 642 (Kerela) it has been held that mere proof of signature on cheque is not proof of its execution. In the absence, of any positive evidence regarding the execution of the cheque by the accused, it is to be held that the accused had issued only blank cheque and the same was not executed by him. Simply CC No. 25746/10 17 of 28 because the cheque contained the signature of the accused, it cannot be said that the cheque was drawn by the accused as contemplated by Section 138 of the Act. 32 Also in M.J Joseph v. Gladis sasi 2010 (3) Civil Court Cases 702 Kerala, it has been held that admission of signing a blank cheque does not amount to admission of execution of cheque.
33 So in the light of above discussion, I hold that the arguments of counsel for the complainant that once the signature on the cheque is admitted, presumption arises under section 139 of N.I Act do not hold any ground. In the present complaint, it has already been observed that cheque in question was given as blank, there being no presumption under Section 139 of NI Act in respect of blank cheque, therefore, complainant cannot resort to the said presumption.
34 Another contention raised by learned counsel for accused is that complainant has misappropriated the cheque in question by filling an arbitrary figure of Rs.1,76,580/ without any justification as statement of account filed by the complainant does not show the liability of the accused as on 20.11.2009. Learned counsel for the accused has invited the attention of this court to the cross examination of CW2 wherein questions and suggestions were put to the witness regarding the liability of the accused. To controvert this, learned counsel for the complainant has averred that foreclosure sheet Ex.CW2/E clearly reflects the outstanding against the accused to the extent of the amount of cheque in question.
35 It is not in dispute that accused took a loan of Rs 1,25,000/ from the complainant in CC No. 25746/10 18 of 28
the month of August, 2007 which was to be repaid in 36 installments. Ten installments totaling to Rs.48,644 has admittedly been received by the complainant. It is stated by CW2 in his cross examination that installment overdue as on 17.11.2009 was Rs 87,542/ and rest were late payment charges, cheque bouncing charges, foreclosure charges etc. Although, the foreclosure sheet Ex.CW2/E mentions all these charges but there is no explanation as to how these charges are quantified and assessed. When it has been admitted by the witness that installment overdue as on 17.11.2009 was Rs.87,542/ then how come this figure of Rs.1,76,580/ cropped up. The charges imposed by the complainant looked arbitrary and exorbitant, there being no deposition with regard to basis of imposing such charges. The explanation to section 138 of N.I Act clearly tells that to attract an offence under section 138, there should be a legally enforceable debt or other liability subsisting on the date of drawal of the cheque and time and again, it has been reiterated by Apex Court that existence of legal enforceable debt or liability is not the matter of presumption. Therefore, regarding the existence of debt to the extent of the amount of cheque in question, I hold that apart from the pending installments, other charges imposed by the complainant appear ambiguous and humongous and are not legally enforceable.
36 At this juncture, it is also proper and necessary to point out that the amendment brought in the NI Act, penalising the dishonour of cheques, to give more sanctity to commercial transcations involving cheques have given way, rather leverage to unscrupulous monely lenders to squeeze their debtors through the instrumentality of the court by resorting to prosecution against such debtors on dishonoured cheques which are very often collected in blank form which signature alone as security. True, the maker of the instrument, who signs such a instrument in blank form invities the risk of prosecution and sometimes penal CC No. 25746/10 19 of 28 consequences, on inflated claims later incorporated in the instrument without his knowldege and consent. He has taken such risk while signing the instrument in blank form is only a lame excuse and that will not relieve the court the instrumentality of Justice from examining the genuineness of the transaction covered by the instrument. A court is expected to examine whether the transaction covered by the cheque is genuine and bona fide. In a case where the materials produced disclose of suspicious circumstances surrounding the transaction unless satisfactory explanation removing such suspicion is tendered by the holder of the instrument no conviction is legally permissable solely banking upon the statutory presumptions. 37 Another limb of argument advanced by learned counsel for accused is that even though the reason of dishonour on the return memo Ex.CW1/D of the complainant bank is "Account Closed" but in fact account of the accused was not closed but transferred owing to the transfer of the accused from Ranjeet Nagar branch to Sadar bazar branch of Punjab and Sind Bank [drawee bank in the present case]. To provide teeth to his argument, learned counsel for accused got examined DW1, Officer of Punjab and Sind Bank who produced documents Ex.DW1/1 i.e certified copy of letter of offer of promotion dated 26.08.2008 showing offer of promotion given to the accused and his posting at Sadar Bazaar Branch with effect from 01.09.2008 and Ex.DW1/2 i.e certified copy of Bank certificate dated 08.01.2010 showing that account of the accused got transferred to Sadar Bazaar branch. It is further averred that soon after receiving the legal notice from the complainant, accused replied the same by sending letter dated 02.01.2010 Ex.CW1/D2 to the advocate of the complainant as well as at the office of the complainant company and accused also got sent a letter dated 08012010 Ex CW1/D1 along with the certificate issued by Manager, Punjab and Sind Bank informing the complainant that returning memo was wrongly returned with the remarks account closed, in fact it was CC No. 25746/10 20 of 28 transferred. In retort, counsel for the complainant has contended that return memo Ex.CW1/D clearly shows that cheque in question got dishonoured due to "account closed" and not transferred and that the documents placed on record by DW1 do not show that accused accepted the offer of promotion and got transferred to another branch. He relied upon Ex DW1/3 which shows that cheque bearing no 323182 i.e cheque in question got dishonoured with the endorsement "account closed". It is also averred that complainant had not received any letters, reply to legal notice and any other correspondence alleged to have been sent by the accused and that accused has not placed on record any proof showing the receipt of any such letter by the complainant. It is further contended by counsel for the complainant that even if we assume that the reason of dishonour was account transferred and not closed still accused cannot be exonerated from his liability in view of Judgment of Delhi High Court in Rajat Pharmachem (supra).
38 Perusal of the document Ex.DW1/2 produced by officer of the drawee bank evinces that cheque bearing no. 323182 dated 20.11.2009 for Rs.1,76,580/ favouring M/s Religare Finvest Ltd i.e, the cheque in question drawn by accused Ranjeet Singh was presented for clearing on 21.11.2009 but due to the transfer of the accused from Ranjeet Nagar branch to Sadar Bazar branch, who was the employee of the drawee bank, his account also got transferred to that branch. Although the cheque got dishonoured with the endorsement "Account Closed" but the certificate issued by the manager of the drawee bank clearly shows that in fact the account was transferred not closed. Now the question arises whether the dishonour of cheque due to account transfer falls within the ambit of Section 138 of N.I Act. Although section 138 does not categorically provides for fixing the liability in case of dishonour on any ground other than insufficiency of funds but there are catena of Judgments of various CC No. 25746/10 21 of 28 High Courts and Apex Court which have widened the ambit of Section 138 of N.I Act by including other grounds of dishonour like Stop payment, Account closed etc within the province of Section 138 so that unscrupulous drawers could not evade their liability under the garb of limited ground provided in the said section. The courts in those Judgments have laid emphasis on the fact that reason of dishonour has to be seen in the context of insufficiency of funds meaning thereby that suppose if the cheque is returned with the remarks account closed then it is to assumed that drawer has withdrawn all his money and that was why his account got closed. Now in the complaint in hand although the reason of dishonour was account closed but what is to be seen is that whether account was closed due to the reason of withdrawal of the money from the account or due to some other reason. It has already been discussed above that due to the transfer of the accused, his account was also transferred and that precisely was the reason of dishonour of the cheque. Moreover at that time IBR dated 19.09.2008 was also issued which is Ex.DW1/C1 which shows that a sum of Rs.3,029,44/ was transferred from the previous account of the accused in Ranjeet Nagar Branch to Sadar Bazaar Branch, so at that time accused was having sufficient money in his account.
39 Further more, to show his bonafides accused got send the reply of the legal notice of the complainant reiterating his stand that at the time of loan, complainant had taken 11 blank cheques and one of those cheques has been misused by the complainant by filling the huge amount and also that reason of dishonour was not "account closed" but "account transferred"
and also a letter dated 08.01.2010 addressed to the complainant company intimating the complainant about the reason of dishonour of cheque on the returning memo. CW1 in his cross examination has stated that although he did not know whether the complainant has received any document dated 08.01.2010 Ex CW1/D1 but he admitted that addressed mentioned in the CC No. 25746/10 22 of 28 document is the correct address of the complainant and regarding the receipt of reply of legal notice, CW1 showed ignorance. In such a scenario, Section 27 of General Clauses Act comes into picture.
The section reads as under:
"S.27 Meaning of service by post Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression "serve" or either of the expressions "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.
40 So it is quite clear from S.27 of General Clauses Act and catena of Judgments that when a letter is properly addressed, prepaid and posted by registered post service shall be deemed to be effected at the time at which the letter would be delivered in the ordinary course of post.
41 Perusal of the document Ex.CW1/D1 and Ex.CW1/D2 i.e reply to the legal notice shows that the letters were sent at the address of the complainant by registered post, therefore the same were deemed to have been served upon the complainant in the ordinary course of post. So, the contention of the complainant that complainant had not received any such letter from the accused cannot pass muster.
42 Now coming to the Judgment in Rajat pharmachems (supra), it was held in para10.1 that whatever may be the reasons for return of cheque, if the drawer does not satisfy CC No. 25746/10 23 of 28 the demand within 15 days of its receipt the offence stands committed in the eyes of law. In such a situation, a presumption will be drawn against the drawer that the cheque was returned unpaid either on account of the amount standing to the credit of the drawer in his account being insufficient. Now as regards the present case, I hold that accused has produced sufficient material on record to rebut that presumption by proving that transfer of his services to some other branch led to the transfer of his account which eventually was the reason of dishounour of cheque in question. Now regarding the argument of counsel for the complainant that accused has not placed on record any document which could show that he has accepted the offer of promotion, I hold that when it has been sufficiently proved that account of the accused got transferred to some other branch, then non production of any document showing the acceptance of the offer of promotion is of no relevance.
43 Another limb of argument raised by learned counsel for complainant is that to rebut the presumption under Section 139 N.I Act in favour of the complainant, accused has to lead cogent evidence by examining himself but in the case in hand accused has not examined himself to prove his defence. In support of his submission, learned counsel for the complainant has relied upon Judgment of Delhi High Court in V.S Yadav v. Reena CRL. A. NO. 1136 of 2010.
44 Before deliberating upon the submission of learned counsel for the complainant, it will be useful to refer to the relevant paragraphs of the Judgment of the Apex Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde (1) Apex Court Judgments 412 SC.Para 31 reads as under...
"31. The courts below, as notice hereinbefore, proceeded on the basis CC No. 25746/10 24 of 28 that section 139 raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and u nless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct" (Emphasis added)
45 The Apex Court thus reitereated well established legal position that for rebutting the presumption under section 139 of the said Act, it is not necessary in every case for the accused to step into the witness box. The Apex Court held that the standard of proof on the part of the accused and that of prosecution to prove a case is different. The prosecution has to prove the guilt of an accused beyond reasonable doubt, but the standard of proof so as to prove a defence is "preponderance of probability". Inference of preponderance of probabilities can be drawn even by reference to circumstances. In paragraph 44 the Apex Court observed thus : "The presumption of innocence is a human right (see Narendra Singh v. State of M.P., Ranjitsing Brahmajeetsing Sharma V. State of Maharashtra and Rajesh Rajan Yadav V. CBI) Article 6 (2) of the European Convention on Human Rights provides :
"Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law." Although, India is not bound by the aforementioned convention and as such it may not be necessary like the countries forming European countries to bring common law into land with the Convention, a balancing of the accused's rights and the interest of the society is requeired to be taken into consideration. In India, however, subject to the stautory interdicts, the said principle forms the basis of criminal jurisprudence. For the aforementioned purpose the nature of the offence, seriousness as also gravity thereof may be taken into consideration. The courts must be on guard to see that merely on the application of presumption as contemplated under section 139 of the Negotiable Instruments Act, the same may not lead to injustice or mistaken conviction........." (Emphasis added) CC No. 25746/10 25 of 28 In paragraph 45 the Apex Court held thus:
"45. We are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industiral activitites of the country and the strict liablitity to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing courntry like India. This, however, shall not mean that the courts shall put a blind eye to the ground realitites. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have rebutted. Other important principles of legal jurisprudence, namely, presumptioin of innocence as human rights and the doctrine of reverse burden introduces by section 139 should be delicately balanced. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materlials brought on record and having regard to legal principles governing the same." (Empahsis added)
46 Thus, what has been held by Apex court is that presumption of innocence forms part of human rights and therefore the doctrine of reverse burden introduced by section 139 has to be delicately balanced.
47 Thus, it is amply clear from the above mentioned Judgment of Apex Court that for proving his case accused need not in every case step into the witness box meaning thereby that it will depend upon facts and circumstances of each case. If accused is able to make out his case by bringing on record any lacuna in the cross examination of the complainant witness then it is not incumbent upon him to examine himself. He can discharge his burden by mere preponderance of probabilities. In the present case, although accused has not examined himself in defence but he has placed on record sufficient material in the form of cross examination of complainant witness and by examining officer of the drawee bank i.e, DW1 in CC No. 25746/10 26 of 28 his defence which could advance his cause. In the case cited by learned counsel for complainant, it was observed by Honourable Justice S.N Dhingra that statement of accused under Section 313 of Cr.P.C is not the evidence of the accused and mere statement that cheques were issued as security would not suffice. But in para 7 of that Judgment, it was held that accused has to produce cogent evidence to prove his case and then in para 8 it was held that no evidence, whatsoever, was produced by the accused and the trial court travelled extra steps. From the perusal of the Judgment in totality, it appears that in that case, trial court solely relied upon the statement of the accused under section 313 Cr.P.C and accused failed to produce any evidence which of course is not the case in the complaint in hand, therefore, the submission of learned counsel for the complainant that since accused in the present case has not entered into witness box and thus he has failed to discharge his burden falls face down. 48 In the backdrop of aforesaid discussion, I hold that complainant has failed to establish that cheque in question was issued by the accused towards the discharge of legally enforceable debt or liability. Merely because of admission of signature on the cheque, it cannot be said that execution of the cheque is proved. In the facts and circumstances of the case , on appreciation of the evidence and on the basis of materials on record, since the very execution of the cheque has been denied by the accused, the complainant cannot seek the aid of presumption available under Section 139 of N.I Act.CW1 has admitted to have received certain blank cheques from the accused at the time of loan in August 2007 and there being no material on record which could show any understanding or agreement between the accused and complainant to fill the cheque for such a huge amount, the loan being sanctioned for a sum of Rs 1,25,000 in August, 2007 out of which approximately Rs 48,000 has CC No. 25746/10 27 of 28 admittedly been paid by the accused, it does not pass my comprehension that accused could have issued the cheque of Rs 1,76,580 in the month of November 2009 and that too drawn on the branch from which his account got transferred around September, 2008 i.e, almost a year prior to the date of the cheque in question. All these circumstances go a long way to show that cheque in question was given as blank. Further more, the cheque got dishonoured due to transfer of the account of the accused from one branch to some other branch of the drawee bank which I feel would not fall within the province of Section 138 of N.I Act in facts of the case, therefore, no offence under Section 138 of N.I Act is made out against the accused, hence accused stands acquitted.
Bail bond of the accused stands discharged.
File be consigned to record room.
ANNOUNCED IN THE OPEN (NAVJEET BUDHIRAJA)
COURT ON 23.03.2011 METROPOLITAN MAGISTRATE
SPECIAL COURT 06,
DWARKA COURTS, DELHI.
CC No. 25746/10 28 of 28