Delhi District Court
Satin Credit Care Network vs . Ashok Kumar on 31 January, 2012
1
IN THE COURT OF SHRI KISHOR KUMAR, METROPOLITAN
MAGISTRATE, DWARKA COURTS, NEW DELHI
In Re:
C.C No. 48/11
U/s 138 read with section 141 &142 Negotiable Instrument Act.
1. C.C No. : 48/11
2. Date of Institution : 18.01.11
3. Name of the complainant
his parentage and residence: Satin Credit Network Ltd.,
306, LUSA Tower, Azadpur
Commercial complex,
Delhi110033.
4. Name of the accused
his parentage and residence: Ashok Kumar
s/o Late Banwari Lal
M/s Banwari Girdhari Lal,
16/1591 E Bapa Nagar, Arya
Samaj Road, Karol Bagh,
New Delhi110005.
5. Date when judgment : Not reserved.
was reserved
6. Date when Judgment : 31.01.12
was pronounced
7. Offence Complained of : U/s 138 read with section
141&142 N.I.Act.
CC No. 48 /11
Satin Credit Care Network Vs. Ashok Kumar
2
8. Plea of accused : He pleaded not guilty and
claimed trial.
9. Final Judgment : Convicted
JUDGEMENT
1. Complainant bank M/s Satin Credit Care Network Ltd. through its AR Sh.Shyam Sunder has filed the present complainant u/s 138 read with section 141 & 142 Negotiable Instrument Act ( hereinafter be referred to as "Act" ) against the accused Ashok Kumar contending inter alia that the complainant company is registered one under the Companies Act and is engaged in the business of leasing and financing the vehicles and consumer durable goods and personal loan under the monthly or daily installments collection scheme on mutually agreed terms and conditions. The accused approached the complainant company and requested for grant of personal loan. On the request of the accused, the complainant company granted personal loan to the accused vide personal loan agreement No. H5321dated 9.09.08 for a sum of Rs.24,480/. The payment schedule under the said agreement was on the basis of daily installments of Rs.68x360 days. It is further CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 3 alleged by the complainant company that the accused after making initial payment towards daily installment, later on started violating the terms and conditions of the said agreement. The accused lastly stopped making the payment. The accused despite repeated reminders and requests of the complainant company failed to make the repayment installments. On scrutinizing the amount, it was noticed that the accused had to make payment of Rs.55,790/. Accordingly, the complainant company sent a demand notice dated 11.10.10 to the accused claiming the payment of the outstanding amount. The accused after receipt of the said demand notice dated 11.10.10, came to the office of the complainant company and settled the entire loan transaction and had issued the present cheque involved in the instant complaint bearing No.098583 dated 09.11.10 drawn on Allahabad Bank, Karol Bagh, New Delhi in the sum of Rs.55,790/ in favour of the complainant company. The above referred cheque on its presentation to the banker of the accused was dishonored with the remarks "Funds Insufficient" vide cheque return memo dated 10.12.10. Thereafter, inconsonance with the provision of section 138(b) of the N.I Act, the complainant company sent a notice dated 16.12.10 to the accused on 20.12.10 through registered post and UPC demanding the amount of the dishonored cheque within 15 days of the receipt of the notice. The accused even after receipt of the legal notice CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 4 dated 16.12.10 failed to make the payment of the dishonored cheque . Hence, the present complaint having been preferred by the complainant company against the accused praying therein for summoning and trying the accused for the offence punishable u/s 138 NI Act.
2. On perusal of the complaint as well as the documents filed along with it as also the affidavit in evidence of the AR for the complainant through which the general power of attorney of AR for the complainant has been mark A, extracts of the meeting of the Board of Directors by virtue of which the general power of attorney in favour of the AR for the complainant company has been executed Mark A, the certificate of incorporation is mark B collectively, certificate of registration of the complainant company with Reserved Bank of India is mark C, the personal loan agreement executed between the accused and the complainant company is mark D. The cheque bearing No.098583 dated 09.11.10 in the sum of Rs.55,790/ in favour of the complainant company, allegedly issued by the accused is Ex.CW1/B, the cheque return memo is Ex.CW1/C, the legal demand notice is Ex.CW1/D collectively. The UPC receipt as well as the registered post receipt is Ex.CW1/D collectively. On the basis of these evidence, prima facie case having been found to be made out against the accused for the offence punishable u/s 138 NI Act , the accused was summoned. CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 5
3. The accused appeared and requested for grant of legal aid assistance at the cost of the State. Accordingly his request was allowed and the counsel from DLSA was provided to him.
4. On the basis of prima facie case having been made out against the accused, notice u/s 251 Cr.P.C for the offence punishable u/s 138 N.I Act was framed on 25.07.11, to which accused had pleaded not guilty and claimed trial, disclosing his defence to the effect that he had issued cheque in question to the complainant bank as security cheque signed by him. Opportunity was afforded to the accused to cross examine CW1, AR for the complainant. CW1 has been cross examined by counsel for the accused from DLSA at length.
5. On closer of complainant evidence, statement of the accused u/s 313 Cr.P.C was recorded. In his examination u/s 313 Cr.P.C the accused has stated that he had cleared all the loan amount to the complainant company. The cheque in question is a security cheque and being misused by the Complainant company. He has not received any notice from the complainant for any demand. He only came to know when some police official apprised him regarding pendency of the present case. There is no legal liability against him. The accused CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 6 chose to lead defence evidence.
6. I have heard Ld.counsel for the complainant , Ld.counsel for the accused from DLSA and have gone through the record.
7. It is argued by Ld.counsel for the complainant that on the basis of the allegations contained in the complaint, the evidence of the CW1 and various documentary evidence having been brought and proved on record, the complainant has successfully proved its case against the accused that the accused had issued the cheque in question in favour of the complainant company in discharge of his liability/debt and the said cheque stood dishonored on its presentation which fact stands established on the basis of documentary evidence led by the complainant company in support of its case . There is presumption u/s 118 and Section 139 of the Act and relying thereon, the case against the accused stands proved beyond any reasonable doubt. The accused himself has admitted of default on his part in making the timely installments. The liability against the accused is very much established from the statement of account pertaining to the accused. Whatever, the complainant is claiming from the accused is on the basis of loan agreement executed between the parties. The accused has not disputed the fact of taking loan from the complainant company. The complainant CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 7 company has also relied upon section 20 of NI Act submitting that even if it is presumed for the sake of arguments that accused had given blank signed cheque, the accused had given implied authority to the complainant company to fill in the suitable amount therein. The complainant has prayed for allowing of the complaint, conviction of the accused and award of the appropriate compensation under the facts and circumstances of the present case. Ld. Counsel for complainant has relied upon judgments i.e AIR 2001, Supreme Court 2895, AIR 2009 Supreme Court 386, 2005 (1) DCR 219 , and Rangappa Vs. Shri Mohan decided by the Hon'ble Supreme Court on 7.5.10.
8. On the other hand, it is argued by Ld.counsel for the accused Sh.
Hitender Attri, counsel from DLSA that the accused had given the cheque in question to the complainant company at the time of execution of various loan documents as security cheque and at that moment the accused did not owe any debt or liability qua the complainant company . No legal demand notice either dated 11.10.10 or notice dated 16.12.10 u/s 138 (b) of the Act was ever served upon the accused. It is further argued by counsel for the accused that the original of the loan agreement was not filed on the record. No statement of account has been filed by the complainant in support of its case. That accused had repaid the entire loan as per the terms and conditions but the CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 8 complainant neither issued any clearance certificate nor returned the cheque given by the accused as security. The complainant has misused the security cheque. The complainant did not for a period of two years bother to recover the alleged dues from the accused. The complainant has not been able to prove as to when the accused had visited the office of the complainant and issued the present cheque after alleged due negotiation as contained in para No.7 of the complaint. The accused as per settled proposition of law is not required to lead positive evidence in support of its case in view of the fact of complainant not being able to prove its case beyond any reasonable doubt and in such circumstances the benefit of doubt has to go in favour of the accused. The proceedings u/s 138 of the Act cannot be termed to be recovery proceedings . The complainant company has not come to the court with clean hands. The whole evidence, facts and circumstances of the present case cast suspicion on the case of the complainant company. Benefit of doubt may be extended to the accused, resulting in his acquittal and dismissal of the present complaint is the prayer of Ld.counsel for the accused from DLSA.
9. Accused has examined himself as DW1 u/s 315 Cr.P.C. The accused as DW1 on S.A has deposed that he had taken loan of Rs. 20,000/ in the year, 2008. The loan amount was payable in 360 CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 9 installments of Rs.68/ per day. He had given 2 or 3 blank cheques to the complainant for the purpose of security. He had already paid all the installments to the collection agent of the complainant regularly and collection agent used to take his signatures on a ledger book which was to be kept by him. The accused further deposed on oath that he did not receive any legal demand notice from the complainant company nor was he served with any notice of recall of loan. The cheque was given in blank signed by him. The accused has further deposed that after repaying the entire loan amount, he had requested the agent of the complainant to return his security cheque but collection agent avoided the matter.
10. The complainant company has filed the present case on the the ground that accused had taken loan from it and committed to pay timely payment of the same along with interest. However, the accused did not adhere to the payment schedule and defaulted in making the daily installments. The complainant company has further alleged that they remained on requesting the accused to repay the loan amount and ultimately the accused was served with a notice to repay the defaulted amount, the accused on the receipt of the said demand notice dated 22.10.10, visited the office of the complainant company and settled with the complainant and in discharge of his liability/debt, allegedly CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 10 accused issued the present cheque which on its presentation to the banker of the accused was dishonoured with remarks "funds insufficient" and the present complainant has been preferred by the complainant bank.
11. The bone of contention of Ld.counsel for the complainant is that under section 118 (b) of the N.I Act there is presumption of consideration to be raised against the accused and in favour of the complainant as also presumption as stipulated u/s 139 of NI Act in favour of the holder of the cheque that the cheque has been issued by the drawer in discharge of whole or in part of any debt or other liability unless the contrary is proved. Both these presumptions are rebutable onus of which heavily lie upon the accused.
12. Under Section 139 of the Act the courts are bound to entertain presumption in favour of the holder of the cheque that the cheque has been issued in favour of the holder in discharge of his liability/debt. Certainly the legislature in its wisdom made such presumption rebutable.
Section 139 for appraisal is reproduced here under:
139. Presumption in favour of holder CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 11 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".
13. A bare perusal of the above provision u/s 139 of NI Act lays down that it is the accused who has to rebut the presumption that he had not issued the cheque in question in discharge of any debt/liability. The accused has taken two fold defence that he had repaid the entire loan and secondly he gave the cheque in question as security in blank signed by him. The accused as DW1 has been cross examined by Ld.counsel for the complainant. During the examination in chief as DW1, the accused has deposed on oath that he gave 23 blank cheques to the complainant for the purpose of security. However, in the same breath during cross examination, the accused has deposed that at the time of execution only the cheque in question was taken by the complainant from him. The accused has deposed contradictory in the chief as well as in cross examination.
14. Coming to the second defence of the accused that he had already repaid the entire loan , the same is not corroborated by the accused by CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 12 way of any cogent and convincing evidence that he had already repaid the loan. It is a matter of common prudence that when a person pays to someone that too a financial company , he would pay without getting any receipt. As per deposition of the accused himself he used to run a ration shop and also he is 9th class pass person. The defence taken by the accused that he repaid the entire loan amount to the complainant company without getting receipt thereof , seems to be false , concocted and an after thought with a view to wriggle off his debit/liability towards the complainant company. During further cross examination of the accused as DW1 the accused has deposed that he never asked the collection agent for the receipt of payment made by him. A prudent person who is involved in commercial activities like that of running a ration shop where tens of people daily visit him, would not asked for the payment receipt from the collection agent does not seem to be a sound and probable defence.
15. The Ld.counsel for the accused had argued that accused did not receive the legal demand notice dated 16.12.10. The accused when cross examined by Ld.counsel for the complainant as DW1, on oath has deposed that the legal demand notice Ex.CW1/D bears the same address as stated by him in the court. Perusal of the file reveals that the legal demand notice Ex.CW1/D had been sent to the accused on CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 13 20.12.10 by way of UPC as well as Registered A.D Ex.CW1/D. The original UPC and the postal receipt is on record. The accused at the time of framing of notice u/s 251 Cr.P.C for the offence punishable u/s 138 of N.I Act has disclosed the same address as mentioned on the legal notice Ex.CW1/D as well as mentioned in Ex.CW1/D. Further the accused has not brought and proved on record that he did not get correspondences at the same address on which legal demand notice Ex.CW1/D has been issued by the complainant company. Not only this court has also got the summons and warrants executed against the accused at the same very address as written on the legal demand notice Ex.CW1/D. Merely by taking a bald defence that no notice Ex.CW1/D was received by the accused, would serve no purpose in absence of any concrete and plausible evidence brought on record by the accused. To curb such practices on the part of the accused , the legislature in its wisdom had brought on statute book section 27 of the General Clauses Act.
16. Section 27 of the General Clauses Act which relates to the deemed service reads as under: Sec.27Meaning of Service by post. Where any (Central Act) or Regulation made after the commencement of this Act CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 14 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".
17. In Similar circumstances, the Hon'ble Supreme Court in AIR 2009 Supreme Court 386 M/s Indo Auto Mobiles Vs. M/s Jai Durga Enterprises and Ors. was pleased to held that " notice sent to the respondent through registered post and under certificate of posting on their correct address - must be presumed that service has been made effective. Service of notice could not be found to be not valid merely because of bald denial by the accused that he did not receive any notice u/s 138 of the Act. Moreso , the accused has not examined any witness from the postal department. CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 15
18.No doubt section 138 of the Act does not require that the notice should be given only by post. Nonetheless, the principle incorporated in section 27 of the General Clauses Act,1897 can profitably be imported in a case where the sender has dispatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sender unless he proves that it was not really served and that he was not responsible for such non service. Any other interpretation can lead to a very tenuous position as the drawer of the cheque who is liable to pay the amount would resort to the strategy of subterfuge by successfully avoiding the notice.
18. In the present case the accused has taken a very meek and bald defence that he did not receive any legal notice from the side of the complainant bank after dishonor of the cheque in question under 138 (b) of the Act. Contrary to the same, the accused has not been able to rebut the presumption that he is not residing and /or working for gains on the same very address as given on the notice Ex.CW1/D. The accused has everywhere given the same address as mentioned on the notice Ex.CW1/D. CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 16
19. To curb the practice on the part of the accused persons of alleging of not having received notice of demand u/s 138 (b) of the Act as is generally in every case is taken by the accused persons in cheque bounce cases, the Hon'ble Supreme Court India in Damodar S. Prabhu Vs. Sayed Baba Lal H has held that the trial court while issuing summons to the accused persons in cheque bounce cases shall inform the accused that he can make an application for compounding of the offence at the first or second hearing of the case and in that case compounding may be allowed by the court without imposing any cost.
20. I find that the logic and the rationale behind the above referred judgment of the Hon'ble Supreme court is that when an accused takes the plea that he did not receive any legal demand notice, still he can pay the amount of the dishonored cheque to the complainant by way of compounding before the court. Looking from another angle , it can safely be said that in the notice u/s 138(b) of the Act the complainant also demands the amount of the dishonored cheque. Therefore, through the evolution of law CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 17 particularly for the cases u/s 138 NI Act, the accused persons are afforded two opportunities to make the payment of dishonored cheque to the complainant. Therefore, the saying on the part of the accused that he did not receive any notice u/s 138 (b) of the Act does not sound appalling.
21. Ld. counsel for the accused had further took defence that the cheque in question Ex.CW1/B was given as security at the time of disbursement of the loan and that accused do not owe any debt/liability towards the complainant company.
22. The Negotiable Instrument Act 1881 was passed with a view to streamline the banking business through negotiable instruments. Sometime it is seen that certain miscreants to cheat or deceit, issue instruments to gain and to cause losses to the genuine person and thus dishonor of cheque made an offence. At the same time, the legislature made the offence compoundable. The N.I Act being a special statute, the offence primarily based on documents, where the defaulting party would like to avoid his liability towards the bank/complainant, hence, the legislature in its wisdom had CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 18 incorporated certain presumptions in favour of holder in due course of the cheque. The relevant provisions are section 118 (a) and 139 of the Act which reads as under:
118. Presumptions as to negotiable instrumentsUntil the contrary is proved, the following presumptions shall be made:
(a) of consideration ; that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration."
139. Presumption in favour of holderIt 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".
CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 19
23. Presumptions both under Sections 118(a) and 139 of the Act are rebuttable in nature.
What would be the effect of the expressions "May Presume", 'Shall Presume" and 'Conclusive Proof has been considered by this Court in Union of India (UOI) v. Pramod Gupta (D) by L.Rs and Ors., (2005) 12 SCC in the following terms:
"It is true that the legislature used two different phraseologies "shall be presumed" and "may be presumed" in Section 42 of the Punjab Land Revenue Act and furthermore although provided for the mode and manner of rebuttal of such presumption as regards the right to mines and minerals said to be vested in the Government visvis the absence thereof in relation to the lands presumed to be retained by the landowners but the same would not mean that the words "shall presume" would be conclusive. The meaning of the expressions "may presume" and "shall presume" have been CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 20 explained in Section 4 of the Evidence Act,1872, from a perusal whereof it would be evident that whenever it is directed that the court shall presume a fact it shall regard such fact as proved unless disproved. In terms of the said provision, thus, the expression "shall presume"
cannot be held to be synonymous with "conclusive proof".
In terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words 'proved' and 'disproved' have been defined in Section 3 of the Evidence Act (the interpretation clause) to mean: Proved A fact is said to be proved when , after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought , under the circumstances of the particular case, to act upon the supposition that it does not exist."
CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 21 Applying the said definitions of 'proved' or 'disproved' to principle behind Section 118(a) of the Act, the Court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist . For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.
24. In the present case, from the perusal of the deposition of DW1 (accused) on oath, his examination u/s 313 Cr.P.C, his defence disclosed to the notice u/s 251 Cr.P.C, the accused has not been able to put a probable defence. In other words the accused has not been able to rebut the presumption as raised against him u/s 118 (a) and 139 of the Act. The defence of the accused is not consistent.
CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 22
25. A cursor look of the above provision mandates that under section 139 of N.I Act a presumption is drawn against the drawer and in favour of the holder that unless the contrary is proved that the holder of a cheque received the cheque for the discharge, in whole, or in part , of any debt or any other liability.
Here, I, refer to the decision of the Hon'ble Apex Court in K.Bhaskaran V. Sankaran Vaidhyan Balan and Ors. AIR 1999, Supreme Court, 3762 where almost a similar observation was held that the complainant has discharged his initial burden the onus shifted on the accused to produce rebuttal evidence against the presumption laid down in favour of the complainant.
Here the accused has not produced any evidence to discard the testimony of CW1. Therefore, the presumption is to be drawn in favour of holder of the cheque who has received it for discharge of liability. Again in view of the decision of the Supreme Court in case of Adalat Prasad Vs. Roop Lal Jindal and Ors., once the cheque has been issued and the same has been presented and upon its dishonor , the procedure prescribed for issuance of the notice had been followed, the presumption u/s 139 NI Act arises CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 23 immediately.
26. In AIR 2001 Supreme Court 2895 K.N Beena Vs. Muniyappan and another, the Hon'ble Supreme Court had held Sections 138, 139, 118cheque dishonor complaintburden of proving that cheque had not been issued for any debt or liability is on the accused. Denial/averments in reply by accused are not sufficient to shift burden of proof on to the complainant. The accused has to prove in trial by leading cogent evidence that there was no debt or liability.
27. Further the Hon'ble Supreme Court in Criminal appeal No.1020/2010 Rangappa Vs. Shri Mohan, the then Hon'ble Chief Justice of India had held that " the bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff /complainant. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 24 consideration did not exist or its non existence was so probable that a prudent man would , unless the circumstances of the case, act upon the plea that it did not exists".
28. In support of the above contention of the accused of giving of blank security the cheque about three years ago at the time of disbursement of the loan, the accused has not brought on record any statement of account proving that the same series of cheques (that of the cheque in question) have been honored/issued in the year 2008. However, I am not convinced of the plea/defence taken by the accused in view of section 20 of N.I Act which empowers the holder to fill in the cheque on subsequent date on the accrual of the liability/debt against the payee. For the sake of convenience section 20 of the N.I Act is reproduced hereunder: Section 20. Inchoate stamped instrumentswhere 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 CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 25 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".
29. A bare perusal of section 20 of the N.I Act explicits that where a simple signature on blank stamp paper is delivered by the signer in order that it may be converted into a bill, it operates as a prima facie authority to fill it up as a complete bill for any amount the stamp will cover, using the signature for that of the drawer or the acceptor or an endorser, and in like manner, when a bill is wanting in any material particular, the person in possession of it has a prima facie authority to fill up the omission in any way he thinks fit. So even if the cheque in question was given by the accused to the complainant company in blank but signed, the accused had given prima facie authority to the complainant company to fill the cheque in any way he thinks fit. CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 26
30. For the sake of appreciation of arguments of Ld. Counsel from both the sides, section 138 NI Act is reproduced hereunder:
138. Dishonor 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 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 many standing to the credit of that account is insufficient to dishonor the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years , or with fine which may extend to twice the amount of the cheque or with both".
CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 27
31. The first part of section 138 NI Act indicates that there are two essential ingredients that have to be present in order to attract the offence u/s 138 NI Act. The first is that the cheque ought to have been drawn by the drawer in favour of the payee on account with a bank. As regards this ingredient, it has been submitted by the accused that the cheque was signed by him but it was incomplete instrument since it did not contain the material particulars. In fact, in the form the cheque was handed over to the complainant company, it was not the cheque in the sense of term as contemplated by the NI Act. The second ingredient is that the issue of the cheque must be in total or partial discharge of the liability owed by the drawer to the payee. The argument of Ld.counsel for the accused has to be seen in the light of section 139 of NI Act which states that it shall be presumed unless the contrary is proved that the holder of a cheque received the cheque for the discharge in whole or in part of any debt or other liability.
32. The word 'cheque' has been inclusively defined under section 6 of the Act to include a bill of exchange drawn on a CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 28 specified banker and not expressed to be payable otherwise then on demand. The word 'bill of exchange ' have been defined in section 5 of the Act as an instrument in writing containing an unconditional order, signed by the maker directing a certain person to pay a certain sum of money only to , or to the order of , a certain person over to the bearer of the instrument. The expression "Negotiable Instrument " has been defined in section 13 NI Act as meaning a promissory noted, bill of exchange or cheque payable either to order or bearer.
33. From the above definitions, the essential feature of a cheque is that it has to be signed by the maker. This signing of the cheque need not be by hand alone. After the amendment to section 6 in 2002, the NI Act acknowledges that there can be an electronic cheque which can be generated, written and signed in a secure system. Nevertheless, the signing of the cheque is indeed an essential feature. But what about the other material particulars ? Can the word cheque occurring in section 138 NI Act include a blank cheque which is signed by the drawer but the material particulars of which are left unfilled at the time it was CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 29 handed over to the payee? While on the one hand section 138 NI Act which contemplates a no fault liability has to be strictly construed as regard the basic ingredients which have to be shown to exist, it requires examination of the other provisions of the NI Act in order to ascertain if a cheque that was signed but left blank can, if the material particulars are subsequently filled up and presented for payment, still attract the same liability.
34. To deal with above questions, I find Section 87 of the Act pertinent. Section 87 Effect of material alteration. Any material alteration of a negotiable Instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto unless it was made in order to carry out the common intention of the original parties. The provisions of section 87 of the NI Act are subject to sections 20 , 49, 86 and 125 .
35. While it is correct that in terms of the above provision, any material alteration to a cheque without the consent of the drawer unless it is made to carry out the common intention of CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 30 the original parties thereto renders the cheque void, the expression "material alteration" has not been defined. Significantly, section 87 has been made subject to Sections 20,49, 86 and 125 NI Act. These provisions help us to understand what are not considered 'material alterations' for the purpose of Section 87.
36. Section 20 NI Act talks of "inchoate stamped instruments"
and states that if a person signs and delivers a paper stamped in accordance with the law and "either wholly blank or have written thereon an incomplete negotiable instrument" such person 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 no exceeding the amount covered by the stamp." Section 49 permits the holder of a negotiable instrument endorsed in blank to fill up the said instrument "by writing upon the endorsement, a direction to pay any other person as endorsee and to complete the endorsement into a blank cheque, it makes it clear that by doing that the holder does not thereby incurred the responsibility of an CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 31 endorser." Likewise Section 86 states that where the holder acquiesces in a qualified acceptance, or one limited to part of the sum mentioned in the bill, or which substitutes a different place or time for payment, or which, where the drawees are not partners, is not signed by all the drawees, all previous parties whose consent has not been obtained to such acceptance would stand discharged as against the holder and those claiming under him, unless on notice given by the holder they assent to such acceptance. Section 125 NI Act permits the holder of an uncrossed cheque to cross it and that would not render the cheque invalid for the purposes of presentation for payment. These provisions indicate that under the scheme of the NI Act an incomplete cheque which is subsequently filled up as to the name, date and amount is not rendered void only because it was so done after the cheque was signed and delivered to the holder in due court.
37. The above provisions have to be read together with Section 118 NI Act which sets out various presumptions as to negotiable instruments. The presumption is of consideration, as CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 32 to date, as to time of acceptance, as to transfer , as to endorsement, as to stamp. The only exception to this is provided in proviso to Section 118 which reads as under:
Provided that , where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
38. A collective reading of the above provisions shows that even under the scheme of the NI Act it is possible for the drawer of a cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up at a subsequent point in time and presented for payment by the drawee. There is no provision in the NI Act which either defines the difference in the handwriting or the ink pertaining to the material particulars filled up in comparison with the signature thereon as constituting a ' material alteration' for the purposes of Section 87 NI Act. What however is essential is that the cheque must have been signed by the drawer. If the CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 33 signature is altered or does not tally with the normal signature of the maker, that would be a material alteration. Therefore, as long as the cheque has been signed by the drawer, the fact that the ink in which the name and figures are written or the date is filled upon is different from the ink of the signature is not a material alteration for the purposes of Section 87 NI Act.
39. The position in law has been explained in the judgment of the Division Bench of the Kerala High Court in Lillykutty v. Lawrance 2003 (20) DCR 610 in the following words:
"In the instant case, signature is admitted. According to the drawer of the cheque, amount and the name has been written not by the drawer but by somebody else or by the payee and tried to get it encashed. We are of the view, by putting the amount and the name there is not material alteration on the cheque under Section 87 of the Negotiable Instrument Act. In fact, there is no alteration but only adding the amount and the date. There is no rule in banking business that payee's name as well as the amount should be written by drawer himself. In the instant case Bank CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 34 has never found that the cheque was tempered with or forged or there is material alteration or that the handwriting by which the payee's name and the amount was written was differed. The Bank was willing to honour the cheques if sufficient funds were there in the account of the drawer even if the payee's name and the amount was written by somebody else other than the holder of the account or the drawer of the cheque. The mere fact that the payee's name and the amount shown are not in the handwriting of the drawer does not invalidate the cheque. No law provides in the case of cheques that the entire body has to be written by the drawer only. What is material is the signature of the drawer and not the body of the instrument. Therefore when the drawer has issued the cheque whether the entire body was written by the drawer written beyond the instructions of the drawer, whether the amount is due or not, those and such matters are defenses which drawer has to raise and prove it. Therefore the mere fact that the payee's name and the amount shown in the cheque are in different handwriting is not a reasons for not honoring the cheque by the Bank. Banks would normally see whether the instrument is that of the drawer and the cheque CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 35 has been signed by the drawer himself. The burden is therefore entirely on the drawer of the cheque to establish that the date, amount and the payee's name are written by somebody else without the knowledge and consent of the drawer. In the instant case, the drawer of the cheque has not discharged any burden. Apart from the interested testimony of the drawer, no independent evidence was adduced to discharge the burden".
40. In view of the above discussions, the law laid down by various Hon'ble High Courts as well as the Hon'ble Supreme Court as also in view of the facts and circumstances of the present case, the complainant has successfully proved its case against the accused beyond reasonable doubt that accused had issued the cheque Ex.CW1/B bearing No.098583 dated 9.11.10 for a sum of Rs.55,790/ drawn on Allhabad Bank, Karol Bagh , New Delhi in favour of the complainant in discharge of his debt/liability and this cheque got dishonored on its presentation to the banker of the accused for the reasons funds insufficient vide cheque return me Ex.CW1/C dated 10.12.10. The accused further failed to pay the amount of the dishonored cheque given CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 36 on receipt of legal demand notice Ex.CW1/D dated 16.12.10 sent through UPC and registered AD post Ex.CW1/D on 20.12.10, within the mandatory period of 15 days. Accordingly, the accused is hereby held guilty for the offence punishable u/s 138 of the Negotiable Instruments Act read with section 141/142 of the Act.
41. Put the case for argument and order on the point of sentence on 2.2.12 at 12 noon.
Announced in the open court on this 31st January,2012.
(Kishor Kumar.) Metropolitan Magistrate02 (Municipal) Dwarka Court, Dwarka, New Delhi.
CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 37 C.C No.48/11 Satin Credit Care Network Vs. Ashok Kumar 31.1.12 Present: Counsel for the complainant. Counsel for the accused.
Vide my separate detailed judgment of even date, the accused is hereby held guilty for the offence punishable u/s 138 of the Negotiable Instruments Act read with section 141/142 of the Act.
Put the case for argument and order on the point of sentence on 2.2.12 at 12 noon.
(Kishor Kumar.) Metropolitan Magistrate-02 (Municipal) Dwarka Court, Dwarka, New Delhi.
CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar 38 C.C No.48/11 Satin Credit Care Network Ltd.
04.02.12 Present: AR for the complainant.
Convict in person along with counsel Sh.Hitender Attri, advocate from DLSA.
Today the case is fixed for making the payment of the fine as imposed vide order on sentence dated 2.2.12. Instead, an application u/s 389 Cr.P.C is moved on behalf of the convict praying for suspension of the sentence and for enlargement of the convict on bail for the period of 30 days enabling him to prefer an appeal against the impugned judgment dated 31.1.12 and order on sentence dated 2.2.12.
In the interest of justice, the application of the convict u/s 389 Cr.P.C is hereby allowed. The operation of judgment dated 31.1.12 is stayed till 5.3.12 and order on sentence dated 2.2.12 is also suspended till 5.3.12.
The personal bond furnished by the convict on the last date of hearing is also extended till 5.3.12.
Put up the case for further proceedings on 12.3.12.
(Kishor Kumar.) Metropolitan Magistrate-02 (Municipal) Dwarka Court, Dwarka, New Delhi.
CC No. 48 /11 Satin Credit Care Network Vs. Ashok Kumar