Delhi District Court
The Hon'Ble Supreme Court In The Case Of ... vs . State Of on 14 October, 2020
IN THE COURT OF Sh. ANIMESH KUMAR, M.M. 05, N.I. ACT, SOUTH
DISTRICT,SAKET, NEW DELHI
C.C. No. 8864/2019
PS : Hauz Khas
Ram Kewal Mahto
S/o Sh. Magan Mahto
R/o 44, Uday Park, August
Kranti Marg, New Delhi - 49.
...Complainant
Versus
Shiv Kumar Mahto
S/o Sh. Ram Prasad Mahto.
R/o H. NO. F-190A, 2nd Floor,
Lado Sarai, New Delhi-30.
Also at: Village Piprauliya,
PO-Arariya Sangram, via Tulapat,
Ganj Bazar, Distt. Madhubani, Bihar..
...Accused
Date of Institution : 12.04.2019
Offence complained of : 138 NI Act
Date of final arguments : 23.09.2020
Date of decision : 14.10.2020
Plea of guilt : Not guilty.
Decision : Acquitted.
C.C. No. 8864/19 Dated 14.10.2020 Page 1/29
JUDGMENT:
The present complaint has been filed by the complainant against the accused under section 138 Negotiable Instruments Act, 1881 (hereinafter referred as the "Act").
Version of the complainant:
1. The complainant and the accused have friendly relationship for many years and due to this old friendly relation, the complainant gave a sum of Rs.
2,50,000/- to the accused in cash during the period from March 2017 to February 2018. The accused promised the complainant to repay the said loan within few months.
2. Thereafter, in discharge of his legal liability, the accused had issued a cheque to the complainant bearing no. 010653 dated 07.03.2019 amounting to Rs. 2,50,000/- drawn on HDFC Bank, Bajrang Market, Hospital Road, Jhanjharpur, Bihar. Consequently, the complainant presented the impugned cheque with its Banker, Punjab National Bank, Aya Nagar Branch, New Delhi on 07.03.2019 which got dishonoured vide return memo dated 08.03.2019 with remarks "Account closed".
3. Thereafter, the complainant sent a legal demand notice dated 18.03.2019 on both the available addresses of the accused. Legal demand notice sent on the permanent address of the accused in Bihar was returned with a postal remark saying "Prapt karta gaon may nahi hai bahar rehne ka pata uplabdh nai hai, atah wapas kiya jata hai". Thereafter, another legal demand notice was sent on the residential address of the accused in Delhi which was returned to the complainant with postal remark "Refused". The said legal demand notice was also sent to the accused through whatsapp. Certificate u/s 65 Evidence Act in this regard has been filed by the complainant on record.
4. Upon failure of the accused to make payment of the cheque in question within the stipulated time of 15 days, the complainant has filed the present complaint u/s 138 of the Act.
C.C. No. 8864/19 Dated 14.10.2020 Page 2/29Notice against the accused:
5. Following notice was framed against the accused on 05.03.2012:
"Notice is hereby given to you accused Shiv Kumar Mahto S/o Sh. Ram Prasad Mahto, R/o H. NO. F-190A, 2nd Floor, Lado Sarai, New Delhi that you in discharge of your liability to complainant issued one cheque of Rs. 2,50,000/- bearing no. 010653, drawn on HDFC Bank, Bajrang Market, Hospital Road, Jhanjhar Pur, Bihar dated 07.03.2019, in favour of the complainant which were returned unpaid due to reason "Unpaid due to reason account closed" vide memo dated 08.03.2019 and despite notice for demand dated 18.03.2019 served upon you, you failed to make the payment of the said cheque within stipulated time and thereby you have committed an offence punishable U/s 138 Negotiable Instruments Act and within my cognizance and I hereby direct you be tried by this court on the above said notice."
Plea of defence of the accused:
6. The accused had taken the following plea in his defence:
"I plead not guilty and claim trial.
I have not issued any cheque to discharge my any legal liability to the complainant. I had not taken any money from the complainant."
Defence of the accused:-
7. Ld. Counsel for the accused submitted that the accused is defending on the following grounds -
The accused did not receive any legal demand notice from the complainant;
The accused had not taken any loan from the complainant and that the complainant had not the financial capacity to advance loan of such amount; and C.C. No. 8864/19 Dated 14.10.2020 Page 3/29 The accused had not issued any cheque to the complainant in discharge of his legal liability;
8. Ld. Counsel for the accused submitted that for the above reasons, the present complaint is liable to be dismissed.
Evidence:
9. The complainant examined himself as CW-1 who was cross examined by Ld. Counsel for the accused. Statement of the accused was recorded under section 313 Code of Criminal Procedure 1973 (hereinafter referred as "Cr.P.C") on 04.09.2020. The accused examined himself as DW-1 and he was duly cross examined by the Ld. Counsel for the complainant. The witnesses were cross-examined by Ld. Counsel for the complainant. DE was closed on 04.09.2020. Final arguments were heard on behalf of both the parties and my findings are discussed subsequently:.
The Law:
10. Before proceeding to the merits of the case, it is considered important to lay down the basic provisions of law with respect to section 138 of the Act.
11. Section 138 of Negotiable Instruments Act, 1881 makes dishonour of cheques an offence. It provides that "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 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".
12. Careful reading of section 138 of the Act reflects that there are three key ingredients which need to exist in order to constitute an offence therein.
The three ingredients were highlighted by the Hon'ble Supreme Court in the C.C. No. 8864/19 Dated 14.10.2020 Page 4/29 case of Krishna Janardhan Bhat v. Dattatraya G. Hegde AIR 2008 SC 1325 wherein the Apex Court held that the procedural requirements of section 138 are:
There is a legally enforceable debt.
The drawer of the cheque issued the cheque to satisfy part or whole of the debt.
The cheque so issued has been returned due to insufficiency of funds.
13. It is a well settled principle of criminal jurisprudence that a criminal trial proceeds on the presumption of innocence of the accused i.e. an accused is presumed to be innocent unless proved guilty. Thus, normally the initial burden to prove is on the complainant/ prosecution to prove the guilt of the accused. Also, the standard of proof is beyond reasonable doubt. However, in offences under section 138 of the Act, there is a reverse onus clause contained in sections 118 and 139 of the Act.
14. 1Section 118(a) of the Act provides that until the contrary is proved, it shall be presumed that "that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration."
15. Further, Section 139 of the Act lays down that "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."
16. On bare reading of these provisions, it becomes clear that the court shall presume the execution of a negotiable instrument for consideration unless and until the contrary is proved. Similarly, the Court shall also draw a presumption in favour of the complainant/holder of the cheque that the said cheque has been issued in discharge of legally enforceable debt of other liability.C.C. No. 8864/19 Dated 14.10.2020 Page 5/29
17. There is a statutory presumption under section 139 of the Act which arises in the favour of the complainant. This presumption is rebuttable and the accused is required to raise a probable defence. Burden of proof is hence upon the accused in such cases. Reliance can be placed on the decision of the Hon'ble Supreme Court in the case of M.S Narayan Menon vs. State of Kerala (2006) 6 SCC 39, wherein the Hon'ble Court has discussed in detail the scope and ambit of statutory presumption under section 118 read with section 139 of the Act. The relevant extract of the judgment is reproduced below:
"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"
18. Further, it is also a settled proposition of law that the standard of proof which is required from the accused to rebut the statutory presumption under section 118 read with section 139 of the Act is prepondereance of probabilities. The accused is not required to prove his case beyond reasonable doubt. This onus on the accused can be discharged from the materials available on record and from the circumstantial evidences. At this point, the Hon'ble Supreme Court in M.S Narayan Menon case (supra) has interalia held the following:
"The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies"C.C. No. 8864/19 Dated 14.10.2020 Page 6/29
19. Further as discussed above, it should also be noted that the standard of proof in order to rebut the statutory presumption may be inferred from the materials on record and circumstantial evidences. It is not always mandatory for the accused to examine its own witnesses in order to rebut the said statutory presumption. At this point, reliance may be placed on the decision of the Hon'ble Supreme Court in the case of Krishna Janardhan Bhat (supra), wherein the Hon'ble Court has categorically held the following:
"32. accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. As accused has a constitutional right to remain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different.
34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove defence on the part of an accused is "preponderance of probabilities". Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies."
20. This principle has been reiterated by the Hon'ble Supreme Court in Rangappa vs. Sri Mohan (2010) 11 SCC 441 wherein while discussing the scope and ambit of statutory presumption under section 139 of the Act, the Hon'ble Court has held the following:
"27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by section 138 C.C. No. 8864/19 Dated 14.10.2020 Page 7/29 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof.
28. In the absence of compelling justifications, reverse onus clause usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the exitence of a legally recoverable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the material submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
Thus, section 139 of the Act puts the burden on the accused to prove his defence. However, the accused has to prove his defence on the balance of probabilities and not beyond reasonable doubt. Accused can prove his defence by drawing inferences from the materials already on record (including complainant's evidences), circumstances of the case and also leading his own evidences. If the accused sucessfully creates doubts in the complainant's claim about the existence of legally enforceable debt then the burden of proof shifts back to the complainant who is the required to prove the guilt of the accused beyond reasonable doubt.
Points of Determination:
(i) Whether the accused in the present case was in receipt of legal demand notice?C.C. No. 8864/19 Dated 14.10.2020 Page 8/29
(ii)Whether presumption under section 118(a) read with section 139 of the Act can be raised in favour of complainant in the present case?
(iii) Whether legally enforceable debt exists in the present case?
(iv) Whether the impugned cheque was issued by the accused in discharge of a legally enforceable debt?
I shall be deciding the abovementioned points of determination separately.
(i) Whether the accused in the present case was in receipt of legal demand notice?
21. Ld. Counsel for the accused submitted that the accused did not receive any legal demand notice issued by the complainant in the present case. In order to substantiate the submission, he has referred to the statement recorded u/s 313 Cr.PC of the accused. Accused has stated therein that he did not receive any legal demand notice which is Ex. CW1/C. In his statement as DW- 1, he deposed that he came to know about the present case only when the police came to his house with summons.
22. Perusal of the file shows that the legal demand notice was sent by the complainant on two addresses of the accused. Legal demand notice sent on the permanent address of the accused in Bihar was returned with postal remarks "Prapt karta gaon may nahi hai bahar rehne ka pata uplabdh nai hai, atah wapas kiya jata hai". Another legal demand notice was sent on residential address of the accused in Delhi which was returned to the complainant with postal remarks "Refused". Further, the legal demand notice was also sent through whatsapp. A certificate u/s 65 B Evidence Act regarding the same has been filed on record by the complainant.
23. Before examining the issue in hand, it would be prudent to run through the legal position on the due service of notice sent by post. Presumption regarding successful delivery of documents sent by post (whether registered or not) can be raised by the court as per provision enshrined in section 27 of General Clauses Act r/w section 114 of Indian Evidence Act 1872 (herein after referred "Evidence Act"). In terms of Section 27 of C.C. No. 8864/19 Dated 14.10.2020 Page 9/29 General Clauses Act, notice must be deemed to have been served in the ordinary course subject to the fulfillment of the conditions laid down therein. Section 27 reads as under;
"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, pre-paying 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".
24. Reference can be taken from the decision of Hon'ble Supreme Court in the case of Subodh S. Salaskar vs. Jay Prakash M. Shah & Anr (2008) 13 SCC 689 wherein the Hon'ble Court has categorically held that service of notice which is sought to be effected by speed post / registered post shall be deemed to have been served in the ordinary course within few days. Such presumption of delivery of notice can also be raised u/s 114 of Evidence Act.
25. The aforesaid principle has been reiterated by the Hon'ble Supreme Court in the case of C.C Alavi Haji vs. Palapetty Muhd. & Anr 2007 6 SCC 555 wherein the Hon'ble Court has opined that section 27 of General Clauses Act gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business.
26. A similar view was taken by the Honble Supreme Court in the case of M/s Madan & Company vs. Wazir Jaivir Chand 1989 1 SCC 264. In this case, the Hon'ble Court while dealing with the question, as to whether the duty of the landlord was complete by sending of notice with reference to the presumption u/s 27 of General Clauses Act, held that once there is a proper C.C. No. 8864/19 Dated 14.10.2020 Page 10/29 tender of demand notice at the correct address, then there is service of demand notice in view of the said presumption.
27. After examining the legal position with respect to the service of any notice by way of registered post, it would be prudent to examine the instant case in realm of the above discussed legal position. In the present case, as discussed above, the legal demand notice dated 18.03.2019 was sent on two addresses of the accused which got returned with postal remarks "Refused" and "Praptakarta Gaon Me Nahi Rehta Hai...". At this point, it is pertinent to note that the accused in his defence plea/evidence or statement recorded under section 313 Cr.P.C has not disputed the addresses on which the legal demand notice was sent. He simply took the plea that he did not receive any legal demand notice.
28. Moreover, one of the speed posts (through which the legal demand notice was sent) was returned with remarks "Refused". It is a settled proposition of law that refusal of any post shall be considered as due service of notice and the date of refusal has to be taken as the commencing period for counting of 15 days for making the payment under section 138 of the Act. Reference can be taken from the decision of the Hon'ble Supreme Court in the case of K. Bhaskaran vs. Sankaran Vidhyan Balan (1999) 7 SCC 510, wherein while discussing the effect of refusal of drawer in receiving the legal demand notice sent through post, the Court has interalia held the following:
"Thus, when a notice is returned by the sender as unclaimed such date would be the commencing date in reckoning the period of 15 days contemplated in clause (c) to the proviso of section 138 of the Act. Of couse such reckoning would be without prejudice to the right of the drawer of the cheque to show that he had no knowledge that the notice was brought to his address."
29. Similar observation has been made by the Hon'ble Supreme Court in C.C Alava Haji case (supra), wherein the Hon'ble Court has held that when a notice is sent by the registered post and is returned with a postal endorsement "refused" or "not available in the house" or "house locked"
etc. due service has to be presumed. Further, in the case of Harcharan Singh C.C. No. 8864/19 Dated 14.10.2020 Page 11/29 vs. Smt. Shivrani (1981) 2 SCC 535, the Hon'ble Supreme Court while discussing the effect of refusal vis-a-vis due service of post, has interalia the following:
"It is impossible to accept the contention that when factually there was refusal to accept the notice on the part of the appellant he could not be visited with the knowledge of the contents of the registered notice because, in our view, the presumption raised under Section 27 of the General Clauses Act as well as under Section 114 of the Indian Evidence Act is one of proper or effective service which must mean service of everything that is contained in the notice. It is impossible to countenance the suggestion that before knowledge of the contents of the notice could be imputed the sealed envelope must be opened and read by the addressee or when the addressee happens to be an illiterate person the contents should be read over to him by the postman or someone else. Such things do not occur when the addressee is determined to decline to accept the sealed envelope. It would, therefore, be reasonable to hold that when service is effected by refusal of a postal communication the addressee must be imputed, with the knowledge of the contents thereof and in our view, this follows upon the presumptions that are raised under Section 27 of the General Clauses Act, 1897 and Section 114 of the Indian Evidence Act".
30. Therefore, in light of the above mentioned judgments of the Hon'ble Supreme Court, I am of the considered view that a presumption regarding delivery of service of notice can be raised if the notice is sent through post on correct address of the accused and if it has been returned with remarks "Refused" or "Not Available in House". Hence, in the present case, since, the addresses of the accused on which legal demand notice is not disputed, the said addresses seem to be correct. Legal demand notice in the present case was sent on the correct address of the accused through speed post, and, therefore, a presumption can be raised about its successful delivery.
C.C. No. 8864/19 Dated 14.10.2020 Page 12/2931. Further, it should also be noted that the said legal demand notice in the present case has also been sent to the accused through watsapp. An image of the said watsapp message has been filed on record by the complainant along with a certificate under section 65B of Evidence Act in order to prove the successful delivery of the notice.
32. Section 65B of the Evidence Act provides for the admissibility of electronic record in evidence subject to the fulfillment of conditions mentioned therein. A certificate under section 65B (4) needs to be filed for the admissibility of the electronic records. Relevant extract of this section is reproduced below:
"Section 65B: Admissibility of Electronic Records (1) Notwithstanding anything contained in this Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer (hereinafter referred to as the computer output) shall be deemed to be also a document, if the conditions mentioned in this section are satisfied in relation to the information and computer in question and shall be admissible in any proceedings, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible.
(2) The conditions referred to in sub-section (1) in respect of a computer output shall be the following, namely--
(a) the computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer;
(b) during the said period, information of the kind contained in the electronic record or of the kind from which the information so contained is derived was regularly fed into the computer in the ordinary course of the said activities;C.C. No. 8864/19 Dated 14.10.2020 Page 13/29
(c) throughout the material part of the said period, the computer was operating properly or, if not, then in respect of any period in which it was not operating properly or was out of operation during that part of the period, was not such as to affect the electronic record or the accuracy of its contents; and
(d) the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities.
(3) Where over any period, the function of storing or processing information for the purposes of any activities regularly carried on over that period as mentioned in clause (a) of sub-section (2) was regularly performed by computers, whether--
(a) by a combination of computers operating over that period; or
(b) by different computers operating in succession over that period; or
(c) by different combinations of computers operating in succession over that period; or
(d) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combinations of computers, all the computers used for that purpose during that period shall be treated for the purposes of this section as constituting a single computer;
and references in this section to a computer shall be construed accordingly.
(4) In any proceedings where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say,--
(a) identifying the electronic record containing the statement and describing the manner in which it was produced;
C.C. No. 8864/19 Dated 14.10.2020 Page 14/29(b) giving such particulars of any device involved in the production of that electronic record as may be appropriate for the purpose of showing that the electronic record was produced by a computer;
(c) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub-section it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it.
33. Reference may be taken from the decision of Hon'ble Supreme Court in the case of Anvar P.V vs. P.K Basheer (2014) 10 SCC 473, wherein the Court has held that electronic record by way of secondary evidence can be admitted in evidence under section 65B only when all conditions mentioned therein are fulfilled and a certificate under section 65B(4) in this regard is filed on record. This ratio has been reiterated by Hon'ble Supreme Court in the case of Arjun Panditrao Khotkar vs. Kailash Kushan Rao Gorantyal 2020 SCC online SC 571.
34. As discussed above, it is settled proposition of law that an electronic record by way of secondary evidence can be admissible in evidence if a certificate under section 65 (B) in this regard has been filed. In the instant case, watsapp message (through which demand notice was sent to the accused) is exhibited as Ex. CW-1/H and the certificate under section 65B has also been filed which is exhibited as CW-1/I. The complainant in his complaint and affidavit has stated that the legal demand notice was sent through watsapp to the accused. Accused has neither cross-examined the complaint on this aspect nor has he specifically denied the receipt of notice through watsapp in his plea of evidence. Therefore, service of legal demand notice to the accused through whatsapp is also proved.
35. Therefore, as discussed above, a presumption is raised in favour of the complainant regarding due delivery of legal demand notice on the accused. Accused has neither disputed the correctness of the addresses on which the C.C. No. 8864/19 Dated 14.10.2020 Page 15/29 notice was sent nor did he cross examine the complainant on this aspect. An evasive and bald denial of receipt of notice by the accused in his statement under section 313 Cr.P.C would not be of any help to the accused.
36. Hence, considering the materials available on record, I am of the considered view that the accused has failed to rebut the presumption regarding successful delivery of legal demand notice sent by the complainant. Therefore, legal demand notice issued to the accused is deemed to have been duly served through post as well as through whatsapp.
(ii) Whether presumption under section 118 read with section 139 NI Act can be raised in the favour of complainant in the present case?
37. As discussed in the preceeding paragraphs, section 118 (a) read with 139 of the Act raises a presumption in favour of the complainant regarding the issuance of the cheque by the accused for consideration and in discharge of a legally enforceable debt.
However, it should be noted that this statutory presumption would be raised in favour of the complainant only when the accused admits its signature on the cheque or if the complainant proves the issuance of cheque by the accused. At this point, reference can be taken from the decisions of the Hon'ble Supreme Court in the case of Kumar Exports vs. Sharma Carpets (2009) 2 SCC 513, wherein while discussing the contours of section 118(a) r/w 139 of the Act, the Hon'ble Court has held interalia the following:
"14. Section 139 of the Act provides that 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.
15. Applying the definition of the word "proved" in section 3 of the Evidence Act to the provisions of sections 118 and 139 of the Act, it becomes evident that in a trial under section 138 of the Act a presumption will have to be made that every negotiable intstrument was made or drawn for consideration C.C. No. 8864/19 Dated 14.10.2020 Page 16/29 and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under section 118 and 139 of the Act help him shift the burden on the accused. The presumption will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt pr liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists."
38. Therefore, in light of the above mentioned decision of the Hon'ble Supreme Court, it is amply clear that the presumption under section 118(a) and 139 would arise only when the execution of the cheque or other negotiable instruments, as the case may be, is either proved by the complainant or admitted by the accused.
39. In the instant case, it is pertinent to note that the accused in his statement recorded under section 313 Cr.P.C as well as in his examination in chief and cross-examination as DW-1 has denied the issuance of impugned cheque by him. In his statement under section 313 he has also denied his signature on the impugned cheque. However, no such statement has been made in his examination in chief as DW-1. The accused has neither filed his specimen signature on record nor produced any evidence (whether documentary or oral) on record to prove that the signature on the impugned cheque does not belong to him.
40. It is a settled proposition of law that statement under section 313 Cr.P.C can be used only to complete the chain of evidences already on record. It cannot be the sole basis of conviction or acquittal. In the present case, the denial of signature on the impugned cheque by the accused in his statement under section 313 cannot be used in his favour in the absence of any other evidence on record.
C.C. No. 8864/19 Dated 14.10.2020 Page 17/2941. Further, the denial made by the accused regarding his signature in the present case can at best be considered as an evasive and bald denial. It is a settled proposition of law that any denial which is made by a party should be specific and not evasive. Sufficient evidences should be filed on record in support of such denial. A solitary evasive statement regarding denial would not be sufficient.
42. Reliance can be taken from the decision of the Hon'ble Supreme Court in the case of Kumar Exports (supra), wherein while discussing the denial of existence of legally enforceable debt in the context of section 139, the Hon'ble Court has held that bare denial of the consideration and existence of debt, apparently would not serve the purpose of the accused and something which is probable has to be brought on record by the accused. This ratio has been reiterated by the Hon'ble Supreme Court in the case of Kishan Rao vs. Shankargouda (2018) 8 SCC 165.
43. Therefore, from the discussion above, it is clear that the accused in the present case has not explicitly denied his signature on the impugned cheque. Denial made in the statement under section 313 Cr.P.C being an evasive and bald denial, cannot be considered in the favour of accused. Accused has remained silent on this aspect in his examination in chief and also did not cross examine the complainant or CW-2 (bank official) on this aspect.
44. On the other hand, the complainant in the present case has examined the bank official as CW-2 who has deposed in his examinationin-chief that "Today I have brought the computer generated statement of complainant Ram Kewal Mahto from the period 06.03.2019 to 17.10.2019 which shows that the cheque has been dishonoured due to the reason account closed". The accused while cross-examining CW-2 did not ask any specific question regarding his signature. It should be noted that the return memo filed on record as well as the statement of CW-2 do not show that the cheque was dishonoured due to mismatch in signature of the accused.
45. Therefore, considering the evidence on record and in light of the discussion above, I am of the considered view that the complainant has been successful C.C. No. 8864/19 Dated 14.10.2020 Page 18/29 in proving the execution of impugned cheque by the accused. Accused has been unable to prove that the impugned cheque has not been signed by him. Therefore, statutory presumptions under section 118(a) and 139 would be raised in favour of complainant regarding the fact the impugned cheque has been drawn for consideration and issued by the accused in discharge of legally enforceable debt.
(iii) Whether legally enforceable debt exists in favour of complainant?
46. As discussed in the preceding paragraphs, there is statutory presumption under section 118(a) and 139 of the Act in favour of complainant regarding interalia the following aspects:
That the impugned cheque was issued by the accused for consideration;
That there exists a legally enforceable debt in favour of the complainant; and That the impugned cheque has been issued in discharge of a legally enforceable debt.
47. Therefore, the burden of proof lies on the accused to prove the contrary. The standard of proof required by the accused is based on preponderance of probabilities which means that the accused is only required to create doubt in the complainant's claims and is not required to prove his own defence beyond reasonable doubt. The accused can examine his witnesses or file his own evidences for this purpose. He can even draw inferences from the evidences filed on record by the complainant in order to create doubts in the complainant's claims.
48. In order to create doubt in the complainant's claims, the accused has adopted two-fold defences:
No loan was taken from the complainant; and Complainant did not have financial capacity to grant loan of Rs. 2,50,000/-C.C. No. 8864/19 Dated 14.10.2020 Page 19/29
I shall be dealing with these defences separately.
(a) No loan was taken from the complainant
49. The accused stated in his plea of defence as well as statement under Section 313 Cr.PC that he had not taken any loan from the complainant. In his defence, the accused has also denied to have issued the impugned cheque to the complainant. He further stated that he had taken a loan of Rs. 25,000-30,000 from the complainant in the year 2017-2018 and had already given a fridge to the complainant in discharge of the said liability.
50. To prove that the accused had not taken any loan from the complainant, he examined himself as DW-1 and deposed that "The complainant is my brother- in-law in relation. I had some arguments with the complainant in February 2019 when he was sitting with my brother namely Sanjeev Kumar. The complainant used to come to my residence regularly. I came to know about the present case when the police came to my residence with summon. When I searched for my cheque book in my house then I could not find it. The complainant must have taken cheques from my house and misappropriated it in order to the file the present case."
51. Throughout his cross-examination, the accused maintained that he had not taken any loan from the complainant and that no cheque was issued by him to the complainant in discharge of any legal liability whatsoever. The issue regarding issuance of impugned cheque is discussed in the later part of the judgment.
52. Further, the accused has also referred to the evidences produced by the complainant in order to create doubt on the complainant's claim. The accused referred to the cross-examination of the complainant wherein he deposed that "The accused approached me for financial help for buying car in the month of November 2016. It is correct that I have not mentioned in my evidence affidavit when the accused approach me for financial help. I had given the loan for 4-6 months. The amount was given in cash to the accused in parking area at Lado Sarai.****** There were no public person or any person was present at the time of giving the loan amount.****There was no agreement was executed between us in writing. It is correct that I was having C.C. No. 8864/19 Dated 14.10.2020 Page 20/29 good relations with the accused and used to visit the house of the accused at Lado Sarai. I do not know other family members of the accused".
53. Ld. Counsel for the accused submitted that the complainant has not examined a single witness to prove that the impugned loan was given to the accused. No document or agreement has been filed on record by the complainant to prove the impugned loan transaction.
54. On the other hand, Ld. Counsel for the complainant submitted that the relations between the parties were so close that there was no need felt for executing documents at the time of loan. At this juncture, reference may be taken from the judgment of Harish Dubey v. Ankur Jain 2016(1) RLR 455 wherein the court held that written documents shall not be insisted upon in cases where parties have cordial relations. However, that case dealt with a matter involving a loan amount of Rs. 1,00,000/- only while in the present case the amount of loan is Rs. 2,50,000/- that too by a person with modest source of income. Such a person would be expected to be cautious, while advancing such a huge amount of loan, if at all, as any amount of loss would be of great damage to him. It is not believable that in normal circumstances, a person with reasonable prudence would not execute documents or atleast maintain receipts (formal or informal in nature) while advancing loan irrespective of the close relations between the parties . Thus, the plea of Ld. Counsel for the complainant seems not so plausible.
55. Further, it should also be noted that there are certain contradictions in the statements made by the complainant in his cross-examination. On one hand, he deposed that he had close relationship with the accused & used to visit his house regularly and on the other hand, he deposed that he did not know any of the family members of the accused. This statement seems to be not plausible in the ordinary circumstances.
56. Further, it is pertinent to note that the complainant in his complaint and affidavit stated that the impugned loan was granted to the accused during the period from March, 2017 to February, 2018. A bare reading of this statement seems to suggest that the impugned loan must have been given in several tranches over the period from March, 2017 to February, 2018.
C.C. No. 8864/19 Dated 14.10.2020 Page 21/29However, in his cross-examination, the complainant deposed that the accused approached him for loan in November, 2016 and he advanced the impugned loan to him for 4-6 months. The complainan remained silent on the specific time line of advancing of impugned loan to the accused. A bare reading of the statements made by the complainant in his cross-examination seems to sugges that the impugned loan was granted to the accused at one go and not in several tranches. Complainant has not stated any specific date on which the alleged transaction had taken place. Therefore, the statements made by the complainant (regarding the time period in which the impugned loan was granted to the accused) in his complaint and cross-examination are in clear contradiction with each other.
57. Moreover, the plea of the complainant that there was not a single public witness or any other witness who has witnessed the alleged loan transaction between him and the accused seems to be not plausible. As discussed in the above paragraph, bare reading of the complaint and affidavit suggests that the impugned loan was given in several tranches during the period from March 2017 to February 2018. However, in his cross-examination, the complainant simply deposed that loan was given in the parking area of Lado Sarai and there were no public witnesses at that time. When the alleged loan was given in many tranches then it is very difficult to believe the complainant's version that not a single witness was present when any of these transactions took place.
58. Also, it is the case of complainant that he had given the loan amount in cash in the parking area of Lado Sarai. It should be noted that the accused also resided in the same locality of Lado Sarai and complainant has close family relationship with him and used to visit his house regularly. Thus, this claim of complainant seems to be not plausible that he always chose to give loan amount to the accused in the parking area i.e. a public place without the presence of any third party despite the fact that the accused also resided in the same locality and complainant used to visit the house of accused on a regular basis. Why would a man with reasonable prudence would give huge loan amount in cash in a public place when he could have given the same in C.C. No. 8864/19 Dated 14.10.2020 Page 22/29 the house of the accused situated in the same locality in the presence of some witnesses.
59. Therefore, considering the evidences on record and in light of the above discussions, I am of the considered view that the accused has successfully raised doubt regarding the grant of impugned loan by the complainant to him.
(b) Complainant did not have financial capacity to grant loan of Rs. 2,50,000/-.
60. Ld. Counsel for the accused submitted that the complainant did not have the financial capacity to advance loan of Rs. 2,50,000/- to the accused. He submitted that there is a grave doubt on the source of funds as when the complainant was asked about it in his cross examination, he deposed that "it is correct that I gave the money to the accused Rs. 2,50,000/- after selling my property of Aya Nagar." The complainant in his further cross-examination on this point deposed that "I had sold my property which was situated at Aya Nagar in the month of December 2017. I have no receipt or any other document in respect of the property." Ld. Counsel for the accused submitted that there is contradiction between the statements given by the complainant in the cross examination regarding source of fund. He submitted that when the funds (to advance loan) were arranged in December 2017 (after selling the property situated at Aya Nagar) then impugned loan could not have been advanced by the complainant in March 2017.
61. Perusal of the statements made by the complainant in his examination-in- chief and cross-examination of the complainant clearly shows that there are contradictions in his statements vis-a-vis source of funds. On one hand, the complainant deposed that he had arranged the loan after selling his plot in December 2017 and on the other hand he has stated in his complaint and affidavit that loan was given to the accused during the period from March 2017 to February 2018. If the funds were arranged only in December 2017, then the loan could not have been given to the accused during the period from March 2017 to December 2017. Moreover, it should also be noted that the complainant has also not filed any document on record which shows his C.C. No. 8864/19 Dated 14.10.2020 Page 23/29 ownership and sale of the said property situated at Aya Nagar (the proceeds of which were allegedly used for the purpose of granting loan to the accused). He has also not examined any witness on this aspect. Therefore, the accused is able to highlight contradictions in the evidence of complainant which raises serious doubts on his source of fund to advance the impugned loan.
62. Further, in order to buttress the proposition that the complainant did not have the financial capacity to advance loan of Rs. 2,50,000/-, Ld. Counsel for the accused also pointed out when the complainant was asked about his source of income and expenditure in his cross-examination, he deposed that "I am taxi driver by profession. My monthly income is about Rs. 25,000/-. I am not a tax payer. ****I have four children and wife. My wife is housekeeper. My all children are school going. It is correct that I am the sole earner of my family. My monthly expenditure is 8,000 to 10,000/-. I am residing on rent which is 4,000/- per month".
63. During the final arguments, Ld. Counsel for the accused submitted that complainant is taxi driver by profession and he is sole earner of his family comprising of his wife and four school going children. Therefore, it would not have been possible for him to grant a loan of Rs. 2,50,000/- when his own monthly income is 25,000/-.
64. Although, it is not always impossible for a person with monthly income to Rs. 25,000/- to grant a loan of Rs. 2,50,000/-, however, in the present case, considering the fact that the complainant is sole earning member of his family which comprises of four school going children and he is residing on rent, it is difficult to fathom how a person with monthly income of Rs. 25,000/- can grant a loan of Rs. 2,50,000/- in cash that too without executing any document (whether formal or informal) to this effect.
65. To buttress the aforementioned conclusion of this court, reference may be taken from the decision of Hon'ble Supreme Court in the case of K. Prakashan v. P.K. Surenderan (2008) 1 SCC 258 case wherein it was held that if a huge amount of money is advanced as a loan then the person who has purportedly advanced the loan must also show the solvency to the C.C. No. 8864/19 Dated 14.10.2020 Page 24/29 extent of the loan either through the bank account or through other means. In the present case, the complainant has miserably failed to show his solvency to advance a huge loan amount of Rs. 2,50,000/-.
66. Therefore, considering the evidences available on record, I am of the considered view that the accused has been successful in raising doubts over the financial capacity of the complainant to advance a loan of Rs. 2,50,000/-.
67. At this stage, it should be noted that when the accused successfully creates doubt in the complainant's case by drawing inferences from the materials on record and also from circumstances, statutory presumptions under section 118(a) r/w 139 of the Act stand rebutted and burden to proof is then shifted to the complainant to prove the guilt of accused beyond reasonable doubt. Reference can be taken from the decision of the Hon'ble Supreme Court from the case of Bharat Barrel & Drum Manufacturing Company vs. Amin Chand Pyarelal 1999 (3) SCC 35, wherein it has held the following:
"Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non- existence of the consideration can be either direct or by bringing on record preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where C.C. No. 8864/19 Dated 14.10.2020 Page 25/29 the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading evidence as the existence of negative evidence is neither possible not contemplated and even if led, it is to be seen with a doubt..."
68. In order to prove the complainant's case, Ld. Counsel for the complainant submitted that the accused has admitted his liability to the extent of Rs. 25,000/- to 30,000/- in his statement recorded under section 313 Cr.P.C. During the final arguments, he submitted that the existence of legally enforceable debt is deemed to have been proved on the basis of said admission.
69. It is a settled proposition of the law that an accused cannot be convicted solely on the basis of his statement recorded under section 313 Cr.P.C. Such statements are read into evidence by the Courts only to complete the chain of other evidences on record. An accused can never be convicted solely on the basis of such statements in the absence of any other corroborative evidences. Burden of proof lies on the prosecution/complainant to prove the guilt of the accused beyond reasonable doubt and the prosecution/complainant cannot escape from this burden by taking advantage of an admission made by the accused in his statement under section 313 Cr.P.C.
70. In the instant case, as discussed above, the burden of proof shifted to the complainant to prove the existence of legally enforceable debt when the accused successfully rebutted the statutory presumptions under section 118(a) and 139 of the Act. Therefore, it is for the complainant to prove the guilt of the accused beyond reasonable doubt by leading cogent evidences on record. However, the complainant has neither examined any witnesses (other than the bank official) nor filed any documents on record to prove the existence of legally enforceable debt. Although, the accused in his statement under section 313 Cr.P.C has indeed admitted that he had taken a C.C. No. 8864/19 Dated 14.10.2020 Page 26/29 loan of Rs. 25,000-30,000 from the complainant in the year 2017-2018, however, he further stated that he had already given a fridge to the complainant in discharge of the said liability. Therefore, a complete reading of the said statement clearly shows that the accused has effectively denied existence of any legally enforceable debt as on date. Moreover, it is pertinent to note that the complainant has not cross-examined the accused on this aspect when the accused deposed as DW-1. Therefore, the complainant cannot be allowed to take advantage of a vague statement made by the accused in his statement recorded under section 313 Cr.P.C and the same cannot be used as a sole evidence to prove the existence of a legally enforceable debt.
71. Therefore, in view of the above discussions, I am of the view that there exists insufficient materials on record to show that the accused had taken the impugned loan amounting to Rs. 2,50,000/- from the complainant. Instead the financial capacity of the complainant as admitted by him in his cross-examination creates a doubt over advancing the said loan amount. Also, the alleged source of fund from which the complainant had advanced the alleged impugned loan is also doubtful in view of the contradictions discussed above. In this light, this court is of the considered opinion that the accused has successfully demolished the case of the complainant regarding the existence of legally enforceable debt.
(iv) Whether the impugned cheque was issued by the accused in discharge of a legally enforceable debt?
72. The accused has stated in his plea of defence as well as in his statement under section 313 Cr.P.C. that he had not issued the impugned cheque to the complainant in discharge of any legally enforceable debt whatsoever. The accused even denied his signature on the impugned cheque in his statement under section 313 Cr.P.C.
73. Ld. Counsel for the accused submitted that the complainant must have taken cheque from the house of accused and misappropriated the same to file the present complaint. He has referred to the statement of the accused made as DW-1 wherein he had deposed that "The complainant must have C.C. No. 8864/19 Dated 14.10.2020 Page 27/29 taken cheques from my house and misappropriated it in order to file the present case". It is the plea of the accused that the complainant has stolen cheques from his house after a quarrel took place between the parties.
74. Although the accused has alleged that the complainant stole the cheque from his house and misappropriated the same in order to file the present complaint, however, it is pertinent to note that no complaint in this regard has been filed by the accused with police. The accused has also not examined any witness to corroborate his plea. Moreover, perusal of the statements of accused as DW-1 shows that this plea is more of a "possibility or probability" rather than a specific claim or allegation. The accused himself is not confident about his plea. Therefore, this plea of the accused regarding stealing of impugned cheque by the complainant from his house seems to be not plausible, and, therefore, difficult to believe.
75. Also as discussed in the preceding paragraphs of this judgment, the execution of the impugned cheque has been successfully proved by the complainant. The accused has neither examined any witnesses nor filed any document on record to prove that he has not executed the impugned cheque. An evasive and bald denial regarding signature on the impugned cheque would not be of any help to the accused.
76. Therefore, considering the evidences available on record, I am of the considered view that the impugned cheque was executed by the accused. Now the question arises as to whether the impugned cheque (even if executed by the accused) was issued in discharge of a legally enforceable debt.
77. As discussed in the preceding paragraphs of this judgment, legally enforceable debt in favour of the complainant has not been proved. Therefore, in the absence of any legally enforceable debt in favour of the complainant, I am of the considered opinion that even if the impugned cheque has been executed by the accused, there is insufficient material on record to prove that the same was given in discharge of any legal enforceable debt.
C.C. No. 8864/19 Dated 14.10.2020 Page 28/2978. In the case at hand, the alleged loan amount was paid in cash. There was no document executed to record the advancement of loan. The complainant could not establish his financial capacity to show that he was capable of advancing loan of Rs. 2,50,000/-. Even his source of fund is doubtful. Although, the accused could not prove his defence but he has succeeded in rebutting the presumption under section 139 of the Act by disproving the case of the complainant. As per Bharat Barrel case (Supra), it is not important that the accused leads his evidence if he can prove his case by disproving the case of the complainant.
79. Therefore, on evaluation of the entire evidence, this court finds the version of the complainant improbable and difficult to believe. The complainant has not been able to establish that there was a legal debt or liability standing on the part of the accused towards the complainant. Thus, the most important ingredient of section 138 of the Act has not been fulfilled.
Decision: -
80. In view of the above discussion, the accused is acquitted for the offence under section 138 of the Act.
ANNOUNCED IN THE OPEN COURT ON 14.10.2020 (ANIMESH KUMAR) MM-05/NI Act/South/Saket New Delhi/14.10.2020 C.C. No. 8864/19 Dated 14.10.2020 Page 29/29