Delhi District Court
Tarminder Singh vs . Daljit Singh on 2 February, 2022
IN THE COURT OF MS. MEDHA ARYA MM (N.I. ACT-03) SOUTH-WEST: DWARKA COURTS: NEW DELHI CNR No. DLSW020158632017 Ct. Case No.11649/2017 PS: Janakpuri U/s.138 N.I. Act. Tarminder Singh Vs. Daljit Singh Date of Institution of case: 22.06.2017 Date of which Judgment reserved: 25.01.2022 Date on which judgment pronounced: 02.02.2022 JUDGMENT
1) Unique ID no. of the case : DLSW0201586320-2017
2) Name of complainant : Tarminder Singh
S/o S. Manohar Singh,
R/o WZ-12, 2nd Floor, Street No.10,
Varinder Nagar,
New Delhi-110058
3) Name and address of accused : (1) Daljit Singh
Prop. M/s Chadha Cloth House,
R/o C4F-126, Ground Floor,
Janakpuri, New Delhi
Also at: -
C4B/334A, Janakpuri, New Delhi.
(2) M/s Chadha Cloth House,
C/o Mr. Daljit Singh,
C4F-126, Ground Floor,
Janakpuri, New Delhi
Also at: -
C4B/334A, Janakpuri, New Delhi.
4) Offence complained of : Section 138 N.I. Act
5) Plea of accused : Not guilty and claim trial
6) Final Order : Acquittal for the offence punishable
U/s.138 N.I. Act
7) Date of order : 02.02.2022
Pg. 1 of 32 C.C. No.11649/2017
MEDHA Digitally signed by
MEDHA ARYA
ARYA Date: 2022.02.02
17:27:22 +05'30'
BRIEF REASONS FOR DECISION
1. The accused no.1 in the instant complaint is the sole proprietor of M/s Chadha Cloth House (accused no.2). Accused no.2 has been arrayed as an accused separately, although it is a well settled proposition of law that a sole proprietorship is not a separate legal entity, and at best, it is merely a trade name adopted by accused no. 1 to conduct business (Raghu Lakshminarayan vs Fine Tubes (2007) 5 SCC 103). It the case of the complainant that business of accused no.2 concern was in losses, and on its behalf, accused no.1 approached the complainant to seek a friendly loan of Rs.1.50 lacs, for a period of 5 months. As the complainant had friendly relations with the accused no.1, he advanced a loan of Rs.1.50 lacs to the accused , in cash, on 24.08.2016 with the understanding that the same shall be repaid by 24.01.2017. At the time when the loan was advanced by the complainant to the accused, accused issued three post-dated cheques being the cheques in question bearing nos. 567542, 567543 and 567544, all dated 24.01.2017, drawn on Axis Bank Ltd., Janakpuri Branch, New Delhi and each in the sum of Rs.50,000/-, with the assurance that the same shall be honoured upon their presentation. On 24.01.2017, by which date the accused had agreed to repay the loan amount to the complainant, when the complainant called the accused to seek the repayment of loan amount, the accused sought some more time for the same purpose. Thereafter, the cheques in question were presented for encashment by the complainant on 27.03.2017, after receiving the specific instructions of accused no.1 in this regard. To the utter shock and dismay of the complainant, however, the cheques in question were returned dishonoured vide Pg. 2 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:27:38 +05'30' separate return memos, all dated 28.03.2017, with the remarks 'funds insufficient'. The complainant then tried to contact the accused to seek the repayment of loan amount (being the amount of the cheques in question) after informing him that the cheques in question have been dishonoured. The accused, however, continued to avoid the payment of cheque amounts to the complainant on one pretext or another. Resultantly, the complainant served a statutory legal demand notice dated 25.04.2017 on the accused, which was received back by the complainant with remarks 'wilfully refused to accept' and 'no such person'. Constrained thus, the complainant approached this court by way of the above captioned complaint seeking the prosecution and conviction of the accused. It is the case of the complainant that the complaint has been filed within the period of limitation as per Section 142 N.I. Act, and the territorial jurisdiction to try the present complaint vests with this Court.
2. It is pertinent to mention here that another complaint case between the same parties is also pending disposal before this Court, the subject matter of which are three separate cheques amounting to Rs 50,000/- each, also issued by the accused herein in favour of the complainant, towards repayment of a separate loan of Rs. 1.5 Lacs advanced by the complainant to the accused in November, 2016. The trial in both the cases progressed simultaneously, and the said complaint is being disposed of by way of a separate judgment today itself.
MEDHA Digitally signed
by MEDHA ARYA
Pg. 3 of 32 C.C. No.11649/2017
ARYA Date: 2022.02.02
17:27:56 +05'30'
3. Reverting to the facts of the present case, the complainant was examined u/s.200 CrPC after a preliminary scrutiny of the complaint. At this stage, the complainant tendered his evidence affidavit Ex.CW1/1. The contents of the same are not being reproduced herein in the interest of brevity, the same being a reiteration of contents of the complaint. The complainant also placed reliance on the following documents:
(i) Ex.CW1/A, Ex.CW1/B, Ex.CW1/C being cheques in question bearing no. 567542, 567543 and 567544, all dated 24.01.2017 and drawn on Axis Bank Ltd., Janakpuri Branch, New Delhi, and each in the sum of Rs.50,000/-
(ii) Ex.CW1/D, Ex.CW1/E and Ex.CW1/F being the cheque return memos, all dated 28.03.2017,
(iii) Ex.CW1/G being the legal demand notice dated 25.04.2017,
(iv) Ex.CW1/H being the speed post receipt and
(v) Ex.CW1/I being the envelopes containing the legal notice.
Upon consideration of pre-summoning evidence, the scrutiny of documents, and after hearing the complainant on the point of summoning, cognizance of the offence punishable u/s.138 N.I. Act with respect to the cheques in question was taken against the accused, who was summoned to face the trial.
MEDHA Digitally signed
by MEDHA ARYA
ARYA Date: 2022.02.02
Pg. 4 of 32 C.C. No.11649/2017
17:28:16 +05'30'
4. The accused (being accused no.1, also representing accused no.2, which being a proprietorship concern does not have a separate identity in law) duly entered appearance to face the trial in pursuance to service of summons. Formal notice u/s.251 CrPC was framed against the accused, vide which notice the substance of the accusations against him was explained to the accused, and the accused was given an opportunity to substantiate his plea of defence. At this stage, the accused pleaded not guilty to the offence punishable u/s.138 N.I. Act. The accused stated that he owes no liability towards the complainant. The accused further stated that it is infact the complainant who had approached him for a loan of Rs.7,00,000/-, and Rs.3,90,000/- was advanced by him to the complainant by way of various cheques, including the cheques in question.
5. Thereafter, an application u/s.145(2) N.I. Act was filed by the accused, which was not opposed by the complainant and accordingly, allowed. Thereafter, the accused was permitted to cross examine the complainant and the hearing in the case was fixed for C.E.
6. At the stage of C.E., the complainant examined himself as CW1. At this stage, the complainant adopted his pre-summoning evidence as his post-summoning evidence. The complainant also placed reliance on the documents already exhibited as Pg. 5 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:28:34 +05'30' Ex.CW1/A to Ex.CW1/I. The complainant was cross-examined at length by the accused and discharged as a witness, thereafter.
7. No other witnesses were examined by the complainant and CE was closed.
8. Thereafter, the accused was examined u/s.313 CrPC. All the incriminating material against him was put to the accused, and the accused was given an opportunity to offer explanation qua the same. At this stage, the accused stated that he had never taken any loan from the complainant. The accused further stated that the complainant had approached him for a loan of Rs.10 lacs, and he had advanced to him a loan of Rs.3.90 lacs by way of cheques. The accused stated that the cheques in question were also given by the accused to the complainant for the same purpose- advancing a loan to the complainant. The accused further stated that he has also filed a civil suit for recovery of Rs.3.90 lacs against the complainant, which is pending trial. At this stage, the accused admitted the receipt of statutory legal demand notice from the complainant, and stated that it is when he received the said legal demand notice that he got to know about the dishonour of the cheques in question. When queried to this effect, the accused opted to lead D.E. in the affirmative.
MEDHA Digitally signed
by MEDHA ARYA
ARYA Date: 2022.02.02
Pg. 6 of 32 C.C. No.11649/2017
17:29:01 +05'30'
9. The proceedings of the case thereafter progressed to the stage of D.E. At the stage of D.E., the accused examined Jay Prakash, Deputy Manager, Axis Bank as DW-1. DW1 brought on record the certified copy of statement of account of M/s Chadha Cloth House is Ex.DW1/1, maintained by by Daljit Singh Chadha (accused no.1). DW1 also brought on record the statement of account of M/s. Chadha Cloth House Ex.DW1/2 (Colly.). DW1 was not cross-examined despite opportunity, and was then discharged as a witness.
10. The accused next took the witness-stand himself as DW2, after his application u/s.315 CrPC was allowed. In his examination-in-chief, the accused stated that he was not facing any financial crisis at the time when the loan was allegedly advanced to him. The accused affirmed on oath that he had never taken any loan of Rs.1.50 lacs from the complainant, and in fact, he had advanced the loan of Rs.3.90 lacs to the latter, which remains unpaid, in toto, till date. He further deposed that he had given an amount of Rs.6.90 lacs to the complainant in total, by way of cheques, ie three cheques amounting to Rs.1,00,000/- each, one cheque amounting to Rs.50,000/-, one cheque amounting to Rs.40,000/- and two cheques amounting to Rs.1.50 lacs each, and Rs.10,000/- in cash (version of the accused being that cheques worth Rs.3,90,000/- were actually encashed by the complainant, and remaining cheques were misused by him). He further deposed that he did not mention the cash amount in his recovery suit since he has no proof regarding the same. He stated the complainant has filed a false and frivolous complaint by misusing the cheques in question. Pg. 7 of 32 C.C. No.11649/2017
MEDHA Digitally signed by MEDHA
ARYA
ARYA Date: 2022.02.02 17:29:26
+05'30'
Thereafter, DW-2 was cross-examined at length by Ld. Counsel for the complainant. At this stage, the accused admitted issuing the cheques in question in favour of the complainant. He deposed that he had given a few cheques, including the cheques in question, in total amounting to Rs 6,90,000/- to the complainant, all undated, on a single date, when the latter approached him to seek a loan in Feb/March 2016. He denied the suggestion that he was in financial distress post November 2016, and also denied the fact that he fled from his house on 28.02.2017 on account of his incapacity to repay the loan he had obtained from several people. He admitted the address mentioned in the legal demand notice as correct, but neither confirmed nor denied the receipt of the said notice by him. He denied the suggestion that he had filed the recovery suit against the complainant as a counterblast to the present complaint. He further deposed that the complainant was to return the loan amount to him after October, 2016, when the last of the cheques given by him to the complainant was encashed. He further asserted on oath that he had initially given two cheques amounting to Rs.1.50 lacs each to the complainant, and later on six cheques, each amounting to Rs.50,000/-, was given by him to the complainant after seeking the return of the said two cheques of Rs.1.50 lacs each. Further, he stated that he cannot produce those two cheques (of Rs 1.5 Lacs) since he cancelled the same, having no reason to preserve them. He further stated that six cheques of Rs.50,000/- (in lieu of cheques amounting to Rs.1.50 lacs) were given to the complainant somewhere in October, 2016. Further, he deposed that he does not remember if his bank balance during the period December, 2016 to March, 2017 ever crossed the limit of Rs.49,900/-. DW 2 further deposed that he had given the six cheques in lieu of cheque Pg. 8 of 32 C.C. No.11649/2017 Digitally signed by MEDHA MEDHA ARYA ARYA Date: 2022.02.02 17:29:52 +05'30' of Rs.1,50,000/- to complainant on account of the latter seeking financial aid, and expressing inability to repay the loan amount advanced by him in October 2016. The witness deposed that six cheques amounting to Rs. 50,000/- were given by him to the complainant in undated condition, and the latter had assured the repayment of the amount of the loan obtained by him by March, 2017. Further, he deposed that he earns Rs.30,000/- per month from a private job, and when he used to earlier run the business in the name and style of Chadha Cloth House, he used to earn Rs.2 lacs per month, which income used to be apportioned between his family, and the families of his father and brother. When asked about the proof of this income, DW2 expressed his inability to bring on record the same, the business having been shut for more than five years, accounted from the date of his testimony. He denied the suggestion that he has taken a loan from several people namely Raminder Singh, Rahul Duggal, Ajay Babbar, Gurjeet Singh etc or that he had given post-dated cheques for repayment of loans to these people too. He deposed that he had given a loan of Rs.3.90 to the complainant, and when the latter failed to repay the loan within the stipulated period, it was suggested by the complainant himself that he shall pay interest on the loan amount to the complaint @ 24% per annum w.e.f. October, 2016, which he failed to. Confronted with the certified copy of document Ex.DW2/CW1 being the plaint of the recovery suit filed by him against the complainant, which document states that the interest had to be charged w.e.f. 01.04.2017, the witness deposed that discrepancy found in his testimony in the instant case is due to lapse of his memory. DW2 deposed that he did not issue stop payment instructions qua the cheques in question, as they were given by him to the complainant in undated condition, and were presented by the latter Pg. 9 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:30:12 +05'30' without his permission. He further deposed that he requested the complainant to return the cheques in question to him, but complainant refused to return the same. He further deposed that he never filed any police complaint nor sent any notice to the complainant to seek return of cheques in question, nor did he file a suit seeking a decree of declaration qua the cheques in question. DW2 deposed that the agreement between him and the complainant regarding payment of interest by the latter had been arrived at prior to the date of dishonour of the cheques in question. He deposed that he had advanced the loan of Rs. 3.90 lacs to the complainant in tranches. DW2 admitted his signatures on the cheques in question as well as that he filled other particulars thereupon. When queried specifically, he stated that he does not remember if the date on the same was filled by him. DW2 was discharged as a witness after this detailed cross examination.
11. No other witnesses were examined by the accused, and DE was closed on 17.11.2021 itself. The matter was then fixed for final arguments.
12. Ld. Counsel for the complainant argued that the edifice of the offence punishable u/s 138 NI Act is built on the foundation of reverse onus of proof theory, and the accused has not been able to discharge the burden of proof placed upon him by virtue of Section 139 N.I. Act. It was submitted that the accused failed to disprove the version of the complainant that he had advanced a loan of Rs.1.50 lacs to the accused, Pg. 10 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:30:32 +05'30' in cash, on 24.08.2016, towards the repayment of which, the post-dated cheques, being the cheques in question were given by the accused to the complainant. Emphasis was put on the fact the accused has admitted his signatures on the cheques in question, as well as receipt of legal notice, and has not been able to set up a consistent defence to be able to dispel the burden of proof stacked against him. Ld. Counsel for the complainant submitted that there are many incongruities in the testimony of DW-2, such as DW2 stating at one place that the complainant had approached him for a loan of Rs.10 lacs, at another that the complainant had approached him for a loan of Rs.7,00,000/-, and at a third place (being the plaint Ex.DW2/CW1), that the complainant had approached him for a loan of Rs.4,00,000/-, the discrepancy relating to the term of the loan given by the accused to the complainant, and that pertaining to the alleged agreement between the parties binding the complainant to pay interest, described differently in the testimony of the accused in the case at hand, when compared to its description in the plaint filed by the accused in the recovery suit pending adjudication. It was argued that the fact that the accused was in financial distress at the time when the loan was advanced to him by the complainant is also established, strengthening the case of the complainant. It was submitted that in view of so many discrepancies, the version of the accused is rendered incredible and the accused is liable to be convicted.
Per contra, Ld. Counsel for the accused has vehemently argued that the accused has discharged the onus of proof placed upon him by virtue of Section 139 N.I. Act, and the complainant has miserably failed to prove his case beyond reasonable Pg. 11 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:30:52 +05'30' doubt thereafter. It was submitted that the payment of Rs.3.90 lacs from the accused to the complainant in various tranches has been proved by the accused by eliciting from the complainant an admission in this regard, which proves that the loan was advanced by the accused to the complainant and not vice-versa, and this fact is sufficient in itself to dislodge the burden of proof placed upon the accused. It was submitted that in view of the fact that the alleged loan transaction was not disclosed by the complainant in his ITR return and the fact that the complainant could not explain the receipt of payment of Rs.3,90,000/- from the accused in his bank account, even if the version of the complainant is believed for the sake of arguments, the machinery of law should not be made available to the complainant for the recovery of unaccounted-for sums of money. It was further submitted that once cornered regarding the receipt of payment of Rs 3.90/- lacs from the accused, the complainant took resort to the version that he had advanced a loan of Rs.7,00,000/- to the accused as a last-ditch effort, but in view of the fact that the complainant could not prove the fact that he had advanced a loan of Rs.7,00,000/-, in cash, to the accused, as the said amount of money was neither disclosed in the ITR by the complainant, nor was the transaction encapsulated in a written agreement, the case of the complainant falls, the complainant failing to show that the amount of the cheques was allegedly due to him from the accused, or that the same constituted a legally recoverable debt. It was further vehemently argued that the machinery of law cannot be allowed to be misused by the complainant to seek the recovery of unaccounted for / black money, in view of the clear embargo contained in Section 269SS of the Income Tax Act, as per which, cash transactions are permissible only for an amount upto Rs.20,000/-, and the version of the complainant is that he had Pg. 12 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:31:13 +05'30' advanced Rs. 7 lacs in total to the accused in cash. It was vehemently argued that the evidence on record shows on the one hand that the accused was not in any financial distress when the loan was allegedly sought by him from the accused, and in fact, the complainant himself did not have the financial wherewithal to advance a huge amount of Rs 7 lacs as a loan to the accused, reflected from his ITR of the relevant period. It was argued that the civil suit filed by the accused cannot be construed to have been filed as a counterblast to the instant complaint merely because it was filed after the present complaint, as the same was filed within the period of limitation prescribed there-for in the relevant statute. Ld. Counsel for the accused also placed reliance on the following judgments to support his arguments: -
(i) K Subramani vs K Damodara Naidu AIR 2015 SC Supp 1772
(ii) Vijay vs Laxman & Anr (2013) 3 SCC 86
(iii) Krishna Janardhan Bhat vs Dattatraya G. Hegde (2008)4SCC 54
(iv) Birender Singh vs State (Nct Of Delhi) And Anr.; I (2008) BC 452
(v) M/S Kumar Exports vs M/S Sharma Carpets (2009) 2 SCC 513
(vi) M.S. Narayana Menon @ Mani vs State of Kerala & Anr (2006) 6 SCC 39
(vii) Vipul Kumar Gupta vs Vipin Gupta 2012 SCC OnLine Del 4384 Pg. 13 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:31:31 +05'30'
(viii) Kulvinder vs . Kafeel Ahmad 2013 SCC OnLine Del 34
(ix) Sanjay Mishra vs Ms.Kanishka Kapoor @ Nikki 2009 SCC OnLine Bom 290
(x) Dalmia Cement (Bharat) Ltd vs M/S.Galaxy Trades & Agen-
cies Ltd. AIR 2001 SC 676
(xi) Rajesh Agarwal vs State & Anr. 2010 SCC OnLine Del 2511
(xii) Bharat Barrel And Drum Mfg. Co. vs Amin Chand Payrelal (1999) 3 SCC 35
(xiii) Devender Kumar vs Khem Chand (2015)223 DLT 419
(xiv) G. Pankajakshi Amma & Others v/s Mathai Mathew (D) Thr.
Lrs. & Another (2004) 12 SCC 83
(xv) K. Prakashan vs P.K. Surenderan (2008) 1 SCC 258 In rebuttal, Ld. Counsel for the complainant argued with vehemence that no document was executed with respect to the loan transaction, in view of the fact that the parties had friendly relations subsisting between them for over 25 years. Ld. Counsel further argued that the accused while deposing as DW2, on 21.10.2021, the accused admitted that his business had shut down 5-6 years ago, which strengthens the case of the complainant that the accused was in financial distress at the time when the loan was advanced by the complainant to him. To buttress this argument that accused Pg. 14 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:31:48 +05'30' had constrained financial resources when the loan was advanced to him, counsel for the complainant adverted the attention of the court to the account statement of the accused placed on record, and submitted that the bank account statement of the accused reflects that the accused did not have the financial capacity to pay the amount of the cheques in question, on the date when they were presented. It was further argued by the counsel for the complainant that the fact that the accused did not issue stop payment instructions with respect to the cheques in question also makes the case of the accused suspicious. It was further argued that there are a lot of discrepancies between the case set up by the accused in defence to the instant complaint, and the recovery suit filed by him, which also shows that the version taken by the accused lacks credibility and is liable to be disregarded. In support of her arguments, Ld. Counsel for the complainant has also placed reliance on the judgments as follows: -
(i) M/s. Kumar Exports v. M/s. Sharma Carpets 2009(2) SCC 513
(ii) C.C. Alavi Haji v. Palapetty Muhammed and Another (2007) 6 SCC 555
(iii) V.S. Yadav v. Reena, 172 (2010) DLT 561
(iv) A.C. Narayanan v. State of Maharashtra (2015) 12 SCC 203
(v) Rohitbhai Jivanlal Patel v. State of Gujarat & Anr. (2019) 18 SCC 106
13. Heard. Record perused. Considered.
MEDHA Digitally signed
by MEDHA ARYA
Pg. 15 of 32 C.C. No.11649/2017 ARYA Date: 2022.02.02
17:32:07 +05'30'
14. It would be apposite at this stage to briefly discuss law applicable to the offence of dishonour of cheques. The legal position that emerges, from a reading of S.138 N.I. Act, is that before finding of conviction with the offence punishable under Section 138 N.I. Act can be returned against the accused, it has to be established, cumulatively-
(i) that the cheque in question was issued by the accused in favour of the complainant for the discharge of legally enforceable liability.
(ii) presentation of the cheque to the bank within three months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(iii) a demand being made in writing by the payee or holder in due course by the issuance of a notice in writing to the drawer of the cheque within thirty days of the receipt of information from the bank of the return of the cheques; and
(iv) the failure of the drawer to make payment of the amount of money to the payee or the holder in due course within fifteen days of the receipt of the notice.
The legal position was discussed by the Hon'ble Supreme Court of India in MSR Leathers vs. S. Palaniappan (2013) 1 SCC 177, wherein it was held thus, "12. The proviso to Section 138, however, is all important and stipulates three distinct conditions precedent, which must be Pg. 16 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:32:27 +05'30' satisfied before the dishonour of a cheque can constitute an offence and become punishable. The first condition is that the cheque ought to have been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. The second condition is that the payee or the holder in due course of the cheque, as the case may be, ought to make a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. The third condition is that the drawer of such a cheque should have failed to make payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice. It is only upon the satisfaction of all the three conditions mentioned above and enumerated under the proviso to Section 138 as clauses (a), (b) and
(c) thereof that an offence under Section 138 can be said to have been committed by the person issuing the cheque."
This court shall now examine if the four ingredients as described in the forgoing paragraph have been satisfied in this case.
MEDHA Digitally signed by
MEDHA ARYA
Pg. 17 of 32 C.C. No.11649/2017
ARYA Date: 2022.02.02
17:32:43 +05'30'
15. That the cheques in question Ex.CW1/A, Ex.CW1/B are Ex.CW1/C were presented for encashment by the complainant within the statutory period has not been disputed by the accused at any stage of trial. Accordingly, condition no.(ii) above stands satisfied.
16. Qua the service of statutory legal demand notice upon the accused, the complained has deposed in his examination in chief as CW1 that the envelopes containing the notices were received back by him, being Ex CW/I. At the stage of recording of statement u/s.251 CrPC itself, however, the accused admitted that he had duly received any statutory legal demand notice from the complainant. In his statement u/s.313 CrPC also, the accused stated that he had received the legal notice from the complainant. In his testimony as DW-2, the accused stated that he can neither affirm nor deny if he had received the legal demand notice Ex.CW1/G, but stated that the address mentioned on the legal demand notice is correct. As such, as the accused has admitted the receipt of legal notice at two stages, and has not denied the correctness of the address mentioned on the same even while deposing on oath, which fact can be construed as an admission of receipt of legal notice, when read in conjunction with Section 27 of General Clauses Act which provides that service of any document by post shall be deemed to be affected by properly addressing, prepaying and posting by registered post, the letter containing the said documents. The condition of service of statutory legal demand notice also stands satisfied. Further, the accused has stated that he never replied to the statutory legal notice and also did not make the payment of amount of cheques in question to the complainant despite receipt of statutory legal Pg. 18 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:33:03 +05'30' demand notice. As such, conditions no.(iii) and (iv) above also stand satisfied.
17. Now it only remains to be seen if the cheque in questions Ex.CW1/A, Ex.CW1/B & Ex.CW1/C were issued by the accused in favour of the complainant in discharge of a legally enforceable debt.
18. At this stage, it becomes imperative to mention Section 139 of the Negotiable Instrument Act, 1881 which carves out a presumption in favour of the drawee that the cheque was issued to him in discharge of a debt or other liability of a legally enforceable nature. Also, the said provision must be read along-with Section 118 of the same enactment which spells out another presumption in favour of the drawee that every negotiable instrument was 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.
19. The first point of determination is as to whether presumption under Section 139 r/w S.118 N.I. Act can be raised against the accused. In the case at hand, accused has admitted that the cheques in question bear his signatures but has taken the defence that he had not filled the date on the same, when he had given the cheques to the complainant. Section 20 of the Negotiable Instrument Act assumes relevance here, which provides that prima-facie, a holder of an inchoate negotiable instrument has the authority to complete the document. That is to say, a person issuing a cheque is Pg. 19 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:33:22 +05'30' presumed to authorize a holder to fill up the blank spaces and cannot escape his liability on this ground alone. Reliance at this juncture can be also placed upon the law laid down by Hon'ble High Court of Delhi in 'Jaspal Singh Vs. State (Govt. of NCT. Of Delhi) 2016 SCC OnLine Del 6007'. In view of the legal position described above, this court is of the considered opinion that presumption u/s.139 r/w S.118 N.I. Act can duly be raised against the accused, even if his version that he had not filled the date on the cheques in question himself if accepted at face value at this stage.
20. The offence of Section 138 N.I. Act being premised on the theory of reverse onus of proof, the next point of determination is whether the accused has been able to discharge the onus of proof placed upon him. The journey of trial qua a complaint under Section 138 NI Act commences, after a determination is made that the presumption as per Section 139/118 Negotiable Instruments Act, 1881, can be raised against the accused, from the point of the accused who is required to prove that the cheque in question was not given for a consideration or for the discharge of any legally enforceable debt. In this regard, reliance can be place on Hiten P. Dalal Vs. Bratindranath Banerjee (2001) 6 SCC 16 wherein it was held as under: -
"22. Because both Sections 138 and 139 require that the Court `shall presume' the liability of the drawer of the cheques for the amounts for which the cheques are drawn, ..., it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption has been Pg. 20 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:33:40 +05'30' established. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused. Such a presumption is a presumption of law as distinguished from a presumption of fact which describes provisions by which the court may presume a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable probability of the nonexistence of the presumed fact.
23. In other words, provided the facts required to form the basis of a presumption of law exists, the discretion is left with the Court to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. 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 Pg. 21 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:33:59 +05'30' particular case, to act upon the supposition that it exists. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man."
In the backdrop of the legal position enunciated above, it is to be examined whether the accused, on a scale of preponderance of probabilities, has been able to prove his case, or has been able to discredit the case of the complainant so as to shift the onus placed upon him to the complainant. As held by the Hon'ble Supreme Court of India in Kumar Exports vs Sharma Carpets (2009)2 SCC 513, the accused can either prove the non-existence of consideration and debt by direct evidence, or by bringing on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man may act upon the plea that they did not exist. If this Court comes to the conclusion that the accused has not been able to rebut the presumptions raised against him, by failing to bring on record direct evidence or by even failing to sufficiently perforate the case of the complainant, the complainant is entitled to a decision in his favour.
Pg. 22 of 32 C.C. No.11649/2017
MEDHA Digitally signed by
MEDHA ARYA
ARYA Date: 2022.02.02
17:34:15 +05'30'
21. Simply stated, the accused has to offer on record something that makes his version probable. This the accused can do by both successfully raising and proving competing version to the case of the complainant or by perforating the case of the complainant. Opportunity to do this arises for the accused at four stages: -
(i) When the accused puts forth defence at the time when his plea of defense as recorded after the substance of accusation explained to him u/s 251 CrPC
(ii) When the accused cross examines the complainant pursuant to his application u/S.145(2) N.I. Act being allowed,
(iii) When statement of the accused is recorded u/s 313 CrPC and
(iv) When defence witness is examined.
22. The version of the complainant is that he advanced the loan of Rs.1.50 lacs to the accused, in cash in August, 2016, for a period of five months, as the accused was in financial distress at the said time. The cheques in question were given by the accused to the complainant towards repayment of the loan amount as post-dated cheques on the date when the loan itself was advanced, but they were dishonored because of the insufficiency of funds in the account of the accused. The competing version set up by the accused is that it is he, in fact, who had advanced the loan of Rs.3.90 lacs to the complainant, and the cheques in question were given by him to the complainant, so that the complainant could use the said cheques in question to show Pg. 23 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:34:34 +05'30' his credibility to his creditors and for the purpose of advancing a further loan amount to the complainant. To establish the defence that he owes no liability towards the complainant, the accused cross-examined the complainant/CW-1. In so far it is the case of the complainant that the parties had friendly relations subsisting between them, it has not been challenged by the accused. To this extent, the version of the complainant sustains. The cause of dishonor of cheques being insufficiency of funds is also admitted.
23. In his cross-examination as CW1, CW1 admitted that he had received an amount of Rs.3.90 lacs in his bank account from the accused. CW1 further deposed that this payment of Rs.3.90 lacs was made to him by the accused towards repayment of previous loan of Rs.4,00,000/- advanced by him to the accused. The details of this loan transaction did not find any mention in either the complaint or examination-in- chief of the CW1. Despite repeated questions, CW1 was unable to spell any details of this loan transaction, such as the date or place of this transaction, let alone adducing any documentary proof qua the same. CW1 stated that he had not disclosed the fact that he had advanced another loan of Rs.4 lacs to the accused in his ITR returns for the relevant period, nor does he have any document in support of his assertion, making his testimony doubtful. Further, it is the case of the complainant that he had advanced a loan of Rs.4 lacs to the accused on a previous occasion, but only Rs.3,90,000/- was repaid to him and Rs.10,000/- remained outstanding. Despite this, when the complainant accepted the cheques in question towards repayment of loan of Rs.1.5 lacs, the complainant did not insist upon the repayment of the balance amount of MEDHA Digitally signed by Pg. 24 of 32 C.C. No.11649/2017 MEDHA ARYA ARYA Date: 2022.02.02 17:34:51 +05'30' Rs.10,000/- also, which fact boggles the imagination of this Court.
24. In a subsequent portion of his testimony, the complainant/CW1 admitted that the previous loan was repaid by the accused by August, 2016, and also admitted that this payment of Rs.3.90 lacs was received by him from the accused in period spanning from March, 2016 to October, 2016. CW1 deposed that "to the best of my knowledge the amount as stated above on 30.03.2016 is in respect of my previous loan of Rs 4 lacs". It seems farcical if not absurd that CW1, having received payments from the accused, does not seem to remember exactly the purpose for which he received the payments, and his testimony's truthfulness was made contingent on "the best of his knowledge" by the witness himself. Pertinently, CW1 deposed that "The previous advanced loan was paid by the accused before August 2016". The complainant himself admitted that the accused had no outstanding liability qua any previous loan in August 2016, and therefore, the payments received by him from August 2016-October, 2016 at least, cannot be attributed towards a previous loan, even as per the best case of the complainant. When a specific question was put to him as to why the complainant accepted any payment from the accused in October, 2016, when the previous loan was repaid to him by August, 2016, the complainant/ CW1 deposed that the amount credited in his account in the period between August, 2016 to 30.10.2016 was with respect to the cheques in question. This is an important admission on part of the complainant, as it fortifies the inference that the entire amount of the cheques in question was not outstanding against the accused, on the date they were presented. Merely deposing that he had not sought any payment from the accused in October, Pg. 25 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:36:10 +05'30' 2016 does not help the case of the complainant, as he had received the payment from the accused in October, 2016, irrespective. By eliciting testimony on the above- described lines, the accused has been able to create a doubt in the mind of the Court regarding the outstanding liability of the accused towards the complainant being Rs 1,50,000/- on the dates when the cheques in question were presented, as also regarding the veracity of the case of the complainant.
25. The case of the complainant also appears to be implausible in view of the fact that the complainant chose to not divulge the details of entire loan amount of Rs.7,00,000/- in his complaint initially, deposing about the said fact only when confronted with question regarding payment of Rs 3,90,000/- received by him in his bank account during his cross-examination, and even then chose not to bring any evidence on record to prove that a loan of Rs.7 lacs was indeed advanced by him to the accused. Now, another complaint, for the dishonor of 3 other cheques amounting to Rs 50,000/- is pending against the accused. However, for the remaining amount of Rs 4 lacs, no explanation has been offered by the complainant- when such loan was advanced, whether it was advanced in one installment or in tranches, and for what reason. This, even when the complainant admitted being in receipt of Rs 3,90,000/- from the accused, and testified that this was with respect to the said loan of Rs 4 lacs. The explanation of the complainant qua the receipt of this payment also appears incredible for this reason, and amplifies the glaring gaps in the case of the complainant.
Pg. 26 of 32 C.C. No.11649/2017
MEDHA Digitally signed by
MEDHA ARYA
ARYA Date: 2022.02.02
17:36:27 +05'30'
26. The complainant tried to set up a case that the accused was facing financial distress at the time when the loan was advanced by him to the accused, and great stress was placed by the complainant on the fact that the bank account statement of the accused for period December, 2016 to March, 2017 shows that the balance in the account of the accused during the said period was less than Rs.50,000/-. This fact does not much aid the complainant in view of the fact that he has admitted the receipt of payment of Rs.3.90 lacs from the accused between the period March, 2016 to October, 2016. Moreover, this does not prove that the accused was having constrained finances when he sought the loan from the complainant, allegedly. The fact that the business run by the accused no.1 in the name and style of accused no.2 was shut down also does not help the case of the complainant for the same reason. In fact, the weakness in the case of the complainant is brought to the fore, since it does not appeal to a reasonable mind that a person shall accept from a borrower a post-dated cheque for repayment of loan amount, knowing fully well that the borrower is in financial distress, without first securing the transaction by executing any document before advancing a large amount of Rs.7 lac, in all, as a loan. More pertinently, the suggestion given by the complainant to the accused, though denied by the latter, that the accused was in financial distress after November 2016 makes the case of the complainant himself dubious, who ludicrously advanced the loan to the accused in August 2016, months before the accused was facing distress. Further, a suggestion was given by the complainant to the accused that the latter had obtained a loan from several people, but Pg. 27 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:36:46 +05'30' none of these were examined by the complainant. The complainant tried to bring on record the fact that the accused had fled his residence in order to avoid repayment of the various loans sought by him from many others, but failed to prove this line of defense, mostly for the fact that the accused, till date, admittedly resides at the same house where he has been residing since long. The complainants' version that the accused was in financial distress and therefore, sought a loan from the complainant, also remains unestablished.
27. The ITR return of the complainant Mark A and Mark B, on which both parties have relied, shows the disconnect between the income of the complainant (Rs 3,84,000/-) and the amount of loan advanced by him in cash to the accused. What renders the case of the complainant even more incredible is the fact that he states that he had advanced a loan of Rs.7 lacs to the accused in cash, and accepted the repayment of part of the loan amount (Rs.3.90 lacs) from the accused in his account. Further, CW1 deposed that he has not disclosed any part of the loan in his ITR returns. This factor is also to be construed against the complainant, as he seeks action for the dishonor of cheques purportedly given to him for a loan of Rs 7 lacs advanced by him in cash, in violation of Section 269 SS IT Act, and not disclosed by him in his books of account. As such, the complainant has not been able to establish that the cheques in question were issued in his favour by the accused for a legally recoverable debt. Reliance at this juncture can be placed upon the judgment of Kafil Ahmed Supra. These circumstances, when considered cumulatively, show that the accused has been Pg. 28 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:37:12 +05'30' able to perforate the case of the complainant.
28. The case of the accused in affirmative is that it is the accused who had in fact advanced the loan to the complainant. As per the accused, the amount of Rs.3.90 lacs was paid by him in the account of the complainant is the loan which accused had advanced to the complainant. The accused has stated that in all, various cheques worth Rs 6,90,000/- in total were given by him to the complainant, for the purpose of advancing a loan to him and not for the purpose of discharging any legal liability, and the cheques in question are three of these cheques. The version of the accused that the date of cheques in question were not filled by him has remains unrebutted. When deposing as DW2, the accused stated in his cross-examination that he had not filled the date in cheques in question himself. The complainant, throughout the cross- examination of DW2, shied from giving clear suggestion to the accused that he had filled the date on the cheques in question. Further, even after a clear stand was taken by the accused that the date on the cheques in question were not filled by him, the complainant did not pray for forensic examination of handwriting on the cheques in question. It is already discussed that it unbelievable the accused had made the payment of Rs.3.90 lacs to the complainant via bank transfer, for the repayment of loan which was advanced to him in cash. The story of the accused that it is infact him who had given the cheques in question to the complainant, without putting a date on them, to advance a loan to the complainant, appears to be better-knit than the story of the complainant, although there are discrepancies in the case of the accused as well. The Pg. 29 of 32 C.C. No.11649/2017 Digitally signed by MEDHA MEDHA ARYA ARYA Date: 2022.02.02 17:37:38 +05'30' accused states that he first given two cheques of Rs.1.50 lacs each to the complainant, and later gave him six cheques amounting to Rs.50,000/- each, including the cheques in question, replacing the first two cheques of Rs.1.50 lacs and also gave the complainant other cheques worth Rs.3.90 lacs. No reasonable explanation for this has been offered by the accused. At one place, the accused states that he had been approached by the complainant for a loan of Rs 7 lacs, and at other, that the loan sought was Rs 10 lacs, whereas in Ex.DW2/CW1 being the plaint, he has stated that the loan sought by the complainant was only Rs 4 lacs. Further, the fact that the accused states as DW2 that the loan advanced by him to the complainant had to be repaid by the later by October, 2016, and when the complainant could not repay the loan by the said period, he agreed to pay interest to the accused @24% per annum whereas in the plaint of the recovery suit (Ex.DW2/CW1) filed by the accused, certified copy of which is on record, the accused had stated that the loan had to be repaid by the complainant latest by November, 2017, also highlights the gaps in the defense set up by the accused in the affirmative. These lacunae in the case of the accused shows that the defence taken by him is not perfect. However, although there are gaps in the defence set up by the accused, at the cost of the reiteration, the case of the complaint in comparison seems to be a clumsier piece of workmanship. Moreover, the accused was required to prove his case on a scale of balance of probabilities only, and by getting the complainant to admit the receipt of payment of Rs 3,90,000/- in his account, showing that he faced no financial distress at the time when the alleged loan is stated to have been given to him by the complainant, and putting under a shadow of doubt the financial capacity of the complainant to advance a loan of Rs 7 lacs to the Pg. 30 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:38:25 +05'30' accused, as also the credibility of the entire testimony of CW1, the accused has been able to discredit the case of the complainant and dislodge the burden placed upon him by virtue of Section 139 N.I. Act. Admittedly, the accused did not issue 'stop payment' instructions with respect to the cheques in question, but as this Court has accepted the explanation of the accused that the cheques were given by him to the complainant in undated condition, this circumstance does not aid the case of the complainant. Further, the fact that the accused did not file any suit for declaration qua the cheques in question cannot have any adverse impact on his case in a criminal trial, where having dispelled the presumptions stacked against him, the accused could be convicted only consequent to the complainant proving his case beyond any reasonable doubts. Last but not the least, the circumstance that the civil suit for recovery was filed by the accused after the filing of the present complaint also does not have any detrimental impact upon the case of the accused, the said suit having been filed within the period of limitation. More so, when the complainant has also not stated on record that he has filed a suit for recovery against the accused. MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:38:50 +05'30'
29. Once the accused was able to dispel the burden of proof placed upon them by virtue of Section 139 N.I. Act, the onus to prove his case shifted back to the complainant, who was now required to prove his case beyond any reasonable doubt. In view of the fact that the complainants' case is that he had in total advanced a loan of Rs.7,00,000/- to the accused in cash which he could not establish for want of any documentation or any other proof regarding the same, the fact that the amount of the Pg. 31 of 32 C.C. No.11649/2017 MEDHA Digitally signed by MEDHA ARYA ARYA Date: 2022.02.02 17:39:09 +05'30' total loan allegedly advanced by the complainant was disclosed by the complainant only at the stage of his cross-examination and no sooner, and finally, that complainant has admitted payment of Rs 3,90,000/- in his account from the accused, but has been unable to offer a cogent explanation for this payment, are factors on the basis of which this court has reached the conclusion that complainant has not been able to prove the case against the accused beyond any reasonable doubt. Accordingly, accused namely Daljit Singh sole proprietor of M/s. Chadha Cloth House, C4F-126, Ground Floor, Janakpuri, New Delhi is hereby acquitted for the offence punishable under Section 138 N.I. Act with respect to the cheques in question. File be consigned to record room after due compliance with Section 437 A Cr.PC.
MEDHA Digitally signed by
MEDHA ARYA
ARYA Date: 2022.02.02 17:39:30
+05'30'
Announced in open Court on (MEDHA ARYA)
2nd day of February, 2022 M.M. (N.I. Act-03), South-West,
(32 pages) Dwarka Courts, New Delhi
Pg. 32 of 32 C.C. No.11649/2017