Delhi District Court
Kasim vs Ramesh Kumar on 25 January, 2022
1
IN THE COURT OF MS ABHILASHA SINGH : METROPOLITAN
MAGISTRATE - 02 : SOUTH : SAKET COURT : NEW DELHI
KASIM VS RAMESH KUMAR
CC NO. 2627/2017
U/S 138 NEGOTIABLE INSTRUMENTS ACT
JUDGMENT
(1) Serial number of the case : 2627/2017
(2) Name of the complainant : Kasim
S/o Akhtiyar Ahmad
R/o F-1/217-C, Sangam Vihar,
New Delhi-80
(3) Name of the accused, : Ramesh Kumar @ Monu
parentage & address S/o Ram Kripal Gupta
R/o Plot No. 615/2, Devli Village,
Near Master Wali Gali, Main
Holi Chowk, Sangam Vihar,
New Delhi-110080
(4) Offence complained of or proved : 138 Negotiable Instruments
Act, 1881
(5) Plea of the accused : Pleaded not guilty
(6) Date of Institution : 08.02.2017
(7) Date of Judgment : 25.01.2022
(8) Final order : CONVICTION
KASIM VS RAMESH KUMAR
CC NO. 2627/2017
Page 1 of 20
2
BRIEF STATEMENT OF THE REASONS FOR THE DECISION
1. The brief facts of this case as carved out from the complaint are that complainant gave a friendly loan of Rs01 lakh to the accused in the month of August 2014 on two different dates, Rs50,000/- on 16.08.2014 & Rs50,000/- on 27.08.2014 for a period of one year. On persistent requests of complainant, accused issued a cheque bearing no. 000049 dated 10.10.2016 for Rs01 lakh drawn on Bank of India, branch Sangam Vihar in favour of the complainant. The above said cheque on presentation was dishonoured with remarks "Funds Insufficient" vide cheque return memo dated 05.01.2017. Thereafter, on failure of accused to pay the cheque amount, a legal demand notice dated 17.01.2017 which was deemed to be served upon the accused. Despite that payment of the cheque in question was not made by the accused within the stipulated time of 15 days. Hence, the complaint.
2. In the pre-summoning evidence, affidavit by way of evidence Ex.CW1/1 was filed by the complainant. In his affidavit of evidence Ex.CW1/1, the complainant reiterated all the averments made in his complaint and relied on documents which are the copy of voter ID card ExCW1/A (OSR), certificate U/s 65B along with copy of Whatsapp messages ExCW1/B, original cheque in question ExCW1/C, its return memo ExCW1/D, office copy legal notice KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 2 of 20 3 ExCW1/E, postal receipts ExCW1/F, returned memo with returned envelope ExCW1/G and the tracking report ExCW1/H. After closure of pre-summoning evidence, since sufficient material was found against the accused, summoning order u/s 204 CrPC was passed against the accused vide order dated 10.02.2017.
3. Accused appeared pursuant to issuance of summons and notice U/s 251 CrPC was served upon the accused vide order dated 12.07.2017 to which the accused pleaded not guilty and claimed trial. Accused stated that his friend Suresh Kumar had taken loan of Rs20,000/- from the complainant in the year 2015 through him for the purpose of treatment of his father and he stood as a guarantor. Accused further stated that the complainant has taken blank signed cheque from him as guarantee. Accused further stated that his friend Suresh Kumar has repaid the entire loan of Rs20,000/- in installments and he asked the complainant to return the cheque. Accused further stated that in January 2017, complainant along with some bad elements had come to his home and he had taken money from his father and handed over the same to the complainant despite that complainant has misused his cheque and got it dishonoured. Accused further stated that he has no legal liability to pay the cheque amount to the complainant.
4. Thereafter, upon oral application of accused U/s 145(2) N I Act to cross KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 3 of 20 4 examine complainant and his witnesses, the same was allowed vide order dated 12.07.2017 and the accused was given an opportunity to cross examine the complainant and his witnesses.
Complainant examined himself as CW-1 in his post summoning complainant evidence. Sh Akhtiyar Ahmed was examined as CW-2 by way of affidavit ExCW2/A. Both the witnesses were duly cross examined by Sh Markandey Gupta, Ld counsel for the accused. (CW-2 was cross examined after allowing of application U/s 311 CrPC moved on behalf of the accused).
No other witness was produced by the complainant and on oral request of the complainant, CE was closed vide order dated 03.09.2019.
5. Thereafter, the plea of the accused Ramesh Kumar u/s 313 r/w 281 CrPC was recorded vide order dated 01.10.2019, wherein, all material existing on record including the exhibited documents were put to accused. The accused stated that he was employed in a job in the year 2013 and he was not doing any business. Accused further stated that he took a loan of Rs20,000/- from the complainant somewhere in Oct 2014. Accused further stated that since he had taken loan @ interest of 10% pm, he repaid the same ie Rs40,000/- to the complainant. Accused further stated that the complainant did not give him any amount of Rs01 lakh in two parts of Rs50,000/- each as claimed by the complainant that he gave him the amount in presence of his father. Accused KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 4 of 20 5 further stated that he does not even know the father of the complainant. Accused further stated that he came to know him only during the court proceedings. Accused further stated that the Whatsapp messages ie ExCW1/B were communicated between us but the same were regarding the amount of Rs20,000/-. Accused further stated that the cheque in question only bears his signatures and he had not filled the particulars therein. Accused further stated that the handwriting on the cheque was not his. Accused further stated that it was handed over to complainant at the same time when he took the loan of Rs20,000/-. Accused further stated that the complainant presented the said cheque without informing him. Accused further stated that he offered him to pay Rs20,000/- more but he instead told me that he will file a complaint against him. Accused further stated that he received the legal demand notice. Accused further stated that as stated by complainant that he was his tenant in the year 2012 is wrong as he had my own house. Accused further stated that he owed no legal liability towards the complainant.
Accused further expressed his desire to lead defence evidence.
6. Thereafter, matter was listed for DE and accused examined himself as DW-1 in his defence evidence after allowing of application U/s 315 CrPC. Accused was duly cross examined by the counsel for the complainant and thereafter, DE was closed vide order dated 25.02.2020 and matter was fixed for KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 5 of 20 6 final arguments.
7. Sh. S Alam, Ld. counsel for complainant and & Sh Markandey Gupta, Ld. counsel for accused have addressed final arguments.
8. Arguments advanced by both parties heard. Case file perused meticulously.
9. Before dwelling into the facts of the present case, it would be apposite to discuss the legal standards required to be met by both sides. In order to establish the offence under Section 138 of NI Act, the prosecution must fulfil all the essential ingredients of the offence. Perusal of the bare provision reveals the following necessary ingredients of the offence:-
First Ingredient: The cheque was drawn by a person on an account maintained by him for payment of money and the same is presented for payment within a period of 3 months from the date on which it is drawn or within the period of its validity; Second Ingredient: The cheque was drawn by the drawer for discharge of any legally enforceable debt or other liability; Third Ingredient: The cheque was returned unpaid by the bank due to either insufficiency of funds in the account to honour the cheque or that it exceeds the amount arranged to be paid from that account on an agreement made with that bank; Fourth Ingredient: A demand of the said amount has been made by the payee or holder in due course of the cheque by a notice in writing given to the drawer within thirty days of the receipt of KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 6 of 20 7 information of the dishonour of cheque from the bank; Fifth Ingredient: The drawer fails to make payment of the said amount of money within fifteen days from the date of receipt of notice.
The accused can only be held guilty of the offence under Section 138 NI Act if the above-mentioned ingredients are proved by the complainant co-extensively. Additionally, the conditions stipulated under Section 142 NI Act have to be fulfilled.
10. The proof of first, third, fourth and fifth ingredient is not disputed. The complainant has proved the original cheque Ex. CW-1/C which the accused has not disputed as being drawn on his account. The accused has admitted the issuance of cheque in his reply against notice under Section 251 CrPC. It is not disputed that the cheque in question was presented within its respective validity period. The cheque in question was returned unpaid vide return memo Ex. CW-1/D due to the reason, "funds insufficient". The complainant has proved on record legal notice Ex. CW-1/E dated 17.01.2017, and postal receipt Ex. CW-1/F(2P). The receipt of legal notice is also admitted by the accused in his statement recorded under Section 313 CrPC. The fact that the payment was not made within 15 days of the receipt of the legal notice is also not disputed. As such, on the basis of the above, the first, third, fourth and fifth ingredient of the offence under Section 138 NI Act stands proved KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 7 of 20 8 against the accused.
In the present case, the issuance of the cheque in question is not denied. The accused admitted that he had issued filled cheque to the complainant in his reply to notice framed under Section 251 CrPC and also his statement recorded under Section 313 CrPC.
11. As far as the proof of second ingredient is concerned, the complainant has to prove that the cheque in question was drawn by the drawer for discharging a "legally enforceable debt". In the present case, the signature of the accused on the cheque in question is not denied. The accused admitted that he is signatory to the cheque in question in his reply against notice under Section 251 CrPC and also in his statement recorded under Section 313 CrPC. Under the NI Act, once the accused admits the signature on the cheque, certain presumptions are drawn, which result in shifting of onus. Section 118(a) of the NI Act lays down the presumption that every negotiable instrument was made or drawn for consideration. The second presumption is contained under Section 139 of NI Act. Act, once the accused admits drawing of the cheque, certain presumptions are drawn, which result in shifting of onus. The provision lays down the presumption that the holder of the cheque received it for the discharge, in whole or part, of any debt or other liability.
12. The combined effect of these two provisions is a presumption that KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 8 of 20 9 the cheque was drawn for consideration and given by the accused for the discharge of debt or other liability. Both the sections use the expression "shall", which makes it imperative for the court to raise the presumptions, once the foundational facts required for the same are proved {Refer Hiten P. Dalal vs. Bratindranath Banerjee (2001) 6 SCC 16}.
13. Further, it has been held by a three-judge bench of the Hon'ble Apex Court in the case of Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The principles pertaining to the presumptions and the onus of proof were recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarise the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 9 of 20 10 that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence. Section 139 imposed an evidentiary burden and not a persuasive burden. 25.5. It is not necessary for the accused to come in the witness box to support his defence."
14. The presumptions raised under Section 118(b) and Section 139 NI Act are rebuttable presumptions. A reverse onus is cast on the accused, who has to establish a probable defence on the standard of preponderance of probabilities to prove that either there was no legally enforceable debt or other liability. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon (refer M.S. Narayana Menon v. State of Kerala, (2006) 6 SCC 39).
15. Admittedly, accused has issued the cheque Ex. CW-1/C on 10/10/2016. In the instant case, the defence of the accused is four fold. Firstly, the cheque was issued as security cheque for the loan advanced to him or he KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 10 of 20 11 stood as guarantee for the loan. Secondly, that there is deficiency in Cheque Return Memo. Thirdly that the loan amount is already paid by the accused or by the person for whom he stood as guarantee and fourthly, complainant is in the business of money lending and the loan advanced cannot be recovered.
16. First defence:- Nature of cheque In the present case, the accused had submitted that the cheque in question was issued as a security cheque while the complainant had submitted the cheque was issued at the time of advancement of loan. No written receipt or agreement is filed by either party in respect of the nature or the time of delivery of cheque.
In Sripati Singh v. State of Jharkhand, , 2021 SCeJ 1252, (2021-4)204 PLR 687 (SC), the Hon'ble Supreme Court of India held that when a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation.
To prove his case, the complainant had examined his father as KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 11 of 20 12 CW-2. According to him accused is involved in catering business and the loan was advanced in front of him in cash, also the cheque was delivered in his presence. The accused was earlier tenant of the complainant and hence they knew each other and no written agreement in respect of the loan advanced was made.
Mere pleading not guilty and stating that the cheque was issued as security, would not give amount to rebutting the presumption raised under Section 139 of N.I. Act. In order to rebut the presumption under Section 139 of N.I. Act, the accused, by cogent evidence, has to prove the circumstance under which cheque was issued (refer Rohitbhai Jivanlal Patel vs. State of Gujarat 2019 SCC OnLine SC 389).
The accused has taken contradictory defence at different stages of the trial. In the reply to notice under section 251 CrPC dated 12.07.2017 he stated that a blank signed cheque was delivered to the complainant, while he stood as guarantee for the loan advanced by the complainant to one Mr. Suresh Kumar. Later in his statement u/s 313 Cr.PC dated 01.10.2019 he claimed that the cheque was delivered at the time of advancement of loan to himself. Further in his statement as DW-1 dated 16.01.2020 he stated that two blank cheques were issued to the complainant, when he stood as guarantee for the loan advanced to his friend Mr Suresh Kumar.
KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 12 of 20 13 It is pertinent to note that accused took different stands regarding the cheque in question and never examined either Mr Suresh Kumar or his father, who were witness to this whole transaction according to his statements. Therefore, there are contradictions in his stance taken on the nature of cheque at various stages of the trial. Further, CW-2 inspires trust of the court since he maintained his stand throughout the cross examination.
17.Second defence:- Deficiency in Cheque Return Memo The accused has raised a defence that presumption of dishonour of cheque under section 139 NI Act r/w section 146 NI Act shall not be raised in favour of the complainant since the return memo placed on record by the complainant doesn't bear any official stamp or signature of the bank concerned. Section 146 of the NI Act,1881 states that the court shall presume dishonour of cheque upon production by the complainant, of bank's slip or memo having thereon the official mark denoting that the cheque has been dishonoured. The court shall presume the same unless it is disproved by the accused. However perusal of this section reveals language of the provision is couched in a positive way and not negatively. So it is the case of the accused that the presumption u/S139 NI Act cannot be raised against the accused person in its reference with Section 146 NI Act. However, accused never raised KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 13 of 20 14 any issue regarding it until final arguments and had accepted the dishonour of cheque.
Therefore, a technical defect in the return memo that is taken up in defence at the stage as belated as final arguments cannot hold a valid defence in the eyes of law specially when the fact of dishonour of cheque has been admitted by the accused himself at various stages of the trial. Further, where there is a clear admission of fact by a party in the proceedings, the same need not be proved according to the parameters of the law of presumption since admitted facts don't need proof in law. In the present factual matrix, perusal of the cheque return memo Ex. CW-1/D reveals that the same is a computer generated document which doesnt bears the stamp of the bank which issued the same. However, since the same has been admitted by the accused himself, negative presumption shall not be raised against the complainant's case on basis of admission and also since that is not the intent of the legislature as is evident in the language of section 146 NI Act.
18. Third Defence:- Repayment of loan Admittedly, in the reply to notice under section 251 CrPC dated 12.07.2017 and in statement u/s 313 Cr.PC dated 01.10.2019 and further in his statement as DW-1 dated 16.01.2020 the accused conceded that he took a loan from the complainant, the bone of contention is with regard to the amount of KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 14 of 20 15 loan and whether the same is repaid or not.
The complainant had put on record Supreme Court judgment Bir Singh V Mukesh Kumar (Criminal Appeal nos.230-231 of 2019) in order to support his claim that even a blank signed cheque raises a presumption under section 139 of the Negotiable Instrument Act, 1881. However the fact of delivering a blank cheque has to be seen in conjunction with other surrounding circumstances.
In order to prove his case the complainant had examined his father Akhtiyar Ahmed as witness. The father of the complainant, CW-2 had stated that the loan of Rs.100000/- was advanced in cash before him. The cheque in question was also delivered before him although the exact date and time are not known to him. The accused as DW-1 mentioned that his friend namely Mr. Ramesh Kumar and his father had paid the loan but none of these two were called as defence witnesses by the accused.
The accused has taken contradictory defence at the different stages of the suit. In the reply to notice under section 251 CrPC dated 12.07.2017 he stated that his friend Suresh Kumar took a loan of Rs. 20000/- from the complainant and he stood as guarantee for him. Later in his statement u/s 313 Cr.PC dated 01.10.2019 he claimed that he took a loan of Rs. 20000/- at interest of 10% per month. Further in his statement as DW-1 dated KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 15 of 20 16 16.01.2020 he stated that he took a loan of Rs. 20000/- for giving it to his friend Suresh Kumar. Also, accused never examined the said Suresh Kumar or his father who later paid the amount of Rs.40000/-.
The doubt grows by the fact that even after paying the said loan the accused never collected the cheque in question back from the accused. Also father of accused is said to have paid Rs.40000/- to the complainant, even after the said the payment accused never bothered to collect his cheque or file a complaint regarding the same. The testimony of the accused is inconsistent on the point- whether he took the loan for himself or for his friend.
The complainant had put on record whatsapp messages marked as Ex.CW-1/B. In the messages the complainant is constantly demanding money from the accused. However no principal amount due is stated nor is any confirmation of payment by accused highlighted. Regarding amount and payment the whatsapp chat is inconclusive.
The accused took the defence that the complainant had not filed any ITR and so the source of funds to lend is unclear and that presumption u/S 139 NI Act doesn't raise in favour of the complainant.. To rebut the same, R.Narender vs Yakamma Keloth (Criminal Appeal No.2852 of 2018) has been relied upon by the complainant to show that mere non filing of ITR does not absolve the accused of the presumption under section 139 of the NI Act. This KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 16 of 20 17 in itself does not demolish the case of the complainant. The non-filing of Income Tax Return by itself would not mean that the complainant had no source of income and thus, no adverse inference can be drawn in this regard only because of absence of Income Tax Return.
19. Fourth defence:- Complainant is a money lender The accused appearing as DW-1 in his statement dated 16.01.2020 had submitted that the complainant is a money lender and he had already given him two cheques. The law regarding money lending is dealt under The Punjab Registration of Money-lender's Act, 1938.
According to The Punjab Registration of Money-lender's Act, 1938 referring relevant sections of this Act:
3. Suits and applications by money-lenders barred, unless money-lender is registered and licensed. - Notwithstanding anything contained in any other enactment for the time being in force, a suit by a money lender for the recovery of a loan, or an application by a money-lender for the execution of a decree relating to a loan, shall, after the commencement of this Act, be dismissed, unless the money-lender -
(a) at the time of the institution of the suit or presentation of the application for execution; or
(b) at the time of decreeing the suit or deciding the application for execution -
(i) is registered; and
(ii) holds a valid licence, in such form and manner as may be prescribed; or
(iii) holds a certificate from a Commissioner granted under section 11, specifying the loan in respect of which the suit instituted, or the decree in KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 17 of 20 18 respect of which the application for execution is presented; or
(iv) if he is not already a registered and licensed money- lender, satisfies the Court that he has applied to the Collector to be registered and licensed and that such application is pending : provided that in such a case, the suit or application shall not be finally disposed of until the application of the money-
lender for registration and grant of licence pending before the Collector is finally disposed of.
Also money lender is defined under section 2(9):
(9) "Money-lender" means a person, or a firm carrying on the business of advancing loans as defined in this Act, and shall include the legal representatives and the successors-in-interest whether by inheritance, assignment or otherwise, of such person or firm; provided that nothing in this definition shall apply to -
(a) a person who is the legal representative or is by inheritance the successor-
in-interest of the estate of a deceased money-lender together with all his rights and liabilities; provided that such person only -
(i) winds up the estate of such money-lender;
(ii) realises outstanding loans;
(iii) does not renew any existing loan, nor advance any fresh loan;
(b) a bona fide assignment by a money-lender of a single loan to any one other than the wife or husband of such assignor, as the case may be, or any person, who is descended from a common grand-father of the assignor.
The accused may have claimed that the complainant is in the business of money lending, but the complainant had never accepted the same. In the light of said facts it is not possible to declare the complainant as a money lender. Accordingly this case cannot be dismissed as mandated under section 3 of The KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 18 of 20 19 Punjab Registration of Money-lender's Act, 1938. Also, this Court is not a Court of Civil Judicature and so determination of adequate rate of interest in commercial transaction is not within the domain of this court. This court is only restricted to determining whether an offence under Section 138 of Negotiable Instruments Act has been made out against the accused or not. As such, in light of the documentary evidence furnished by the complainant in her support, this court is not of the view that the existing consideration was improbable or illegal. Further, Section 269SS of the Income Tax Act, 1961 prohibits making of any payment in cash above a sum of ₹20,000/-. Thus, any person violating the same would attract imposition of penalties under the said Act. However, the same does not render the said debt un-enforceable or precludes the lender from recovering the same.
The complainant had put on record the judgment Dilip Chawla V Ravinder Kumar (Criminal Revision Petition 607/2016), Sheela Sharma V Mahender Pal (Crl. L.P. 559/2015), Krishna P Morajkar V Joe Ferrao (Criminal Appeal No. 6 of 2012) and Sanjay Mishra V Kanishka Kapoor (Criminal Application No. 4694 of 2008) in order to support his claim that section 271D and Section 269SS of the Income Tax Act does not provide that advancing loan in cash make the transaction null and void.
Although payment of loan amount in cash is in itself not KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 19 of 20 20 prohibited but the fact has to be supported by other evidences. The CW-2 had accepted that the loan was advanced before him. The accused had produced no evidence either to show that the loan advanced was repaid or complainant is in the business of money lending. In absence of the same the court cannot presume that the complaint is a money lender.
CONCLUSION -
20. In view of the above discussion, it is clear that accused has failed to raise a probable defence to rebut the presumption in favour of the holder in due course/complainant and in absence of probable defence the accused Ramesh Kumar is held guilty for punishable under section 138 NI Act and resultantly convicted under Section 138 NI Act in the present case.
Let the convict be heard separately on quantum of sentence. A copy of this judgment be given free of cost to the convict.
Digitally
signed by
Announced in the open court on 25.01.2022 ABHILASHA
ABHILASHA SINGH
SINGH Date:
2022.01.25
10:51:15
+0530
(ABHILASHA SINGH)
Metropolitan Magistrate-02/N I Act/South
Saket Court/New Delhi
Certified that this judgment contains 20 pages and each page bears my signature.
Digitally signed by ABHILASHA ABHILASHA SINGH SINGH Date: 2022.01.25 10:51:20 +0530 (ABHILASHA SINGH) Metropolitan Magistrate-02/N I Act/South Saket Court/New Delhi KASIM VS RAMESH KUMAR CC NO. 2627/2017 Page 20 of 20