Delhi District Court
Deepak Sharma vs . Santosh Singh Cc No. 22142/2018 Page ... on 30 January, 2020
IN THE COURT OF MR. MRIDUL GUPTA, METROPOLITAN MAGISTRATE,
SOUTH-WEST, DWARKA, DELHI
In Re:
CNR No. DLSW02-022599-2018
CC No. 22142/2018
Deepak Sharma
S/o Sh. Sant Kumar Sharma
R/o B-122, School Road,
Uttam Nagar, New Delhi
............Complainant
Versus
Santosh Singh @ Raju
S/o Sh. Shyamal Singh
R/o House No. 119 Sector-5
Ansari Raod Sainik Enclave, Mohan Garden,
Uttam Nagar, New Delhi
.............Accused
(1) Offence complained of or
proved : 138 N.I. Act
(2) Plea of accused : Pleaded not guilty
(3) Date of institution of case : 25.05.2018
(4) Date of conclusion of arguments: 22.01.2020
(5) Date of Final Order : 30.01.2020
(6) Final Order : Convicted
Deepak Sharma vs. Santosh Singh CC No. 22142/2018 Page no. 1 of 13
JUDGMENT
1. Vide this judgment I shall dispose of the complaint filed by the complainant under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the 'Act ').
2. Brief facts relevant for the decision of the case are as under:-
The complainant alleges that he has friendly relations with accused and the complainant advanced friendly loan of an amount of Rs. 1,50,000/- to the accused in September 2017. The accused in discharge of his loan liability gave one cheque of Rs. 1,50,000/- i.e. cheque in question bearing no. 945069 dated 20.03.2018 drawn on State Bank of India, Mohan Garden, Uttam Nagar, Delhi to complainant, with an assurance of its encashment. The complainant presented the cheque in his account maintained at Axis Bank Vikas Puri, Delhi, which was returned with the remarks "Funds Insufficient" vide bank return memo dated 21.03.2018. Thereafter, complainant served a legal notice dated 16.04.2018 upon the accused through his counsel demanding the said amount. Despite service of aforesaid notice, neither any reply was sent nor the money was repaid by the accused. Thereafter, complainant has filed the present complaint case with the submission that accused be summoned, tried and punished according to law.
3. In his pre-summoning evidence, complainant examined himself on affidavit Ex. CW-1/1. He reiterated the contents of complaint and placed on record, original cheque of Rs. 1,50,000/- i.e. cheque in question bearing no. 945069 dated 20.03.2018 drawn on State Bank of India, Mohan Garden, Uttam Nagar, Delhi as Ex. CW-1/A, cheque returning memo dated 21.03.2018 as Ex. CW-1/B, legal demand notice dated 16.04.2018 as Ex. CW-1/C, receipts of speed post as Ex. CW-1/D and tracking reports as Ex.CW-1/E.
4. Upon appreciation of pre-summoning evidence, accused was summoned for an offence punishable under Section 138 of the Act and notice under Section Deepak Sharma vs. Santosh Singh CC No. 22142/2018 Page no. 2 of 13 251 Cr.P.C. for this offence was framed upon accused to which he pleaded not guilty and claimed trial. He admitted his signature on the cheque in question, however denied filling in any of the remaining details. He stated that he had taken only loan of Rs.20,000/- from the complainant in September, 2017. he had given the cheque in question as blank signed security cheque to complainant at time of taking loan. The loan was repayable in monthly installments. He further stated that he repaid some amount to complainant as shown in the collection card. He denied receipt of legal notice. He stated that the cheque in question has been misused by the complainant.
5. The accused moved an application to cross-examine the complainant. Complainant as CW-1 was duly cross examined by the accused. No other witness was produced by the complainant and he closed his evidence by giving a separate statement to this effect. Thereafter, statement of accused under Section 313 Cr.P.C. was recorded in which all the incriminating evidence were put to him to which accused reiterated the stand taken by him in answer to notice U/s 251 Cr.P.C. He further stated that he had repaid only one installment of Rs. 2,400/- to complainant in cash.
6. Accused preferred to lead evidence in his defence and had examined one Smt. Jolly as DW-1 and one Smt. Laxmi Devi as DW-2. Both the witnesses were cross-examined by counsel for complainant. The accused did not examine any other witness and vide his statement, defence evidence was closed.
7. Thereafter, matter was listed for final arguments. It was argued by the Ld. counsel for the complainant that this is a fit case for conviction of the accused as all the essential ingredients of Section 138 of the Act read with Section 139 of the Act have been fulfilled and that the same has been aptly demonstrated by the complainant before the court. It was argued that accused admitted his signatures on the cheque in his plea of defence recorded at the time of framing of notice under Section 251 Cr.P.C as well as in his statement U/s 313 Cr.P.C. He argued that accused never gave reply to the legal demand notice. He also argued that the Deepak Sharma vs. Santosh Singh CC No. 22142/2018 Page no. 3 of 13 record of loan transaction produced by the defence witnesses were with one Zenith Capital and not with the complainant. He argued that accused could not produce any proof to show that the complainant was owner of Zenith Capital. He also argued that whereas in cross-examination of complainant it was suggested that accused had taken loan of only Rs. 19,000/- from complainant out of which Rs. 8,000/- was repaid, on the other hand in the notice under Section 251 Cr. P.C and in statement of accused under Section 313 Cr. P.C it was stated that loan of Rs. 20,000/- was taken by accused out of which Rs. 2,400/- was repaid. The accused did not produce any written document or receipt regarding the alleged repayment of loan to complainant. He also argued that accused never filed a complaint against the complainant for wrongful retention of cheque in question. It was argued that accused failed to raise the probable defence to disprove the case of complainant and to rebut the presumption under Section 139 NI Act. Therefore, accused be convicted for the offence under Section 138 of the Act.
8. Per contra, on behalf of accused, Ld. Counsel reiterated the submissions made by him in his plea of defence at the time of framing of notice under Section 251 Cr.P.C and in his statement under Section 313 Cr.P.C. He argued that as stated by DW-1 and DW-2, complainant used to run firm by the name of Zenith Capital advancing small amounts of loan up to Rs. 20,000/- on interest. He argued that cheque in question was also given as blank signed cheque for such a loan taken by accused from complainant. He argued that in the legal demand notice it was not mentioned as to since when the complainant and accused had friendly relations and when the loan was asked for. He argued that as per evidence affidavit of complainant, the loan was repayable within five months of September 2017 whereas as per the complaint it was repayable on or before 31.01.2018. He argued that complainant did not sufficiently disclose the sources of funds for present loan and also did not show the loan in question in his ITR. He also argued that transaction above Rs. 20,000/- could not be done in cash as per income tax rules and hence, the same was illegal. He also argued that evidence of complainant suffered from material lapses and was not sufficient to establish the case against accused. He submitted that complainant has failed to prove his Deepak Sharma vs. Santosh Singh CC No. 22142/2018 Page no. 4 of 13 case beyond reasonable doubt and accused is entitled to be acquitted of offence u/s 138 of the Act.
9. I have perused the entire record as well as evidence led by the complainant as well as by the accused.
10. Before appreciating the facts of the case in detail for the purpose of decision, let relevant position of law be discussed first:-
For the offence under Section 138 of the Act to be made out against the accused, the complainant must prove the following points, that:-
1. the accused issued a cheque on account maintained by him with a bank.
2. the said cheque had been issued in discharge, in whole or in part, of any legal debt or other liability.
3. the said cheque has been presented to the bank within a period of three months from the date of cheque or within the period of its validity.
4. the aforesaid cheque, when presented for encashment, was returned unpaid/dishonoured.
5. the payee of the cheque issued a legal notice of demand to the drawer within 30 days from the receipt of information by him from the bank regarding the return of the cheque.
6. the drawer of the cheque failed to make the payment within 15 days of the receipt of aforesaid legal notice of demand.
11. The Act raises two presumptions in favour of the holder of the cheque i.e. Complainant in the present case; firstly, in regard to the passing of consideration as contained in Section 118 (a) and secondly, a presumption that the holder of cheque receiving the same of the nature referred to in Section 139 discharged in whole or in part any debt or other liability.
Section 118 of the N.I Act provides :
"Presumptions as to negotiable instruments: Until the contrary is proved, the following presumptions shall be made: (a) of consideration - that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, Deepak Sharma vs. Santosh Singh CC No. 22142/2018 Page no. 5 of 13 negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration;"
Section 139 of the N.I Act further provides as follows:
"Presumption in favour of holder - it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability".
12. For the offence under Section 138 of the Act, the presumptions under Sections 118(a) and 139 have to be compulsory raised as soon as execution of cheque by accused is admitted or proved by the complainant and thereafter burden is shifted to accused to prove otherwise. These presumptions shall be rebutted only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability etc. A presumption is not in itself evidence but only makes a prima facie case for a party for whose benefit it exists. Presumptions both under Sections 118 and 139 are rebuttable in nature. Same was held by the Hon'ble Supreme Court of India in Hiten P. Dalal v. Bratindranath Banerjee [(2001) 6 SCC 16].
13. In the present case, accused has admitted his signatures on the cheque in question, in the notice U/s 251 Cr.P.C. He did not deny his signature on the cheque either in cross-examination of complainant, or his statement U/s 313 Cr.P.C and also in defence evidence. Reference can be made to Judgment of Apex Court in Rangappa v. Mohan, AIR 2010 SC 1898,that, "Once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under Section 139 of the Negotiable Instruments Act has to be raised by the Court in favour of the complainant."
Also in the case of K. Bhaskaran Vs. Sankaran Vaidhyan Balan 1999 (4) RCR (Criminal) 309, it has been held by the Hon'ble Supreme Court as under:
"As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the court to presume that the holder of the cheque received it for the Deepak Sharma vs. Santosh Singh CC No. 22142/2018 Page no. 6 of 13 discharge of any debt or liability."
It has been held in M/s. Kumar Exports v. M/s. Sharma Carpets, [2009 A.I.R. (SC) 1518] that the accused may rebut these presumptions by leading direct evidence and in some and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Further, the burden may be discharged by the accused by showing preponderance of probabilities and the onus on the accused is not as heavy as it is on the complainant to prove his case. In light of aforestated legal position, let us carry out a scrutiny of the evidence led at the trial.
14. In the present case, the complainant by way of an affidavit led his own evidence testifying that cheque was issued to him in discharge of liability, after he had advanced loan of Rs. 1,50,000/- to the accused. The cheque in question, dishonour memo of the cheque and legal demand notice were exhibited on record.
15. The principle defence taken by the accused as brought out from his statement U/s 313 Cr.P.C, is that he had taken a loan of only Rs. 20,000/- from complainant and that he had repaid one EMI of Rs. 2, 400/- to complainant. It is also his defence that cheque in question was given as a blank signed cheque for security purpose at time of taking loan from complainant and same has been misused by complainant.
16. However, perusal of evidence shows that said version of accused is not supported by any material on record. The accused did not examine himself as a witness in present case and did not produce any written receipt or document regarding loan of Rs. 20,000/- or any repayment of Rs. 2,400/- or otherwise to the complainant. The cheque in question has been dishonored vide cheque returning memo dated 21.03.2018 for reason "Funds Insufficient" (Ex. CW-1/B) and not for any other reason. There is no explanation or evidence as to why, if the cheque Deepak Sharma vs. Santosh Singh CC No. 22142/2018 Page no. 7 of 13 was not returned after repayment of some amount of loan, stop payment instructions were not issued by accused to bank. It is also not the case of the accused that he filed any complaint against the complainant for wrongful retention or misuse of his cheque. In light of the above, the version of accused that he had taken a loan of Rs. 20,000/- only from complainant out of which Rs. 2,400/- has been repaid, is not credible, as the same is not supported by any evidence on record.
17. The defence witnesses, DW-1 and DW-2 also deposed that complainant advances loans on interest by the name of Zenith Capital. They also produced collection cards Ex. DW-1/1 (OSR )and Ex. DW-2/1 (OSR), purportedly issued by the complainant to show the repayment of installments to the said zenith capital. However, perusal of this record reveals that said collections card do not bear name of complainant or his signatures or any acknowledgement at any place. Moreover, in cross-examination of DW-1 and DW-2 also complainant has clearly denied having issued any such collection cards or running any company by name of Zenith Capital. Thus, the onus to show that said collection cards were issued by complainant was on the accused, which he has failed to discharge. Even, otherwise the testimony of DW-1 and DW-2 and the collection cards produced by them relate to their own loans and have nothing to do with the loan of accused and the cheque in question. Thus, the testimony of DW-1 and DW-2 are of no assistance to case of accused.
18. Regarding the averment that cheque was given as blank signed cheque which was misused by complainant, the same is also not a credible defence. Even if for the sake of argument, it is considered that the accused gave a blank signed cheque to the complainant, once accused has admitted his signatures on the cheque he cannot escape his liability on the ground that the particulars have not been filled in by him, or that signatures on cheque and the contents are filled in different writings and inks. When such a cheque containing blanks is signed and handed over, it means that the person signing it has given implied authority to the holder of the cheque, to fill up the blank which he has left. It has been clearly Deepak Sharma vs. Santosh Singh CC No. 22142/2018 Page no. 8 of 13 laid down in Section 20 of Negotiable Instruments Act 1881, that where one person signs and delivers to another a Negotiable Instrument either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives, "prima facie authority to the holder thereof to make or complete, as the case maybe, upon it a negotiable instrument". In the case of Satish Jayantilal Shah v. Pankaj Mashruwala and Anr. 1996 Cri. L. J. 3099, it has been held that:
"no law provides that in case of any negotiable instruments entire body has to be written by maker or drawer only."
In the case of Moideen v. Johny 2006 (2) DCR 421, it has been held that when a blank cheque is issued, the drawer gives an authority to the person to whom it is issued, to fill it up at the appropriate stage with necessary entries and to present it to the bank. Thus, the accused can not dispute the contents of the cheque in question.
19. Ld. Counsel for accused also argued that in the legal demand notice it was not mentioned as to since when the complainant and accused had friendly relations and when the loan was asked for. He argued that as per evidence affidavit of complainant, the loan was repayable within five months of September 2017 whereas as per the complaint it was repayable on or before 31.01.2018. He argued that complainant did not sufficiently disclose the sources of funds for present loan. He argued that these instances cast doubt on case of complainant.
20. However, these arguments of Ld. Counsel for accused are also devoid of any merit, as perusal of the evidence shows that accused has not denied financial transactions with complainant and also admitted the factum of taking loan from the complainant, though it is averred that accused took only loan of Rs.20,000/-, and not Rs.1,50,000/- from the complainant. This also shows that the accused has admitted the financial capacity of complainant to advance loan to him. Moreover complainant also deposed that he is running an NGO and also has property dealing business. The complainant also disclosed in complaint that accused approached him for loan in September 2017. Hence averments as to Deepak Sharma vs. Santosh Singh CC No. 22142/2018 Page no. 9 of 13 since when the parties had friendly relations, when loan was asked for, or as to sources of funds of complainant, do not stand ground. Moreover the statement as per evidence affidavit of complainant that the loan was repayable within five months of September 2017 whereas as per the complaint it was repayable on or before 31.01.2018, does not bring out any major inconsistency in the time period of repayment as such. Furthermore the complainant was never confronted with both the statements in his cross-examination, to bring out any material inconsistency.
21. Reliance in this regard can also be placed on decision of Hon'ble High Court of Delhi, in Sanjay Arora V. Monika Singh, Crl. Appeal No. 98/2017, dated 31.05.2017, wherein it was observed:
"Mere admission of the complainant that he was earning only Rs. 12,000 per month from small business or his failure to file income tax returns, or his omission to produce the bank passbook or to examine Chhotu as a witness in corroboration, are inconsequential. In order to rebut the statutory presumption, it was the burden of the respondent to prove the facts she had pleaded in answer to the notice under Section 251 Cr.P.C. No material in support of such plea having come on record, the statutory presumption under Section 139 Negotiable Instruments Act in the case at hand has not been rebutted."
In the present case also the defence taken by the accused is that he had taken loan of only Rs. 20,000/- from complainant and repaid some amount of the loan taken from the complainant. However he has failed to produce any material in support of his plea of defence.
22. Ld. Counsel for accused also argued that complainant did not show the loan in question in his ITR. He also argued that transaction above Rs. 20,000/- could not be done in cash as per income tax rules and hence, the same was illegal. These arguments of Ld. Counsel for accused is also devoid of any merit as though the amount of loan is not shown in ITR of complainant, it is trite law that mere non disclosure does not defeat claim of complainant. Moreover, the provisions of Section 269SS of Income Tax Act, 1961, prohibit taking or accepting loan over amount of Rs. 20,000/- in cash and do not make the amount of loan Deepak Sharma vs. Santosh Singh CC No. 22142/2018 Page no. 10 of 13 given in cash, unrecoverable in proceedings under Section 138 of the Act. Reliance in this regard can be placed upon the decision of Hon'ble High Court of Delhi in Lekh Raj Sharma v. Yashpal Sharma, (Crl.L.P. 567/2014),D.O.D. 30.06.2015, wherein it was observed:
".......21. The finding that, as the amount of loan disbursed to the respondent was not shown in the balance sheet and income tax return, the appellant could not be said to have proved its case beyond reasonable doubt, is also erroneous.In this regard, reference may be placed on the decisions of the Bombay High Court in:
........
ii) Mr. Krishna P. Morajkar vs. Mr. Joe Ferrao, 2013 CRIJ (NOC) 572 Bombay (Decided on 19.07.2013), wherein the Court observed:
"The underlined observations do not disclose as to where can one find a prohibition on recovering amounts not disclosed in income tax returns. With utmost humility, I have to state that I have not come across any provision of Income Tax Act, which makes an amount not shown in the income tax returns unrecoverable. The entire scheme of the Income Tax Act is for ensuring that all amounts are accounted for. If some amounts are not accounted for, the person would be visited with the penalty or at times even prosecution under the Income Tax Act, but it does not mean that the borrower can refuse to pay the amount which he has borrowed simply, because there is some infraction of the provisions of the Income Tax Act. Infraction of provisions of Income Tax Act would be a matter between the revenue and the defaulter and advantage thereof cannot be taken by the borrower. In my humble view, to say that an amount not disclosed in the income tax returns becomes irrecoverable would itself defeat the provisions of Section 138 of the Negotiable Instruments Act."
Therefore, though non disclosure of loan in ITR or non-compliance of provisions of Section 269SS of Income Tax Act,1961, may invite penal action under the said Act, however the same cannot operate to undue advantage on borrower who can refuse to pay the loan amount taken by him on this ground.
23. The accused has also denied receipt of legal demand notice under section 138 of the Act. However, it is worth noting that the address of the accused as mentioned in legal demand notice is H No. 119, Sector 5, Sainik Enclave, Mohan Garden, Uttam Nagar, Delhi, which is the same as his address in notice under Deepak Sharma vs. Santosh Singh CC No. 22142/2018 Page no. 11 of 13 section 251 Cr.P.C., statement of accused under section 313 Cr.P.C, and his bail bonds. Moreover the accused has not brought on record any evidence to show that he was not residing at above address at time of legal notice. The above shows that legal notice was sent at correct address of accused. Once the legal notice is proved to be sent by post to correct address of accused then the presumption u/s 27 of General Clauses Act, 1897 arises and it shall be presumed unless proved contrary, that legal notice sent to address of accused was delivered to him. In M/s Darbar Exports and Ors. Vs. Bank of India, 2003 (2) SCC (NI) 132 (Delhi), the court held that a presumption of service of notice is to be drawn where the notice is sent through registered post as well as UPC on correct address. In the light of the same the legal notice is deemed to have been served upon the accused. The accused has failed to adduce any evidence to rebut the presumption of due service. As such, the legal notice stood served upon the accused but no payment was made despite the service nor any reply sent to the same. In Rangappa v. Mohan (supra), the Apex Court held:
"Furthermore, the very fact that the accused had failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version."
The decisions in Santosh Mittal v. Sudha Dayal, 2014 (8) AD (Delhi) 268, and G.L. Sharma v. Hemant Kishor 2015 (2) AD (Delhi) 340, are also to the same effect.
24. Moreover as per the dicta of Apex Court in C.C. Alavi Haji vs Palapetty Muhammed & Anr, 2007 Cr. L.J. 3214, If the accused did not receive the legal notice, he could have made payment of the cheque amount within 15 days of receipt of summons from this court and could have prayed for rejection of the complaint, but this course of action has not been adopted by accused. Hence the defence of non-service of legal notice is without substance.
25. In view of the above, this court is of the considered opinion that apart from not raising a probable defence, the accused was not able to contest the existence Deepak Sharma vs. Santosh Singh CC No. 22142/2018 Page no. 12 of 13 of a legally enforceable debt or liability. The complaint disclosed the existence of a legally enforceable debt or liability vide the cheque in question, return memo and the legal notice brought on record. However, accused failed to rebut the presumption in favour of complainant either on the basis of other material available on record or by adducing any cogent defence evidence. There is sufficient material on record to conclude that complainant has successfully proved his case beyond reasonable doubt.
26. Accordingly, the accused is convicted for the offence under Section 138 of Negotiable Instruments Act, 1881.
27. Let the convict be heard on quantum of sentence.
28. Copy of Judgment be supplied to the convict free of cost.
Digitally signed by MRIDUL MRIDUL GUPTA
GUPTA Date:
2020.01.30
13:19:51 +0530
ANNOUNCED IN THE OPEN COURT (MRIDUL GUPTA)
TODAY i.e. 30th JANUARY 2020 METROPOLITAN MAGISTRATE
DWARKA DISTRICT COURTS/ DELHI
Deepak Sharma vs. Santosh Singh CC No. 22142/2018 Page no. 13 of 13