Delhi District Court
Hdfc Bank vs Prabhakar Kumar Shaw on 28 July, 2011
IN THE COURT OF SH. NAVJEET BUDHIRAJA, METROPOLITAN MAGISTRATE,
SPECIAL COURT - 06, DWARKA COURTS, NEW DELHI.
HDFC BANK
VS
PRABHAKAR KUMAR SHAW
P.S.: I.P.ESTATE
U/S: 138 NEGOTIABLE INSTRUMENTS ACT
1.Serial No./CC No. of the : 11315/1 case
2. Name of the complainant : HDFC Bank Express Building, Bahadurshah Zafar Marg, New Delhi - 110 002
3. Date of institution : 16.03.2009
4. Name of the accused, his : Prabhakar Kumar Shaw parentage and residence C29 Gali No. 3, Sita Puri, Delhi - 110 045
5. Date when judgment was : 04.07.2011 reserved
6. Date when judgment was : 28.07.2011 pronounced CC No. 11315/1 1 of 24
7. Offence complained of and : Section 138 Negotiable Instruments Act proved
8. Plea of accused : Pleaded not guilty and claimed trial
9. Final Judgment : Accused found guilty of offence under Section 138 Negotiable Instrument Act and convicted for the same.
: J U D G M E N T : 1 Vide this judgment, I shall decide the present complaint filed by the complainant HDFC Bank under Section 138 of Negotiable Instruments Act (hereinafter referred to as "NI Act") against the accused Prabhakar Kumar Shaw. 2 Factual matrix of the present case is that the complainant is a bank incorporated under the Companies Act, 1956 having its office at New Delhi. It is averred that accused availed a personal loan from the complainant vide loan number 91610596 and in partial discharge of his liability towards the complainant, the accused issued cheque bearing number 484857 dt. 05.12.2008 drawn on ABN Amro Bank for an amount of Rs.22,086/ which when presented for encashment returned unpaid vide returning memo dt. 15.12.2008 for the reason "Insufficient Funds". Thereafter, complainant through its counsel sent a notice in writing to the accused through Registered AD and courier on 10th January, 2009 demanding the payment of the said cheque within 15 days of the receipt of the notice. It is further averred that accused failed to make the payment thereby committing offence under Section 138 NI Act for the prosecution of which the CC No. 11315/1 2 of 24 present complaint has been filed.
3 In complainant's pre summoning evidence complainant got examined Sh. Gopal Ranga, Authorized Representative [hereinafter referred to as "AR"] of the complainant who tendered his evidence by way of affidavit Ex.CW1/1. Other documents relied upon the AR for the complainant are cheque Ex.CW1/B, returning memo Ex.CW1/C, legal demand notice Ex.CW1/D and postal receipt Ex.CW1/E. 4 After taking cognizance of the offence summons were issued to the accused post which accused entered appearance and was admitted to bail on 11th August, 2010. Thereafter, notice under Section 251 Cr.P.C encompassing all the accusations against the accused was served upon the accused to which he pleaded not guilty and specified his defence. Thereafter, matter got fixed for Defence Evidence. 5 In the meanwhile, accused moved an application under Section 145 (2) NI Act for recalling the complainant witness for cross examination. The said application was allowed and matter got fixed for cross examination of the complainant. In cross examination, AR for the complainant deposed that he is the employee of the complainant bank since March, 2008. AR for the complainant further deposed that loan of Rs.2,68,000/ approximately was disbursed in favour of the accused by Centurion Bank of Punjab in the year, 2007 after the execution of the loan agreement between the parties. AR for the complainant further stated that the agreement was not executed in is presence and also stated that he did not remember the loan account number. AR further stated that the personal loan number 91610596 mentioned in the complaint in the new loan CC No. 11315/1 3 of 24 account number pertained to the year, 2008. AR volunteered that the new account number was generated after the merger of the Centurion Bank of Punjab with HDFC. AR further stated that the cheque in question was issued by the accused in the year 2008 but he did not remember the month as well as the date on the cheque in question. AR further stated that the cheque in question was given towards the defaulted installments and the amount of the cheque in question is approximately Rs. 22,000/. AR denied the suggestion that the cheque is a property of the Centurion Bank of Punjab and stated that the cheque was transferred to the Centurion Bank of Punjab after the merger. AR further denied the suggestion that Centurion Bank of Punjab had taken blank cheques from the accused and complainant HDFC Bank has misused those cheques, AR further stated that the EMI of the accused was Rs.7,562/ but he cannot tell as to for which month the cheque of EMI was issued. AR admitted that the returning memo Ex.CW1/C does not contain the account number of the accused. AR denied the suggestion that the document Ex.CW1/C is forged and fabricated. AR admitted that the loan account number LOME20110000493917 pertains to the account of the accused but volunteered that the same is old loan account number before the merger. Thereafter, receipts Ex.CW1/D1 and Ex. CW1/D2 were shown to the AR who admitted that the receipt Ex.CW1/D1 was issued by the complainant HDFC bank and Ex.CW1/D2 was issued by Centurion Bank of Punjab and the loan account number is the same in both the receipts. AR denied the suggestion that accused has already repaid the loan amount to the Centurion Bank of Punjab as well as the HDFC Bank and also denied the suggestion that 9 cheques given to the Centurion Bank of Punjab in the year 2007 at the time of taking the loan has been taken and misused by the HDFC bank. Lastly, AR stated that he did not know any Sanjeev Kumar and that accused has entered into the loan transaction with one Sanjeev CC No. 11315/1 4 of 24 Kumar and Vikas Kumar of the Centurion Bank of Punjab.
6 Thereafter, statement of the accused was recorded under Section 313 Cr.P.C r/w 281 Cr.P.C wherein accused admitted to have taken loan from the Centurion Bank of Punjab, but stated that he did not remember the amount of the loan. Accused further stated that he has issued the cheque in question as blank for security purpose at the time of availing of the loan and not towards the discharge of any liability. Accused denied to have received any legal demand notice from the complainant. He further stated that he has already repaid a substantial amount of his loan and was assured by one Mr. Sanjeev Kumar and Mr. Vikas Kumar that NOC will be issued to him. Lastly, he stated that he wanted to lead defence evidence.
7 In defence evidence, accused got examined himself as DW1 and stated that one Mr. Sanjeev Kumar and Mr.Vikas Kumar executives of the Centurion Bank of Punjab approached him in the month of March, 2007 who offered him the credit card facility and the loan facilities. He further deposed that after 15 days he gave 9 blank cheques to the executives of the bank for the purpose of security and was informed by the complainant that some amount of the loan will be credited in his account. He further stated that he did not know how much amount was credited and also that complainant told him to repay the amount through ECS to which he agreed and approximately Rs.7,000/ per month was deducted from his account through ECS. He further deposed that he had made certain payments to the complainant company as well as Centurion Bank of Punjab, the receipts of which are Ex.DW1/1 to Ex.DW1/8. DW1 further deposed that one Sanjeev Kumar used to take cash from him without issuing any receipt in this regard. Accused further CC No. 11315/1 5 of 24 deposed that he has repaid his loan amount and has no liability to pay any amount towards the cheque in question. He further stated that the cheque in question was given blank and also stated that he did not receive any legal demand notice from the complainant. Lastly, he stated that the loan agreement number 91610596 mentioned in the complaint does not pertain to him. In cross examination DW1 stated that he has not taken any loan from the HDFC bank but has availed the facility of credit card from the Centurion Bank of Punjab. DW1 further stated that he used to pay loan amount through cash, cheque or ECS, but stated that he did not remember how much amount he has paid till December, 2008. He further admitted that the cheque in question is signed by him. He also admitted that the address mentioned in the legal demand notice is his correct address where he is residing. DE stood closed vide order dt. 21.05.2011. 8 After adducing defence evidence, Learned counsels for complainant and accused addressed their respective final arguments at length. Before appreciating the evidences and arguments of both the parties, it would be appropriate to advert to the relevant provisions of N.I Act.
Section 138 of N.I Act reads as under
Section 138 of NI Act reads as under: S. 138 Dishonour of cheque for insufficiency, etc., of funds in the account - where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an CC No. 11315/1 6 of 24 agreement make with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to twice the amount of the cheque or with both.
Provided that nothing contained in this section shall apply unless
(a) The cheque has been presented to the bank within a period of six months from the bank within a period of six months from the date on which it was drawn or within the period of its validity, whichever is earlier.
(b) The payee or the holder in due course of the cheque, as the case may be, makes 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; and
(c) the drawer of such cheque fails to make the 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 15 days of the receipt of the said notice.
Explanation - For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
9 Section 138 of the NI Act has three ingredients, viz., (i) that there is a legally enforceable debt; (ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which pre supposes a legally enforeceable debt; and (iii) that the cheque so issued had been returned due to insufficiency of funds. The proviso appended to the said section provides for compliance of legal requirements before a compliant petition can be acted upon by a court of law.
CC No. 11315/1 7 of 24 10 I would now embark on the evidences and rival contentions advanced by counsel of the parties and give my findings thereon.
Ld. Counsel for the accused has placed reliance on the following judgments : ➢ Jankivashdeo Bhojwani and Anr. Vs. Indusind Bank Ltd., AIR 2005 Supreme Court, 439.
➢ M.A. Nachimuthu Vs. Thiru N Ravichandran, 2007 (2) DCR 334 Madras, High Court.
➢ M/s Jain Irrigation Systems Ltd. Vs. Arvind Irrigating Services, 2006 (2) DCR 602 Bombay, High Court.
➢ K. Narayana Nayak Vs. M. Shivarama Shetty, 2009 (1) DCR 403 Karnataka, High Court.
➢ A. Sreekantan Nair Vs. P. Valsarajan, 2007 (2) DCR 338 Madras, High Court.
11 Counsel for the complainant has contended that accused had availed loan from Centurion Bank of Punjab, which got merged with complainant HDFC Bank pursuant to the order dated 20.05.2008 of RBI and towards the partial discharge of his liability, issued cheque in question amounting to Rs 22,086/ which got dishonoured and thereafter legal notice was sent to the accused but he failed to make any payment thereby committing offence under section 138 of NI Act. On the other hand, it is contended by learned counsel for the accused that accused availed the loan from Centurion Bank and not HDFC Bank and also that loan account number mentioned in the complaint i.e 91610596 does not pertain to accused, in fact his loan account number was LOMP CC No. 11315/1 8 of 24 20110000493917. It is further contended that accused was not informed about the merger of Centurion Bank with HDFC bank and also about the change in the loan account number, therefore accused has no liability towards the complainant HDFC Bank. 12 Perusal of the complaint and affidavit Ex.CW1/1 of complainant witness show that Centurian Bank of Punjab got amalgamated with HDFC Bank pursuant to the order dated 20.05.08 of Reserve Bank of India. AR for the complainant also stated in his cross examination that loan account number 91610596 is the new loan account number of the accused generated pursuant to the amalgamation of Centurian Bank with HDFC Bank. Now the question arises is that will the amalgamation of the Centurian Bank, from which accused availed the loan, with HDFC Bank affect the liability of the accused towards complainant HDFC Bank.
13 We cannot loose sight of the fact that in the modern corporate world, for the purpose of growth and development mergers, acquisitions and amalgamations have become order of the day. So in such a scenario, if one bank gets merged with another bank then will the liability of the borrower of the loan towards that bank gets extinguished. In my opinion, certainly not. Even though in the present complaint, accused was not aware of the merger or the change in his loan account number, still the fact remains that admittedly he had availed the loan from the Centurian Bank which got merged with HDFC Bank and therefore will remain liable towards new entity for the purpose of repaying the loan. Therefore, the argument of learned counsel for the accused that accused has no liability towards the complainant bank cannot be sustained.
CC No. 11315/1 9 of 24 14 Learned counsel for the accused has also contended that the complaint filed
by the complainant through authorized representative is not maintainable in view of Judgment of the Apex court in Janki Vashdeo (supra) which says that power of attorney holder cannot depose in place and instead of principal.
15 With regard to the aforesaid contention, learned counsel for the accused has relied upon Janki Vashdeo (supra) which says that power of attorney holder cannot depose in place and instead of principal. It is pertinent to mention that in the aforesaid Judgment the principal is a natural person who is capable of entering into witness box to depose whereas in the complaint in hand the principal is not a natural person but an artificial person not capable of entering into witness box so it has to appoint a representative who can act, appear, plead and depose on its behalf, therefore, the judgment cited by learned counsel for the accused is not applicable to the facts of the present complaint.
16 It is also contended by learned counsel for the accused that accused had given 9 blank cheques to the Centurion Bank of Punjab for security purpose and cheque in question is one of those blank cheques which has been misappropriated by the complainant by filling the same and therefore there is no liability of the accused. With regard to this argument, I would like to refer to Section 20 of N.I Act which contains provision regarding "inchoate instrument".
20. Inchoate stamped instruments - Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in [India], and either wholly blank of having written thereon an incomplete negotiable CC No. 11315/1 10 of 24 instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provide that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder.
17 In Moideen v. Johny 2007(1) Civil Court Cases 220 (Kerala) , it has been held by Kerala High Court in Paragraph 6 that: "...........Even if a blank cheque is issued as security, the person in possession of the blank cheque can enter the amount of the liability and present it to the bank. When a blank cheque is issued by one to another, it gives an authority on the person to whom it is issued, to fill up at the appropriate stage with the necessary entries regarding the liability and to present it to the bank."
18 In "Ravi Chopra v. State and another" 2008 (102) DRJ 147, it was held by Hon'ble Justice Murlidhar, that even if the body of the cheque is filled in different ink by some person other than the accused, still the instrument will be valid. Following paragraphs are worth mentioning: "18. Section 20 NI Act talks of "inchoate stamped instruments" and states that if a person signs and delivers a paper stamped in accordance with the law and "either wholly blank or have written thereon an incomplete negotiable instrument" such person thereby gives prima facie authority to the holder thereof "to make or complete as the case may be upon it, a negotiable instrument for any amount specified therein and not exceeding the amount covered by the stamp." Section 49 permits the holder of a negotiable instrument CC No. 11315/1 11 of 24 endorsed in blank to fill up the said instrument "by writing upon the endorsement, a direction to pay any other person as endorsee and to complete the endorsement into a blank cheque, it makes it clear that by doing that the holder does not thereby incurred the responsibility of an endorser." Likewise Section 86 states that where the holder acquiesces in a qualified acceptance, or one limited to part of the sum mentioned in the bill, or which substitutes a different place or time for payment, or which, where the drawees are not partners, is not signed by all the drawees, all previous parties whose consent has not been obtained to such acceptance would stand discharged as against the holder and those claiming under him, unless on notice given by the holder they assent to such acceptance. Section 125 NI Act permits the holder of an uncrossed cheque to cross it and that would not render the cheque invalid for the purposes of presentation for payment. These provisions indicate that under the scheme of the NI Act an incomplete cheque which is subsequently filled up as to the name, date and amount is not rendered void only because it was so done after the cheque was signed and delivered to the holder in due course."
"19. The above provisions have to be read together with Section 118 NI Act which sets out various presumptions as to negotiable instruments. The presumption is of consideration, as to date, as to time of acceptance, as to transfer, as to endorsement, as to stamp. The only exception to this is provided in proviso to Section 118 which reads as under:
Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him."
"20. A collective reading of the above provisions shows that even under the scheme of the NI Act it is possible for the drawer of a CC No. 11315/1 12 of 24 cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up at a subsequent point in time and presented for payment by the drawee. There is no provision in the NI Act which either defines the difference in the handwriting or the ink pertaining to the material particulars filled up in comparison with the signature thereon as constituting a 'material alteration' for the purposes of Section 87 NI Act. What however is essential is that the cheque must have been signed by the drawer. If the signature is altered or does not tally with the normal signature of the maker, that would be a material alteration. therefore as long as the cheque has been signed by the drawer, the fact that the ink in which the name and figures are written or the date is filled up is different from the ink of the signature is not a material alteration for the purposes of Section 87 NI Act."
19 Also in a recent Judgment in "D. Atchyutha Reddy v. State of A.P"
through Public Prosecutor 2010(2) RCR 880(A.P) it was held that cheque could be filled up by anybody if it is signed by the account holder of the cheque. It was further held that body of the cheque need not necessarily be written by the accused and it can be in the handwriting of anybody else or typed on a machine, so long as the accused does not dispute the genuineness of the signature on the cheque.
20 From the aforesaid, it is amply clear that to fasten criminal liability upon the accused under Section 138 of the Act it is not necessary that body of the cheque must be filled by the accused. What is important is the signature on the cheque which in the present complaint is not disputed by the accused in his statement under Section 313 of Cr.P.C and also in his cross examination. Further, it is clear from the aforesaid judgment that body of the cheque need not be in the handwriting of the accused, it can be in the CC No. 11315/1 13 of 24 handwriting of anybody else or typed on a machine. Also, a suggestion regarding the giving of blank cheques by the accused was put to the complainant witness but the same was denied by him. Hence, this argument of the learned counsel for the accused is without any force.
21 Another limb of argument raised by learned counsel for accused is that the complainant has not filed any loan documents and statement of account of the accused showing his liability on the date of the cheque in question on record and also not stated the date, month or year of the loan. On the other hand, learned counsel for complainant has contended that although loan documents have not been placed on record but accused has not denied the factum of the loan and moreover there are presumptions under Section 118 and 139 of N.I Act in favour of the holder of the cheque which are to be rebutted by accused and in the present complaint accused has not led any cogent evidence thereby failing to rebut those presumptions.
22 Although, complainant being a financial company should have produced on record the loan documents but since it is a criminal proceeding under Section 138 of N.I Act pertaining to the dishonoured cheque and not a civil suit of recovery, I opine that it is not incumbent on the complainant to place on record such documents particularly when in the present complaint dealing between the accused and the complainant company has not been disputed. The foundation of liability under section 138 of the N.I Act is the issue of the cheque for consideration and not the existence of the original consideration. The significance and efficacy of section 138 of N.I Act will be lost if courts were to insist on proof of original transaction or consideration in every indictment under section 138 of the CC No. 11315/1 14 of 24 N.I Act. It is not the burden on the complainant in every case so long as the presumption under section 139 stands to plead, prove and establish the original transaction to discharge the liability in which the cheque is issued. Assignment of such a burden on the complainant will do disservice to the object, purpose and the legislative dream which prompted the legislature to enact section 138 of the N.I Act namely the introduction of a commercial morality among the polity where cheque transactions will be as effective, efficient and efficacious as cash transactions. That is essential and necessary in a vibrant modern economy.
23 Accused has admitted in his statement under Section 313 of Cr.P.C and also in his cross examination that he had availed loan facility from the Centurion Bank of Punjab which later on got merged with complainant HDFC Bank, so in such a scenario non production of loan documents, in my opinion, is not fatal to the case of the complainant.
24 Another limb of argument advanced by the learned counsel for the accused is that legal demand notice as envisaged by proviso to Section 138 of the Act has not been received by the accused which is sine qua non for prosecution of the complaint under S.138 of the Act. In retort, learned counsel for complainant averred that statutory notice dated 10.01.2009 was issued at the correct address of the accused by registered post and notice is deemed to be served by virtue of presumption under section 27 of General Clauses Act.
CC No. 11315/1 15 of 24 25 It is no longer res integra that service of legal demand notice calling upon
the accused to make the payment in 15 days is indispensable for prosecution under Section 138 of the Act. Before giving my finding on the aforesaid issue, a reference to S.27 of the General Clauses Act will be useful. The section reads as under:
"S.27 Meaning of service by post Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression "serve" or either of the expressions "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post."
26 The Supreme Court in "K. Bhaskaran Vs. Sankarn Vaidhyan Balan"
(supra), wherein it has been held as under:
"(24) No. doubt Section 138 of the Act does not require that the notice should be given only by "post". Nonetheless the principle incorporated in Section 27 (quoted above) can profitably be imported in a case where the sender has despatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such nonservice. Any other interpretation can lead to a very tenuous position as the drawer of the cheque who is liable to pay the amount would resort to the strategy of subterfuge by successfully avoiding the notice."
CC No. 11315/1 16 of 24
27 In "V. Raja Kumari vs P. Subbarama Naidu & Anr" 2004 (8) SCC 774 , it
was held:
In "Madhu v. Omega Pipes Ltd." [1994 (1) ALT (Crl.) 603 (Kerala)] the scope and ambit of Section 138 clauses (b) and (c) of the Act were noted by the Kerala High Court and Justice K.T. Thomas (as His Lordship was then) observed as follows:
"In Clause (c) of the proviso the drawer of the cheque is given fifteen days from the date 'of receipt of said notice' for making payment. This affords clear indication that 'giving notice' in the context is not the same as receipt of notice. Giving is the process of which receipt is the accomplishment. The payee has to perform the former process by sending the notice to the drawer in his correct address, if receipt or even tender of notice is indispensable for giving the notice in the context envisaged in Clause (b) an evader would successfully keep the postal article at bay at least till the period of fifteen days expires. Law shall not help the wrong doer to take advantage of his tactics. Hence the realistic interpretation for the expression 'giving notice' in the present context is that, if the payee has dispatched notice in the correct address of drawer reasonably ahead of the expiry of fifteen days, it can be regarded that he made the demand by giving notice within the statutory period. Any other interpretation is likely to frustrate the purpose for providing such a notice."
28 In "M/s Indo Automobiles v. M/s Jai Durga Enterprises and others"
2008 (4) RCR (Civil) it was held that once the notice demanding payment has been sent by registered post with acknowledgment due to a correct address, it must be presumed that the service has been made effective.
CC No. 11315/1 17 of 24 29 In M/s Prakash Jewellers v. M/s A .K Jewellers 2002 (2) JCC 1171,
division bench of the Delhi High Court has specifically opined that the notice under section 138 of NI Act can be served either through registered post or UPC. It is also held that if notice is even dispatched by UPC with correct address of the drawer written on it, presumption of the service of the said notice arises. Relevant discussion is contained in para 10 of the judgment which is reproduced below:
10 "As it is section 138 does not prescribe any mode for giving of demand notice by the payee or holder of the cheque. But where such notice is served by post through registered post or postal certificate etc. with the correct address of the drawer written on it , it would raise a presumption of service unless the drawer proves that it was not received by him in fact and that he was not responsible for such nonservice. This is in tune with the principle embodied in section 27 of the General Clauses Act or even Rule 19 A of Order
11.Section 27 of General Clauses Act deals with the presumption of service of notice sent by post and provides that service of such notice shall be deemed to have been affected unless the contrary is proved. This principle is equally applicable to the service of notice for purpose of section 138 of the Negotiable Instruments Act also......."
30 So it is quite clear from S.27 of General Clauses Act and catena of Judgments that when a letter is properly addressed, prepaid and posted by registered post, service shall be deemed to be effected at the time at which the letter would be delivered in the ordinary course of post.
31 As can be seen from Ex.CW1/D and Ex.CW1/E, the statutory notice was addressed to the residence of the accused at C29, Sita Puri, New Delhi - 45. Although, CC No. 11315/1 18 of 24 accused has denied receiving any legal notice from the complainant in his statement and examination in chief but he has admitted in his cross examination that the address mentioned in the legal notice is correct and he has been residing at the said address. Moreover summons were issued to the accused on the address mentioned in the complaint which is same as on legal notice post which accused entered appearance. Also the Apex Court in K.Bhaskaran (supra) has held that where the sender has despatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such nonservice. So, the burden lies upon the accused to prove that he has not been served but he has failed to place on record any material to this effect. In the circumstances of the case and for the above reasons, I hold that statutory notice was sent to the correct address of the accused and therefore I hold that the notice is deemed to be served. The contention of learned counsel for the accused that notice was not served on the accused does not pass any muster. 32 Another argument raised by learned counsel for accused is that the returning memo Ex.CW1/C is forged and fabricated as it does not contain the loan account number of the accused. To controvert this , learned counsel for the complainant has averred that return memo is a genuine document and it contains the cheque number of the cheque Ex.CW1/B. 33 Before deciding the aforesaid issue, let me reproduce Section 146 of NI Act:
146. Bank's Slip prima facie evidence of certain facts. the CC No. 11315/1 19 of 24 court shall, in respect of every proceeding under this Chapter, on production of bank's slip or memo having thereon the official mark denoting that the cheque has been dishonoured, presume the fact of dishonour of such cheque, unless and until such fact is disproved. 34 So, it is clear from the aforesaid provision that there is a presumption regarding the fact of the dishonour of the cheque. Ex.CW1/C contains the number i.e 484857 which is the same as the number of the cheque in question. The said memo is signed by the authorized signatory of the bank. And if the accused is disputing the genuiness of the memo then burden lies upon him to establish that the memo is false and fabricated and in support of his contention, he could have examined the bank official of the bank that issued the memo which he has failed to, therefore the aforesaid contention of the accused cannot be sustained.
35 Now comes the most important ingredient of Section 138 of N.I Act which is the issuance of the cheques for the discharge in whole or in part of a debt. Counsel for the accused has contended that there is no liability of the accused to pay the cheque amount as accused had already paid substantial part of his loan amount to the Centurion Bank and the receipts of the same are Ex DW1/1 to Ex DW1/8.
36 At this juncture, it would be appropriate to refer to the provisions in Section 118 and 139 of N.I Act. Under Section 118, unless the contrary is proved, it is to be presumed that the Negotiable Instrument (including a cheque) had been made or drawn for consideration. Under section 139 the Court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in CC No. 11315/1 20 of 24 part of a debt or liability. Thus, in complaints under Section 138 the court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttalbe. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused. The Supreme Court in "Hiten P. Dalal V. Bratindranath Banerjee", 2001 Crl. L.J 4647 while dealing with sections 138 and 139 of NI Act held that whenever a cheque was issued to the complainant for a specific amount, there is a presumption that it is towards discharge of legally enforceable debt. In the event of dispute, the burden is on the accused to prove that there is no subsisting liability as on the date of issuing of cheque and the proof must be sufficient to rebut the presumption and mere explanation is not sufficient. So, there is obligation on the part of the Court to raise the presumptions under Sections 118 and 139 of the NI Act in every case where the factual basis for raising of the presumption had been established.
37 Recently the Apex Court in Rangappa v. Mohan AIR 2010 SC 1898 has held that the presumption mandated by S.139 of the Act does indeed include the existence of legally enforceable debt or liability. This is of course in the nature of rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. 38 So it is quite clear from the above that there is an initial presumption in favour of the complainant that the cheque has been received for the discharge of debt or liability which needs to be rebutted by the accused. In the present complaint, accused has cross examined the complainant witness but nothing material could be elicited which can advance the cause of the accused. In his cross examination, accused has admitted CC No. 11315/1 21 of 24 availing credit facility from the Centurion Bank (now HDFC Bank) and also admitted his signature on the cheque in question. He has also admitted that his monthly installment was Rs 7,000/ approximately which was to be paid through ECS. But he has not placed on record any material to show that he paid his monthly installments on time. He could have placed on record his bank statement to show that Rs 7,000/ was deducted monthly towards the payment of the loan but he has failed to produce any such record.And the receipts Ex DW1/1 to DW1/8 placed on record by him do not pertain to the period around the date of cheque in question. In fact, the receipts pertain to different months of the year 2007 and 2008 and that too for a very less amount then the EMI amount of Rs 7,000/ which go on to show that accused was not regularly paying his monthly installments on time. Although, accused has stated that he has paid the amount due towards him to one Sanjeev Kumar and Vikas Kumar who did not give him the receipts but then in such a situation as a prudent person it was his duty to insist upon the receipt or any other proof of payment. Accused has also admitted in his cross examination that he would pay his loan amount through cash, cheque and ECS. So, it can be presumed that cheque is one of the mode of payment of the loan. Although he has stated that the cheque was issued blank and not towards the discharge of any legal liability but merely deposing the same, without placing on record any material will not be sufficient to rebut the presumptions, therefore in these circumstances, I hold that accused has failed to discharge the onus that cheque in question was not issued for a debt or liability hence the presumption that has arisen in favour of the complainant under section 139 of N.I Act stands unrebutted. 39 Now coming on to the judgments relied upon by Ld. Counsel for the accused. As regards the judgment in M.A.Nachimuthu (Supra), I hold that in the said CC No. 11315/1 22 of 24 judgment finding of acquittal was upheld on the ground that no evidence was produced to prove the existing debt or liability but in the present complaint it has already been found by this court that there was existing debt and liability against the accused, therefore, the said judgment is not applicable to the facts of the present complaint. As regards the judgment M/s Jain Irrigation System (Supra) I hold that there is no evidence on record which could show that the cheque has been issued blank for security purpose therefore the said judgment is also not applicable. Lastly, the judgment in A. Sreekantan (supra) talks about the post dated cheque which is not the case in the present complaint therefore, this judgment is also not applicable to the facts of the present complaint. 40 The complainant has proved basic facts of borrowing of loan and issuing of Ex.CW1/B cheque by the accused. Once the basic facts stand proved by the complainant, he discharges the initial burden. Then, it is for the accused to rebut the presumptions that are drawn in favour of the complainant under Sections 118 and 139 of the N.I Act. He can make out his case from material brought on record by the complainant. Though complainant witness was cross examined by the accused, nothing material was elicited to rebut the presumptions under Sections 118 and 139 of N.I Act. It was suggested to AR for the complainant that complainant obtained blank cheques as security for the loan availed by the accused. The said suggestion was denied by him. DW1 accused has admitted his signature on the cheque in question.
41 Thus the complainant is able to establish that the accused borrowed loan and issued Ex CW1/B cheque amounting to Rs. 22,086/ dated 05.12.2008. On presentation of the cheque, it came to be dishonoured with the remarks CC No. 11315/1 23 of 24 "funds insufficient" vide return memo Ex CW1/C and thereupon the complainant issued Ex.CW1/D notice calling upon him to make good the amount covered under the cheque in question. The accused received the notice but failed to give any reply. The complainant presented the complaint. All the essential ingredients of Section 138 N.I Act have been made out by the complainant. Therefore, the accused stands convicted for the offence under Section 138 of N.I Act.
ANNOUNCED IN THE OPEN (NAVJEET BUDHIRAJA)
COURT ON 28.07.2011 METROPOLITAN MAGISTRATE
SPECIAL COURT 06,
DWARKA COURTS, NEW DELHI
CC No. 11315/1 24 of 24
IN THE COURT OF SH.NAVJEET BUDHIRAJA, METROPOLITAN MAGISTRATE, SPECIAL COURT06, DWARKA COURTS, NEW DELHI.
In the matter :
HDFC Bank Ltd.
.........................Complainant
VERSUS
PRABHAKAR KUMAR SHAW
................................ Accused
CC No : 11315/1
PS : I.P.Estate
Under Section : 138 Negotiable Instruments Act
Present : Counsel for the complainant, Sh. Rajesh Kumar
Convict in person with his counsel, Sh.B.N,Shah.
ORDER ON SENTENCE
1 Arguments on the point of sentence heard today.
2 Counsel for the complainant submits that convict is chronic defaulter and
should be dealt with strictly and should be sentenced to maximum punishment.
3 Counsel for the convict submits that he does not wish to say anything on the point of sentence.
CC No. 11315/1 25 of 24 4 In view of the aforesaid submissions of both the counsels and keeping in
mind the fact that at the time of imposition of the sentence it is not only the right of the convict but also that of the victim as well as the society at large has to be taken into account. The object of Section 138 NI Act is to bring about honesty and credibility in such transactions and also to curb the practice of indiscriminate issuance of the cheques without making necessary arrangements for it. Therefore, in view of facts and circumstances of the case and keeping in mind the object of the legislation convict is sentenced to simple imprisonment for 3 months and to pay compensation of Rs. 30,000/ to the complainant and in default of payment of compensation to be sentenced to further simple imprisonment of 1 month.
5 Copy of the order be given free of cost to the accused.
6 File be consigned to Record Room
ANNOUNCED IN THE OPEN (NAVJEET BUDHIRAJA)
COURT ON 04.08.2011 METROPOLITAN MAGISTRATE
SPECIAL COURT 06,
DWARKA COURTS, DELHI.
CC No. 11315/1 26 of 24