Delhi District Court
Noted In State Of Madras vs . A. Vaidyanatha Iyer Air 1958 on 4 February, 2023
IN THE COURT OF SH APOORV BHARDWAJ, MM-08
(NI ACT) SOUTH WEST/DWARKA COURTS/DELHI
In case of:-
PRAMOD KUMAR ... Complainant
VERSUS
MANDEEP SINGH ... Accused
JUDGMENT
a) Sl no. of the case : 9821/2020
b) CNR of the case : DLSW020146452020
c) Date of institution 25.07.2020
d) Name, parentage and Pramod Kumar
address of the S/o Sh. Kundan Lal
complainant : R/o H.No 130-A, Gali No. 7
Vishnu Garden, New Delhi - 110018
e) Name, parentage and Mandeep Singh
address of the accused R/o S-221/157, Gali No. 4
persons: Vishnu Garden,
New Delhi - 110018
f) Offence complained of : 138 NI Act
g) Total cheque amount : Rs 1,00,000/-
h) Plea of the accused : Pleaded not guilty
i) Arguments heard on : 24.01.2023
j) Final order : Convicted
k) Date of Judgment : 04.02.2023
BRIEF STATEMENT OF FACTS FOR THE DECISION
1. Vide this judgment, I shall decide the present complaint filed under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act') by the complainant against the accused.
Factual Matrix
2. As per the complainant's affidavit, the parties were having good relations being neighbours for many years. In the first week of September, 2019 the accused approached the complainant for a friendly loan of Rs 1,00,000/- (Rupees One Lakh Only) for a period of four months for his urgent requirement. After 3 to 4 days, the complainant arranged the loan amount and advanced a sum of Rs 1,00,000/- to the accused in cash in the second week of September 2019 at his residence.
3. The accused on his part handed over a post dated cheque i.e. the cheque in question bearing no. 54885 dated 09.01.2020 for a sum of Rs 1,00,000/- drawn on Ram Garhia Cooperative Bank Ltd. Thereafter, upon request of the accused that the aforesaid cheque be presented after 20.02.2020, the complainant presented this cheque on 28.02.2020 to his bank i.e Axis Bank, Vikas Puri Branch, however, the same was returned unpaid for the reason "Funds Insufficient'' vide returning memo dated 29.02.2020. Thereafter, despite issuance of legal demand notice to the accused, the accused failed to pay the cheque amount within 15 days thereof and hence the present case.
4. Upon a prima facie consideration of pre-summoning evidence, Ct No.9821/2020 Pramod Kumar v. Mandeep Singh 2 cognizance of offence under section 138 NI Act was taken and the accused persons were summoned. Thereafter, separate notice explaining the accusation was put to the accused under section 251 of The Code of Criminal Procedure, 1973 (hereinafter referred to as 'CrPC') to which he pleaded not guilty and claimed trial. At this stage the accused admitted his signatures but denied having filled the material particulars. He stated that he did not receive the legal demand notice and neither the address mentioned thereon belonged to him. In his defence he stated that -
"... 3 to 4 years back somewhere around in 2017, I had borrowed a sum of Rs 5,000/- from the complainant in return of blank signed cheque as security. I have paid somewhere around Rs 2,000/- to Rs 2,500/- out of the Rs 5,000/-1 which I have borrowed from the complainant. The complainant had asked for Rs 7,500/- for the loan of Rs 5,000/-. I agree that I am yet to give Rs 5,000/- to the complainant. The complainant has misused the cheque against me. "
Thereafter, cross-examination of the complainant's witnesses under section 145(2) NI Act was permitted.
5. The complainant examined himself as CW1 and adopted his pre-summoning evidence as his post summoning evidence and relied on his evidence by way of affidavit Ex CW1/H and on the following documents i.e. ● Ex. CW1/A (cheque in question) ● Ex. CW1/B (returning memo) ● Ex. CW1/C (legal demand notice) ● Ex CW1/D & Ex CW1/E (postal receipt) 1 In record this figure is mentioned as " 5,0000/-". Presumably, a typographical error. Ct No.9821/2020 Pramod Kumar v. Mandeep Singh 3 ● Ex CW1/F & Ex CW1/G (tracking reports)
6. Thereafter, CW-1 was cross-examined.
7. In the statement of the accused under section 313 CrPC, he reiterated his defence disclosed at the stage of framing of notice under section 251 CrPC. He did not lead Defence Evidence.
8. During the course of final arguments Ld counsel for the complainant submitted that the complainant has duly proved his case by placing on record the entire documentary evidence. He also submitted that the accused has failed to rebut the presumption against him. He relied on the following cases ● The Jammu and Kashmir Bank v Abhishek Mittal, Crl. A. No. 294/2011 decided by the Hon'ble High Court of Delhi on 26.05.2011.
● Kalamani Textiles v P Balasubramanian (2021) 5 SCC 283 ● Oriental Bank of Commerce v Prabodh Tiwari 2022 SCC OnLine SC 1089 ● P Rasiya v Abdul Nazeer 2022 SCC OnLine SC 1131 ● Guddo Devi v Bhupender Kumar Crl. Rev. P. 1246/2019 decided by Hon'ble High Court of Delhi on 11.02.2020 ● Krishna P Morajkar v Joe Ferrao Crl. A. No 6 of 2012 decided by Hon'ble Bombay High Court on 19.07.2013 ● Jain P Jose v Santosh Crl. A. No of 2022 decided by Hon'ble Supreme Court on 10.11.2022 He prayed that the accused be convicted.
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9. Per contra, written submissions were filed on behalf of the accused and the following grounds have been agitated ● That the accused never received the legal demand notice as the address mentioned thereon is incorrect. ● The accused had taken a loan of only Rs 5,000/- on interest and has already returned a sum of Rs 2,500/- to the complainant. At present the liability of the accused is only Rs 5,000/- towards the complainant. ● The complaint has been filed beyond the period of limitation.
● The complainant has not shown the loan amount in his ITR.
● The complainant has allegedly provided the loan amount in cash which is illegal and in violation of section 269SS of Income Tax Act, 1995.
● No date of advancing the loan has been mentioned by the complainant.
● The cheque was given in a blank signed condition to the complainant and the same has been misused. ● Complainant did not produce any witness in support of his complaint.
● The complainant did not place on record any complaint made by him against the accused under section 420 IPC It was prayed that the accused be acquitted.
Legal Position:-
10. Before proceeding further to reflect upon the defence and Ct No.9821/2020 Pramod Kumar v. Mandeep Singh 5 evaluation of evidence, the foremost check point is whether the facts averred by the complainant fulfil the basic statutory requirement for constituting an offence under section 138 NI Act. To establish the offence under Section 138 of the NI Act against the accused, the complainant must prove the following:-
● The accused must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;
● The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
● That cheque has been presented to the bank within a period of three months from the date on which it is drawn or within the period of its validity whichever is earlier;
● That cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
● The payee or the holder in due course of the cheque 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 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
Ct No.9821/2020 Pramod Kumar v. Mandeep Singh 6 ● The drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
Being cumulative it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under section 138 NI Act.
11. It is apt to discuss that a negotiable instrument including a cheque carries following presumptions in terms of Section 118 (a) and Section 139 of the NI Act.
Section 118 of the NI 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, 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"
Thus, the combined effect of Section 118(a) and Section 139 of NI Act raises a presumption in favour of the holder of the cheque that he has received the same for discharge, in whole or in part of any debt or other liability.
12. For appreciating the legal position, reliance is placed on the Ct No.9821/2020 Pramod Kumar v. Mandeep Singh 7 judgement of the Hon'ble Supreme Court in the case of Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16 wherein it was held that:
"22. Because both Sections 138 and 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras vs. A. Vaidyanatha Iyer AIR 1958 SC 61, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. "It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused" (ibid). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non existence of the presumed fact."
Similar view has been taken by the Hon'ble Supreme Court in the case titled as K.N. Beena vs. Munyappan and Ors. AIR 2001 SC 289.
13.Further, recently the Hon'ble Supreme Court in the case titled as Basalingappa v Mudibasappa, (2019) 5 SCC 418 summarised the principles related to sections 118(a) and 139 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 the probable defence. The standard of proof for rebutting the Ct No.9821/2020 Pramod Kumar v. Mandeep Singh 8 presumption is 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.
From the ratio decidendi laid down in the aforesaid judgements, it is clear that for the offence under Section 138 of the Act, the presumptions under Section 118(a) and Section 139 of NI Act have to be compulsorily raised as soon as execution of cheque by the accused is admitted or proved by the complainant and thereafter, burden is shifted to the accused to prove otherwise.
Whether presumption under section 118 (a) and 139 NI Act can be drawn against the accused
14. Evaluating the facts of the present case in the light of the above provision this court deems it fit to first consider as to whether the complainant has prima facie proved the issuance of cheque by the accused towards the legal liability in favour of the complainant from the account maintained by him, so as to constitute an offence under section 138 NI Act. To carve out a prima facie case the complainant has filed on record original cheque as Ex. CW1/A. The said cheque was presented to the bank within a period of Ct No.9821/2020 Pramod Kumar v. Mandeep Singh 9 three months from the date on which it was drawn and was returned dishonoured for the reason "Funds Insufficient". The return memo dated 29.02.2020 bearing the fact of dishonour of cheque in question has been exhibited by the complainant as Ex. CW1/B. The complainant then sent a legal notice, Ex CW1/C dated 11.03.2020 on the same date i.e. within the period of statutory requirement of 30 days from the date of receipt of information of dishonour. The original postal receipt of the legal demand notice has been filed as Ex. CW1/D.
15.In the present case the accused has admitted his signatures on the cheque in question but denied having filled material particulars on it. He has also denied having received the legal demand notice and has also stated that the address mentioned thereon is incorrect. However, in light of the decision of the Hon'ble Supreme Court of India in C C Alavi Haji v Palapetty Muhammad (2007) 6 SCC 555, the accused not having paid the amount of cheque in question within 15 days of service of summons to him, he cannot be allowed to take the plea that legal demand notice was never sent to him.
16. The above facts suffice in raising the presumption under Section 118(a) & 139 NI Act in favour of the complainant and against both accused no.1 and accused no.2. In Rangappa v Sri Mohan (2010) 11 SCC 451, Hon'ble Supreme Court held that section 139 raises a presumption of existence of legally enforceable debt or liability and not simple existence of debt or liability. This presumption is a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of legally Ct No.9821/2020 Pramod Kumar v. Mandeep Singh 10 enforceable debt or liability can be contested.
17. When the presumption is raised in favour of the complainant, the burden is shifted on the accused to disprove the case of the complainant by rebutting the presumption raised in favour of the complainant. Being the rule of reverse onus, it is the duty of the accused to prove that he does not owe any liability towards the complainant. The accused can displace this presumption on the scale of preponderance of probabilities and lack of consideration or a legally enforceable debt need not be proved beyond a reasonable doubt as is the general rule in criminal cases. The accused has to make out a fairly plausible defence which is acceptable to the court. This the accused can do either by leading his own evidence or by raising doubt /demolishing the material or evidence brought on record by the complainant. With this in mind, this court now proceeds to discuss the defence of the accused.
Whether the accused has been able to rebut the presumption against him:-
18. In the present case, the main defence of the accused is that he had taken a loan of only Rs 5,000/- from the complainant on interest. It is also his case that the complainant has misused his blank signed security cheque and filled an amount much more than his legal liability.
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19. Upon perusal of record I hold that the accused has miserably failed to rebut the presumption against him for the following reasons ● To begin with, it appears to be highly improbable that a person would issue a blank signed cheque only for a loan amount of Rs 5,000/-.
● Still, to probabilize his defence the accused could have taken steps to examine any other person who could have supported his case regarding the complainant being a money lender. However, for reasons best known to the accused he did not take any such steps.
● The accused also did not confront the complainant with names of any such people or details of any other cases filed by him under section 138 N.I. Act.
● Under the apprehension of his cheque being misused, any prudent person would have issued 'stop payment' instructions to his banker. However, for reasons best known to the accused, he did not take any such step.
20. As far as remaining arguments of Ld. Counsel for the accused are concerned, this court observes the following 20.1 Non-disclosure of a specific date of advancement of loan is not fatal to the case of the complainant. The complainant has stated that the Ct No.9821/2020 Pramod Kumar v. Mandeep Singh 12 accused approached him in the first week of September 2019 and the loan was advanced after 3 to 4 days in the second week of September, 2019. There is no material on record to doubt this testimony.
20.2 It is trite that averment that a blank signed security cheque has been misused is no defence unless the accused can prove on a scale of preponderance of probabilities that he did not have a crystallized legal liability co-extensive to the cheque amount on the date of presentation of the cheque. Accused has failed to discharge this burden. Reliance can be placed on Bir Singh v Mukesh Kumar (2019) 4 SCC 197, Credential Leasing & Credits Ltd. v Shruti Investment 2015 SCC OnLine Del 10061 and The Jammu and Kashmir Bank (Supra).
20.3 The effect of not receiving the legal demand notice has already been discussed in para no. 15 above. Furthermore, even during the trial the accused did not attempt to prove that he was not residing on the address mentioned in the legal demand notice at the relevant time. During the cross-examination of the complainant as well he has stated that he had sent the legal demand notice on the correct address as the parties were neighbours. There is nothing on record to doubt this testimony.
Ct No.9821/2020 Pramod Kumar v. Mandeep Singh 13 20.4 It is not the case of the accused that the complainant lacked financial capacity to advance the alleged loan, rather his version is that the complainant is a money lender. Once financial capacity per se is not disputed, not showing the loan in ITR is not a relevant circumstance whatsoever in favour of the accused. Further, the effect of providing the loan in cash is also no more res integra. Reliance can be placed on Guddo Devi (Supra) in which it was held that section 269SS of the Income Tax Act, 1961 prohibits making of any payment in cash above a sum of Rs. 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 unenforceable or precludes the lender from recovering the same. Moreover, plain reading of section 269SS along with section 271D makes clear that the same applies to persons who either take or accept cash of Rs. 20,000/- or more and not on the person who advances the loan.
20.5 Similarly, not filing of any complaint against the accused under section 420 IPC is also not a relevant circumstance to rebut the presumption against the accused. The remedy available under section 138 NI Act is a suitable and sufficient remedy for the complainant to have taken in the circumstances. Also, since the presumption is already in favour of Ct No.9821/2020 Pramod Kumar v. Mandeep Singh 14 the complainant and furthermore in view of admission/denial of documents, the complainant was not obligated to examine any other witness in his support
21. Lastly, the argument of Ld. Counsel for the accused that the instant complaint is barred by limitation is also without any merit. In the present case the returning memo is dated 29.02.2020 and the legal demand notice has been sent on 11.03.2020 i.e. within 30 days. Thereafter, the instant complaint was filed on 25.07.2020 i.e. within the extended period of limitation as ordered by Hon'ble Supreme Court of India from time to time during the covid pandemic in the Suo Motu Writ Petition (C) No. 3/2020 Re:
Cognizance for Extension of Limitation (orders dated 23.03.2020, 08.03.2021, 23.09.2021 and 10.01.2022)
22. In view of the evidence adduced, documents put forth and arguments advanced by the parties and further in view of the above discussion, the court is of the considered view that the accused Sh. Mandeep Singh is guilty of offence under Section 138 of Negotiable Instruments Act, 1881 and accordingly, he is hereby convicted under Section 138 of Negotiable Instruments Act, 1881.
Announced in open court on 04.02.2023 Judgment consists of 15 pages. Digitally signed by APOORV APOORV BHARDWAJ BHARDWAJ Date: 2023.02.04 15:19:41 +05'30' APOORV BHARDWAJ MM-08 (NI Act) SOUTH WEST:DWARKA COURTS.
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