Delhi District Court
Noted In State Of Madras vs . A. Vaidyanatha Iyer Air 1958 on 31 March, 2022
IN THE COURT OF SH APOORV BHARDWAJ, MM-08
(NI ACT) SOUTH WEST/DWARKA COURTS/DELHI
In case of:-
SMT. GEETA SINGH ... Complainant
VERSUS
SH. CHANCHAL ... Accused
JUDGEMENT
a) Sl no. of the case : 9300/2017
b) CNR of the case : DLSW02-012668-2017
c) Date of institution 19.05.2017
d) Name, parentage and Smt Geeta Singh
address of the W/o Capt. Sh V P Singh
complainant : R/o A 701, Hind Apartments, sector
5, Plot no. 13 Dwarka
e) Name, parentage and Sh Chanchal
address of the accused : S/o Sh Jasmer Singh Lochab R/o H. no. 34A, Village Bamnoli Sector 28, Dwarka, New Delhi
f) Offence complained of : 138 NI Act
g) Plea of the accused : Pleaded not guilty
h) Arguments heard on : 05.3.2022
i) Final order : Convicted
j) Date of Judgement : 31.03.2022 BRIEF STATEMENT OF FACTS FOR THE DECISION
1. Vide this judgement, 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. According to the complainant, the parties used to reside in the same locality and had good family relations. On the basis of this relationship, the accused had taken a total loan of Rs 19 lakhs from the complainant on different dates starting from 24.07.2013 to 16.06.2014 (both included) in the following manner (arranged chronologically) i. Rs 6,00,000/- on 24.07.2013 through RTGS transfer in the account of the accused ii. Rs 39,600/- on 13.08.2013 paid by the complainant to the accused from the account of her husband vide a cheque iii. Rs 1,00,000/- on 06.09.2013 in cash to the accused iv. Rs 70,000/- on 14.10.2013 paid by the complainant to the accused from the account of her husband vide a cheque v. Rs 2,00,000/- on 07.02.2014 in cash to the accused vi. Rs 2,00,000/- on 21.04.2014 paid by the complainant to the accused through self cheque vii. Rs 1,00,000/- on 30.04.2014 in cash to the accused viii. Rs 3,93,400/- on 15.05.2014 in cash to the accused. ix. Rs 2,00,000/- were given by the complainant from the account of her husband vide a blank cheque on 16.06.2014 CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 2 and the accused trasferred the cheque amount in the account of his friend namely Sh Sumit Shokeen The accused on his part issued two cheques in the sum of Rs 10 lakhs and 9 lakhs each, both dated 02.03.2017 towards repayment of the above loan which were dishonoured upon presentation due to the reason "funds insufficient" vide return memo dated 07.03.2017. 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.
3. Upon a prima facie consideration of pre-summoning evidence, cognizance of offence under section 138 NI Act was taken and the accused was summoned. Thereafter separate notice explaining accusation against the accused 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 said that the cheque in question neither bears his signature nor has he filled the other material particulars on it. He also denied having taken any loan from the complainant but admitted that he received the legal demand notice. Thereafter, an application under section 145(2) NI Act on his behalf was allowed and he was granted an opportunity to cross-examine the complainant.
4. The complainant examined herself as CW1 and adopted her pre-summoning evidence as her post summoning evidence and relied on her evidence by way of affidavit Ex CW1/A and 9 documents i.e. Ex. CW1/1 & Ex CW1/2 (cheques in question), CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 3 Ex. CW1/3 (returning memo), Ex. CW1/4 (colly) (photocopy of passbook), Ex. CW1/5 (legal notice), Ex CW1/6 & Ex CW1/7 (postal receipts), Ex CW1/8 & Ex CW1/9 (returning envelope with remarks 'refused'). In her cross-examination CW1 deposed that she does not know to which school or college did the accused go to. She also did not know the name of the wife or children of the accused. She also stated that no loan agreement was executed between her and the accused and that no receipt towards cash payments made to the accused was executed. She also stated that initially no rate of interest was charged from the accused but later when he started to make delay in payments, the amount was given at 2% rate of interest. She further stated that she does not know how much interest was charged from the accused. She admitted her signatures on Ex D1/CW1 (An affidavit dated 27.06.2016 stating that one Mr Vikas s/o Mr Jasmer Singh R/o 34A Bamnoli Village New Delhi, has paid back the entire friendly loan availed by him to the complainant) and said that the same was given to the brother of the accused with respect to transactions with him. Upon being confronted with Ex D2/CW1 (police complaint dated 13.07.2017 made by accused to SHO PS Sector 23 Dwarka with respect to committing cheating, fraud and forgery by the complainant in respect of the cheque in question) she stated that she is unaware whether any such complaint was filed by the accused.
5. In the statement of accused under section 313 CrPC, he reiterated the defence disclosed at the stage of framing of notice under section 251 CrPC with one exception that he denied having CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 4 received the legal notice at this stage. He however submitted that the address mentioned thereon is his correct address. He further stated that his brother had some dealing with the complainant and one day she had visited his house and taken away some of his cheques and misused them. Accused did not wish to lead DE. Accordingly, the matter proceeded on and final arguments were heard.
6. During the course of final arguments, Ld counsel for the complainant submitted that the complainant has duly proved her case by placing on record the entire documentary evidence along with photocopies of bank passbooks. He also submitted that the accused has nowhere denied having received a loan of Rs 6 lakhs directly in his bank account from the bank account of the complainant. He submitted that the complainant has proved her financial capacity by showing withdrawal of cash amounts from her and her husband's bank accounts. He also submitted that even though the accused has denied his signatures on the cheque but since the reason for dishonour is insufficiency of funds, the accused cannot take such a plea.
7. Per contra, ld. counsel for the accused submitted that there were no friendly relations between the parties. He also submitted that there is no evidence whatsoever to show any cash loan was given to the accused. He submitted that as per the complainant substantial amount was given to the accused from the account of her husband and an amount of Rs 2,00,000/- was transferred in the account of one Mr Sumit Shokeen from the account of her CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 5 husband at the behest of the accused. He submits that the complainant has failed to bring her husband or Mr Sumit Shokeen to prove the said transactions. He further submitted that the complainant has admitted to charging interest rate on loan and hence, she has been acting as a moneylender in an illegal manner. He relied on the following judgements ● K Subramani v K Damodar (2015) 1 SCC (CRL) 576 ● Leena Kataria v State 266 (2020) DLT 630 ● Ram Yudhishter Yadav v Jai Prakash Garg 256 (2019) DLT 83 ● Pushpa Devi v Sushila (2018) 3 JCC (NI) 177 ● Mahesh Chand Sharma v Hari Chander 2018 (4) JCC NI 249 ● Sanjay Verma v Gopal Halwai 2019 (2) JCC 1470 ● K Prakashan v P K Surendran (2008) 1 SCC 258 He prayed that the accused be acquitted.
Legal Position:-
8. Before proceeding further to reflect upon the defence and 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:-
(i) 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;
(ii)The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 6
(iii) 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;
(iv) 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;
(v) 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;
(vi) 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.
9. 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 CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 7 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.
10. For appreciating the legal position, reliance is placed on the 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.
CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 811. 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 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.
CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 9Whether presumption under section 118 (a) and 139 NI Act can be drawn against the accused
12. 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 cheques as Ex. CW1/1 and Ex CW1/2. The said cheques were presented to the bank within a period of three months from the date on which it was drawn and was returned dishonoured for the reason "funds insufficient". The return memo dated 07.03.2017 bearing the fact of dishonour of cheque in question has been exhibited by the complainant as Ex. CW1/3. The complainant then sent a legal notice dated 05.04.2017 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. CW1/6 & Ex CW1/7. Despite this the accused failed to make payment of the cheque amount.
13. In the present case, the accused has not admitted that the cheque in question bears his signatures. However, since the reason of dishonour of cheque is 'funds insufficient' and not 'drawers signature differ' or some like reason, it is prima facie proved that the cheque in question bears the signatures of the CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 10 accused. Reliance can be placed on the decision of the Hon'ble Supreme Court of India in L.C. Goyal v Suresh Joshi, (1999) 3 SCC 376 in which it has been held that "8. The complainant alleged that when the appellant realized that the complainant has come to know that he had misappropriated a sum of Rs 25,491, he gave a cheque for a sum of Rs 38,000 which is Ext. C-4. The said cheque was drawn on UCO Bank and the same was deposited in Central Bank of India in the account of the Union, viz., Siemens Employees' Union, New Delhi. But the said cheque was dishonoured due to insufficient funds. The appellant denied his signature on Ext. C-4 and contended that his signature was forged by the complainant. It is in this context that it was urged before the Bar Council of India that some handwriting expert be examined in order to find out the genuineness of the signature on Ext. C-4. As stated above, the cheque bounced not on account of the fact that the signature on Ext. C-4 was not tallying with the specimen signature of the appellant kept with the Bank, but on account of insufficient funds. Had the signature on Ext. C-4 been different, the Bank would have returned the same with the remark that the signature on Ext. C-4 was not tallying with the appellant's specimen signature kept with the Bank. The memos Ext. C-6 and Ext. C-8 issued by the Bank clearly show that the signature of the appellant on Ext. C-4 was not objected to by the Bank, but the same was returned with the remark "insufficient funds". This circumstance shows that the signature on Ext. C-4 was that of the appellant." (emphasis supplied)
14. The accused has also not disputed the genuineness of the postal receipt or the return memo and has admitted that the legal demand notice was sent on his correct address, although he CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 11 denied having received it at the stage of recording of his statement under section 313 CrPC. However, since the legal demand notice was properly addressed and posted, it is presumed to have been delivered under section 114 Indian Evidence Act, 1872 (hereinafter, "Evidence Act"). Moreover, 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, cannot be allowed to take such a plea.
15. The above facts suffice in raising the presumption under section 118(a) & 139 NI Act in favour of the complainant. In Rangappa v Sri Mohan 2010 V AD (SC), 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 enforceable debt or liability can be contested.
16. 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 CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 12 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.
Defence of the accused:-
17. The defence taken by the accused as disclosed by him at the stage of framing of notice under section 251 CrPC, the lines on which cross examination was conducted, his statement recorded under section 313 CrPC and arguments advanced on his behalf is that the accused never took any loan from the complainant, that his cheques were stolen, forged and fabricated by the complainant, the complainant did not have any financial capacity to advance the loan and that she was acting as a money lender in an illegal manner.
18. At the outset, it is difficult to believe the defence set up by the accused that the cheques were stolen, forged and fabricated. Accused has confronted the complainant with a police complaint dated 13.07.2017 filed by him with PS Sector 23 Dwarka. Whereas the present case was instituted on 19.05.2017. The accused has also not placed on record whether any further steps were taken by him in relation to his police complaint. Moreover, the accused never took any steps to get the cheque in question examined by any expert witness so that it could be proved that the same does not bear his signatures. Therefore, it appears that the CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 13 police complaint is only a sham defence setup as a result of an afterthought.
19. It has also been argued before me that the complainant lacked the financial capacity to advance the loan since she has admitted in her cross examination that she has no monthly earnings. However, this defence also does not stand on its own legs since the complainant has duly shown the account statements of her and her husband's bank accounts as source of funds. Once the source of funds has been proved to be money withdrawn from a bank account, the financial capacity of the complainant cannot be doubted.
20. It is also submitted that there were no family relations between the parties. Complainant was also unable to tell the name of the wife and children of the accused in her cross examination. However, since the complainant has proved that a loan of Rs 6,00,000/- was transferred from her bank account to the account of the accused, the accused cannot take the plea of being unfamiliar with the complainant. Moreover, Ex DW1/C1 has been brought on record by the accused himself which shows that the brother of the accused had some transactions with the complainant. This shows that even if parties were not having family relations, they were at least well acquainted with each other and had financial relations.
21. Accused has also denied having taken any loan whatsoever from the complainant. However, this blanket denial falls flat in light of the amount of Rs 6,00,000/- having been transferred in his CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 14 bank account from the account of the complainant. No question or suggestion has been put to the complainant qua this amount in her cross-examination. Therefore, her testimony has gone unrebutted in this aspect. The accused has also not explained why two cheques in the amount of Rs 39,600/- and 70,000/- got cleared in his account from the account of the husband of the complainant. Hence, it is quite clear that a loan was certainly being advanced by the complainant to the accused.
22. As far as the remaining cash transactions are concerned, indeed no written acknowledgment/receipt has been filed in their respect. However, the complainant has provided specific dates on which the amount was advanced and the same is duly corroborated by entries in passbooks. As far as the aspect that last tranche of loan was provided in the account of one Sumit Shokeen from the account of the husband of the complainant, the testimony of the complainant is very clear that the cheque was handed over to the accused who had said that he will himself mention the name of the payee on the cheque. Thereafter, not even a suggestion to the contrary has been put to the complainant. Therefore, the complainant's testimony in this regard has also gone unrebutted.
23. One last argument that has been advanced on behalf of the accused is that the complainant is acting as a money lender in an illegal manner. I am of the view that the accused cannot be allowed to take such a plea since according to him he never took any loan from the complainant. Therefore, the accused has set up wholly untenable, contradictory and unreliable defences throughout the trial and has miserably failed at rebutting the CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 15 presumption.
24. I have also perused the cases cited at bar and found that none of them apply to the facts of the present case or help the cause of the accused ● In K Subramani (supra) and Sanjay Verma (supra) the complainant had failed to prove his source of funds which is in stark contrast to the case in hand.
● In Leena Kataria (supra) the complainant had specifically stated that she can produce a bank statement to show withdrawal of money from her account, however, she did not produce any document. She had also failed to mention any specific dates on which the payment was made to the accused. This is not the fact scenario in the present case. ● In Ram Yudhishthir Yadav (supra) the date of advancement of loan and issuance of cheque was not mentioned in the complaint or the affidavit. Petitioner had also failed to explain as to why the cheque was dated 31.12.2012 when the loan was given in December 2012 for 2-3 months. Therefore, these facts are quite different from the ones at hand.
● In Pushpa Devi (supra) the loan amount was to be repaid in 3-4 months at an interest rate of 24% p.a, however the amount on the cheque did not include the interest amount. In the present case however, as per the testimony of the complainant, initially the loan was advanced in interest free manner. In Mahesh Chand Sharma (supra) again no alleged date of loan was mentioned. Furthermore, in both CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 16 these cases the court was not confronted with a situation where part of the loan was advanced by the mode of RTGS and cheque transfer.
● In K Prakashan (supra) the complainant had failed to show his financial capacity and had also failed to produce a diary evidencing the alleged transactions maintained by him. Therefore, facts of this case were also quite different from the present case in hand.
25. 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 Chanchal 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.
26. Let a copy of this judgement be provided to the accused free of cost.
Announced in open court on 31.03.2022 Judgement consists of 17 pages.
Digitally signed by APOORV APOORV BHARDWAJ
BHARDWAJ Date: 2022.03.31
15:26:11 +0530
APOORV BHARDWAJ
MM-08 (NI Act)
SOUTH WEST:DWARKA COURTS.
N.D/31.03.2022
CC no. 9300/17 Smt Geeta Singh v Sh. Chanchal 17