Delhi District Court
Guidelines Of The Landmark Judgment ... vs . State Of on 30 March, 2013
IN THE COURT OF MS. NIYAY BINDU, MM (NI ACT)01, SOUTHEAST,
DISTT. SAKET COURTS, NEW DELHI
M/s Asra Chit Fund Pvt. Ltd.,
through its Director
Mr. Dinesh Kumar Mittal
S/o Late Narain Das Mittal,
office at : F14, Lado Sarai,
New Delhi.
........ Complainant
Vs
Digamber Jha
S/o Sh. Punidhar Jha
R/o F205, Jawahar Park,
New Delhi110062.
.......... Accused
C C No. : 2789/10
OFFENCE COMPLAINED OF : U/s 138 Negotiable Instruments
Act
PLEA OF ACCUSED : Not Guilty.
DATE OF INSTITUTION : 21.05.2010
DATE OF RESERVING ORDER : 23.02.2013
FINAL ORDER : Convicted
DATE OF ORDER : 30.03.2013
Judgment
Brief facts of the case:
1.The present case is a complaint filed under section 138 Negotiable Instruments Act, 1881 (hereinafter referred to as 'the Act') by the complainant against the accused for dishonour of cheque bearing no.
02406R0490222010 1 of 11 729221 on the account of insufficiency of funds. The brief facts averred by the complainant in his complaint are that the complainant is running the chit business since long. The accused became the member of the Chit in the month of March, 2005 and his Chit No. was M1/13 having monthly subscription of Rs.5,000/ and the total number of installments were 30. In the auction held in August, 2005, the accused was allotted the chit prize amount of Rs.1,05,000/ which was allotted to him through cheque dated 8.9.2005 which was duly encashed by the accused. The accused kept paying the montly subscription / installment of his Chit till the month of October, 2005 i.e. upto 10th installment. After that he stopped paying the monthly subscription without any intimation to the complainant and thus, he became defaulter as per Chit agreement. The accused was liable to pay the total amount of the remaining 20 installments plus interest @ 1% per month from the date in which he was allotted the chit prize amount i.e. from September, 2005. In the month of August, 2007, the accused paid Rs.20,000/ to the complainant as part payment of the amount due upon the accused through the cheque bearing no.717055 dated 21.8.2007 against receipt no.1533 dated 22.8.2007. Again the accused paid Rs. 20,000/ to the complainant in cash on 27.3.2008 against receipt no.1534. In discharge of the remaining liabilities, the accused issued a cheque of Rs.65,000/ bearing no.729221 dated 10.3.2010 drawn on Syndicate Bank, Ambedkar Nagar, New Delhi and assured that on presentation the said cheque would be honoured. The complainant presented the said cheque for encashment to his banker namely Oriental Bank of Commerce, Saket, New Delhi, but it was returned unpaid by the banker of the accused 02406R0490222010 2 of 11 for the reason "Funds Insufficient" vide memo dated 19.3.2010. Thereafter a legal notice was sent by the complainant to the accused on 15.4.2010 by registered A.D., which was duly received by the accused, but despite the receipt of legal notice, the accused neither replied the legal notice nor paid the said cheque amount within the stipulated period and therefore, the present complaint was filed by the complainant. Proceedings before the Court:
2. On the aforesaid facts, court took cognizance of the offence and issued summons to the accused vide order dated 29.05.2010. The accused appeared pursuant to issuance of summons and was admitted to bail.
Vide order dated 07.07.2011, notice was framed and served upon the accused to which the accused pleaded not guilty and claimed trial. In his plea of defence, he stated that the cheque in question was given as a blank signed cheque to the complainant as security at the time he had taken membership of the complainant company and he also stated that there was only Rs.8,000/ due upon him and he had already paid a sum equivalent to 16 chits given by the complainant. He also stated that the sum in respect of 14 chits was due upon him, in respect of which, he had already paid a sum of Rs.64,000/. He further stated that there is no liability against him in respect of the present cheque in question and the complainant has misused the cheque in question. He also stated that on receipt of the legal notice, he offered a sum of Rs.15,000/ to the complainant in respect of all his pending dues, which the complainant refused to take and has filed the present false complaint against him.
3. The complainant adopted the presummoning evidence as his post 02406R0490222010 3 of 11 summoning evidence wherein he had already tendered the documents including original resolution passed in favour of the AR Mr. Dinesh Kumar Mittal as Ex.CW1/X, original cheque as Ex.CW1/A, return memo as Ex.CW1/B, legal demand notice is Ex.CW1/C, postal receipt is Ex.CW1/D and UPC receipt is Ex.CW1/E. Counsel for accused sought to cross examine the complainant under section 145(2) of the Act, which was allowed. CW1 was duly cross examined by defence counsel.
4. After the framing of notice, the matter was listed for D.E. in view of the guidelines of the landmark judgment i.e. Rajesh Aggarwal vs. State of Hon'ble High Court of Delhi and therefore, it is apparent from the proceedings of the matter that the Ld. Predecessor dispensed with the statement of the accused and thereafter, the matter was listed for defence evidence after the crossexamination of AR of the complainant.
5. In the defence evidence, the accused produced DW1 namely one Sh.H.K. Jha, who deposed before the court whereby submitted that his brotherinlaw (accused in the present matter) had also subscribed a chit in the complainant company, but there was no liability against the witness. He also submitted that he had given a cheque to the complainant on behalf of his brotherinlaw (the accused) for a sum of Rs.20,000/ dated 27.3.2008 and the same was debited from his account on 30.3.2008 and he also produced his statement of account as Ex.DW1/1. The defence witness i.e. DW1 was duly crossexamined by the counsel for the complainant. No other witness was produced by the accused. Thereafter D.E. was closed and the matter was listed for final arguments.
6. During the final arguments, it has been argued by the complainant that 02406R0490222010 4 of 11 the accused became the member of the chit in the month of March, 2005 having monthly subscription of Rs.5,000/ for total 30 installments and in the month of August, 2005, the accused was allotted the chit price for the amount of Rs.1,05,000/, but after payment of 10 installments, the accused stopped the payment and thus, became the defaulter as per chit agreement and in discharge of his pending liabilities, he made the payment of Rs.20,000/ in the month of August, 2007 and again made the payment of Rs.20,000/ on 27.03.2008 and in discharge of the remaining liabilities, the accused issued the cheque in question which got dishonoured for the reason "Insufficient Funds" and failed to make the payment even after due service of the legal notice i.e. Ex.CW1/C and hence deserves to be convicted for the commission of offence under section 138 of the Act.
7. Per contra, it has been argued by the defence counsel that the impugned cheque has not been issued by the accused in discharge of any liability, but the same was only a security cheque. It is argued that the claim of the complainant is untrue and malicious as the accused does not owe any legal debt or liability towards the complainant and even the cheque in question has been misused by the complainant as the same was handed over as blank cheque. It is argued that on these grounds that no case is made out against the accused.
Appreciation of Evidence:
8. I have carefully heard both the counsels and thoroughly perused the record from which I consider it necessary to determine following contentions for making out a case u/s 138 N I Act against the accused.
02406R0490222010 5 of 11
(I) Accused must have drawn a cheque on an account maintained by
him in a bank.
(II) There is legally enforceable liability / debt.
(III) The drawer of the cheque issued the cheque to satisfy part or whole of the debt or other liability.
(IV) The cheque so issued has been returned due to certain specific reasons.
(V) Payment not made by the accused despite service of the legal demand notice.
Ingredient No. I
9. Section 138 of the Act categorically provides that in order to make out an offence against the accused, the cheque must have been drawn by the accused on an account maintained by him with a banker. The accused has not disputed the factum of the issuance of the cheque from his account but his contention in defence is that the cheque was issued by him as a security cheque. It is also contended on behalf of the accused that the accused handed over only a blank cheque to the complainant, but as no evidence has been lead on behalf of the accused in this regard, this contention cannot be relied upon.
Ingredient No. II & III.
10. In order to decide ingredient no. II & III, it is convenient for the sake of clarity to reproduce section 118 (a) and 139 of the Negotiable Instrument Act, Section 118 (a) read as:
"That every negotiable instrument was made or drawn for consideration, and that every such instrument, when 02406R0490222010 6 of 11 it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration."
and section 139 reads as under:
"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, or any debt or other liability."
As per section 118 (a) of the Act, there is presumption in favour of complainant that the instrument i.e. cheque in dispute is issued for a consideration and further under section 139 of the Act it shall be presumed, unless the contrary is proved that the holder of the cheque received the cheque for discharge, in whole or in part, or any debt or other liability. The presumption raised under Section 118 and 139, however, is rebuttable. Discussion the standard of proof, Hon'ble Supreme Court observed in M/S Kumar Exports V/s M/S Sharma Carpets 2009 (1) Civil Court Cases 778 (Supreme Court).
"To rebut the statutory presumption an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non existence of consideration and debt by leading direct evidence because the existence of negative is neither possible nor contemplated. At the same 02406R0490222010 7 of 11 time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of accused."
11. For the purpose of appreciating the rival contentions of both the parties, it is necessary to examine the existence of legally enforceable debt or liability in light of the decision of Hon'ble Supreme Court in Rangappa Vs Sri Mohan 2010 AIAR Cri 584 (SC) wherein the court while upholding the decision and observation of the Hon'ble High Court that " once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheques, then initial presumption as contemplated under section 139 of the Act has to be raised by the court in favour of the complainant. The presumption referred to in section 139 of the Act is a mandatory presumption and not a general presumption, but the accused is entitled to rebut the said presumption. What is required to be established by the accused in order to rebut the presumption is different from each case under given circumstances. But the facts remains that mere plausible explanation is not expected from the accused and it must be more than a plausible explanation by way of rebuttal evidence. In other words, the defence raised by way of rebuttal evidence must be probable and capable of being accepted by the court..."
The Apex Court categorically ruled that the presumption as mandated by section 139 of the Act does indeed include the existence of a legally enforceable debt or liability.
12. In order to rebut the presumptions and prove his innocence, counsel for accused cross examined CW1, the complainant. During cross 02406R0490222010 8 of 11 examination, the complainant deposed that no cheques are taken at the time of making anybody a member of complainant chit fund and the members make the payment of chit installments either by way of cheque or cash. He declined the suggestion of the counsel for the accused that the cheque in question was given as security for the chit and that no amount was ever due upon the accused.
13. During the trial, the entire defence of the accused which culminates from his plea of defence recorded under section 251 Cr.P.C. at the time of framing of notice as also from cross examination of CW1 and defence evidence is that the aforesaid cheque was only issued by him as a security cheque and not in discharge of any liability, but in his plea of defence, it is being categorically admitted by the accused that there was only Rs.8,000/ due upon him as he had already made the payment with respect of 14 chits which were due upon him for a sum of Rs.64,000/ and in discharge of the liability of Rs.8,000/, he offered a sum of Rs.15,000/ to the complainant which the complainant refused to accept.
14. During the defence evidence, DW1 i.e. H.K. Jha deposed that he gave a cheque dated 27.3.2008 for a sum of Rs.20,000/ to the complainant on behalf of his brotherinlaw (i.e. The accused), but in the compliant as well as in the affidavit in evidence filed on behalf of the complainant, the said payment has been admitted. So, no purpose could be served for forming a defence in favour of the accused as the payment which the accused was trying to prove for a sum of Rs.20,000/ was not disputed by the complainant and even it is also being specified in the contents of para no. 7 of the complaint that a due receipt bearing no.1534 was given to the 02406R0490222010 9 of 11 accused with respect to the said payment.
15. Though the accused has raised the contention that he has already made the payment of 14 chits which were due upon him but he has miserably failed to show the receipt of the said payment as it is being specified by the complainant in the compliant that a receipt is always being issued whenever the payment is being made against the chit by any member of the chit fund as neither any document nor any witness was produced on behalf of the accused in this regard. Even in the crossexamination, the AR of the complainant as CW1, has submitted that he issued the receipt to the accused for the cash payment made by him of any installments. Moreover, it is being submitted by the accused in his defence that after receipt of legal notice, the accused offered for the payment of a sum of Rs.15,000/to the complainant in respect of the pending dues which was not accepted by the complainant, but the accused also failed to establish this fact and in fact he has admitted the part liability himself in his plea.
16. In view of the above discussion, it is apparent that the cheque in question was issued in discharge of a legally enforceable liability by the accused. Thereofre, ingredients No. II and III stand proved against the accused. Ingredient No. IV
17. As regards ingredient no. IV, the cheque must have been returned unpaid for specific reasons, in this case, it is for insufficiency of funds. Return of cheque for "funds insufficient" is duly established from the cheque return memo Ex. CW1/B. Further, section 146 of the Act raises a rebuttable presumption of dishonour of cheque, on production of bank's slip and memo having thereon the official mark denoting that the cheque has been 02406R0490222010 10 of 11 dishonoured. The cheque return memo has not been disputed by the accused. The accused has led no evidence to rebut this presumption. As such, ingredient no. IV stands proved against the accused. Ingredient No. V
18. In the present matter, the accused himself has categorically admitted in his plea of defence whereby submitted that he received the legal demand notice and thereafter approached the complainant with the offer of a sum of Rs.15,000/ against the pending dues, which was refused by the complainant. As the legal demand notice was sent for the cheque amount i.e. Rs.65,000/ which was duly received by the accused and therefore, it is apparent that despite the receipt of legal notice, the accused failed to make the payment within the stipulated time. In view of the same, the ingredient no. V stands proved in favour of the complainant. Final Order:
19. From the material on record, it stands established that the cheque was issued by the accused, the same were returned dishonoured for the reason "funds insufficient", legal notice was served upon the accused despite which no payment was made. Accused has failed to rebut his liability under section 138 of the Act even on preponderance of probabilities. Accordingly, the complainant has proved his case beyond reasonable doubt. As such, the accused is convicted for the offence under Section 138 of the Negotiable Instrument Act.
Announced in the open court (NIYAY BINDU) 30.03.2013 MM1(N I Act):SE Distt: 30.03.2013 02406R0490222010 11 of 11