Delhi District Court
M/S Barclays Bank Plc vs . on 8 August, 2011
IN THE COURT OF SH.SUSHIL ANUJ TYAGI
METROPOLITAN MAGISTRATE: DWARKA COURT:NEW DELHI
CC No. 16987/10
IN THE MATTER OF
M/s Barclays Bank PLC, ... Complainant
Eros Corporate Tower,
Nehru Place, Delhi 110 019
Vs.
Sh. Gursharn Singh ... Accused
Proprietor of M/s G.S. Aggro,
Shop No. 807, First Floor, B Block,
Subzi Mandi, Azadpur,
New Delhi
Date of institution of case : 13.04.2009
Date of reserving Judgment : 28.07.2011
Date of pronouncement : 08.08.2011
JUDGMENT
1. Serial No. of the case : 16987/2010 2. Name of the complainant : M/s Barclays Bank PLC 3. Name of the accused : Sh. Gursharn Singh 4. Offence complained of : S.138 & 142 N. I. Act, 1881 5. Plea of accused : Pleaded not guilty 6. Final Order : Acquitted 7. Date of such order : 08.08.2011 BRIEF FACTS AND REASONS FOR DECISION OF THE CASE
1. The present complaint under section 138 Negotiable Instruments Act,1881 (hereinafter referred to as "NI Act") is filed by the complainant. 2. The brief facts of the case as per the complainant are that the accused/Gursharan Singh had availed business loan vide Agreement no. 000001001710 and the accused has issued cheque bearing no. 241275 dated 13.02.2009 drawn on The Jammu & Kashmir Bank Ltd. for amount of Rs.1,02,698/ to the complainant towards discharge of legal liability which got dishonoured on presentation for the reason "Exceeds Arrangement" vide return memo dated 18.02.2009. The complainant sent legal notice dt. 02.03.2009 to the accused vide speed post on 03.03.2009 and despite service the accused did not paid the cheque amount. Hence the present complaint was filed against the accused by the complainant through its authorized representative on 13.04.2009 (hereinafter referred to as "AR").
3. The AR was examined under section 200 Code of Criminal Procedure (hereinafter referred to as "CrPC") by way of tendering of presummoning affidavit on 23.04.2009.
4. After being satisfied that prima facie ingredients of Section 138 NI Act are made out, cognizance was taken and accused was summoned under section 204 CrPC.
5. After appearance of the accused, the notice under section 251 CrPC was served on the accused to which he pleaded not guilty and claimed trial. It was submitted by the accused that he had given 11 blank cheques to the complainant in January 2008 at the time of grant of loan and admitted only the signature on the cheque but denied other contents written on it. He further submitted that he had not issued the cheque for any liability but it was given as security. He denied receiving of the legal demand notice in admission/denial proceedings under section 294 CrPC. He also submitted that complainant had also filed other cases for cheques in other courts where the judgments were given in his favour and that complainant had misused the blank cheques given by him at the time of grant of loan.
6. In Complainant's evidence, the AR (CW 1) tendered his affidavit in post summoning evidence as Ex CW 1/A and relied on documents:
Ex CW 1/1 Power of attorney
Ex CW1/2 Cheque in question
Ex CW1/3 Return memo
Ex CW1/4 Legal notice
Ex CW1/5 Speed post receipt
7. The CW1 was examined, crossexamined and discharged. The Complainant evidence was closed.
8. The accused was examined under section 313 CrPC where all the incriminating evidence was put to the accused. It was stated by the accused that he was granted loan by complainant for which he has given cheque in question as blank after putting his signatures as security. He further stated that he has no information about when these blank cheques were filled and presented to his bank. The accused also denied receiving the legal demand notice and stated that he had issued 11 blank cheques bearing no. 241265 to 242275 as security at the time of disbursement of loan. Accused examined himself as DW1, crossexamined and discharged. DE was closed and the matter was fixed for final arguments.
9 At that stage learned counsel for the complainant submitted that the matter has been transferred from Barclays Bank to M/s Phoenix ARC India Pvt. Ltd. and as such he has no instructions from the complainant to prosecute the present matter. Despite several adjournments in the present case none has come forward to prosecute the complaint on behalf of complainant. Therefore, this court was constrained to proceed with the case in absence of the complainant.
10. The learned counsel for the accused had advanced the final arguments. It was submitted by the learned counsel that loan of Rs.20 lacs was availed by the accused on 25.01.2008 which was repayable in 60 EMIs of Rs.50,787/ each. The mode of repayment was through ECS and not cheque. It is averred that the accused had given 11 security cheques bearing no. 24126575 in blank and signed to the complainant. It is further submitted that the EMI amount was Rs.50,787/, however, the cheque amount is Rs.1,02,698/ which is not the multiple of Rs.50,787/ and the complainant has not been able to prove as to how the cheque amount is Rs.1,02,698/. It is further submitted that the loan account had not been foreclosed on the date mentioned on the cheque. It is further submitted that the accused had not gone to the bank nor it is the case where any representative of the bank had approached the accused, if it was the case then the counterfoil for the cheque must have been issued by the bank in its normal practice. It is further argued that AR does not have the personal knowledge of the present case and therefore, he cannot deny the suggestions in respect of the facts of the case. It is further submitted that no authority to fill the security cheques were given by the accused and nothing is mentioned in the loan agreement in respect of the cheques. The complainant had also not filed the loan agreement to support his case. It is further submitted that cheque bearing no. 241266 was issued on 21.08.2009 i.e. 6 months after the impugned cheque bearing no. 241275 which makes it clear that the impugned cheque was given for security purposes at the time of grant of loan and not on the date mentioned on cheque. It is further submitted that the complainant had filed two other cases also in other courts where the accused was acquitted. In those cases the complainant had filled multiple of 6 EMIs in the cheque and there were no bouncing charges included. However, in the present case the complainant has during the crossexamination deposed that the cheque amount includes the bouncing charges also. It is submitted that the other two cases were filed on the basis of the cheques dated August 2009 and September 2009 for six EMIs each. It is argued that the present cheque is purported for two EMIs in February 2009, then how can the liability of accused raised to 6 EMIs in August 2009 and again 6 EMIS in September 2009. It is submitted that it shows the malafide on the part of the complainant to harass the accused by using the security cheques. It was further submitted that the statement of account Ex DW1/3 clearly shows that the cheque bearing no. 24129899 were encashed on 28.02.2008 and the present cheque in question is shown to be dated 13.02.2009 which is false as in the ordinary course nobody will issue cheques disturbing the sequence of cheque numbers.
11. The learned counsel for accused had relied on following judgments to support his case: i. BDPL Investments Pvt. Ltd. Vs. Maple Leaf Trading International Ltd. in 129(2006) DLT 94. ii. Krishna Janardhan Bhat Vs. Dattatraya G. Hegde in Criminal Appeal No. 518 of 2006. iii. Gopan Vs. Tonny Varghese in 2009(1)DCR 314.
iv. M/s Collage Culture & Ors. Vs. Apparel Export Promotion Council & Anr. in 2007[4]JCC [NI]388.
v. K.N. Beena Vs. Muniappan & Anr. in Criminal Appeal No. 1066 of 2001. vi. Thakur Lal Vs. Ram Adhar in S.A. No. 443 of 1967.
vii. Chackochan T.K. Vs. P.P. Paul and Another in 2009(2) DCR 506.
12. Heard Mr. M. S. Oberoi, ld counsel for accused. Judicial record perused.
13. The learned counsel for the accused has not assailed the present complaint on any other ground except that the issuance of cheque for legally enforceable debt/liability as required u/s 138 NI Act. Thus, the main question that is in consideration of this court is whether the cheque was issued towards the legally enforceable liability/debt or not. To decide this question it is important to discuss the law relating to S. 138 NI Act at first. The Section 138 NI Act is reproduced below:
"138. Dishonour of cheque for insufficiency, etc., of funds in the accounts 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 agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for "a term which may extend to two year", or with fine 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 date on which it is drawn or within the period of its validity, whichever is earlier.
(b) The payee or the holder induce 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 cheques 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 fifteen days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other liability"
means a legally enforceable debt or other liability."
14. It is trite law that to constitute the offence u/s 138 NI Act, the issuance of cheque for the discharge in whole or in part of any legally enforceable debt or liability is a sine qua non. The legal presumptions u/s 139 and 118 NI exists in favour of the payee or holder in due course. The sections are reproduced below:
"139. 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, or any debt or other liability."
"118. Presumptions as to negotiable instruments of consideration 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 bee accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration.
(b) As to date that every negotiable instrument bearing a date was made or drawn on such date;
(c) ............................................................................"
15. These presumptions are rebuttable in nature and the burden to rebut lies on the accused. It is now concrete law that the accused may rebut these presumptions by either leading evidence to the contrary or by demolishing the prosecution case. The Hon'ble Supreme Court while discussing the standard of proof in criminal case u/s 138 NI Act in Krishna Janardhan Bhat v. Dattatraya G. Hegde AIR 2008 SC 1325 observed that: Para no. 25. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is "preponderance of probabilities". Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to the circumstances upon which he relies...................... Para no. 34. We are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This, however, shall not mean that the courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have rebutted. Other important principles of legal jurisprudence, namely presumption of innocence as human rights and the doctrine of reverse burden introduced by Section 139 should be delicately balanced. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same."
16. It is crystal clear the burden rests on the accused to raise a probable defence to rebut the presumption under section 118 and 139 NI Act and the standard would be of preponderance of probabilities and not to prove his defence beyond reasonable doubt. The burden on complainant and accused are not parimateria. The accused only has to prove that the consideration does not exist or the nonexistence of the consideration is so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist.
17. In the present case, admittedly the accused has availed a loan of Rs.20 lacs from the complainant which was to repayable in 60 EMIs of Rs 50,787/ each. The case of the complainant is that the accused has issued the impugned cheque of Rs. 102698/ towards discharge of his outstanding liability. The defence of the accused is that he has not issued the impugned cheque for any legally enforceable liability or debt but the impugned cheque is one of the 11 blank signed cheques were given to the complainant with serial No. 241265 to 241275 at the time of availing the loan. It is also the defence that the EMI was payable through ECS mode and not through cheque.
18. The CW 1 during his crossexamination has failed to depose about the mode of payment of the said loan due to lack of knowledge. CW 1 also failed to answer the specific question put to him, under the guise of want of knowledge, whether the 11 blank signed cheques of series 241265241275 was taken from the accused at the time of sanctioning of loan. The CW1 also expressed lack of knowledge on the handing over of the cheque in question. He has failed to depose to whom the impugned cheque was handed over and when. CW1 has also expressed lack of knowledge qua the other complaints u/s 138 NI Act pertaining to the present loan account. The CW1 deposed that the impugned cheque amount Rs. 102698/ comprises of two EMIs of Rs. 50787/ each plus bouncing charges for two months which is Rs.562/ for each month. CW 1 showed lack of knowledge whether the bouncing charges are mentioned in the loan agreement or not. Admittedly, the loan agreement has not been filed or proved on record.
19. Indisputably, the present loan was disbursed to the accused in January 2008 and accused had paid 9 EMIs towards the aforesaid loan which were paid through ECS till November 2008. It is the case of the complainant that the present cheque in question was issued by the accused to clear his dues after the ECS were bounced. CW1 deposed that the cheque amount includes 2 EMIs plus bouncing charges of Rs.562 for each month. At this juncture, it is important to consider the the two complaint filed by the complaint u/s 138 NI Act for cheque amount Rs. 3,04,722/ which is multiple of EMI i.e. Rs. 50787 x 6 in each case. Surprisingly, the cheque amount does not include any bouncing charges in any of those cases. The complainant has not proved any document to show that the bouncing charges are payable by the accused. Thus the issuance of cheque for legally enforceable liability becomes doubtful on this fact alone.
20. Now the other defence of the accused is that the blank cheques bearing no. 241265241275 were issued to the complainant at the time of grant of loan. Accused has deposed this fact by examining himself as DW1. The accused has proved the statement of account Ex DW1/3 to show that the cheques sequentially later to the impugned cheque were encashed prior to the impugned cheque. Conspicuously, the cheques bearing no.241297241299 were encashed on 20.02.2008, 241276241278 on 01.02.2008, 241287241296 also on various dates in February 2008. Also the counterfoil of the cheque book ExDW1/4 purports that the cheque with serial no. 241265241275 were issued to the Barclays and no other details is mentioned in the counterfoil which suggests that they were issued in blank. The cheques sequentially prior are shown to be issued in January 2008 and the cheques sequentially later are shown to issued in last of January 2008. The impugned loan amount was granted in January 2008 and the cheques bearing no. 241265241275 are purportedly issued by the accused to Barclays as shown in Ex DW1/4 and the clearance of sequentially later cheques in February 2008 leads to only possible conclusion that the impugned cheque was issued by the accused to the complainant in January 2008 at the time of granting of loan. These facts casts a serious dent on the prosecution's story that the present cheque in question was issued in February 2009 for discharge of legally enforceable liability on that date.
21. The Hon'ble Supreme Court of India in M.S Narayana Menon @ Mani Vs. State of Kerela & Anr.(2006) 6 Supreme Court Cases 39 has fortified that the cheque issued by the accused for security will not attract the provisions of section 138 NI Act. The said judgment was relied by Hon'ble High Court of Delhi in Collage Culture case (supra) and it was observed that:
"20. A post dated cheque may be issued under 2 circumstances. Under circumstance one, it may be issued for a debt in present but payable in future. Under second circumstance it may be issued for a debt which may become payable in future upon the occurrence of a contingent event.
21. The difference in the two kinds of postdated cheques would be that the cheque issued under first circumstance would be for a debt due, only payment being postponed. The latter cheque would be by way of a security.
22. The word 'due' means 'outstanding at the relevant date'. The debt has to be in existence as a crystallized demand akin to a liquidated damages and not a demand which may or may not come into existence; coming into existence being contingent upon the happening of an event.
......................
24. It would be relevant to note that the statute does not refer to the debt being payable, meaning thereby, a post dated cheque for a debt due but payment postponed at a future date would attract Section 138 of the Negotiable Instruments Act 1881. But the cheque issued not for an existing due, but issued by way of a security, would not attract Section 138 of the Negotiable Instruments Act 1881, for it has not been issued for a debt which has come into in existence."
Further, in Ramakrishna Urban Cooperative Credit Society Ltd. v. Rajendra Bhagchand Warma 2010 STPL(DC) 891 BOM : II (2010) BC 481, the Bombay High Court relying on a series of judgments of Hon'ble High Courts and Supreme Court of India observed:
"14. Thus the object of the amendment and introduction of Chapter XVII in the Negotiable Instruments Act by Act o£J988 was mainly to encourage all major transactions including commercial or business transactions through cheques and to enforce credibility and acceptability of cheques in settlement of liability in general. Encouragement of payment by cheques/credit cards/debit cards rather than by cash is necessary for healthy economy. That also brings in transparency in transactions and discourages creation of black or unaccounted money through evasion of taxes or other mal practices. So, provisions like Section 138 of Negotiable Instruments Act are salutary to give reliability, credibility and acceptability of negotiable instruments like cheques in daily life. However, the object was not to provide effective and speedy remedy for recovery of loans. Law makers must not have intended or imagined that money lenders or Banks would obtain blank or post dated cheques while sanctioning/disbursing loans as securities and would use them to malte debtors/borrowers to repay loan under threat of prosecution and punishment under Section 138 of the Negotiable Instruments Act. So, it is doubtful if provisions of Section 138 of the Negotiable Instruments Act would be attracted to a case in which a blank or post dated cheque is obtained by a Bank or money lender before or while sanctioning or disbursing loan amount as security for the loan.
..........................................................
21. In the present case blank cheques were issued prior to disbursement of loan as a collateral security for loan which was sanctioned. In such case there was no existing debt or liability when the cheque is issued. So, in the facts and circumstances of the case, the case does not fall within four corners of offence punishable under Section 138 of the Negotiable Instruments Act. Of course such defence is available against payee and note holder in due course."
22. In the present case, this court in view of aforementioned discussions and observations has come to the conclusion that the impugned cheque was issued at the time of grant of loan. At that point of time it cannot be said that the cheque was issued for payment of legally enforceable liability/debt. The cheque was undoubtedly for the security which does not attract the penal provision of S. 138 NI Act. This court finally has no hitch to hold that the accused has successfully rebutted the legal presumptions favouring the complainant.
FINAL ORDER
23. In the light of above discussions and observations, this court holds that the complainant has failed in proving their case beyond the shadow of reasonable doubts. This court exonerates the accused/Gursharan Singh for the offence under section 138 NI Act. The accused is hereby acquitted. Bail bonds are cancelled and sureties stands discharged. Endorsements, if any, stands cancelled. Announced in the open Court on 8th day of August, 2011 (Sushil Anuj Tyagi) Metropolitan Magistrate Dwarka, New Delhi 08.08.2011