Delhi District Court
Gurpreet Singh vs Mahender Sharma on 18 April, 2012
IN THE COURT OF SH. DHEERAJ MITTAL: M.M-02 (N.I.ACT):
SOUTH-EAST DISTRICT, SAKET COURTS COMPLEX: NEW DELHI
Gurpreet Singh vs Mahender Sharma
CC No.1955/1/2003
U/s 138 Negotiable Instruments Act, 1881
1. Serial Number of the : 1955/1/2003
case
2. Name of the complainant : Gurpreet Singh
S/o Sh. Sunder Singh
Office at 3/30, East Patel Nagar,
New Delhi-110060
3. Name of the accused : Mahender Sharma
parentage & residential S/o Sh.Sant Ram Sharma
address R/o K-140, Ambedkar Nagar,
Sector-5, New Delhi-1100062
4. Offence complained of : U/s 138 Negotiable Instruments
or proved Act, 1881
5. Plea of the accused : Pleaded not guilty and claimed
trial.
6. Final order : Acquitted
7. Date of order : 18.04.2012
Date of Institution : 25.07.2003
Date of Reserving Order : 11.04.2012
Date of Pronouncement of Order: 18.04.2012
JUDGMENT
Brief reasons for the decision are: -
1. This is a complaint filed u/s 138 read with Section 142 of the Negotiable Instruments Act 1881 (hereinafter referred to as N.I. Act).Gurpreet Singh vs Mahender Sharma Page 1 of 14
2. Brief facts of the case are:
That the accused approached the complainant for a friendly loan of Rs.3,50,000/- on 05.06.2002 and accepting the request of the accused, complainant lent a loan of Rs.3,50,000/- to the complainant at the rate of interest 2% p.m. till the refund of principle amount. That at that time of loan, accused duly signed and executed a promissory note in favour of the complainant containing the terms and conditions of the loan. That after grate persuasions and follow up, accused issued a cheque bearing No.079843 dated 05.12.2002 for Rs.3,50,000/- drawn on The Kangra Cooperative Bank Ltd., New Delhi (i.e. cheque in question) for the discharge of his legal liability, but when the complainant presented the cheque for encashment in the bank, the same was returned unpaid with remarks "funds Insufficient". After the dishonourment of the cheque, complainant issued a legal notice dated 10.06.2003 to the accused and demanded money but when the accused did not pay the amount the complainant filed the present complaint case.
3. After being satisfied that prima facie case against the accused u/s Section 138 N.I.Act is made out, cognizance was taken and accused was summoned for the offence u/s 138 N.I.Act by my Ld. Predecessor vide summoning order dated 26.07.2003.
4. After the appearance of the accused, notice u/s 251 Cr.P.C was framed against the accused on 24.11.2004 to which he pleaded not guilty and claimed trial.
5. The complainant examined himself as CW-1 by adopting the affidavit dated 25.07.2003 Ex.CW1/I, which he tendered during Gurpreet Singh vs Mahender Sharma Page 2 of 14 pre summoning evidence, deposed on the same lines as in the complaint and exhibited the relevant documents as under:-
(i) Promissory Note as Ex.CW1/1.
(ii)Cheque bearing No.079843 dated 05.12.2002 amounting Rs.3,50,000/- (Rupees Three Lacs Fifty Thousand only) drawn on The Kangra Cooperative Bank Ltd., New Delhi as Ex.CW1/2.
(iii) Returning memo dated 14.05.2003 with remarks "Funds Insufficient" as Ex.CW1/3.
(iv) The cheque debit advice slip dated 17.05.2003 as Ex.CW1/4.
(v) Legal demand notice dated 10.06.2003 as Ex.CW1/5.
Registered postal dispatch receipts as Ex.CW1/6, UPC dispatch receipt as Ex.CW1/7 & Returned acknowledgment cards as Ex.CW1/8 & Ex.CW1/9.
6. After his evidence (complainant/CW-1), complainant closed his evidence and thereafter on 21.09.2011 statement of accused was recorded u/s 313 Cr.P.C. where all the incriminating evidence was put to him. In that statement accused did not deny the signatures on the cheque but submitted that at the time of advancing the loan complainant took three blank signed cheques and some other documents signed by me for securing the repayment of the loan amount.
After recording of statement of the accused u/s 313 Cr.P.C., the matter was fixed for defence evidence as accused wanted to lead evidence in his defence but despite opportunities accused could not lead any evidence in his defence and voluntarily closed his defence evidence on 03.02.2012 by his separate statement.
Gurpreet Singh vs Mahender Sharma Page 3 of 147. Before going into the merits of the present complaint case, lets consider the important legal provisions and case laws.
7.1 It is settled proposition of law that for fastening liability u/s 138 Negotiable Instruments Act, following requirements are to be fulfilled: -
(a) Drawing of the cheque by the person on the account maintained by him.
(b) Drawer of the cheque issued the cheque to discharge in whole or in part,any legal enforceable debt or other liability.
(c) The cheque issued has been returned unpaid due to insufficiency of funds or exceeds the arranged amount.
(d) The drawer fails to make payment within stipulated time after the receipt of demand notice.
7.2 Important presumptions relating to offence u/s 138 N.I.Act are:-
Section 118 Clause (a) of Negotiable Instruments Act provides for presumptions regarding the consideration for the Negotiable Instruments. It reads as under: -
"That every negotiable instrument was made or drawn for consideration and that every such instrument when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration".
Section 139 of the Negotiable Instruments Act provides for presumption in favour of a holder. It reads as under: -
Gurpreet Singh vs Mahender Sharma Page 4 of 14"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."
The combined reading of above said sections 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. However, it is settled principle of law that the presumption available u/s 139 Negotiable Instruments Act can be rebutted by the accused by raising a probable defence but the burden of proof is on the accused.
7.3 Important case laws are: -
In "Rangappa vs S.Mohan AIR 2010 SC 1898" the Apex Court of India held as under: -
".... we are in agreement with the respondent- claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observation in Krishna Janadardhan Bhat (supra) may not be correct..."
".... it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the Gurpreet Singh vs Mahender Sharma Page 5 of 14 accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
Similar observations have been made by the Apex Court in the following judgments: -
(a) "M.S. Narayana Menon vs State of Kerala" (2006) 6 SCC 39.
(b) "M/s Kumar Exports vs M/s Sharma Carpets" AIR 2009 SC 1518.
(c) "Kamla S. vs Vidyadharan M.J. & Anr." (2007) 5 SCC 264.
(d) "K.Prakashan vs P.K. Surenderan" (2008) 1 SCC 258.
8. Now, lets come back to the facts and merits of the present case. In the present case, accused has not denied his signatures on the cheque and as per settled law once signatures on the cheque are admitted, burden shifts upon the accused to rebut the presumption raised against him by virtue of Section 139 N.I.Act.
8.1 Before looking at whether the accused has succeeded or not in rebutting the presumption, let us consider what is the standard of burden/proof upon the accused to rebut the presumption. By various judicial pronouncements, now it is settled that the burden upon the accused to rebut the presumption is not so high as of the prosecution in the criminal case and accused can rebut the presumption by raising a probable defence. Moreover, it is also settled law that to rebut the presumption accused need not lead evidence in his Gurpreet Singh vs Mahender Sharma Page 6 of 14 defence and while rebutting presumption he can rely upon the material submitted by the complainant. Here, reference is made to recent judgment of Supreme Court in case titled as "Rangappa vs S.Mohan" (cited supra). The relevant portion of the judgment is reproduced hereunder for the sake of clarity;
".... it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
8.2 I have perused the record, considered the submissions made by the counsel for the complainant and the accused.
The counsel for the complainant submitted that accused has admitted his signatures on the cheque in question, accused admitted the receipt of legal notice but did not reply the same, accused could not lead any evidence in his defence despite sufficient opportunities, presumption u/s 139 N.I.Act is also in favour of the complainant, accused has executed the promissory note Ex.CW1/1 at that time of loan. By making these submissions, counsel submitted that accused has failed to rebut the presumption raised against him u/s 139 N.I.Act and therefore, he be convicted for the offence u/s 138 N.I.Act.
On the other hand, accused submitted that the cheque was Gurpreet Singh vs Mahender Sharma Page 7 of 14 not issued towards the discharge of any legal liability but the same was one of the three security cheques handed over to the complainant in the year 2002. He further submitted that the cheque in question was a blank signed cheque i.e. the cheque was having his signatures only but other contents of the cheque were not filled by him. Accused further submitted that the promissory note was not executed by him and his signatures on the blank promissory note was taken by the complainant. By making these submissions, accused submitted that since the cheque was a security cheque and not for the purpose of discharge of any legal liability, therefore, no offence u/s 138 N.I.Act is made out and thus he be acquitted of the offence u/s 138 N.I.Act.
9. Let's see whether in this case accused has succeeded or not in rebutting the presumption raised against him u/s 139 N.I.Act.
9.1 In rebutting the presumption, the accused relied upon the discrepancies and contradictions in the case of the complainant. To reiterate, accused can rely upon the material submitted by the complainant and it is not necessary that to rebut the presumption accused must lead evidence in his defence. Reference is made to "Rangappa vs S.Mohan AIR 2010 SC 1898" cited supra.
9.2 Perusal of the complaint, evidence led by the complainant/CW-1 and the cross examination of the CW-1 will show that there are number of material contradictions and discrepancies in the version of the complainant that cannot be ignored. Some of those contradictions and discrepancies are as Gurpreet Singh vs Mahender Sharma Page 8 of 14 under: -
(a) In his complaint and his evidence affidavit Ex.CW1/I, complainant averred that he lent a loan of Rs.3,50,000/- to the accused on 05.06.2002 and on the same day promissory note Ex.CW1/1 was executed by the accused. But in his cross examination complainant/CW-1 deposed that the loan was given in two installments, first installment was of more than Rs.
2,00,000/- given in June, 2002, whereas second installment was given after 10-15 days. If the version of the complainant/CW-1 told by him in his cross examination that loan was advanced in two installments is accepted true, then how promissory note Ex.CW1/1 could reflect receiving of amount of Rs.3,50,000/- by the accused on a single date i.e. on 05.06.2002. Moreover, at the backside of the promissory note the details of the cheque in question, except the date on the cheque, have been mentioned and it has been mentioned that the cheque was given by the accused to the complainant on the same date i.e. on 05.06.2002. For the sake of clarity the writings at the backside of the promissory reproduced here: -
"Given cheque No.079843 drawn on the Cangra Co-operative bank Ltd., Govind Puri, Kalkaji of amount 3,50,000/- (Three lacs fifty thousand only) SD/ Mahender Sharma "
Now, it has been averred by the complainant in his complaint as well as evidence affidavit that promissory note was executed by the accused on the same date i.e. 05.06.2002 when the loan was granted to him, but in the same complaint and evidence affidavit the complainant has said that the accused issued the cheque in question after great persuasions Gurpreet Singh vs Mahender Sharma Page 9 of 14 and follow up, which means that cheque was not issued on the date of loan i.e. 05.06.2002 but it was issued later on. These two contradictory versions given by the complainant raises doubt about the veracity of his case. Had the promissory note been duly completed and filled in by the accused on the date of loan i.e. 05.06.2002 and had the accused issued the cheque in question to the complainant after sometime when the complainant made a follow up to the accused then it is difficult to understand that how the details of the cheque in question came to be mentioned at that backside of the promissory note.
From these material contradictions as noted above, it appears that the signatures of the accused were taken on a blank promissory note which was filled thereafter by the complainant to support of his case and cheque in question was taken blank without date from the accused as security.
(b) In his complaint and his evidence affidavit the complainant has averred that the accused approached him for a friendly loan of Rs.3,50,000/- on 05.06.2002 and after due execution of the promissory note the loan amount of Rs. 3,50,000/- was advanced to the accused. In his cross examination complainant/CW-1 deposed that before granting the loan he verified the antecedents of the accused to check his capacity to repay the loan. But complainant has not made this averment either in his complaint or evidence affidavit that he checked the antecedents of the accused relating to his repaying capacity. Moreover, I fail to understand when the accused approached the complainant for a loan on 05.06.2002 and the same was advanced on the same date then when the complainant checked the antecedents of the accused qua his Gurpreet Singh vs Mahender Sharma Page 10 of 14 repaying capacity.
Moreover, in his complaint and evidence affidavit the complainant has averred that he advanced a loan of Rs. 3,50,000/- to the on 05.06.2002 but in his cross examination he said that the loan was advanced in two installments. Furthermore, the complainant has averred that the loan was repayable along with interests @ 2% p.m. till the refund of principal amount then why the complainant accepted the cheque of only principle amount i.e. Of Rs.3,50,000/ and why the date of repayment was not mentioned in the promissory note Ex.CW1/1.
(c) The cheque in question is dated 05.12.2002 but the bank debit advice Ex.CW1/4 and bank returning memo Ex.CW1/3 would suggest that the cheque was presented for encashment in the month of May, 2003. Had the version of the complainant be true, no persons would wait for almost six months in presenting the cheque for encashment, which has been received from the other party after great persuasions and follow up. The delayed presentation of the cheque in question for encashment, without explaining that why the cheque was presented so late for encashment, raises doubt about the version of the complainant.
(d) In his cross examination complainant/CW1 once said that there was one witness to the execution of promissory note Ex.CW1/1 and that person came with the accused but when the promissory note was shown to the CW-1, he admitted that there are no signatures of any witness on the promissory note. He further said that signatures of witness might be on some other papers. The absence of any witness to the execution of promissory note makes the story of the complainant doubtful. I Gurpreet Singh vs Mahender Sharma Page 11 of 14 fail to understand that when the complainant was lending a huge amount of Rs.3,50,000/- to the accused who was on a clerical job, why the complainant did not bother to secure the presence of any witness to the execution of promissory mote Ex.CW1/1.
(e) Very importantly, in his complaint and evidence affidavit, complainant has averred that the cheque in question was issued by the accused after sometime of the grant of loan when he persuaded the accused for the return of the loan but in his cross examination, complainant deposed that the cheque in question was given by the accused to him at the time of loan by putting date of six months later. Had this averment of complainant been true that the cheque in question was handed over by the accused at the same time when the loan was granted by putting a date of six months later, then this fact would have surely be mentioned in the promissory note Ex.CW1/1. But perusal of the promissory note Ex.CW1/1 would reveal that in the main body of the promissory note there is no mention about the return of the loan amount and there is no mention of the details of the cheque in question. It is noteworthy that at the backside of the promissory note details of the cheque have been mentioned but date of the cheque has not been written. The non mentioning of the date of the cheque at the back side of the promissory note raises serious doubt about the version of the complainant that the cheque was handed over at the time of loan by putting a date of six months later. Moreover, this version of the complainant cannot be accepted true at any cost because in his complaint and evidence affidavit he has averred that cheque in question was issued sometime later when he persuaded the accused for the return of the loan.
Gurpreet Singh vs Mahender Sharma Page 12 of 14In the same cross examination the complainant deposed that the cheque in question was taken from the accused when he paid the first installment of Rs.2,00,000/- to the accused.
(f) In his cross examination, complainant/CW-1 deposed that in the year 2002 he was having annual income of approximately more than Rs.2,00,000/-. In the same cross examination complainant deposed that he had given loan to 10-15 persons approximately in the financial year 2002. He further deposed that he had given friendly loan to more than 35 people from 2000 to 2002. These statements by the complainant in his cross examination raises serous doubts about the truthfulness of his present case. From these statements made by the complainant/CW-1 in his cross examination, it appears that the complainant do the business of financing and when the loanees did not return the loan amount, he files cases against them by making allegations that it was a friendly loan. These observations find support from the statement of complainant/CW-1 in his cross examination where he deposed that he has filed almost 25-30 civil and criminal cases against the people for recovery of loans.
10. Thus, in view of the above discussions, I am of the considered view that accused has succeeded to rebut the presumption by pointing out material contradiction and discrepancies in the case of complainant and his defence seems to be probable. On the other hand complainant has failed to establish that the cheque was issued for a legally enforceable debt or liability. Hence accused is entitled to acquittal, therefore, acquitted of offence u/s 138 N.I.Act. All bail bonds, except bail bond furnished by the accused along with Gurpreet Singh vs Mahender Sharma Page 13 of 14 surety u/s 437 A Cr.P.C., stands cancelled. Surety is/are discharged. File be consigned to record room after necessary formalities.
Pronounced in the open court (Dheeraj Mittal) on 18.04.2012 M.M.(N.I. Act)-02:SED: Saket Courts:New Delhi Gurpreet Singh vs Mahender Sharma Page 14 of 14