Delhi District Court
Cc No. 515497/2016 Anil Verma vs Manoj Verma Page 1 Of 26 on 27 February, 2021
CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 1 of 26
CNR- DLCT020015552014
IN THE COURT OF SH. VISVESH, METROPOLITAN
MAGISTRATE, N.I. ACT-06, CENTRAL, TIS
HAZARI COURTS, DELHI
DLCT020015552014
CC No.: 515497/2016
ANIL VERMA
3184, Lal Darwaza,
Sita Ram Bazar,
Delhi-110006.
...... Complainant
Vs.
MANOJ VERMA
Proprietor of
M/s Anushka Enterprises
1872, Gali Takhat Wali,
Kuch Pati Ram,
Sita Ram Bazar,
Delhi-110006. ...... Accused
Date of Institution : 20.11.2014
Offence complained of : s.138 of The Negotiable Instruments
Act,1881
Plea of the Accused : Not Guilty
Final Order : Convicted
Date of Decision : 27.02.2021
JUDGEMENT
1. The present Complaint has been filed by the Complainant against CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 1 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 2 of 26 CNR- DLCT020015552014 the Accused under section 138 Negotiable Instruments Act, 1881.
Factual Matrix
2. The brief facts as alleged by the Complainant in the Complaint are that the Accused and Complainant are known to each other and have good family terms from the last so many years. It is further averred that in the month of January, 2014 the Accused had taken a friendly loan of Rs. 2,00,000/- for business from the Complainant @ 18% per annum for a period of six months and promised to repay the loan amount along with interest within time.
2.1 It is further stated that the Accused did not pay the above said loan amount along with interest in time and started delaying on one pretext or the other and ultimately with great difficulty a settlement was arrived at in which it was agreed that the Accused would pay the principal amount of Rs. 2,00,000/- only by way of cheque and then Accused had issued one cheque bearing no. 124274 dated 04.08.2014 amounting Rs. 2,00,000/- drawn on United Bank of India, Khari Baoli Branch, Delhi towards the discharge of his legal liability in favour of Complainant and assured that the said cheque would be honored on presentation.
2.2 When the Complainant presented the said cheque through his banker Allahabad Bank, Hauz Qazi Branch, the same was returned unpaid by the banker of the Complainant vide returning memo dated 09.08.2014 with the remarks "Funds Insufficient".
CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 2 of 26CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 3 of 26 CNR- DLCT020015552014 2.3 It is averred that when the Complainant informed the Accused about the said dishonour of cheque, Accused had requested to Complainant to represent the cheque after one month time on the pretext that Accused had not received his business payment and assured Complainant that this time the cheque will be honoured and in good faith, Complainant accepted the Accused's request and accordingly, represent the abovesaid cheque through his banker Allahabad Bank, Hauz Qazi Branch, the same was returned unpaid by the banker of the Complainant vide returning memo dated 16.09.2014 with the remarks "Funds Insufficient".
2.4 The Complainant thereafter issued a legal demand notice on 07.10.2014 through counsel calling upon the Accused to pay the said cheque amount within a period of 15 days from receipt thereof. The said notice was duly served upon the Accused and the Accused failed to pay the previously mentioned cheque amount within the statutory period.
2.5 Hence, the present Complaint u/s 138 Negotiable Instrument Act 1881 (hereinafter the NI Act) was filed on 20.11.2014 by the Complainant, praying for the Accused to be summoned, tried, and punished for commission of the offence u/s 138 of the Negotiable Instruments Act, 1881. The Complainant has averred that the present Complaint is within the period of limitation and falls within the territorial limits of this Court's jurisdiction; thus, being tenable at law.
CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 3 of 26CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 4 of 26 CNR- DLCT020015552014 Proceedings before the court
3. Pre-summoning Evidence: To prove a prima-facie case, the Complainant led pre-summoning evidence by way of affidavit Ex. CW-1/A wherein the Complainant has affirmed the facts stated in the instant Complaint.
4. Documentary Evidence: To prove the case, the Complainant has relied upon the following documents:
a) Original cheque bearing no. 124274 dated 04.08.2014 for a sum of Rs. 2,00,000/- drawn on United Bank of India, Khari Baoli Branch, Ex. CW1/1.
b) Original cheque return memos dated 09.08.2014 and 16.09.2014 Ex.CW-1/2 and Ex.CW1/3.
c) Office Copy of legal notice dated 07.10.2014 Ex.
CW1/4.
d) Postal receipts Ex. CW1/5 and Ex.CW1/6.
e) Internet generated tracking report Ex.CW1/7.
f) AD Card Ex.CW1/8.
5. Summoning of the Accused: On finding of a prima-facie case against the Accused, the Accused was summoned on 28th of November 2014 where the Accused appeared before the court on 26th of February 2015.
6. Framing of notice & plea of defence: Notice u/s 251 Cr.P.C. was framed against the Accused on 20th of April 2015 to which he pleaded not guilty and claimed trial. The plea of defence of the CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 4 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 5 of 26 CNR- DLCT020015552014 Accused was recorded where the Accused had stated that he knows the Complainant since the last 20 years and the cheque in question bears only his signatures and other particulars have not been filled in by him. He further stated that Complainant is his relative and one Mr. Sushil Verma and the Complainant are brothers. He further stated that Mr. Sushil Verma is dealing in the business of sanitary goods and that the Accused had placed an order of some sanitary material as he was renovating his home. The Accused then stated that most the of items were not available with Mr. Sushil Verma, he promised the Accused to arrange the same from the market and for this purpose, Accused gave two undated blank signed cheques to Mr. Sushil Verma towards advance payment and as a security for arranging and supplying the demanded goods to the Accused. Thereafter, no goods were arranged by the aforesaid Mr. Sushil Verma. The Accused stated that there was no loan transaction as alleged by the Complainant and the aforesaid two cheques were misused by Mr. Sushil Verma and his brother Mr. Anil Verma and the cheques were without any consideration. It is further stated that Accused had not received the legal demand notice but the address appearing on it is his. It is stated by the Accused that he does not have any outstanding to be paid to the Complainant.
7. Evidence of the Complainant: After the framing of notice, the Accused was granted permission to cross-examine the Complainant. Thereafter, the Complainant was examined as CW-1, adopting the pre-summoning evidence as post-summoning evidence and was CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 5 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 6 of 26 CNR- DLCT020015552014 cross examined and discharged. No other witnesses were examined by the Complainant. Thereafter, Complainant evidence was closed, and the matter was listed for statement of the Accused u/s 313 Cr.P.C. r/w Section 281 Cr.P.C.
8. Statement of the Accused: Statement of the Accused was recorded u/s 313 Cr.P.C. r/w Section 281 Cr.P.C on 19th of December 2020 wherein all the incriminating circumstances appearing in evidence against the Accused were put to him to which the Accused stated that the cheque in question bears his signatures, however, the rest of the details are not filled by him and the cheque was given by the Accused for payment of sanitaryware products which were required to be purchased from the Complainant. Accused stated that the cheque in question was given in 2013. It was stated by the Accused that he does not know about the dishonor of the cheque and he did not receive any legal demand notice from the Complainant. Accused further stated that he does not owe any liability towards the Complainant under the cheque in question as the goods agreed to be supplied by the Complainant were not actually supplied to him and this cheque in question was given as advance payment. It was further stated by the Accused that Complainant has falsely deposed against him in respect of loan allegedly advanced and the cheque in question has been misused by the Complainant.
9. Defence Evidence: The Accused has not examined any defence witness in his favour, choosing to substantiate his defence only upon the cross examination of CW - 1. A separate statement of the CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 6 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 7 of 26 CNR- DLCT020015552014 Accused to that effect was recorded and defence evidence was closed. The matter was then fixed for final arguments.
10. I have heard the submissions of the Ld. Counsel for the Complainant as well as the Accused. I have also perused the record. The Ld. Counsel for the Complainant has relied upon the following judgements:
(a) Jaspal Singh Vs. State, Crl. Rev. No. 160/2016
(b) Ravi Chopra Vs. State, 2008(102) DRJ 147
(c) ICDS Ltd. Vs. Beena Shabeer, 2002(2) SCC 426
(d) V.S.Yadav Vs. Reena, Crl. Appeal No. 1136/2010
(e) Hiten P. Dalal Vs. Bratindranath Bannerjee, Crl.Appeal No. 688/1995
(f) DK Chandel Vs. M/s Wockhardt Ltd, Crl. Appeal No. 132/2020
(g) Amar Kumar Agarwal Vs. Ramesh Singh, CRA No. 766/2017 Appreciation of evidence
11. Before embarking upon a journey of appreciation of evidence, it would be fruitful to examine the statutory contours of the offence u/s 138 of the Negotiable Instruments Act, 1881 and the conspectus of cases which have served to explicate them.
12. For the application of s.138 of the Negotiable Instruments Act, 1881, the following legal requirements must be satisfied from the averments in the Complaint as well as the evidence of the Complainant: -
CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 7 of 26CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 8 of 26 CNR- DLCT020015552014
(a) That a person has drawn a cheque, 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 legally enforceable debt or other liability;
(b) That the 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;
(c) That the cheque has been returned by the drawee bank unpaid, for the reason that 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 agreement made with that bank;
(d) That the payee or holder in due course has made a demand for payment of the said amount of money by giving a notice in writing to the drawer of the cheque within 30 days of receipt of information from the bank regarding the return of the cheque as unpaid;
(e) That the drawer of the cheque fails to make the payment of the said amount of money to the payee or holder in due course within 15 days of receipt of the said notice;
13. The aforesaid legal requirements are cumulative in nature, i.e. only when all of the aforementioned ingredients are duly proved is the drawer of the cheque deemed to have committed an offence under s. 138 of the Negotiable Instruments Act.
14. The provision of s.138 is buttressed by s.139 and s.118 of the Act. s. 139 of the Act provides that the court shall presume, that the holder of a cheque received the cheque for the discharge, wholly or in part CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 8 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 9 of 26 CNR- DLCT020015552014 of any debt or other liability. s.118 of the Act provides inter alia that the court shall presume, until the contrary is proved, 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.
15. What follows from the aforesaid is that the offence u/s 138 of the Negotiable Instruments Act operates on reverse onus of proof theory. The presumptions u/s 139 and s. 118 of the Act mandate the court to draw them, when a given set of facts are shown to exist. The same is evident by the peremptory language "Shall Presume" used. However, the said presumptions are rebuttable in nature, i.e. it is open for the defence to disprove the same by establishing facts to the contrary.
16. In the case of Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 the Hon'ble Supreme Court had occasion to examine the confines of the presumption u/s 139 of the Act, wherein it held as follows:
"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 (..) 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. at p. 65, para 14.) (...) Presumptions are rules of evidence CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 9 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 10 of 26 CNR- DLCT020015552014 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.
(...) Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man".
(...) The distinction between the two kinds of presumption lay not only in the mandate to the court, but also in the nature of evidence required to rebut the two. In the case of a discretionary presumption the presumption if drawn may be rebutted by an explanation which "might reasonably be true and which is consistent with the innocence" of the Accused. On the other hand in the case of a mandatory presumption, the burden resting on the Accused person in such a case would not be as light as it is where a presumption is raised under Section 114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the Accused is reasonable and probable. It must further be shown that the explanation is a true one.(...) Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted". (emphasis supplied).
17. Also, in the case of Rangappa v. Sri Mohan, (2010) 11 SCC 441 it was held that "(..)we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 10 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 11 of 26 CNR- DLCT020015552014 indeed include the existence of a legally enforceable debt or liability. (..)
27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. (..)the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant- Accused cannot be expected to discharge an unduly high standard or proof.
28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, 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(...)
18. With regard to the factors taken into account for rebutting the presumption u/s 139 read with s.118 of the Act, the judgement of Hon'ble Delhi High Court in V.S. Yadav v. Reena CRL. A. No. 1136 Of 2010 assumes importance, wherein it was held that:
"Mere pleading not guilty and stating that the cheques were issued as security, would not give amount to rebutting the presumption raised under Section 139 of N.I. Act. If CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 11 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 12 of 26 CNR- DLCT020015552014 mere statement under Section 313 Cr. P.C. or under Section 281 Cr. P.C. of Accused of pleading not guilty was sufficient to rebut the entire evidence produced by the Complainant/prosecution, then every Accused has to be acquitted. But it is not the law. In order to rebut the presumption under Section 139 of N.I. Act, the Accused, by cogent evidence, has to prove the circumstance under which cheques were issued." (emphasis supplied)
19. Now I shall proceed to deal with the legal ingredients one by one and give my finding on whether the evidence on record satisfies the legal ingredient in question or not.
(a) That a person has drawn a cheque, on an account maintained by him with a banker for payment of any amount of money to another person from out of that account another person from out of that account for the discharge, in whole or in part, of any legally enforceable debt or other liability
20. This condition pertains to the issuance of the cheque itself. It is pertinent to note that the Accused, in his notice of accusation has admitted his signature on the cheque in question. Further, the cheque in question has been drawn from the account of the Accused. This leads to drawing of an inference u/s 139 read with s.118 of the Act, that the cheque was issued in discharge of a legally recoverable debt or other liability.
21. In the case of Bharat Barrel & Drum Mfg. Co. v. Amin Chand Pyarelal, (1999) 3 SCC 35, it was held "12. (...) the position of law which emerges is that once CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 12 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 13 of 26 CNR- DLCT020015552014 execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies.(...) The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff."
22. The presumption now having been raised against the Accused, it falls upon the Accused to rebut it. It is trite that the Accused need not himself step into the witness box for rebutting the presumption. He can establish his defence on preponderance of probabilities by relying upon the material brought forth in the cross-examination of the Complainant/CW - 1.
23. It is the defence of the Accused that the cheque in question was given undated blank signed to Mr Sushil Verma as advance payment and as security for arranging and supplying the demanded sanitaryware CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 13 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 14 of 26 CNR- DLCT020015552014 goods to the Accused. The Accused has contended that he is not liable under the cheque in question as Mr Sushil Verma did not supply the goods demanded by the Accused. It is also the case of the Accused that the Complainant, Mr Anil Verma being the brother of Mr Sushil Verma has misused the cheque issued by the Accused and that the Accused does not have any liability towards the Complainant. The Accused has categorically refuted the existence of any loan transaction as alleged by the Complainant and has stated that the cheque in question has been issued without consideration.
24. The Accused remains consistent in his defence as is evident by the cross-examination of CW - 1 and in the statement of Accused u/s 313 read with s.281 Cr.P.C.
25. The law regarding issuance and delivery of blank signed cheques is well settled. In the case of Bir Singh Vs. Mukesh Kumar, 2019 (4) SCC 197 the Hon'ble Supreme Court observed and held:
"37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted."
38. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 14 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 15 of 26 CNR- DLCT020015552014 invalidate the cheque. The onus would still be on the Accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence."
26. Hence, the defence that a blank signed cheque was given will not operate to negate the application of s.138 of the Act as against any payee who has filled up the missing details and presented the cheque for encashment, unless it is shown by the Accused that the same was not in discharge of a debt or other liability.
27. Now, if we examine the other limb of the defence of the Accused, that the said cheque was given as a security cheque, the same is also without merit considering the judgement of the Hon'ble Supreme Court in ICDS Ltd. Vs. Beena Shabeer, (2002) 6 SCC 426 assumes significance wherein it was held:
"The issue as regards the co-extensive liability of the guarantor and the principal debtor, in our view, is totally out of the purview of Section 138 of the Act.(...) The language of the Statute depicts the intent of the law-makers to the effect that wherever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of the Act: 'Any cheque' and 'other liability' are the two key expressions which stands as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the Statute."
28. In Credential Leasing & Credits Ltd. vs Shruti Investments & Anr. (2015) SCCOnLine Del 10061, Hon'ble Delhi High Court has held that the scope of section 138 NI Act would cover cases where ascertained and crystallized debt or other liability exists on the date CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 15 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 16 of 26 CNR- DLCT020015552014 when the cheque is presented and not only to the cases where ascertained and crystallized debt or other liability exists on the date on which it was delivered to the seller as a post- dated cheque or as a current cheque with a credit period.
29. It is pertinent to note that the Accused has merely pleaded the aforesaid defences but has brought nothing on record in proof of his defence. The Accused has not brought forth anything to show that renovation work was going on at his house at the relevant time and he needed sanitaryware goods, for which he had approached the brother of the Complainant. The Accused also did not bring on record any document/bill to show that an order was placed with the brother of the Complainant. Further, no explanation was forthcoming from the side of the Accused as to why he did not act like a reasonable or prudent man and issue stop payment instructions qua the cheque in question or demand the return of the cheque in question when it became apparent to him that the brother of the Complainant would not supply the goods demanded by the Accused. It does not stand to reason as to why a person would issue undated blank signed cheques as security for procurement of sanitaryware goods when it is common knowledge, of which the Court can also take judicial notice that sanitaryware items are commonly available items in the market and stocked by innumerable dealers. Hence, the defence of the Accused does not inspire the confidence of the Court.
30. It has been the case of the Complainant all along that the Accused had taken a friendly of ₹ 2 lakh from him. The fact of advancement CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 16 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 17 of 26 CNR- DLCT020015552014 of friendly loan is backed by the oral testimony of CW - 1. Even the testimony of CW - 1, when he is specifically questioned as to the material aspects of the friendly loan, remains to be more or less, consistent. In the cross examination of CW - 1 conducted on 2nd of January 2018, it is admitted by him that the alleged loan was advanced by way of cash and that no document was executed between the parties. It is also admitted by him that no witnesses were present at the time when the loan was advanced. CW - 1 then states that he has shown the alleged loan amount in his ITR and the cross examination is deferred for want of ITR. When CW - 1 is recalled for further cross examination on 15th of January 2019, he produces his ITR and the same is Ex. CW-1/9. He then admits that he is unable to show anything in the ITR which would depict the advancement of the loan amount to the Accused. The cross- examination of CW - 1 is deferred again as CW - 1 states that he now wants to produce the relevant balance-sheet. Now on 19th of December 2020, CW - 1 states that he does not have the relevant balance-sheet in his possession.
31. It has been argued on behalf of the Accused that the failure to reflect the loan transaction in the ITR and the non-production of the balance sheet/account books should raise an adverse inference against the Complainant and the Court should consider the presumption u/s 139 r/w s.118 of the Negotiable Instruments Act rebutted. Reliance is placed on s.114 of the Indian Evidence Act and in particular the Illustration (g) thereof which reads:
CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 17 of 26CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 18 of 26 CNR- DLCT020015552014 "(g) That evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it;"
The aforesaid contention, though attractive at first blush, is untenable for the reason that the presumption u/s 114 of the Indian Evidence Act is a discretionary presumption "May Presume"
whereas the presumption u/s 139 r/w s.118 of the Negotiable Instruments Act are mandatory presumptions "Shall Presume, unless the contrary is proved". The standard of proof to rebut the presumption u/s 139 r/w s.118 of the Negotiable Instruments Act is not as light as the presumptions u/s 114 of the Indian Evidence Act. As discussed in Hiten P. Dalal Vs. Bratindranath Bannerjee (Supra), the onus upon the Accused cannot be discharged merely by reason of the fact that the explanation offered by the Accused is reasonable and probable. It must further be shown that the explanation is a true one. The Accused has not been able to satisfy the aforesaid standard. Even if an adverse inference is drawn against the Complainant, the fact remains that the Accused cannot rebut the presumption raised against him merely by relying on an adverse inference against the Complainant. One statutory presumption cannot stand rebutted by having recourse to another statutory presumption, especially when the nature of the two presumptions are fundamentally different in nature.
32. It has been argued that advancement of loan amount of more than Rs. 20,000 in cash and failure to mention the loan in the ITR and failure to produce balance sheet should absolve the Accused of CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 18 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 19 of 26 CNR- DLCT020015552014 liability u/s 138 of the Negotiable Instruments Act, 1881 and the alleged debt should cease to be recoverable, as the same was advanced in contravention of law. The aforesaid contention is without merit in view of the judgement of Hon'ble High Court of Delhi in Guddo Devi @ Guddi Vs. Bhupender Kumar Crl. Rev. P. 1246/2019, wherein it was held:
"14. Section 269SS of the Income Tax Act, 1961 prohibits making of any payment in cash above a sum of ₹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 un-enforceable or precludes the lender from recovering the same."
33. It cannot be said that that mere fact that the loan has been advanced in cash or that when it is not reflected in the ITR of the Complainant, the said facts would ipso facto cast aspersions on the case of the Complainant. The Income Tax Act is a distinct statute and the assessee will be liable to the consequences therein, as that matter is between the revenue and the assessee. However, it cannot be said that the prosecution u/s 138 of the NI Act in respect of the said loan would become non-maintainable. Reliance is placed on Sheela Sharma Vs. Mahendra Pal Crl.L.P No. 559/2015 (DelHC) and Amar Kumar Agarwal Vs. Ramesh Singh, CRA. No. 766/2017 (ChattisgarhHC).
34. Further, in the case of DK Chandel Vs. Wockhardt Ltd, Crl. A CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 19 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 20 of 26 CNR- DLCT020015552014 No. 132/2020 the Hon'ble Supreme Court has held that production of the account books/cash book may be relevant in the civil court; but may not be so in the criminal case filed under Section 138 of the N.I. Act. This is because of the presumption raised in favour of the holder of the cheque. Hence, the Accused cannot place reliance on the non-production of account books to escape the rigours of the presumption u/s 138 r/w s.118 of the Negotiable Instruments Act.
35. The Ld. Counsel for the Accused has contended that, without prejudice to the aforesaid defenses, CW-1 has made substantial improvements in his cross examination conducted on 19.12.2020 where he has stated that the alleged loan was advanced in installments, a new fact which is absent in the Complaint and evidence affidavit. The Ld. Counsel for the Accused has argued that the aforesaid inconsistency make the testimony of CW-1 unreliable. Perusal of the cross-examination of CW-1 would reveal that he has stated that "I had given the said amount of Rs. 2 Lakhs in three to four instalments. The said instalments were given within the month of January, 2014" whereas Para 2 of the Complaint states that "in the month of January 2014, the Accused had taken a friendly loan of Rs. 200000/-". The abovesaid statements are not contradictory to each other and certainly not material improvements. The testimony of a witness is to be read holistically and not in bits and pieces. The testimony of CW-1 cannot be held unreliable on the aforesaid ground alone.
36. In the instant case, the advancement of friendly loan is not stricto CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 20 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 21 of 26 CNR- DLCT020015552014 sensu disputed by the Accused. In fact, there is only bare denial of the factum of loan in the notice of accusation and in the statement u/s 313 r/w s.281 Cr.P.C. The Accused has not himself stepped into the witness box or led any evidence to substantiate his plea. The cross-examination of CW-1 is also shorn of any material inconsistency. Hence, the said denial by the Accused would not, by itself assume the character of defence evidence as held in V.S. Yadav vs. Reena (supra).
37. The Complainant has stated, in para 2 and para 3 of the Complaint that initially in the month of January 2014 the Accused had taken a loan of ₹ 2 lakh at the rate of 18% per annum for a period of six months. Thereafter as the Accused did not pay the aforesaid loan amount along with interest, with great difficulty a settlement was arrived at in which it was agreed that the Accused to pay the principal amount of Rs. 2 lakhs only by way of the cheque and it is in respect of this amount, it has been alleged by the Complainant that the Accused has issued the cheque in question. CW - 1 has deposed in his cross-examination conducted on 19th of December 2020 that there is no text message or a letter in writing in respect of the settlement which was arrived at between the Complainant and the Accused. CW - 1 goes on to depose that he merely asked for the return of the amount orally. It has been vehemently argued on behalf of the Accused that failure of the Complainant to show any documentary evidence of demand of the repayment of loan or the settlement reached with the Accused will cast reasonable doubt on CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 21 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 22 of 26 CNR- DLCT020015552014 the version of the Complainant. Even this ground agitated by the Accused is without merit, for the reasons stated in the preceding paragraph. The Accused has merely paid lip service to his defence. A bald assertion without necessary proof will not assume the character of defence evidence, howsoever believable or probable it may be. The Accused has to plead and also prove his defence. Mere bald plea is not enough.
38. Finally, it has been argued by the Ld. Counsel for the Accused that the case of the Complainant must stand on its own legs and the Accused is entitled to benefit of doubt. The said ground has been agitated repeatedly in the course of final arguments and deserves mention herein for the said reason. As has been discussed lucidly in the preceding paragraphs, a prosecution u/s 138 of the Negotiable Instruments Act starts on a reverse onus of proof theory. The case of the Complainant is aided by strong presumptions against the Accused. It is only after the Accused manages to rebut the presumptions, on a preponderance of probabilities does the onus shift back to the Complainant. In the instant case, the Accused has not managed to rebut the presumptions raised against him.
39. Hence the aforesaid ingredient stands fulfilled as against the Accused.
(b) That the 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;
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40. This requirement is satisfied on a perusal of the cheque in question Ex. CW1/1which bears date of 04.08.2014 and the return memo Ex. CW1/3 which bears the date of 16.09. 2014.The defence has led no evidence to controvert the same and hence, this ingredient stands fulfilled as against the Accused.
(c) That the cheque has been returned by the drawee bank unpaid, for the reason that 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 agreement made with that bank
41. s. 146 of the Negotiable Instruments Act, 1881 provides that the court shall, on production of bank's slip or memo having therein the official mark denoting that the cheque has been dishonored, presume the fact of dishonour of such cheque, unless and until such fact is disproved. The bank return memo Ex. CW1/3 dated 16.09.2014 on record states that the cheque in question has been returned dishonoured for the reason "Funds Insufficient.". The defence has led no evidence to controvert the same and hence, this ingredient is also fulfilled as against the Accused.
(d) That the payee or holder in due course has made a demand for payment of the said amount of money by giving a notice in writing to the drawer of the cheque within 30 days of receipt of information from the bank regarding the return of the cheque as unpaid
42. As regards the service of legal demand notice, the Complainant has CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 23 of 26 CNR- DLCT020015552014 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 24 of 26 CNR- DLCT020015552014 sent the same, Ex. CW1/4 to the Accused. The original postal receipts in respect of the same are already on record as Ex. CW1/5 & CW1/6. The AD card is Ex. CW1/8. The Accused has denied receiving any legal demand notice in his notice of accusation. However, he has admitted that the address appearing on the legal demand notice is his correct address.
43. Perusal of the record reveals that the address mentioned in the legal demand notice is identical to the address stated by the Accused in his bail bonds.
44. section 27 of the General Clauses Act provides that service of any document sent by post, shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the document unless the contrary is proved. A like presumption is also carved out under section 114 Indian Evidence Act, 1872 which when applied to communications sent by post, enables the court to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. A bare denial by the Accused in his notice of accusation and in his examination u/s 313 read with s.281 Cr.P.C. would not assume the character of defence evidence, as held in V.S. Yadav v. Reena (supra). Hence, the Accused has not been able to rebut the presumption of service of legal demand notice. Resultantly, the benefit of the presumption accrues in the favour of the Complainant and this ingredient is fulfilled as against the Accused.
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(e) That the drawer of the cheque fails to make the payment of the said amount of money to the payee or holder in due course within 15 days of receipt of the said notice
45. In the instant case, the Accused has denied receiving legal demand notice, both in the notice of accusation u/s 251 Cr.P.C. and the statement of the Accused u/s 313 read with s.281 Cr.P.C.
46. In C.C.Alavi Haji vs Palapetty Muhammad (2007) 6 SCC 555 it was held by the Hon'ble Supreme Court:
"Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the Complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (....). A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the Complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation."
47. Hence, regardless of the said averment in respect of non-receipt of legal notice, it was open to the Accused to make the payment due under the cheque within 15 days of service of summons of the instant case. However, the Accused has failed so to do, on the ground that he does not owe any liability towards the Complainant. Hence, this ingredient stands fulfilled as against the Accused.
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48. Hence, all the ingredients of the offence are satisfied against the Accused. Hence, the Accused Manoj Verma is hereby convicted of the offence u/s 138 of the Negotiable Instruments Act, 1881.
49. Let he be heard on point of sentence separately.
VISVESH Digitally signed by VISVESH Date: 2021.02.27 15:12:54 +05'30' ANNOUNCED IN THE OPEN (VISVESH) COURT ON 27.02.2021 MM, NI ACT-06, CENTRAL TIS HAZARI COURTS, DELHI CC No. 515497/2016 Anil Verma V/s Manoj Verma Page 26 of 26 CNR- DLCT020015552014
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