Delhi District Court
Hon'Ble Supreme Court In Rangappa vs Srimohan; Crl. Appeal No. on 3 October, 2013
In the Court of Sh. Gorakh Nath Pandey
Senior Civil JudgecumRent Controller, New Delhi District
Patiala House Courts, New Delhi
C. C No. 1210/1/09/12
In the matter of:
Sh Mukul Pal Taneja
B20, Mayfair Garden,
Hauz Khas Enclave
New Delhi110016 .....Complainant
VERSUS
Sh Dhanesh Barodia
Sole Proprietor
M/s Gangoly Brothers
26, Regal Building, Connaught Place
New Delhi110001
...... Accused
Date of Institution : 20.02.2008
Date of Arguments: 17.09.2013
Date of Judgment : 03.10.2013
COMPLAINT UNDER SECTION 138 OF THE NEGOTIABLE
INSTRUMENTS ACT, 1881.
C. C No. 1210/1/09/12
Mukul Pal Taneja v. Dhanesh Barodia
Page no. 1 of 24
JUDGMENT :
This complaint under section 138 of the Negotiable Instruments Act, 1881 ( hereinafter called the Act) is made by the complainant against the accused. The brief and relevant facts for filing this complaint is as below.
2 As contended, the accused is the Sole Proprietor of M/s Gangoly Brothers and he has approached the complainant and his mother Dr. Nirmala Taneja for loan with a request to repay the same with interest; that on the request of the accused the complainant gave him an amount of Rs. 7,50,000/ by way of three cheques (1) 796336 dated 23.2.2007 for Rs. 2,50,000/ (2) 796337 dated 23.2.2007 for Rs. 2,50,000/ and (3) 796338 dated 26.2.2007 for Rs. 2,50,000/, all drawn on ABN Amro Bank, Hauz Khas, New Delhi110016. It is further contended that in the first week of August the accused gave 18 cheques of Rs. 50,000/ each to the complainant in discharge of his liability/debt; that one of the said cheques, i.e. cheque no. 840356 dated 18.9.2007 for Rs.50,000/ drawn on the South Indian Bank Ltd, Connaught Place, New Delhi110001 was dishonoured for the reasons "Fund Insufficient" on presentation vide memo dated 18.9.2007 and C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 2 of 24 was returned to the complainant by his banker vide return memo dated 9.9.2007. It is further contended that on the request of the accused, the complainant again presented the said cheque for encashment but it was again returned as dishonoured vide memo dated 22.10.2007; that again on the request of the accused the complainant presented the said cheque for encashment and the cheque was returned unpaid vide memo return memo dated 14.12.2007 for the reasons "payment stopped by the drawer". Legal notice dated 12.01.2008 was issued to the accused by the complainant by registered post, speed post as well as UPC and as the accused has not paid the due and outstanding amount towards cheque despite service of the legal notice, this complaint is filed by the complainant against the accused. 3 After examination of the complainant under section 200 of the Code of Criminal Procedure, 1973 (Cr.P.C.) by way of an affidavit and having considered the contents of the affidavit and the documents filed alongwith the same, the accused was summoned to face accusation under section 138 of the N I Act in respect of cheque in question.
4 In pursuance of the process issued by the court, the accused appeared and notice of accusation under section 251 of C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 3 of 24 Cr.P.C. was framed against the accused whereby the accused was charged with the commission of offence punishable under section 138 of the Act in respect of cheque in question. The notice of accusation was read over and explained to the accused to which he did not plead guilty and submitted that he had defence to make as below: "No loan as alleged in the complaint had been given by the complainant to me. The cheque in question had been issued by me as part amount, which the complainant had demanded from me for admission of my grand son Ansh, son of Sh. Mayank Barodia in Modern School, Barakhamba Road, New Delhi in Nursery Class. However, the complainant had failed to get my grand son admitted in the said School and he had no legal right to present the cheque in question. The cheque was not issued towards any legally enforceable debt or liability. No notice dated 12.01.2008 allegedly sent by the complainant was ever received by me."
5 The complainant examined himself as CW1 by way of affidavit Ex. C1 who reiterated the facts disclosed in the complaint C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 4 of 24 and proved the documents i.e. cheque Ex.CW1/1, cheque returning memos Ex.CW1/2 to Ex. CW1/7, returned envelopes containing the legal demand notice are Ex.CW1/8 and CW1/9 sent through registered post and courier receipt Ex.CW1/10 and Ex. CW1/11 respectively. The witness deposed that the accused failed to make the payment despite service of the legal notice and this complaint is true and correct. As no witness remained to be examined, CE was closed by the complainant.
6 The accused was examined under section 313 Cr.P.C. wherein the accused denied to have approached the complainant for alleged loan and the payment by way of the three cheques of Rs. 2,50,000/ each to the accused by the complainant and his mother Dr. Nirmala Taneja. The accused also denied regarding the loan due to financial constraints mentioning that he was not given any cheque as loan. As further mentioned, the accused did not give the cheque in question for repayment of loan and the cheque was issued to the complainant for admission of grand son Ansh Barodia in Modern School. The accused admitted that he got the payment of the cheque in question stopped as his grand son was not admitted in Modern School. He also denied having received legal notice alongwith liability. It is C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 5 of 24 further stated by the accused in his examination under section 313 Cr.P.C. that the complainant used to buy watches from his shop and used to make payment through cheques. The complainant has deposed falsely and there is no entry of all the cheques in the bank statement of the complainant, as mentioned in the complaint. As the accused did not wish to lead any evidence in his defence,the DE was closed. 7 I have heard counsel for the parties and gone through the relevant materials on record.
8 Ld. Counsel for the complainant has argued that the accused has failed to pay the due and outstanding amount to the complainant despite service of the legal notice against the cheque in question, i.e. Ex.CW1/1 which was issued towards legally recoverable debt and the presumption as contemplated under section 118 (a) r/w section 139 of the NI Act goes in favour of the complainant and the accused be convicted for the offence under section 138 of the NI Act. Ld. Counsel for the complainant has relied upon the judgment of Hon'ble Supreme Court in Rangappa vs Srimohan; Crl. Appeal No. 1020/2010 and C. C. Alavi Hazi v. Palapetty Mohd. & Anr, decision dated 18.5.2007 in support of claim and contention. C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 6 of 24 9 Having drawn my attention on the materials on record, it is submitted by counsel for the accused that no offence has been proved against the accused alongwith his liability against the cheque in question Ex. CW1/1 and therefore, the accused is entitled to be acquitted. As argued, the complainant has withdrawn the amount of cheque no. 796336 to 796338 himself as is reflected in the statement of account of the complainant Ex. CW1/DX1 and the complainant has failed to produce any document to show that cheque no. 796336 to 796338 were issued by him in favour of the accused towards loan despite direction of court dated 27.2.2013 and the cheque in question was not issued towards repayment of loan or legally enforceable debt but was issued towards part payment to facilitate admission of grand son of the accused in Modern School, Barakhamba Road, New Delhi. It is further argued that the accused has issued eighteen cheques of Rs. 50,000/ each in lieu of admission of his grand son Ansh Barodia as the complainant has assured Mr. Mayank Barodia, son of the accused for admission of Ansh Barodia in Modern School and these eighteen cheques were to be presented only after admission of grand son of the accused in Modern School, Barakhamba Road, New Delhi; that the payment of the cheque in question was stopped by the accused as his C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 7 of 24 grand son was not given admission in Modern School. There is no liability against the complainant and the compliant u/s 138 of the NI Act is liable to be dismissed with heavy cost. 10 I have given my thoughtful consideration to the submissions made on behalf of the parties and considered the relevant provisions of law. I have also considered the judgments relied by the complaint in support of his claim and contentions. 11 Section 138 of the Act which pertains to dishonour of cheque for insufficiency, etc., of funds in the account, at the relevant time, read as follows:
138. Dishonour of cheque for insufficiency, etc., of funds in the account ― 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 C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 8 of 24 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 be extended to two years, 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 in due 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 fifteen days of the receipt of information by him from the bank regarding the return of the cheque as C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 9 of 24 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 purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
12 From a reading of section 138 of the Act, it can be discerned that to render a drawer of a cheque liable under the said section, it is essential that the cheque must be drawn to discharge a legally enforceable debt or liability. If such cheque is drawn not to discharge any legally enforceable debt or liability, the drawer of such cheque cannot be held liable for commission of offence punishable under section 138 of the Act. From a reading of proviso to section 138 of the Act it can also be discerned that after dishonour of the cheque unless and until a notice as required by clause (b) of the said proviso is served upon the drawer of the cheque whereby he is called C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 10 of 24 upon to make payment against the cheque, such drawer cannot be held liable for the commission of offence punishable under section 138 of the Act.
13 In re Hon'ble Supreme Court of India Krishna Janardhan Bhat v. Duttatraya G. Hagde, 2008 (1) Apex Courts Judgement 412 (SC) referred the ingredients of the offence under section 138. Paragraph 29 reads thus:
"29. Section 138 of the Act has three ingredients viz.:
(i) that there is a legally enforceable debt;
(ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt; and
(iii) that the cheque so issued had been returned due to insufficiency of funds."
2. In paragraphs 30 and 31 the Apex Court dealt with the presumption under section 139 of the said Act. Paragraphs 30 and 31 read thus:
"30. The proviso appended to the said section provides for compliance with legal requirements before a complaint petition C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 11 of 24 can be acted upon by a court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter existence of legally recoverable debt is not a matter of presumption under section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability.
31. The courts below, as noticed herein before, proceeded on the basis that section 139 raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct." (Emphasis added).
3. Further para 13 of the judgment reported as 2009(3) (Supra) reads as under: "13. In the present case, there is a categorical admission that the amount allegedly advanced by the applicant was entirely a cash amount and that the amount C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 12 of 24 was "unaccounted". He admitted not only that the same was not disclosed in the Income Tax Return at the relevant time but till recording of evidence in the year 2006 it was not disclosed in the Income Tax Return.
By no stretch of imagination it can be stated that liability to repay unaccounted cash amount is a legally enforceable liability within the meaning of explanation to section 138 of the said Act. The alleged debt cannot be said to be a legally recoverable debt."
14 As held in Anil Handa vs. Indian Acrylylic Ltd. reported as AIR 2000 SC 145, under section 139 of the Act there is a legal presumption that the cheque was issued for discharging an antecedent liability and this presumption can be rebutted by the person who gives the cheque. The presumption is for casting the burden of proof as to who should adduce evidence in a case. It is open to the accused to adduce evidence to rebut the said presumption. As further C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 13 of 24 held in K. L. George vs. Muhammed Master, (1999) 97, Comp Cases, 664, the presumption available under section 139 can be rebutted by the accused by adducing evidence. So the evidence available on record will have to be appreciated by bearing in mind the above fact regarding burden of proof.
15 We have to examine the matters in issue in the context of Section 118(a) and 139 of the NI Act and decide whether the accused has been able to rebut the presumptions. The Act raises two presumptions, first in regard to the passing of consideration as contained in Section 118 therein and second, a presumption that the holder of cheque receiving the same of the nature referred to in Section 139 discharged in whole or in part any date or other liability. Presumptions both U/s. 118 (a) and 139 are rebuttable in nature. 16 In the case of Bharat Barrel and Drumb Manufacturing Company v. Amin Chand Pyare Lal (1999) 3 SSC 35 interpreting Section 118 (a) of the Act, it was opined :
"Upon consideration of various judgment as noted herein above, the position of law which emerges is that once execution of the promissory note is admitted, the C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 14 of 24 presumption U/s 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 by probabilities by reference of the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the nonexistence of the C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 15 of 24 consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising u/s 118(a) in his favour. 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....."
17 On the issue of burden on the drawer to rebut the presumption, it was held that "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."
In Crl.L.J. 1172, it was observed in para 26 to 33 that:
"A Statutory presumption has an evidentiary value. The question as to whether the presumption whether stood rebutted or not, must, therefore, be determined keeping in view the other evidence on record. For the C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 16 of 24 said purpose, stepping into the witness box by the appellant is not imperative,. In a case of this nature, where the chances of false implication cannot be ruled out, the background fact and the conduct of the parties together with their legal requirements are required to be taken into consideration. "Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter, all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the nonexistence 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 C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 17 of 24 "prudent man".
In determining whether a reverse burden is compatible with the presumption of innocence regard should also be had to the pragmatics of proof. How difficult would it be for the prosecution to prove guilt without the reverse burden? How easily could an innocent defendant discharge the reverse burden? But courts will not allow these pragmatic considerations to override the legitimate rights of the defendant. Pragmatism will have greater sway where the reverse burden would not pose the risk of great injustice-- where the offence is not too serious or the reverse burden only concerns a matter incidental to guilt. And greater weight will be given to prosecutorial efficiency in the regulatory environment." 18 In the case in hand, the accused has admitted the issuance of the cheque but denied his liability explaining the reasons and the purpose of issuance of the cheque. As claimed by the complainant, the complainant had paid Rs. 7,50,000/ to the accused towards loan and for repayment of the same, the accused has issued C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 18 of 24 18 cheques of Rs. 50,000/ each which comes to total of Rs. 9,00,000/. It is the case of the complainant that the loan was paid by the complainant to the accused on interest but no rate of interest is mentioned in complaint or in the testimony of the witness. It is necessary to mention that the complainant has failed to prove the factum of payment of Rs. 7,50,000/ by way of three cheques as detailed in the complaint despite repeated and ample opportunities and nothing was produced on record that any such cheque was encashed by the accused. The accused on the other hand, by way of the statement of account Ex. CW1/DX1 (admitted by the complainant during crossexamination) proved that the complainant by way of these three cheques did not pay Rs. 7,50,000/ to the complainant. The contention of the accused appears to be true as the cheque no. 796337 and 796338 debited Rs. 7000/ and Rs. 25,000/ respectively from the account of the complainant. I have also gone through the order dated 8.1.2013 by my Ld. Predecessor as well as the crossexamination of the complainant recorded on 27.2.2013. The crossexamination of the witness was deferred on 27.2.2013 and the witness was directed to produce the documents with respect to prove that the loan amount of Rs. 7,50,000/ was paid by him to the accused but the complainant C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 19 of 24 failed to produce any such document or prove the same. It is reiterated that the complainant categorically failed to prove any payment of loan of Rs. 7,50,000/ as alleged by him in the complaint. Admittedly the cheques were account payee cheques but the statement of account Ex. CW1/DX1 reflects a contradiction as the cheques were debited not in any account.
19 The accused has not denied the issuance of cheque in question but have denied the liability contending that the cheque was issued to ensure admission of grand son in Modern School, Barakhamba Road, New Delhi and the accused has placed on record the email conversation Ex. CW1/D1 by the complainant as well as the copy of the bill Ex. CW1/D2 to corroborate his version. The complainant also admitted the purchasing of the watches from the accused and consequent acquaintance between the parties. Admittedly, the complainant has not produced any statement of account to prove the factum of payment of any loan to the accused and the consequent liability. Therefore, the accused cannot be held liable. The judgments relied upon by Ld. Counsel for the complainant are not applicable in facts and circumstances of this case. C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 20 of 24 20 As held by the Hon'ble Supreme Court in "SL Goswami vs. State of Madhya Pradesh, decided on 4.1.1972", the onus of proving all the ingredients of an offence is always upon the prosecution and at no stage does it shift to the accused. It is no part of the prosecution duty to somehow hook the crook. Even in cases where the defence of the accused does not appear to be credible or is palpable false that burden does not become any the less . It is only when this burden is discharged that it will be for the accused to explain or controvert the essential elements in the prosecution case which would negative it. It is not however for the accused even at the initial stage to prove something which has to be eliminated by the prosecution to establish the ingredients of the offence with which he is charged, and even if the onus shifts upon the accused and the accused has to establish his plea, the standard of proof is not the same as that which rests upon the prosecution. Where the onus shifts to he accused, and the evidence on his behalf probabilities the plea he will be entitled to the benefit of reasonable doubt. 21 I have also gone through the judgment reported as AIR 2006 SC 3366 wherein it is held that ".... presumptions are rules of C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 21 of 24 evidence and do not conflict with the presumptions 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 nonexistence of the presumed fact. In other words, provided the facts required to form the basis of a presumption of law exists, no discretion is left with the court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, "after considering the matters before it, the court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists".
22 As held in 2010 Cr.L.J. 2871, 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 C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 22 of 24 the grant of relief on the basis of Negotiable Instruments. 23 Examining the case of the complainant from the point of reasonability and preponderance of probabilities also, the complainant failed to prove the case against the accused beyond reasonable doubt. The complainant has failed to prove that the accused is liable and the cheque in question Ex. CW1/1 was issued for the discharge, in whole or in part, of any debt or other liability by the accused to the complainant. The above detailed discussion casts shadow on the case of the complainant. The accused has further proved all the relevant documents in support of his claim and contention during the examination of the witnesses. Therefore, the accused has rebutted the presumption against him.
24 The ratio of the judgement reported as AIR 2009, SC 1518, is squarely applicable in the facts and circumstances of this case. As held,the accused in a trial u/s 138 has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the nonexistence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumption, an accused is not expected to prove his defence beyond reasonable doubt C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 23 of 24 as is expected of the complainant in a criminal trial. 25 In view of the above discussions, this court is of the considered opinion that the complainant has failed to prove that the cheques in question, i.e. Ex. CW1/1 was issued by the accused in favour of the complainant in discharge of his legally enforceable debt or liability. Accordingly, the accused is acquitted of the allegations levelled against him under section 138 of the N I Act. 26 File be consigned to RR.
Announced in the open court on this 3rd day of October, 2013 ( GORAKH NATH PANDEY) Senior Civil JudgecumRent Controller New Delhi C. C No. 1210/1/09/12 Mukul Pal Taneja v. Dhanesh Barodia Page no. 24 of 24