Delhi District Court
Hdb Financial Services Ltd vs Vishal Kumar on 9 May, 2012
IN THE COURT OF SH.NAVJEET BUDHIRAJA, METROPOLITAN MAGISTRATE,
SPECIAL COURT06, DWARKA COURTS, NEW DELHI.
HDB Financial Services Ltd.
VERSUS
Vishal Kumar
P.S.:Lajpat Nagar
U/S: 138 NEGOTIABLE INSTRUMENTS ACT
1.Serial No./CC No. of the : 29005/10 case
2. Name of the complainant : HDB Financial Services Ltd.
H37, 2ndFloor, Bali Nagar, Above Bali Nagar, HDFC Bank, Delhi - 110 016
3. Date of institution : 17.07.2010
4. Name of the accused, his : Vishal Kumar parentage and residence H.No. R30, 1stFloor, West Patel Nagar, New Delhi110008 Also at 2121B, Basti Julhan, Veer Street Sadar Nala Road, Sadar Bazar New Delhi110006
5. Date when judgment was : 04.05.2012 reserved
6. Date when judgment was : 09.05.2012 pronounced
7. Offence complained of and : Offence under Section 138 of Negotiable proved Instruments Act
8. Plea of accused : Accused pleaded not guilty and claimed trial
9. Final Judgment : Accused is acquitted for the offence under Section 138 of Negotiable CC.No.29005/10 Page no.1 of 27 Instruments Act :J U D G M E N T: 1 Vide this judgment, I shall decide the present complaint filed by the complainant HDB Financial Services Ltd., financial institution incorporated under the Companies Act, 1956 under Section 138 of Negotiable Instruments Act (hereinafter referred to as NI Act) against the accused Vishal Kumar. 2 Factual matrix of the case is that on the request and representation of the accused and upon agreeing to various terms, conditions and covenants and execution of agreement no.PL23659, complainant has granted loan facility to the accused. It is further averred that accused defaulted in paying his installments consequent to which loan recall notice was sent to the accused pursuant to which accused offered one time settlement which was accepted and issued cheque bearing number 1368 dt. 04.05.2010 amounting to Rs.2,47,844.22/ which when presented by the complainant with its banker for encashment was returned unpaid by the drawee bank vide return memo dt. 06.05.2010 for the reason "Account Closed".Thereafter, complainant through its counsel served a legal demand notice dated 02.06.2010 to the accused through speed post and courier on 04.06.2010 calling upon him to make the payment of the dishonoured cheque. It is further averred that despite service accused failed to make the payment of the cheque amount demanded through the legal notice thereby committing offence under Section 138 of NI Act for the prosecution of which the present complaint has been filed.
3 After taking cognizance of the offence under Section 138 N.I Act, CC.No.29005/10 Page no.2 of 27
summons were issued to the accused post which accused entered appearance and was admitted to bail on 27.10.2010. Thereafter, notice under Section 251 Criminal Procedure Code (for short Cr.PC) was served upon the accused encompassing all the accusations against him to which accused pleaded not guilty and specified his defence. Thereafter, matter got fixed for defence evidence. 4 In the meanwhile, application under Section 145 (2) of the N.I.Act was filed on behalf of the accused for recalling the witness of the complainant stating the grounds of defence which was allowed and matter got fixed for cross examination of the complainant.
5 Before proceeding with the cross examination, complainant substituted its Authorized Representative (for short AR) and the new AR Sh. Ravi Kumar tendered his evidence by way of affidavit Ex.CW1/1. Other documents relied upon by CW1 are power of attorney Ex. CW1/A, cheque Ex.CW1/B1, returning memo Ex.CW1/C1, legal notice Ex.CW1/D, postal receipts Ex.CW1/E1 to Ex. CW1/E4. In cross examination, CW1 deposed that he has joined the complainant bank after the execution of the loan agreement between the accused and the complainant. He voluntarily deposed that he has joined in August, 2010. He further stated that he is authorized to depose in the present complaint on the basis of his Special Power of Attorney that is filed on record. He denied the suggestion that he is not authorized to depose in this present complaint by virtue of the said power of attorney. He further stated that the cheque in question alongwith the other cheques were given by the accused to one Mr. Veer Pal Singh Rathore who was the branch manager, Patel Nagar who has since been transferred. He further stated that he do not know the place of his transfer, though earlier he was of the knowledge that Mr. Veer Pal Singh CC.No.29005/10 Page no.3 of 27 Rathore has been transferred to Jaipur. He further stated that he did not remember the interest rate that is charged from the accused in the present complaint but stated that same is mentioned in the loan agreement that is on record. Thereafter, complainant witness produced the statement of account which was Marked as 'A'. He further stated that he did not know where Mr. Vir Pal Singh [ex employee of our branch] is posted and also that he did not want to produce Mr. Vir Pal Singh in his evidence. He denied the suggestion that he is deliberately not producing Mr. Vir Pal Singh in this court as at the time of execution of the loan agreement between the accused and our company, Mr. Vir Pal Singh made certain assurances to the accused that the cheques given by the accused at that time are exclusively for the security purpose. Counsel for the accused questioned him that it is mentioned in the agreement that 6 cheques bearing no. 001363, 001364, 001365, 001366, 001367, 001368 were given by the accused at the time of execution of the agreement to which CW1 answered that since he was not present at the time of the execution of the abovesaid loan agreement, therefore, he is not in a position to say anything in this regard and same is the policy matter of our company. He further stated that till date, accused has paid 8 installments to the complainant towards his loan. He denied the suggestion that the cheque in question was given blank to the complainant and the contents of the same were filled by the complainant only. He further stated that the legal notice sent by us was served upon the accused and that the internet generated report of the courier is already on record. He further stated that he did not know whether the legal notice was also sent through registered post or not. He denied the suggestion that we have not sent the legal notice to the accused by any mode and also that accused has not received the said legal notice. He denied the suggestion that accused has paid more than 8 installments to the complainant towards his loan. Counsel for the accused questioned him that in the statement of account which is Marked 'A', all the charges i.e, cheque bouncing CC.No.29005/10 Page no.4 of 27 charges, overdue charges, late payment charges were imposed upon the accused without any agreement in this regard which was denied by CW1.Thereafter witness produced the attested/certified copy of statement of account which is Ex.CW1/S. He denied the suggestion that cheque in question was given as blank and undated for security purpose. He denied the suggestion that he was deposing falsely in favour of the complainant company in which he is working. Court questioned him that when and where did the accused give cheque in question to the complainant to which he answered that the said cheque was given by the accused by visiting the office of complainant and the said cheque was not given in his presence as he joined the complainant company in August 2010 and cheque in question was given by the accused prior to that. Complainant's evidence got closed vide order dated 23.03.2012. 6 Complainant's evidence was followed by Statement of the Accused under Section 313 Cr.P.C r/w 281 Cr.P.C wherein all the incriminating evidences were put to the accused. Accused stated that he availed loan from complainant for sum of Rs.3 lacs. Regarding the issuance of the cheque, he stated that the cheque in question bears his signature but he has neither filled the date nor the amount or the name of the payee. Accused denied to have received the legal demand notice but stated that he was residing at the residential i.e. R30,1 st floor West Patel Nagar, New Delhi08 address as a tenant and had left the said address around two and half years back. The second address i.e 2121B, Basti Julhan, Veer Street, Sadar Nala Road, Sadar Bazar, New Delhi06 was his shop address which he has also closed around two and half years back. Lastly, he stated that he wanted to lead lead defence evidence but on 13.04.2012 accused expressed his unwillingness to adduce defence evidence and closed the same and consequently matter was fixed for final arguments.
CC.No.29005/10 Page no.5 of 27 7 Learned counsel for complainant Mr. Avneesh and learned
counsel for accused Mr. G.D Sharma addressed their respective final arguments at length. Before appreciating the evidences and arguments of both the parties, it would be appropriate to advert to the relevant provisions of N.I Act.
Section 138 of N.I Act reads as under
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 cheque or that it exceeds the amount arranged to be paid from that account by an agreement make with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term 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 bank within a period of six months from the date on which it was 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 thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may CC.No.29005/10 Page no.6 of 27 be, to the holder in due course of the cheque, within 15 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.
8 Section 138 of the NI 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 pre supposes a legally enforeceable debt; and (iii) that the cheque so issued had been returned due to insufficiency of funds. The proviso appended to the said section provides for compliance of legal requirements before a compliant petition can be acted upon by a court of law.
9 I have perused the records of the case giving consideration to the submissions of the counsels.
Before deliberating upon the submission of learned counsels, it will be useful to refer to the relevant paragraphs of the Judgment of the Apex Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde (1) Apex Court Judgments 412 SC. Para 31 reads as under...
"31. The courts below, as notice hereinbefore, 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) CC.No.29005/10 Page no.7 of 27
10 The Apex Court thus reiterated well established legal position that for rebutting the presumption under section 139 of the said Act, it is not necessary in every case for the accused to step into the witness box. The Apex Court held that the standard of proof on the part of the accused and that of prosecution to prove a case is different. The prosecution has to prove the guilt of an accused beyond reasonable doubt, but the standard of proof so as to prove a defence is "preponderance of probability". Inference of preponderance of probabilities can be drawn even by reference to circumstances. In paragraph 44 the Apex Court observed thus : "The presumption of innocence is a human right (see Narendra Singh v. State of M.P., Ranjitsing Brahmajeetsing Sharma V. State of Maharashtra and Rajesh Rajan Yadav V. CBI) Article 6 (2) of the European Convention on Human Rights provides :
"Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law."
Although, India is not bound by the aforementioned convention and as such it may not be necessary like the countries forming European countries to bring common law into land with the Convention, a balancing of the accused's rights and the interest of the society is required to be taken into consideration. In India, however, subject to the statutory interdicts, the said principle forms the basis of criminal jurisprudence. For the aforementioned purpose the nature of the offence, seriousness as also gravity thereof may be taken into consideration. The courts must be on guard to see that merely on the application of presumption as contemplated under section 139 of the Negotiable Instruments Act, the same may not lead to injustice or mistaken conviction........." (Emphasis added). In paragraph 45 the Apex Court held thus:
"45. We are not oblivious of the fact that the said CC.No.29005/10 Page no.8 of 27 provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This, however, shall not mean that the courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have rebutted. Other important principles of legal jurisprudence, namely, presumption of innocence as human rights and the doctrine of reverse burden introduces by section 139 should be delicately balanced. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same." (Emphasis added)
11 Thus, what has been held by Apex court is that presumption of innocence forms part of human rights and therefore the doctrine of reverse burden introduced by section 139 has to be delicately balanced. 12 Thus, it is amply clear from the above mentioned Judgment of Apex Court that for proving his case accused need not in every case step into the witness box to adduce defence evidence. He can rely on the broad improbabilities in the case of the complainant, the improbabilities in the evidence of the witnesses of the complainant, the acceptability of suggestions made to the complainant witnesses in the course of cross examination as also defence evidence if any. So, the presumption under section 139 of N.I Act need not be rebutted only by leading defence evidence and the said presumption can be rebutted even on the basis of the facts elicited in the cross examination of the complainant.
CC.No.29005/10 Page no.9 of 27 13 Counsel for the complainant reiterated the facts stated in the
complaint. Counsel for the accused has contended that the cheque was given as security at the time of the loan in February, 2009 which is evident from the loan agreement and complainant has misused the cheque by filling an imaginary amount without the consent of the accused. He has also contended that accused has not received any legal notice as envisaged under section 138 of N.I Act therefore accused cannot be held liable for the offence. In retort, counsel for the complainant has contended that even if it is agreed that the cheque was security cheque still accused cannot evade his liability in view of Judgments in I.C.D.S Ltd v. Beena Shabeer and another, 12th August 2002 and Constellation Enterprises Pvt v. P.E.C Limited 18th January, 2006.Regarding legal notice, he contended that it was issued at the correct address of the accused by registered post hence it is deemed to be served by virtue of section 27 of General Causes Act.
14 Before zeroing in on the aforesaid contentions of both the parties, let me decide the validity of the power of attorney of the present AR of the complainant Sh. Ravi Kumar which is Ex CW1/A. Paragraph 1 of his affidavit reads as under:
"1 That Mr. Ravi Kumar is one of the Authorized Officer of the complainant and has been duly authorised by the complainant to file and institute the present criminal complaint vide Power of Attorney dated 09.09.10 executed in his favour is exhibited herewith as Ex CW1/A."
Perusal of the Attorney shows that the same was notarised on 17 september 2010.Now let us refer to section 85 of the Evidence Act, 1872 which is as follows:
"85. Presumption as to powers of attorney The Court shall presume that every document purporting to be a Power of Attorney, and to have been executed before, authenticated by, notary public, or any Court, Judge, Magistrate, Indian Consul, or Vice Consul, or representative of the Central CC.No.29005/10 Page no.10 of 27 Government, was so executed and authenticated."
15 The above provision uses the words, notary, execution and authentication. Now referring to the Advanced Law Lexicon of P. Ramanatha Aiyar, where the word Notarize is defined as under: "Notarize. To take acknowledgments, affidavits or depositions, authenticate documents, as a notary public; to swear or affirm to, before a notary. To attest to the authenticity of (a signature, mark, etc.)" 16 Also referring to the functions of the Notaries as specified in Section 8 of the Notaries Act, 1952 where clause (a) reads as under:
"8. Functions of notaries. (1) A notary may do all or any of the following acts by virtue of his office, namely: (a) verify, authenticate, certify or attest the execution of any instrument;"
17 Now turning to the definition of authentication under the Advanced Law Lexicon of P. Ramanatha Aiyar, which reads as under:
"Authentication. 1. Broadly, the act of proving that something (as a document) is true or genuine, esp. so that it may be admitted as evidence; the condition of being so proved (authentication of the handwriting).
2. Specific., the assent to or adoption of a writing as one‟s own. (Black, 7th Edn., 1999) Authentication is the process of validating the identity of someone or something (Information Technology) The act of authenticating.
A process used to confirm the identity of a person or to CC.No.29005/10 Page no.11 of 27 prove the integrity of the specific information. (Information Technology)
18 So from the above, it is clear that there is a statutory presumption under Section 85 of Evidence Act that the Power of Attorney was executed by the person by whom it purports to have been executed and the person who executed the power of attorney was fully competent in this regard. When a seal of the Notary is put on the document, Section 85 of the Evidence Act comes into play and a presumption can be raised regarding the genuineness of the seal of the said Notary, meaning thereby that the said document is presumed to have been attested by a competent Notary of that country. Mere attestation of POA cannot lead to an inference that it was executed before the Notary Public. Execution of POA before the Notary Public and authentication by it is essential condition for valid notarization under the Notary Act and Evidence Act. The condition of notarization can only be fulfilled if it was executed before the Notary Public, meaning thereby that execution and notarization of the POA are on the same date and notarization bears the words "signed/executed before me". The Stamp of Notary indicating the registration number need to be affixed by the Notary.
19 In the complaint in hand, complainant witness Sh. Ravi Kumar has stated in Para 1 of his evidence by way of affidavit that he is authorized by the complainant vide Power of Attorney Dated 09.09.2010 to file and institute the present complaint. Counsel for the accused questioned the validity of authority of AR to represent the present complaint. Relevant portion of the said Power of Attorney is as follows:
CC.No.29005/10 Page no.12 of 27
Dated this 9th day of Sep 2010
SIGNED AND DELIVERED
by Mr. G. Ramesh.......
20 So , it is clear from the above that the said power of attorney was
executed by Mr. G. Ramesh on 9th day of September 2010 whereas it is shown to be notarized on 17.09.2010 which is after the date of execution. So, it appears from this that execution of the said power of attorney was not before the Notary Public and consequently there cannot be proper authentication of the same meaning thereby that presumption under section 85 of Evidence Act cannot be raised. Neither any other witness is examined by the complainant to prove the execution of Power of Attorney in favour of the complainant witness Sh. Ravi Kumar nor any explanation has been tendered by the complainant with regard to the aforesaid discrepancy. 21 To bolster my observation , I would like to refer to the judgment of the Allahabad High Court in Wali Mohammad Chaudhari & Ors. Vs. Jamal Uddin Chaudhari AIR (37) 1950 Allahabad 524, which analyzed Section 85 of the Evidence Act. It was observed that authentication is not merely attestation but something more. Authentication would require a person to have assured himself of the identity of the person who has signed the instrument as well as the fact of execution. It is for this reason that a Power of Attorney bearing the authentication of a Notary Public or an authority mentioned in Section 85 of the Evidence Act is taken as sufficient evidence of the execution of the instrument by the person who appears to be the executant.
CC.No.29005/10 Page no.13 of 27 22 A reference is also made to the judgment of the Supreme Court
in Jugraj Singh & Anr. Vs. Jaswant Singh & Ors. 1970 (2) SCC 386. It was noticed that there was no prescribed form of authentication but reliance was placed in Wali Mohammad Chaudhari case (supra).In that context it was noticed that a proper Power of Attorney duly authenticated as required by law had to be made before the power could be conferred on another person to execute the document or to present it for registration.
In Electric Construction & Equipment Company Ltd v. Jagjit Electric Works AIR 1984 Delhi 363, it was held by Delhi High Court that :
"...........It is, therefore, very essential to stress the two ingredients which are contained in Section 85 of the Evidence Act, viz., execution before the Notary Public and the authentication by the Notary Public. The words are "executed before, and authenticated by". Both these conditions must be satisfied. It appears that neither condition is satisfied in this case because the common seal was affixed on 27th November, 1973, and there is merely an attestation by a Notary Public on 13th December, 1973. There is no authentication at all. So, Section 85 of the Evidence Act does not apply to raise any presumption in favor of this power of attorney."
23 So, from the foregoing discussion, it is amply clear that complainant witness Sh. Ravi Kumar did not have a valid power of attorney in his favour to prosecute the present complaint, hence present complaint has to go on this ground.
24 Now embarking upon the next issue on which both the parties are wrangling over that is whether the cheque in question was given as blank by way of CC.No.29005/10 Page no.14 of 27 security and if yes then whether the same will fall within the purview of Section 138 of N.I Act.
25 Before embarking upon the aforesaid contention, let me reproduce Section 20 of N.I Act 20 Inchoate stamped instruments - Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in [India], and either wholly blank of having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder.
26 No doubt, it is a settled law that the particulars of the cheque need not be in the handwriting of the drawer. It can be filled by any person having the possession of the cheque but there is something more to Section 20 of N.I Act then what meets the eye. Firstly, it has to be seen whether section 20 applies to blank cheques or not as it pertains to stamped instruments and the cheque is not a stamped instrument. Secondly, High Courts across the country are divergent on the aforesaid issue as some say section 20 is applicable while others say it is not. Even if we assume that section 20 is applicable to cheques then what will be the position in the factual matrix of the present complaint.
CC.No.29005/10 Page no.15 of 27 27 As per section 20, no doubt whenever an incomplete negotiable
instrument is handed over, the drawer prima facie gives authority to the holder thereof to complete the negotiable instrument but then the holder is to specify amount not exceeding the amount covered by the stamp and the person signing shall be liable upon such instrument in the capacity in which he signed the same, to any holder in due course for such amount. However the proviso is important. Proviso makes it clear that no person other than holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder. So, prima facie so far as original holder is concerned, drawer is liable to the only amount intended by him to be paid thereunder.
28 Now coming back to the facts of the present complaint, it is nowhere mentioned in the complaint as well as in the evidence of the complainant that when did the cheque in question was issued and handed over by the accused. It merely says that cheque was issued by the accused pursuant to the one time settlement between the parties for Rs 2,47,822.22/.During the cross examination of AR when court questioned him as to when and where the cheque in question was given, AR was ignoramus of it stating that he joined in August 2010 and the cheque was given prior to that. AR was also questioned by counsel for the accused regarding 6 blank security cheques (cheque in question being one of them) given by the accused at the time of the loan to which also he was nescient stating that he was not present at that time. AR has denied the suggestion that the cheque was given blank for security purpose and that the contents of the same were filled by the complainant. But when I waded through the loan documents Ex CW1/G (Colly), it depicts a different story which supports the version of the accused. There is a POST DATED CHEQUE ACKNOWLEDGMENT LETTER which on the top of it has the details of the CC.No.29005/10 Page no.16 of 27 accused/borrower and just below that mentions the count of cheque received which has a column of cheques undated against which 6 is written meaning thereby that 6 undated cheques were given by the accused/borrower and two columns below that details of the cheques given are mentioned in which one of the cheques bearing no. 001368 is the cheque in question against which no amount is mentioned except that amount not to exceed 300000/.Further, just below that it is mentioned that accused/borrower Vishal Kumar has handed over 6 cheques towards repayment of EMI or security cheque for the loan. So from this, one thing becomes amply clear that cheque in question was given undated without any amount for repayment of EMI or security purpose. Now as per the averments and pleadings of the complainant cheque was issued pursuant to the accused committing default and issuance of loan recall notice on 30.04.2010 which appear to be totally misconceived and inconsistent in the light of the terms and conditions of the loan agreement which categorically shows that cheque in question was received at the time of execution of the loan documents. This coupled with the absence of averments in the complaint as well as in the evidence about the specific details of the issuance and delivery of the cheque by the accused seem to aggrandize the stand of the accused that cheque in question was given as blank at the time of loan and although section 20 of N.I Act gives authority to the holder to fill the amount therein but then it should not be more than the amount intended to be paid by the drawer. Cheque in question is obviously not filled for instalment amount. It appears to be outstanding amount in the loan account of the accused. There is no averment in the complaint and no evidence on record which could evince that before filling up the cheque any intimation was sent to the accused or accused intended to pay the amount of the cheque in question and therefore consented to the filling up of the cheque to that amount. To substantiate my view, I would like to refer to paragraph 19 of the Judgment of the Bombay High Court in Pioneer Drip Systems Pvt Ltd. v.
CC.No.29005/10 Page no.17 of 27 Jain Irrigation Systems Ltd, 2010(2) Civil Court Cases 076 (BOMBAY): Para 19 "Thus in my considered opinion, whenever blank cheque or post dated cheque is issued a trust is reposed that the cheque will be filled in or used as per the understanding or agreement between parties. It there is prima facie reason to believe that said trust is not honoured then continuation of prosecution under section 138 of the N.I Act would be abuse of process of law. It is in the interest of justice that parties in such case are left to civil remedy....."
29 In the case of "Gopal Vs. Tonny Varghese" 2008 (1) Civil Court Cases 642 (Kerela) it has been held that mere proof of signature on cheque is not proof of its execution. In the absence, of any positive evidence regarding the execution of the cheque by the accused, it is to be held that the accused had issued only blank cheque and the same was not executed by him. Simply because the cheque contained the signature of the accused, it cannot be said that the cheque was drawn by the accused as contemplated by Section 138 of the Act. 30 In a recent Judgment of Kerala High Court in C.Santhi v. Mary Sherly 2011(4) RCR Civil 269 Kerala, it has been held that mere production of cheque by complainant is not sufficient to prove execution by accused. For successful prosecution of offence under section 138 of N.I Act , complainant must allege and prove that the cheque was drawn or executed by the accused .In the absence of the allegation in the complaint that the cheque was drawn by the accused and in the absence of proof of such fact,an accused cannot be convicted for offence under section 138 of N.I Act.
CC.No.29005/10 Page no.18 of 27 31 It is pertinent to note that going by the provision namely, Section
138 of the NI Act, it can be seen that the legislature has employed certain words cautiously and not without any meaning. The word employed in Section 138 Viz., "drawn', 'discharge of any debt or other liability' are conveying the message of the legislature, through which we can understand the intention of the legislature. So while interpreting the provisions or the word, the court has to give effect to the intention of legislature. At any stretch of imagination, it cannot be said that putting signature on the blank cheque is equivalent to the word 'drawn' used in Section 138 of the NI Act. Therefore, the word 'drawn' used in Section 138 has to be understood as 'execution of cheque'.
32 A person can be said to have "drawn " a cheque , if he has made, prepared or created a cheque. A cheque is an instrument which is created in confirmity with the requirements of section 6 read with section 5 of the N.I Act. A reading of section 5 and 6 shows that a cheque consists of mainly, two parts. One is, an unconditional order in writing directing the banker to pay a certain sum of money only, or to the order of a certain person or to the bearer of the cheque. The second part is the signature of the drawer.
33 As regards the issuance of cheque in question by the accused is concerned, it has been the stand of the accused that the cheque was issued blank i.e, it bears his signature only and body of the cheque has not been filled by him. It is true that when the cheque in question contained the signature of the account holder, it is for the accused to explain the same, but merely because Ex. CW1/ B1 cheque contained the signature of the account holder or the accused it cannot be said that the same was executed by him. In this case, it is relevant to note that the case advanced by the CC.No.29005/10 Page no.19 of 27 accused is that the cheque in question was entrusted with the complainant and the cheque contained nothing more than her signature. Going by Section 138 of the NI Act, it can be seen that 'a drawing of cheque' by a person on an account maintained by him with the 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 of other liability' are two important ingredients, especially in the background of this case. In the decision reported in Ch. Birbal Singh v. Harphool Khan (AIR 1976 Allahabad 23), it was held that execution of documents consists of signing of the document written out, read over and understood and does not consist of merely signing of a blank paper. In another decision reported in Thakurlal v. Ramadhar (1986 ALJ 480), it had been held that mere admission of putting of signature and thumb mark on a blank sheet of paper is not admission of execution of the document. In the present case, the accused did not dispute the signature in Ex. CW1/B1 cheque, but her specific case is that she had entrusted with the complainant blank cheque which contained her signature. 34 In the present complaint, it has already been observed that blank security cheque was taken from the accused which was filled by official of the complainant and filed in the present case. But since there is no evidence of any agreement or understanding between the accused and complainant to fill the amount, complainant was not in its right to fill the cheque without the consent of the accused as regards the amount specified therein. Therefore, it is crystal clear that the cheque was given for security purpose and not towards any debt or liability. When the execution of the cheque is denied by the accused, it is for the complainant to establish the same. In the absence of any positive evidence regarding the execution of the cheque by the accused, it is to be held that the accused had issued only blank cheque and the same was not executed by him. Simply because the cheque contained the signature of the CC.No.29005/10 Page no.20 of 27 accused, it cannot be said that the cheque was drawn by the accused as contemplated by Section 138 of the NI Act.
35 In fairly recent Judgment of Delhi High Court in Ravi Gupta v. State of Delhi and others 1st March, 2011 para 9 and 10 are relevant which is as follows :
9. Plain reading of the above provision of law shows that criminal liability under Section 138 N.I. Act is attracted only if the dishonoured cheque was issued for the discharge in whole or in part of any existing debt or liability. The Section does not apply to a cheque issued to meet future liability which may arise on happening of some contingency. Thus, it is clear that a postdated cheque, if issued for discharge of a debt due, in the event of dishonour, would attract Section 138 of the N.I. Act but a cheque issued not for an existing debt/liability but issued by way of security for meeting some future contingency would not attract Section 138 of the N.I. Act.
10. In the matter of M.S. Narayana Menon @ Mani Vs. State of Kerala & Anr., AIR 2006 (6) SCC 39, the Supreme Court while dealing with the issue, inter alia, observed as under:
"52........If the defence is acceptable as probable the cheque therefore cannot be held to have been issued in discharge of the debt as, for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of section 138 of the Act."
36 It is also proper and necessary to point out that the amendment brought in the NI Act, penalising the dishonour of cheques, to give more sanctity to commercial transactions involving cheques have given way, rather leverage to CC.No.29005/10 Page no.21 of 27 unscrupulous money lenders to squeeze their debtors through the instrumentality of the court by resorting to prosecution against such debtors on dishonoured cheques which are very often collected in blank form with signature alone as security. True, the maker of the instrument, who signs such a instrument in blank form invites the risk of prosecution and sometimes penal consequences, on inflated claims later incorporated in the instrument without his knowledge and consent. He has taken such risk while signing the instrument in blank form is only a lame excuse and that will not relieve the court the instrumentality of Justice from examining the genuineness of the transaction covered by the instrument. A court is expected to examine whether the transaction covered by the cheque is genuine and bona fide. In a case where the materials produced disclose of suspicious circumstances surrounding the transaction unless satisfactory explanation removing such suspicion is tendered by the holder of the instrument no conviction is legally permissible solely banking upon the statutory presumptions.
37 Complainant has also relied upon the Foreclosure letter and statement of account Mark A (colly) of the loan account of the accused to show that the cheque amount is outstanding against the accused as on the date of the cheque i.e 04.05.2010.The said letter shows the principle outstanding, Late payment penalty charges, cheque bouncing charges, pending installments etc and then there is a computerized statement of account. It is significant to mention that in the affidavit of the complainant witness it is stated in para 4 that accused was called upon to pay the outstanding of Rs 2,94,279.03/ and thereafter accused approached the complainant and offered one time settlement of outstanding amount to which complainant agreed and gave to the accused certain waiver pursuant to which accused issued cheque in question. But on perusal of the statement of account, I fail to fathom as to how come CC.No.29005/10 Page no.22 of 27 amount of Rs 2,94,279.03/ was outstanding against the accused. As per the schedule of the loan agreement the tenure of the loan of Rs 3,00,000/ was from the period 04.03.2009 to 04.02.2012, cheque is dated 04.05.2010 and admittedly 8 installments of Rs 11,150/ each stood paid by the accused prior to committing alleged default. There is no specific averment in the complaint or affidavit as to what all charges are included in the alleged outstanding and how these charges are quantified. Further perusal of the statement shows that the same is only stamped and signed by person whose designation is only mentioned as authorized signatory. The said statement is not accompanied by the certificate in terms of section 65B of Evidence Act nor any witness is examined by the complainant to prove the authenticity of the said statement. Therefore , the statement of account Mark A cannot be read in evidence. To fortify my view , I would like to place reliance on the latest Judgment if Kerala High Court in A.M Perumal v. Star Tours and Travels (India) Ltd 2011 (2) , RCR Civil 371 wherein it has been held that electronic record would be admissible in evidence only if the record produced satisfies the conditions laid down under section 65B(2) and contains a certificate as contemplated by section 65B(4) of Evidence Act. A reading of section 65B would be relevant:
65B.Admissibility of electronic records:
1) Notwithstanding anything contained in this Act, any information contained in an electronic record which is printed on paper, stored, recorded or copied in optical or magnetic media produced by a computer ( hereinafter referred to as the computer output) shall be deemed to be also a document, if the conditions mentioned in this section are satisfied in relation to the information and computer in question and shall be admissible in any proceedings, without further proof or production of the original, as evidence of any contents of the original or of any fact stated CC.No.29005/10 Page no.23 of 27 therein of which direct evidence would be admissible.
2) The conditions referred to in subsection (1) in respect of a computer output shall be the following namely:
a) the computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process information for the purpose of any activities regularly carried on over that period by the person having lawful control over the use of the computer;
b) during the said period, information of the kind contained in the electronic record or of the kind from which the information so contained is derived was regularly fed into the computer in the ordinary course of the said activities;
c) throughout the material part of the said period, the computer was operating properly or, if not, then in respect of any period in which it was not operating properly or was out of operation during that part of the period, was not such as to affect the electronic record or the accuracy of its contents; and
d) the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities.
4) In any proceedings where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say.
a) identifying the electronic record containing the statement and describing the manner in which it was produced;
b) giving such particulars of any device involved in the production of that electronic record as may be appropriate for the purpose of showing that the electronic record was produced by the computer;
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c) dealing with any of the matters to which the conditions mentioned in subsection (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this subsection it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it.
38 Going by the evidence on record, I find that complainant has not cared to satisfy the conditions under section 65B(2).Neither Mark A (colly) contains a certificate as contemplated under section 65B(4) of Indian Evidence Act nor the person who took out the print copy was examined. In this view of the matter, no reliance can be given to the said statement of accounts.
39 In view of the foregoing discussion, I hold that the cheque in question was issued as blank for security purpose and not towards the discharge of any debt or liability, therefore it will not fall within the province of section 138 of N.I Act. As regards the Judgment in I.C.D.S (supra) is concerned, I opine that although it is observed by Apex Court that the words "Any cheque" used in section 138 means cheque given for any purpose but it does not provide for cheque given blank, undated containing no amount which later on is filled by the holder himself for behemoth amount without there being any agreement or understanding in this regard. Insofar as the Judgment in Constellation Enterprises (supra) is concerned, that is also on the point of duly filled up post dated cheque which obviously can be presented for encashment but that is not the case in the present complaint as discussed in the preceding paragraphs therefore both the Judgments relied upon by learned counsel for CC.No.29005/10 Page no.25 of 27 the accused are not applicable to the facts of the present complaint. 40 In view of the foregoing discussion, I hold that complainant has not approached the court with clean hands and suppressed material facts regarding issuance of the cheque in question. Complainant has failed to establish that cheque was drawn by the accused for Rs 2,47,844.22/.Complainant has also failed to prove the valid authority in favour of its witness Ravi Kumar to prosecute the present complaint and statement of account filed by the complainant is also inadmissible in evidence due to want of certificate as envisaged by Section 65B of Evidence Act. Accused has discharged initial onus by placing on record some material evincing that cheque in question was issued as blank for security purpose and not towards the discharge of any debt or liability in the manner as has been alleged by the complainant and therefore, it will not fall within the province of section 138 of N. I Act. 41 Therefore, I hold that complainant had miserably failed to prove that cheque in question was drawn in discharge of legal enforceable debt or liability which is the bedrock of the complaint case under section 138 and merely because of the admission of signature on the cheque, it cannot be said that the drawing of the cheque was proved. In the facts and circumstances of the case, on appreciation of the evidence and on the basis of materials on the record, I further hold that accused is able to adduce rebuttal evidence by raising a probable defence which creates doubt on the case of the complainant, hence in such a scenario the evidential burden shifts back to the complainant which has not been sufficiently discharged. Hence, issuance of notice demanding payment of the cheque in question does not assume any significance in the light of the aforesaid findings of the court. Accused has proved his stand by CC.No.29005/10 Page no.26 of 27 preponderance of probabilities by showing that the cheque was given as blank not in discharge of any liability but for security purpose. Therefore, no offence under section 138 of N.I Act is made out against the accused, hence accused Vishal Kumar stands acquitted. He is set at liberty. Bail Bond stands discharged ANNOUNCED IN THE OPEN (NAVJEET BUDHIRAJA) COURT ON 09.05.2012 METROPOLITAN MAGISTRATE SPECIAL COURT 06, DWARKA COURTS, DELHI.
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