Delhi District Court
Cc No.5485/2020 Ajay Kumar vs . Jaspreet Singh Sethi Page No. 1/14 on 23 July, 2022
IN THE COURT OF MS. SONIKA, M.M. 05, N.I. ACT, SOUTH
DISTRICT, SAKET, NEW DELHI
C.C. No.5485/2020
PS: Neb Sarai
Ajay Kumar
S/o Sh. Om Prakash,
R/o B-93A, Jawahar Park,
Devli Road, Khanpur,
New Delhi-110080
...Complainant
Versus
Jaspreet Singh Sethi
S/o late Sh. Rajender Singh Sethi
R/o Omaxe Spa, Ginia Tower-2,
First floor, 102, Anangpur Chowk,
Sector-43, Faridabad, Haryana-121003
Also at:-
Plot No.3, First Floor,
Suraj Kund Road, Lakkarpur,
Sector-39, Faridabad, Haryana - 121009
...Accused
Date of Institution : 02.12.2020
Offence complained of : 138 NI Act
Date of final arguments : 19.07.2022
Date of decision : 23.07.2022
Plea of guilt : Not guilty
Decision : Acquitted
BRIEF FACTS AND REASONS FOR DECISION OF THE CASE
1. Vide this judgment, this Court shall dispose off the present complaint case CC NO.5485/2020 Ajay Kumar Vs. Jaspreet Singh Sethi PAGE NO. 1/14 instituted by the Complainant invoking the provisions of Section 138 of the Negotiable Instruments Act, 1881(hereinafter referred to as "NI Act").
2. The facts giving rise to the instant complaint case, as per the complainant, may be enumerated as hereafter: the accused alongwith his wife had demanded a friendly loan of Rs.5,00,000/- from the complainant on 07.01.2020 by stating an urgent need of money for business purpose and assured to return the same within a month. On 10.01.2020, the complainant had advanced the same to the accused in cash. At that time, the accused had also handed over the cheque bearing no. 000006 dated 06.02.2020 for an amount of Rs.5,00,000/- drawn on Kotak Mahindra Bank, Panchscheel Park Branch, New Delhi, in favour of complainant (hereinafter referred to as "cheque in question") in discharge of his liability with assurance of its encashment. However, the same was dishonoured due to reason 'funds insufficient' vide bank returning memo dated 18.02.2020. Thereafter, upon assurance of the accused, the cheque in question was presented again, however, the same was again dishonored due to reason 'funds insufficient' vide bank returning memo dated 25.02.2022. The complainant sent legal demand notice dated 17.03.2020 to the accused, despite which the accused failed to repay the amount. Thus, the complainant was constrained to institute the present complaint case against the accused persons.
3. Upon appreciation of pre-summoning evidence affidavit, accused persons were summoned for an offence punishable under Section 138 of NI Act. Notice under Section 251, Code of Criminal Procedure, 1973 (herein after referred to as Cr.P.C.) was served upon accused on 01.11.2021 to which he pleaded not guilty and claimed trial. On the same day, the statement of the accused under Section 294 Cr.PC was recorded, wherein, he had admitted his signatures on the cheque in question, however, he had denied the receipt of legal demand notice. At the time of notice under Section 251 Cr.PC., the accused had admitted that he had filled the particulars on the cheque in question except the date. He further stated that he had entered into the oral CC NO.5485/2020 Ajay Kumar Vs. Jaspreet Singh Sethi PAGE NO. 2/14 agreement with the complainant for purchasing plants. It is further stated that it was agreed that there will be an advance payment of Rs.5,00,000/- and the cheque in question was handed over for the advance payment only. He further stated that due to covid -19, he had not received any order and had informed the complainant to cancel this agreement. He denied any liability towards the complainant.
4. Thereafter, vide order dated 01.11.2021, on oral request, the plea of accused under Section 145(2) NI Act was allowed and the accused was granted an opportunity to cross examine the complainant as well as his witnesses, if any.
5. During CE, the Complainant has adopted his pre-summoning evidence affidavit and the same was exhibited as Ex. CW-1/X and relied upon the documents which were exhibited as: cheque in question Ex.CW-1/A, Bank Returning Memo dated 18.02.2020 and the intimations slip dated 18.02.2020 as Ex.CW-1/B and Ex.CW-1/C respectively, return memo dated 25.02.2020 and intimation slip dated 02.03.2020 as Ex.CW-1/D and Ex.CW-1/E respectively; Legal demand notice as Ex.CW-1/F, Postal Receipts as Ex.CW- 1/G and Ex.CW-1/H; the envelopes containing the demand notice which was received back by the complainant as Ex.CW-1/I and Ex.CW-1/J. The complainant was duly cross examined at length by the Ld. Counsel for accused. CE was closed vide order dated 24.03.2022.
6. Accused was, thereafter, examined U/s 281 r/w Sec 313 Cr.P.C. on 30.03.2022, wherein entire incriminating evidence was put to him. At this stage, he has stated that he had never taken any loan from the complainant nor he had met the complainant with his wife. He further stated that the cheque in question was handed over for security deposit as there was a oral agreement between him and the complainant for purchasing plants, however, he had never purchased any plant from the complainant in pursuance of that oral agreement. He further denied any liability towards the complainant. He further denied the receipt of legal demand notice and stated that the address CC NO.5485/2020 Ajay Kumar Vs. Jaspreet Singh Sethi PAGE NO. 3/14 mentioned on the demand notice is incorrect as the correct tower number is 11 and not II and the name of building is Zinnia and not Ginia. Since the accused choose to lead evidence, the matter was fixed for defence evidence.
7. The accused examined only one witness i.e. himself as DW-1 and he was duly cross-examined by the ld. Counsel for complainant. The defence evidence was closed on 20.04.2022 and the matter was fixed for final arguments.
8. I have considered the rival submissions of the parties and perused the entire evidence led by the parties and the material available on record.
9. During the course of final arguments, Ld. Counsel for complainant argued that there exists legally enforceable liability in favour of the complainant on behalf of the accused. He further argued that the cheque in question was issued to the complainant and the signature has been admitted by the accused. He further argued that upon presentation, the cheque has been dishonored twice and the same has been proved by the cheque return memos. Further, he argued that the demand notice was duly served upon the accused. He further argued that the complainant did not receive any payment after service of legal notice. Ld. Counsel for complainant submitted that all the ingredients of Section 138 NI Act are fulfilled and the accused should be convicted.
10. Per contra, ld. Counsel for accused argued that there is no legally enforceable debt/liability in favour of the complainant as the cheque in question was issued for security deposit and not in discharge of any legal liability. He further argued that the legal notice was never received by the accused as the address mentioned on the demand notices is incorrect. He further argued that the alleged advancement of loan is illegal as the accused have not mentioned the same in his ITR. He further argued that the complainant had failed to show any friendly relation with the accused. He further argued that the complainant had violated the provision of Income Tax Act as the alleged loan of Rs.5,00,000/- was advanced in cash. He further CC NO.5485/2020 Ajay Kumar Vs. Jaspreet Singh Sethi PAGE NO. 4/14 argued that the complainant had not disclosed his source of funds for advancing the alleged loan. He prayed that the accused be acquitted of the offence.
11. In the backdrop of the foregoing factual score, this Court shall now proceed to examine the position of law governing the facts peculiar to the present case.
12. The following ingredients must be satisfied in order to bring home the guilt of a person accused for the commission of an offence punishable under Section 138 of NI Act, which has also been observed by the Hon'ble Supreme Court of India in the matter of Jugesh Sehgal Vs. Shamsher Singh Gogi, (2009) 14 SCC 683:
"9. It is manifest that to constitute an offence under Section 138 of the Act, the following ingredients are required to be fulfilled:
(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;
(ii) the cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
(iii) that 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;
(iv) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
(v) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a CC NO.5485/2020 Ajay Kumar Vs. Jaspreet Singh Sethi PAGE NO. 5/14 notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(vi) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice"
The abovementioned proposition of law was reiterated by the Hon'ble Supreme Court in the matter of Aparna A. Shah v M/s Sheth Developers P. Ltd & Anr. (2013)8 SCC 71.
13. It is a well settled principle of criminal jurisprudence that a criminal trial precedes on the presumption of innocence of the accused i.e. an accused is presumed to be innocent unless proved guilty. Thus, normally the initial burden is on the complainant/ prosecution to prove the guilt of the accused and the standard of proof for the same is beyond reasonable doubt. However, in offences under Section 138 NI Act, there is a reverse onus clause, which is contained in Sections 118 and 139 of the Act.
Section 118 of the N.I Act provides:
"Presumptions as to negotiable instruments: Until the contrary is proved, the following presumptions shall be made:
(a) of consideration - that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration;"
Section 139 of the N.I Act further provides as follows:
"Presumption in favour of holder - it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability".
CC NO.5485/2020 Ajay Kumar Vs. Jaspreet Singh Sethi PAGE NO. 6/14
14. Once the foundational facts that the cheque in question bears the signatures of the accused and the same has been drawn on account maintained by him are established, a factual base is established to invoke the presumption of cheque having being issued in discharge of a legally recoverable debt and drawn for good consideration by virtue of Section 118(a) r/w Section 139 of NI Act. It is a mandatory presumption, though the accused is entitled to rebut the said presumption.
15. In case of Kumar Exports vs. Sharma Carpets,(2009) 2 SCC 513 , the Hon'ble Supreme Court had held:-
"The accused under Section 138 NI Act has two options. He can either show that the consideration and debt did not exist or that under the particular circumstances of the case, the non existence 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 as it is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which his probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not CC NO.5485/2020 Ajay Kumar Vs. Jaspreet Singh Sethi PAGE NO. 7/14 exist or there non existence was so probably that a prudent man under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question, was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon the circumstantial evidence and if the circumstances so relied upon are so compelling, the burden may likewise shift again on the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arises under Section 118 and 139 of NI Act".
16. The principles pertaining to the presumptions and the onus of proof were recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarise the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by CC NO.5485/2020 Ajay Kumar Vs. Jaspreet Singh Sethi PAGE NO. 8/14 reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence. Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
17. As discussed above, it is clear that the accused need not discharge burden of proof beyond the shadow of reasonable doubt rather needs to prove his defence upon preponderance of probabilities. Accused can say that the version brought forth by the complainant is inherently unbelievable and therefore, the prosecution cannot stand or the accused can give his version of the story and say that on the basis of his version, the story of the complainant cannot be believed. In the first situation, the accused has nothing to do except to point inherent inconsistencies in the version of the complainant.
18. So far as the factum of liability is concerned, in view of the mandatory presumptions of law as discussed above, if an accepted signed cheque has been produced the complainant, then there cannot be any inherent lacuna in the existence of the liability. Recently, the Hon'ble Supreme Court in Kalamani Tex & Anr. v. P. Balasubramanian (2021 SCC Online SC 75) held as follows:
"14. Adverting to the case in hand, we find on a plain reading of its judgment that the trial Court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NIA. The Statute mandates that once the signature(s) of an accused on the cheque/negotiable instrument are established, then these 'reverse onus' clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him."
But then, definitely, accused can create some loopholes in the story of CC NO.5485/2020 Ajay Kumar Vs. Jaspreet Singh Sethi PAGE NO. 9/14 the complainant. Accused can discharge his burden by demonstrating the preponderance of probabilities.
19. Further, it is trite law that while deciding a complaint U/s 138 NI Act, the Court has to firstly see whether the Complainant has successfully established the ingredients constituting the offence under the said section. The ingredients of Section 138 NI Act which are required to be established by the Complainant have been set out by the Hon'ble SC in Jugesh Sehgal (Supra). Once these ingredients are established by the Complainant and the Accused admits the issuance of the cheque/his signatures, the presumption U/s 118 (a) and 139 of the NI Act arise.
20. One of the key ingredients to attract the liability of the accused under section 138 NI Act is that the " payee or holder in due course of the cheque makes a demand for the payment of said amount of money by giving a notice in writing, to the drawer of the cheque". It is trite law that when the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issuance of notice in terms of clause (b) of proviso to Section 138 of the NI Act stands complied with. At this juncture, reliance is placed upon the judgment passed by Hon'ble Supreme Court in the case of C.C.Alavi Haji vs. Palapetty Muhammed, 2007 (6) SCC 555 wherein it has been held that:
"15. Insofar as the question of disclosure of necessary particulars with regard to the issue of notice in terms of proviso (b) of Section 138 of the Act, in order to enable the Court to draw presumption or inference either under Section 27 of the G.C. Act or Section 114 of the Evidence Act, is concerned, there is no material difference between the two provisions. In our opinion, therefore, when the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issue of notice in terms of Clause (b) of proviso to Section 138 of the Act stands complied with. It is needless to emphasise that the complaint must CC NO.5485/2020 Ajay Kumar Vs. Jaspreet Singh Sethi PAGE NO. 10/14 contain basic facts regarding the mode and manner of the issuance of notice to the drawer of the cheque. It is well settled that at the time of taking cognizance of the complaint under Section 138 of the Act, the Court is required to be prima facie satisfied that a case under the said Section is made out and the aforenoted mandatory statutory procedural requirements have been complied with. It is then for the drawer to rebut the presumption about the service of notice and show that he had no knowledge that the notice was brought to his address or that the address mentioned on the cover was incorrect or that the letter was never tendered or that the report of the postman was incorrect. In our opinion, this interpretation of the provision would effectuate the object and purpose for which proviso to Section 138 was enacted, namely, to avoid unnecessary hardship to an honest drawer of a cheque and to provide him an opportunity to make amends."
21. Further, the Hon'ble High Court of Delhi in R.L. Varma & Sons vs. PC Sharma, 2019 SCC OnLine Del 8964, has observed as follows:
"22.Legal presumption of service of notice can only arise in case the notice is correctly addressed. If the notice is incorrectly addressed no legal presumption can arise..."
"24. Section 138 of the Negotiable Instruments Act mandates the issuance of the statutory notice as a pre-condition to filing of a complaint. The cause of action to file a complaint under section 138 of the Negotiable Instruments Act arises only on issuance and service of statutory notice and failure of the accused to comply with the statutory notice. In the absence of service of statutory notice the cause of action would not accrue. Service of statutory notice would also include legal presumption of service if circumstances so warrant."
CC NO.5485/2020 Ajay Kumar Vs. Jaspreet Singh Sethi PAGE NO. 11/14 "34. Since the pre-condition of filing a complaint under section 138 of the Negotiable Instruments Act of sending a statutory notice has not been satisfied in the present case, no cause of action arose in favour of the complainant to file the subject complaint. Since no cause of action arose, the petitioner could not have instituted the complaint nor could the trial court as well as the appellate court by the impugned order have convicted the petitioner."
22. Accordingly, if the legal demand notice bears the incorrect address of the Accused, no presumption under Section 27 of the General Clause Act, 1897 can be drawn and the requirement of sending a legal demand notice will stand unfulfilled.
23. In the present case, the Accused at the stage of framing of notice under Section 251 CrPC as well as in his statement under Section 313 CrPC had submitted that he had not received the legal demand notice. He further stated that his address mentioned on the legal demand notice is incorrect as the correct tower number is 11 and not II and the name of building is Zinnia and not Ginia. During the course of arguments, ld. Counsel for complainant argued that the demand notice was sent on correct address and the accused in connivance with the postman managed to return the notice to the complainant. Per contra, Ld. Counsel for accused argued that no notice was received by the accused as the same was sent on incorrect address. Perusal of the original envelopes containing the demand notice, Ex. CW1/I and Ex. CW1/J, shows that one envelope (Ex. CW1/I) was addressed on Omaxe Spa Ginia Tower-II, First Floor, 102, Anangpur Chowk, Sector-43, Faridabad, Haryana- 121003 and the second envelope (Ex. CW1/J) was addressed on Plot No. 3, First Floor, Suraj Kund Road, Lakkarpur, Sector 39, Faridabad, Haryana. At the time of his statement under section 313 Cr.P.C., the accused has specifically stated that the correct tower number is 11 and not II and the name of the building in Zinnia and not Ginia. Thus, the envelop Ex. CW1/I was sent on incorrect address. The accused, during his cross-examination, had admitted that his office address is CC NO.5485/2020 Ajay Kumar Vs. Jaspreet Singh Sethi PAGE NO. 12/14 Plot No. 3, First Floor, Suraj Kund Road, Lakkarpur, Sector 39, Faridabad, Haryana and, if we see the address mentioned on Ex. CW1/J, the address mentioned on the envelope is the office address of the accused, but in the name of road "Suraj Kund", there is cutting and the envelope was returned with remarks "insufficient address". During the cross-examination of the accused, no question or suggestion was put to the accused regarding the fact of alterations made in the address. Perusal of the record further reveals that the accused had entered into his appearance on service of summons through electronic mode only. The envelopes containing the demand notice was received back unserved due to incorrect address.
24. Thus, it is evident from the above stated facts that the demand notice was sent on an incorrect address and the same was received back by the complainant. Further, the complainant has failed to lead any evidence to show the reasons for his belief that the tower number of the residential address of the accused is II and not 11, the name of the building is Ginia and Zinnia. Further, he had not led any proof to show that alterations on the envelope, having the office address of the accused is made by any other person and the same was sent without any alteration.
25. Since, Section 138 NI Act is a technical offence, all ingredients as mentioned in Jugesh Sehgal (Supra) must be established for the accrual of cause of action in favour of the Complainant. In view of the above detailed discussion, the Complainant has failed to establish the essential ingredients of Section 138 of NI Act, hence no presumption under Section 139 is attracted in the present case.
26. Since the Complainant has failed to discharge his initial burden under Section 138 NI Act, there is no requirement to delve into further evidence in the present case. Thus, in view of the totality of the circumstance and the settled legal positions as discussed above, the case attempted to be built by the complainant, appears to be suffering from fatal infirmities so much so, it goes directly to the root of the case and shakes the very edifice on which the case of CC NO.5485/2020 Ajay Kumar Vs. Jaspreet Singh Sethi PAGE NO. 13/14 the complainant rests.
27. Accordingly, in light of the above discussion, the accused Jaspreet Singh Sethi stands acquitted of the offence under Section 138 of NI Act.
ANNOUNCED IN THE (SONIKA)
COURT ON 23.07.2022 MM-05/NI ACT/SOUTH/SAKET
NEW DELHI
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