Delhi District Court
Through: Mr. Karanveer Singh vs M/S Seven Wonders International on 20 March, 2023
IN THE COURT OF MS. AAKANKSHA, METROPOLITAN
MAGISTRATE, (NI ACT)07
SOUTHWEST DISTRICT, DWARKA COURTS, NEW DELHI
Ct. Case No. 11614 of 2019
CNR No. DLSW020121232019
Zulfiquar Ali .........Complainant
Through: Mr. Karanveer Singh, Advocate
Versus
M/s Seven Wonders International
Through its proprietor Mohd. Zahid ..........Accused
Through: Mr. Asad Siddiqui and Hasim
Naeem, Advocates
(1) Name of the complainant Sh. Zulfiquar Ali
S/o Sh. Ikhtar Ali
R/o 3/15, First Floor,
Janakpuri, New Delhi58
(2) Name of the accused M/s Seven Wonders
International
Through its proprietor Mohd.
Zahid
R/o H.No. 246, Gali No. 4,
Opp. Shiv Mandir, Hyderpur
Road, Shalimar Bagh, New
Delhi88
Ct. Case No. 11614/2019 Page 1 of 46
(3) Offence complained of or Section 138 Negotiable
proved Instruments Act, 1881
(4) Plea of accused Pleaded not guilty
(5) Date of institution of case 25.03.2019
(6) Date of conclusion of 06.03.2023
arguments
(7) Date of Final Order 20.03.2023
(8) Final Order ACQUITTAL
JUDGMENT
1. The complainant Zulfikar Ali has instituted this complaint u/s 138 Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act') against accused M/s Seven Wonders International, through its proprietor Mohd. Zahid on 07.04.2016.
2. The factual matrix as can be culled out from the complaint is that accused having friendly relations with the complainant borrowed a friendly loan of Rs. 27,00,000/ from complainant in September 2013, at the same time accused issued three account payee cheques from the account of his firm Seven Wonders International bearing numbers 588515, 588516 and 588517 dated 30.09.2015, 30.10.2015 and 30.11.2015, all drawn on Punjab National Bank, Moradabad for an amount of Rs. 5,00,000/ each to the complainant with assurance of their encashment upon presentation and with assurance of repaying the balance amount prior to September 2015, the complainant presented the cheque no. 588517 dated Ct. Case No. 11614/2019 Page 2 of 46 30.11.2015 for encashment with his banker Axis Bank, Janakpuri. However, to the complainant's dismay the said cheque was returned unpaid with remarks "Kindly contact drawer/ drawee bank and please present again" vide return memo dated 16.02.2016. The complainant could not present another cheque bearing number 588515 dated 30.09.2015 within the prescribed period on verbal assurance of accused that he would make the payment, the complainant received the information of dishonor on 16.02.2016 vide SMS but received the cheque and the return memo on 07.03.2016. The complainant then issued a legal notice dated 17.02.2016 calling upon the accused to pay the cheque amount within 15 days from the receipt thereof, the same was deliberately not received by accused and he failed to pay the amount due thus constraining the complainant to file this complaint u/s 138 Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act') seeking redress against the dishonor of the cheque in question bearing number 588517 dated 30.11.2015.
3. With a view to establish a prima facie case in order to enable the court to summon the accused, complainant led pre summoning evidence by way of affidavit Ex. CW1/1. The complainant relied upon following documentary evidence:
(a) Original cheque bearing no. 588517 dated 30.11.2015 for a sum of Rs. 5,00,000/ drawn on PNB, which is Ex. CW1/A.
(b) Copy of cheque return memo dated 22.01.2016, which is Ex.
CW1/B.
(c) Office copy of legal notice dated 16.02.2016, which is Ex. CW 1/C. Ct. Case No. 11614/2019 Page 3 of 46
(d) Copies of two postal receipts, which are Ex. CW1/D and Ex. CW 1/E.
(e) Affidavit regarding unavailability of tracking report, which is Ex. CW1/F. Complainant closed his presummoning evidence on 01.12.2016.
4. On the basis of above material and finding a prima facie case made out against the accused, the accused was summoned vide order dated 01.12.2016. Accused entered his first appearance on date fixed i.e. 23.02.2017.
5. Notice u/s 251 Cr.P.C. was framed against accused on 17.01.2018 stating out to him the substance of accusation, to which he pleaded not guilty and claimed trial. His defence was recorded at the stage of framing of notice in compliance of directions passed by Hon'ble High Court of Delhi in Rajesh Aggarwal v. State 171 (2010) DLT 51. The accused took defence that in the year 2014 he opened a chain of restaurant namely Jazeera Authentic Mughlai and also opened one branch at Janakpuri, the complainant expressed his interest in becoming a partner for the said venture at Janakpuri branch only and offered to invest Rs. 15,00,000/ to become a partner and also to take over the operations of the Janakpuri Branch since he was already running a salon in the same vicinity, he agreed to the same but complainant requested him to accept cash expressing his inability to pay the money through cheque, after giving cash complainant requested to few security cheques to safeguard his interest, that he handed over the present cheques in good faith to him along with Ct. Case No. 11614/2019 Page 4 of 46 authority to run operations of the branch at Janakpuri, but since complainant could not run the branch successfully he offered to withdraw himself from the operations of restaurant and asked for return of his money, since it was the investment made by complainant specially for Janakpuri branch and the operations were also in the hands of complainant the losses were also to be borne by complainant himself, the complainant got aggressive and threatened him of misusing the security cheques which he eventually misused and presented the same without any liability, that the cheque in question was never issued towards any legal liability and he never received any legal notice.
6. Accused was granted right to crossexamine the complainant on an oral request u/s 145(2) NI Act vide order dated 17.01.2018. The complainant was examined as CW1 thereby adopting his presummoning evidence as postsummoning evidence and was crossexamined and discharged. Vide separate statement of complainant, complainant evidence was closed on 27.01.2020.
7. Statement of accused was recorded u/s 313 Cr.P.C. r/w section 281 Cr.P.C. on 20.12.2021 wherein all the incriminating evidence was put to the accused and he was granted an opportunity to explain the circumstances appearing against him at trial. While explaining the circumstances appearing in evidence against him, accused stated without oath that he had opened a restaurant in Janakpuri namely Jazeera but the same was not running well and failed, the complainant had a parlour namely Destiny close to the restaurant and approached him, he gave the restaurant to the Ct. Case No. 11614/2019 Page 5 of 46 complainant to run the same and it was decided that the complainant shall pay Rs. 15,00,000/ but complainant never gave the said amount, he gave the cheque in question as security to the complainant, the restaurant still did not work well and thereafter the disputes arose between them and the complainant did not return the cheque in issue nor gave the money. He admitted his signature on the cheque in question without admitting his handwriting on the cheque and refused having received any legal notice however accepting that the notice bears his correct address. Accused preferred to lead evidence in his defence. However, later accused made a statement that he does not wish to lead evidence in his defence and Defence Evidence was closed vide order dated 01.06.2022.
8. At the stage of final arguments, Ld. counsel for complainant submitted that it is a case of advancement of loan of Rs. 27 lacs to accused, and accused issued three cheques to complainant, out of which one cheque could not be presented within its time frame, the remaining two cheques got dishonoured upon presentation, that since the parties were known to each other the whole amount of Rs. 27 lacs were given in cash to accused, that accused took plea of defence that investment was made by complainant in his restaurant and the cheques were given as security, that the onus was upon accused to prove that the cheques were given as security but he admitted accepting cash in his plea of defence and failed to discharge the said burden. It has been further submitted that if the plea of defence raised by accused is accepted that it was an investment made by complainant, then why was there no agreement to the said effect, that there are numerous cheque bounce cases pending against accused and therefore accused is aware about the true value of a cheque, that the Ct. Case No. 11614/2019 Page 6 of 46 family relationship between the parties is also established from cross examination of CW1, that CW1 deposed that he facilitated the restaurant of accused, which does not mean an investment. Ld. counsel for complainant further submitted that the financial capacity of complainant has not been challenged by accused and that complainant has deposed that he has many properties in his name, as regards the plea of accused that the transactions pertaining to sale of properties is not reflected in ITR of complainant, it is because of the fact that the properties were sold on GPA as the property was situated in an unauthorized colony and the same has been deposed by CW1 as well, also accused himself admitted in his plea of defence that he received Rs. 15 lacs from complainant as investment, that complainant has also placed on record his bank account statements reflecting heavy transactions and therefore source of income of complainant has remained unchallenged. He further stated that although there is some discrepancy in the deposition of CW1 with respect to the time period when the cheques were issued, but that is not relevant, that there was a gap of six years in the cause of action and in crossexamination of CW1 and his memory is weak and therefore some minor discrepancies are bound to arise, but CW1 clearly deposed that he had advanced an amount of Rs. 27 lacs to accused, that CW1 has deposed that he has not advanced loan to any other person thereby suggesting that he is not into business of money lending. It has been further submitted that accused has taken different defence in his statement u/s 313 Cr.P.C. than in his plea of defence in as much as he refused receiving Rs. 15 lacs in his statement u/s 313 Cr.P.C. after admitting the said fact in his plea of defence, also he stated in his plea of defence that complainant made an investment but later stated that he gave restaurant to complainant to run the same, that if accused did not receive Rs. 15 lacs from complainant why did he gave security Ct. Case No. 11614/2019 Page 7 of 46 cheques to complainant as claimed by him and this is the reason why accused did not get himself examined in defence as many cases are pending against him, thus praying to convict the accused.
Ld. counsel for complainant also filed written submissions to the effect that accused is proprietor of M/s Seven Wonders International but Ld. counsel for accused has urged that cheque was issued by director of Pvt. Ltd. Company as such the accused should have been implicated as director and not proprietor, but in fact accused did not furnish any document to show that M/s Seven Wonders Pvt. Ltd. was a limited company, further cheque bears stamp of proprietor and not director, accused did not challenge his summoning order, accused did not return the cheque book to bank when the bank issued cheque book in capacity of proprietor and not director, the accused accepted the issuance of cheque and his signature on the cheque, the presumption is in favour of complainant, accused did not lead any evidence to rebut the presumption, the complainant wanted to crossexamine the accused but he purposefully did not get himself crossexamined. In support of his submissions, Ld. counsel for complainant relied upon the following cases: Devendra Kishanlal Dagalia v. Dwarkesh Diamonds Pvt. Ltd. & Ors. Cr. Appeal No. 19971998 of 2013 decided on 25.11.2013, Bir Singh v. Mukesh Kumar, D K Chandel v. M/s Wock, P. Rasiya v. Abdul Nazer & anr. dated 12.08.2022, Barun Kumar v. State of NCT of Delhi Crl. Rev. P. 398/2018 and Crl. M.A. 8702/2018 decided on 25.06.2021, Kajal v. Marwah Crl. A. 870, 1520, 1521, 1522, 1524, 348 and 1523/2013 decided on 27.03.2014 and Hiten P. Dalal v. Bratindranath Banerjee Appeal (Crl.) 688 of 1995 decided on 11.07.2001.
Ct. Case No. 11614/2019 Page 8 of 469. Per contra, Ld. counsel for accused opposed the contentions of complainant primarily on the ground that the present case is not the only case between the same parties and another case bearing CC No. 11597/19 is also pending for final adjudication before this court wherein complainant had alleged advancement of loan of Rs. 25 lacs to accused and therefore complainant had to prove his financial capacity of lending Rs. 52 lacs and not just of Rs. 27 lacs and the story offered to court must be a plausible one. Another objection taken by Ld. counsel for accused has been that the cheque in issue has been issued on behalf of Seven Wonder International but the legal notice was served upon Md. Zahid and therefore the legal notice was never given to Seven Wonders International, also complainant claimed the amount of all the three cheques in his legal notice and not the two cheques being subject matter of this case and CC No.11595/19, that the third cheque was never presented on time and that when a demand is made in legal notice of an amount more than the due amount the legal notice is bad in law as the demand exceeds requirement of Section 138(b) NI Act. He further submitted that the complaint mentions the fact of handing over of the cheques in September 2013 and if the cheques in this case and the cheque in CC No. 11595/19 were handed over in September 2013 for payment in 2015, then the dates on the cheques should have been that of September 2015 but the cheque in issue is dated 30.11.2015 and the cheque in CC No. 11595/19 is dated 30.10.2015, that the memory of complainant may fade but when the complaint is prepared upon instructions even then the complainant is unaware of his own case, that the complainant's case should stand on its own legs. He further challenged the plea of receiving information of dishonor of cheque on 16.02.2016 while stating that the cheque was of Delhi and was also returned in Delhi, it would take maximum seven days, that notice was Ct. Case No. 11614/2019 Page 9 of 46 sent on 17.02.2016 which was beyond the time period of thirty days from return of the cheque and mere statement of complainant that he received the intimation of dishonor on 16.02.2016 is not sufficient in absence of any pleading about any source of information of such dishonor on a later date, let alone proving the same and if the intimation was received on 22.01.2016 then the cognizance is bad in law, that complainant mentioned in his complaint that he received an SMS about dishonor of cheque on 07.03.2016, however he also issued a legal notice on 17.02.2016 wherein he also mentioned the reason of dishonor of cheque as funds insufficient, whereas the actual reason of dishonour is completely different, that the notice being posted on 17.02.2016 being the 31st day is barred by law. It has been further submitted that CW1 voluntarily deposed that he came to know that accused is dishonest and his payments are bad in 2013 then why did complainant still continue to give accused cash and when the complainant states that he is wealthy he would have given the same through cheque, that actually the venture of accused got failed and cases filed against him were settled by him, that the credibility of complainant is shaken by the fact that he himself does not know when he advanced loan to accused, sometimes he deposes that it was in 2012 and sometimes in 2013, therefore CW1 again deposed that he came to know in 2016 that accused is a defaulter and still complainant gave him loan in cash, that since it is a criminal case despite the presumption of law the complainant had to prove his case beyond reasonable doubt, but the loans are not reflected in his ITR, he stated that he is owner of 45 properties but no document has been placed on record, the purchase of property has not been reflected in his ITR, he also stated that he received Rs. 6 lacs through cheque upon sale of property in unauthorized colony and still the same is not reflected in his account. He further submitted that if the loan was advanced in Ct. Case No. 11614/2019 Page 10 of 46 September 2013 for six months and account payee cheques were taken then the same should be dated latest by April 2014 and cannot be dated 2016, complainant kept changing his statement as to when he advanced loan which means that somehow complainant received cheques and later misused them, and the cheques being presented after the time period of loan are time barred as not legally recoverable amount. Ld. counsel for accused questioned why loan of huge amount was given to accused without profit in cash, that complainant's memory is weak for everything else but he clearly remembered the amount of loan which is questionable. He further submitted that complainant invested Rs. 15 lacs in Jazeera restaurant which was only a proposal as at that time the property was on rent of Rs. 3,25,000/, the proposal came from complainant and accused invested Rs. 50 lacs in renovation, it was a bad venture and everything was at loss due to nonpayment by complainant, although many other cheque bounce cases were pending against accused but all of them have been settled as accused had made payment to every person, only three cases are pending in this court and one case has been challenged by him before Hon'ble High Court of Delhi. He further submitted that accused has refused taking of any loan from day one, story of complainant is in itself doubtful as he is unable to show that he was sound to advance the loan of total Rs. 52 lacs and prayed to acquit the accused. Ld. counsel for accused also filed written submissions incorporating the above contentions. He also referred to the cases of Krishna Janardhanbha v. Dattatraya G. Hegde (2008) 4 SCC 54, Sudhir Kumar Bhalla v. Jagdish Chand 2008 (2) JCC(NI) 241, M.S. Narayana Menon @ Mani v. State of Kerala 2006 JCC(NI) 198, Ashok Bauggh v. Kamal Baugh & anr. 2015 (4) JCC (NI) 269, Devendra Kumar v. Khem Chand 2015(4) JCC (NI) 274, Kulvinder Ct. Case No. 11614/2019 Page 11 of 46 Singh v. Kafeel Ahmad 2014(2) JCC (NI) 100, Khon K. John v. Tom Varghese & anr. AIR 2008 SC 278, Bharat Barrel and Drum v. Amin Chand Payrelal AIR 1999 SC 1008, Vikas Gupta v. Ajay Goel Crl. 655/2016 dated 23.02.2017, Sajdur Rahman v. Rajiv Kashyap & anr. 2017(4) JCC(NI) 225, K, Subramani v. K. Damodara Naidu 2015(1) SCC 99, Indus Airways Pvt. Ltd. v. Magnum Aviation MANU/SC/0288/2014 but failed to file the same. He also relied upon the cases of Ajit v. Capt. Ranga Karkere 2015 (3) JCC (NI) 175, Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd. (2012) 5 SCC 661, Charanjeet Pal Jindal v. M/s L.N. Metallics 2015 (2) JCC(NI) 137, Sunil Bharti Mittal v. CBI AIR 2015 SC 923, Anil Gupta v. Star India Pvt. Ltd. (2014) 10 SCC 373, Himanshu v. B. Shivamurthy & ors MANU/SC/0072/2019, Vijay v. Laxman 2013(1) RCR (Criminal) 1028, Devender Kumar v. Khem Chand 223 (2015) DLT 419 and KPO Moideenkutty Hajee v. Pappu Manjooran & anr. AIR 1996 SC 3356.
10. In rebuttal, Ld. counsel for complainant submitted that the notice is not defective as its heading clearly indicates that complainant is demanding payment of the two cheques and not three, that the issue of limitation has been decided by this court, that complainant has placed on record GPA, other documents and statement of account to substantiate that he was capable of advancing loan.
Ct. Case No. 11614/2019 Page 12 of 4611. After hearing the arguments advanced on behalf of both the parties and perusing the record carefully, the appreciation of evidence and findings of the court are as below.
12. It would be apposite to first consider the legal position serving as base to the offence underlying Section 138 NI Act. The following legal requirements need to be satisfied in order to constitute an offence u/s 138 NI Act, as held by Hon'ble Supreme Court in the case titled as Kusum Ingots & Alloys Ltd. v. M/s Pennar Peterson Securities Ltd.: (2000) 2 SCC 745:
(i) that 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 for the discharge of any debt or other liability;
(ii) that the cheque has been presented to the bank within a pe riod of six months from the date on which it is drawn or within the period of its validity whichever is earlier;
(iii) that the cheque is returned by the bank unpaid either be cause of the amount of money standing to the credit of the ac count 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;
(iv) that 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 notice in writing, to the drawer of the cheque, Ct. Case No. 11614/2019 Page 13 of 46 within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(v) that 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 above legal requirements are cumulative, meaning thereby that only if all the aforementioned ingredients are satisfied can the person who had drawn the cheque be held liable for offence u/s 138 NI Act.
13. Burden of proof: The claim based under the provisions of Negotiable Instruments Act is an exception to the general rule of law that burden of proof lies on the prosecution. The two specific provisions viz. Section 118 (a) and 139 of NI Act contemplates that a presumption is attached in regard to each and every negotiable instrument that the same was drawn and issued against due discharge of the liability and thus, whenever any claim is made on the basis of a negotiable instrument, the presumption has to be drawn in favour of the holder of the cheque (drawee) and the law has put the burden to rebut the presumption on the accused that the cheque was not issued by him against discharge of a debt or a liability. In case, the accused is not able to rebut the presumption and fails to prove his defence, the presumption becomes absolute and it has to be assumed that the cheque was issued by the accused in discharge of debt or liability and consequently, accused is assumed guilty of the offence. It was held by Hon'ble Supreme Court in the case of Rangappa v. Mohan: 2010 (11) SCC 441 that presumption of Section 139 of N.I. Act also includes the existence of legally enforceable debt:
Ct. Case No. 11614/2019 Page 14 of 4614. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the exis tence of a legally enforceable debt or liability.
Hon'ble Supreme Court, in the case of Hiten P. Dalal v. Bratindranath Banerjee: 2001 (6) SCC 16 held that the presumption mentioned in the section 139 NI Act is a presumption of law and not a presumption of fact and thus, this presumption has to be drawn in favour of the drawee and the burden to rebut the presumption with the probable defence is on the accused.
This is indeed an instance of the rule of 'reverse onus', where it is incumbent on the accused to lead what can be called 'negative evi dence' i.e. to lead evidence to show nonexistence of liability. Keeping in view that this is a departure from the cardinal rule of 'presumption of innocence' in favour of the accused and that negative evidence is not easy to be led by its very nature, it is now settled that the accused can displace this presumption on a scale of preponderance of probabil ities and the lack of consideration or a legally enforceable debt need not be proved to the hilt or beyond all reasonable doubts. The accused can either prove that the liability did not exist or make the nonexis tence of liability so probable that a reasonable person, ought under the circumstances of the case, act on the supposition that it does not exist. He can do so either by leading own evidence in his defence or even by punching holes in the case of the complainant in the testing ordeal of crossexamination. This can be deciphered from relevant para no.21 of Hiten P. Dalal (supra):
21. In other words, provided the facts required to form the ba sis of a presumption of law exist, no discretion is left with the Ct. Case No. 11614/2019 Page 15 of 46 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".
Therefore, the rebuttal does not have to be conclusively estab lished 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 'pru dent man'.
Further, in Bharat Barrel v. Drum Manufacturing: AIR 1999 SC 1008 Hon'ble Supreme Court held that the accused has to rebut the presumption and mere denial of passing of consideration is no de fence.
It is, thus, clear that in cases of Section 138 NI Act, upon proof of foundational facts, law presumes in favour of drawee that the cheque was issued by the accused in discharge, wholly or in part, of legally enforceable debt or liability and the burden to rebut the same is upon the accused. The burden does not have to be conclusively estab lished but the accused has to prove his defence on preponderance of probability.
14. Now applying the above law to the facts of the present case, it has to be adjudged whether the legal requirements laid down Ct. Case No. 11614/2019 Page 16 of 46 hereinabove have been fulfilled in the instant case.
14.1. The first legal requirement is:
"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 for the discharge of any debt or other liability."
At the outset, it has to be proved that the accused had issued the cheque in question on his account maintained with a bank for discharge of any debt or other liability. In the instant case, accused has admitted his signatures on the cheque in question in his statement recorded u/s 313 Cr.P.C. and in notice framed u/s 251 Cr.P.C as he admitted issuing security cheque to complainant. The cheque in question has also been drawn on the account maintained by him with Punjab National Bank. The said fact has not been denied by accused at any stage of proceeding.
It was held in the case of Kalamani Tex & anr. v. P. Balasubramanian: 2021 SCC Online SC 75 Hon'ble Supreme Court held that:
"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 NI Act. The statute mandates that once the Ct. Case No. 11614/2019 Page 17 of 46 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."
The above said principle has also been crystallized by Hon'ble Supreme Court in the case of Basalingappa v. Mudibasappa: (2019) 5 SCC 418, by observing that:
"25. We having noticed the ratio laid down by this Court in above cases on Sections 118(a) and 139, we now summarize the principles enumerated by this Court in following manner:
(i) 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.
(ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or 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 reference to the circumstances upon which they rely.Ct. Case No. 11614/2019 Page 18 of 46
(iv) 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.
(v) It is not necessary for the accused to come in the witness box to support his defence."
14.2. In the instant case, the accused having admitted his signatures on the cheque in question, the fact of issuance of cheque to complainant and the said cheque being drawn on his bank account, a mandatory presumption automatically arises in favour of complainant by virtue of Section 118(a) r/w 139 NI Act that the cheque in question was issued by him in discharge of, whole or part of, legally enforceable debt or other liability.
14.3. Now the burden shifts upon accused to rebut the above presumption by raising a probable defence, by leading evidence or bringing such facts on record in the crossexamination of the complainant that could make the latter's case improbable. If, in such a case, the accused is proved to have discharged the initial onus of proof placed on him by showing that the existence of consideration was improbable or doubtful or illegal, then the onus will again shift back to the complainant who will then be under an obligation to prove it as a matter of fact and failure to do so will disentitle him to any relief on the basis of the negotiable instrument (as held in Satish Sharma v. State NCT of Delhi & anr.: (2013) 204 DLT 289).
Ct. Case No. 11614/2019 Page 19 of 4614.4. The accused has chosen to do so by crossexamining the complainant. The defence of accused as disclosed is that complainant offered to run the restaurant namely Jazeera at Janakpuri and also offered to invest Rs. 15,00,000/ in the same, that accepting the said offer accused issued security cheques to the complainant but the complainant could not run the restaurant in profit and therefore misused the security cheque. In plea of defence, accused admitted that he accepted cash of Rs. 15,00,000/ from complainant as investment and when the complainant offered to withdraw from the operations at Janakpuri branch, he asked for return of his money but the accused refused to do so on the ground that since it was investment and the operations at that branch were solely run by complainant, it was complainant alone who was responsible for the losses and that thereafter complainant got aggressive and threatened to misuse the cheques which he eventually misused. However, in his statement u/s 313 Cr.P.C. accused refused receiving any cash of Rs. 15,00,000/ from the complainant as investment money and stated that neither the complainant paid him the money nor returned his security cheques.
14.5. The accused crossexamined complainant/CW1 who deposed that he is running a hair salon at Janakpuri and is also engaged in business of real estate, he knows accused since 201011 as accused used to come to his salon and to his house, he used to visit the Jazeera Hospitality restaurant opened by accused casually, accused took services of his known persons for constructing and running the restaurant but did not pay them, it was somewhere in 2013 but he does not remember the date when accused took services of his known persons and did not pay them, accused issued cheques to his known persons but the same got dishonored, such persons include landlord of Ct. Case No. 11614/2019 Page 20 of 46 the restaurant Mr. Manik Sethi, the restaurant was on rent and was facilitated by him for accused, he came to know that accused is defaulter in end of 2016, since 2014 his known persons told him that accused is a defaulter in making their payments, he did not reflect the loan in his ITR, he could not trace his ITR, he was owner of 45 properties in 201213, in 201314 he sold two properties of Rs. 25 lacs each, the purchase of two properties was not reflected in his ITR, those properties were situated in unauthorized colonies and therefore could not have been purchased or sold by registered sale deeds, he received Rs. 6 lacs out of total consideration of Rs. 25 lacs through cheques, no document of loan was executed pertaining to the cheques including cheque in issue, loan was advanced for six months, the cheque was given at the time of disbursement of loan, postdated cheques were issued with date of six months from the date of disbursement of loan, he advanced loan in 2015, then again said in mid of 2014, he did not advance loan to any other person, thereafter he stated that his memory is weak and he cannot tell when he advanced loan, he does not remember whether he advanced loan for 5 6 months, three cheques were given by accused around 15.09.2015, again said he does not remember the exact date or month but year is the same.
14.6. Now let us examine the defence taken by accused one at a time.
14.7. Whether the legal demand notice is bad in law for demanding payment of three cheques when only two cheques were presented for encashment and for incorrect reason of dishonor?
Ct. Case No. 11614/2019 Page 21 of 46One of the defences taken by accused has been that the legal notice is bad in law for the reason that the demand of three cheques have been made by complainant despite the admitted fact that one of the cheque was not even presented by complainant and that it even mentions incorrect reason for dishonor of the cheque. Ld. counsel for accused relied upon the cases of Rahul Builders v. Arihant Fertilizers and Chemicals & ors. (2008) 2 SCC 321. Ld. counsel for complainant countered the said objection contending that the notice is not defective as its heading clearly indicates that complainant is demanding payment of the two cheques and not three.
14.7.1. It is an admitted position that three cheques were handed over by accused to complainant, one of which was not presented by complainant within its time frame and two cases have been separately instituted by complainant qua the other two cheques, one being the present case and the other bearing Ct. Case No. 11595/19. It is also admitted fact that one common consolidated legal notice was issued in both the above stated cases. A cursory perusal of legal notice Ex. CW 1/C would bring forward the following inconsistencies in it: Whereas the heading of the notice calls upon the accused to make payment of two cheques, bearing number 588516 and 588517, the substantive part of the notice point towards three cheques and their payment being due against accused. Further, the reason for dishonor of the cheque is also mentioned incorrectly in the legal notice as "funds insufficient"
whereas the cheque in question has been dishonored for reason "Kindly contact drawer/ drawee bank and please present again". Now let us examine whether such inconsistencies go to the root of its admissibility.Ct. Case No. 11614/2019 Page 22 of 46
14.7.2. In the case of Rahul Builders (supra), it was held by Hon'ble Supreme Court that it is one thing to say that the demand may not only represent the unpaid amount under cheque but also other incidental expenses like costs and interests, but the same would not mean that the notice would be vague and capable of two interpretations. An omnibus notice without specifying as to what was the amount due under the dishonoured cheque would not subserve the requirement of law. In K. R. Indira v. Dr. G. Adinarayana (2003) 8 SCC 300, Hon'ble Supreme Court clarified that in a given case if the consolidated notice is found to provide sufficient information envisaged by the statutory provision and there was a specific demand for the payment of the sum covered by the cheque dishonoured, mere fact that it was consolidated notice, and/or that further demands in addition to the statutorily envisaged demand was also found to have been made may not invalidate the same. In the present case as well, despite the notice also encapsulating the demand for a third cheque, it clearly calls upon the accused to make payment of the cheque in question for a specific clear amount of Rs. 5,00,000/ and thus cannot be termed as bad in law. Furthermore, it is to be borne in mind that an issuance of notice and making a claim for the amount covered by the dishonoured cheque is one of the essential ingredients of an offence u/s 138 NI Act. While demanding a claim based on a negotiable instrument, the reason for dishonor thereof is only incidental. Even a cursory reading of Section 138(b) of NI Act does not indicate that the reason for dishonor is a must and its absence an immaterial defect. Thus, the legal notice Ex. CW1/C cannot be said to be bad in law.Ct. Case No. 11614/2019 Page 23 of 46
14.8. Whether the legal demand notice not being issued to Seven Wonders International, is bad in law?
Another objection taken by Ld. counsel for accused has been that the cheque in issue has been issued on behalf of Seven Wonder International but the legal notice was served upon Md. Zahid and therefore the legal notice was never given to Seven Wonders International. Ld. counsel for complainant made an objection that Seven Wonders International is a proprietorship concern and thus there was no requirement of issuing a separate legal notice to the firm.
14.8.1. A perusal of the cheque in issue would show that the cheque in issue was issued on behalf of Seven Wonders International, on behalf of "proprietor". Nothing has come on record to prove to the contrary. Thus, proceeding on the premise that the cheque was issued by accused as proprietor of Seven Wonders International, the mere fact that legal notice was issued to the proprietor and not to the proprietorship concern, is not fatal to the case of complainant which has been filed against the proprietor.
14.8.2. Ld. counsel for accused relied upon the case of Sardar Bhupinder Singh v. M/s Green Feeds decided on 26.08.2022, wherein Hon'ble High Court of Punjab and Haryana while setting aside summoning order and the complaint wherein only the sole proprietor was arrayed as an accused but not the sole proprietary concern, observed that even a sole proprietary entity becomes a 'person' committing an offence u/s 138 and besides the said juristic person, is also a 'company', therefore not only the juristic entity Ct. Case No. 11614/2019 Page 24 of 46 concerned was amenable for being arrayed as an accused in the petition complaint, but also all those persons responsible to the sole proprietary concern, for the conduct of its business was also required to be arrayed as accused in the memo of parties of the petition complaint. Reliance was made on Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd. (2012) 5 SCC 661. However, the said judgment has been passed by Hon'ble High Court of Punjab and Haryana, which only has a persuasive value upon this court. Whereas Hon'ble Supreme Court in the case of Raghu Lakshminarayanan v. M/s Fine Tubes (2007) 5 SCC 103 has held that "It is settled position in law that the concept of vicarious liability introduced in Negotiable Instruments Act is attracted only against the Directors, partners or other persons in charge and control of the business of the company, or otherwise responsible for its affairs. Section 141 of NI Act not covers within its ambit, the proprietary concern. The proprietary concern is not a juristic person so as to attract the concept of vicarious liability. The concept of vicarious liability is attracted only in the case of juristic person, such as the company registered under the provisions of the Companies Act, 1956 or the partnership firm registered under the provisions of Partnership Act, 1932 or association of persons which ordinarily would mean a body of persons which is not incorporated under any statute. The proprietary concern stands absolutely on different footing. A person may carry on a business in the name of the business concern being proprietor of such proprietary concern. In such a case the proprietor of proprietary concern alone can be held responsible for the conduct of business in the name of such proprietary concern. Therefore, Section 141 of the Negotiable Instruments Act have no applicability in a case involving the offence committed by a proprietary concern."Ct. Case No. 11614/2019 Page 25 of 46
14.8.3. The same view has been reiterated by Hon'ble High Court of Delhi in the case of M.M. Lal v. State NCT of Delhi 2012 (4) JCC 284 that "It is well settled that a sole proprietorship concern has no separate legal identity and in fact is a business name of the sole proprietor. Thus, any reference to sole proprietorship firm means and includes sole proprietor thereof and vice versa." Thus, in the case of a proprietorship concern, only the proprietorship concern or only the proprietor can be held liable u/s 138 NI Act and sending legal notice to the proprietor is as good as sending notice to the proprietorship concern. Thus, this objection of accused does not sustain.
14.9. Whether the complainant did not have financial capacity to lend the alleged loan?
The pivotal defence raised by accused has been to challenge the financial capacity of complainant to lend a total sum of Rs. 52 lacs. Ld. counsel for accused has contended that since complainant has alleged lending Rs. 27 lacs in the present case in 2013 and also lending of Rs. 25 lacs in Ct. Case No. 11597/2019 on 11.05.2016, the complainant was bound to prove his lending capacity of total Rs. 52 lacs.
14.9.1. CW1 was crossexamined but CW1 failed to bring on record his ITRs. He admitted the fact that he did not reflect the loan transaction in his ITR. However, he deposed that he is running a salon at Janakpuri (which fact is also admitted by accused in his plea of defence and in his statement u/s 313 Cr.P.C.) and that he is also into real estate business. He further deposed that he had 45 properties in Ct. Case No. 11614/2019 Page 26 of 46 his name, two of which he has sold in 201314 for Rs. 25 lacs each, that he received Rs. 6 lacs out of the same through cheque but could not show his bank account statement. He further deposed that he does not have any registered sale deed of the said properties as the properties were situated in unauthorized colonies and therefore they were sold and purchased through GPAs. He also placed on record his bank account statement and GPAs of the two properties sold in 2013 and 2014 Ex. CW1/X, for an amount of Rs. 25,30,000/ and Rs. 22,41,000/. The same points out to the availability of source of funds with the complainant.
14.9.2. In Kulvinder Singh v. Kafeel Ahmed 2013 2AD (Delhi) 81 Hon'ble High Court of Delhi upheld the order of acquittal and observed that if complainant advanced huge amount of money of Rs. 9,30,000/ he ought to have shown to the court the source from where he had generated such a huge amount, but he has failed to reflect the same in his income tax return or books of account, this creates a doubt regarding truthfulness of the stand taken by complainant that he advanced loan of Rs. 9,30,000/ to accused. In the present case as well, the complainant was under bounden duty to show the source from where he arranged Rs. 27 lacs and Rs. 25 lacs, both for advancement in the present case in September 2013 as well in Ct. Case No. 11597/2019 on 11.05.2016. Although complainant failed to reflect the said loan in his ITR, that cannot be the sole ground to raise an inference against him if he is able to show the source of availability of the funds with him at the relevant time. For the same, CW1 has placed on record two GPAs for the properties sold by him in 2013 and 2014. He has also explained the fact that since the said properties were located in unauthorized colonies, the transaction could not have taken Ct. Case No. 11614/2019 Page 27 of 46 place by way of registered sale deeds. On the other hand, accused failed to controvert the said fact. Even otherwise, in his plea of defence, accused has himself admitted receiving of Rs. 15 lacs in cash from complainant. Accused has also admitted complainant to be running a salon at Janakpuri. Accused has also failed to controvert the deposition of CW1 that he is also into business of real estate. Moreover, accused has failed to even question the complainant about his monthly earnings at the relevant time. The point of law should not be lost sight of that the legal presumption is in the favour of complainant in a case filed u/s 138 NI Act and the burden is always upon accused to rebut such presumption. The court cannot proceed on the basis of requirement of complainant to prove its case beyond reasonable doubt. Thus, accused has failed to prove this defence that complainant did not have financial capacity to lend such sum of money to accused.
14.10. Whether the complaint is bad for it being filed after the period prescribed under section 142 NI Act?
Section 142(b) NI Act prescribes that a complaint u/s 138 NI Act shall be filed within one month of the date on which cause of action arises. The cheque in question was dishonored on 22.01.2016 and the legal notice was posted to accused on 17.02.2016. There is no tracking report on record but the accused has admitted the fact that his address is correctly mentioned on the notice. Accused has also failed to challenge the order of the court taking cognizance. Thus, in absence of any document of proof of delivery, going by the norms of service standard of delivery of speed post from booking to delivery as specified on the website of indiapost, the average delivery time taken Ct. Case No. 11614/2019 Page 28 of 46 for speed post within identified pin code of same city is 12 days. Thus, by virtue of presumption of service u/s 27 General Causes Act and the norms of standard delivery as observed hereinabove, it is presumed that the notice was delivered to accused latest by 19.02.2016. The accused, thus, had 15 days' time period to pay the cheque amount but failed to do so by 05.03.2016. Thereafter the complaint should have been filed within a month from expiry of 15 days. This case was filed by complainant on 07.04.2016 i.e. after delay of two days. In the case of Kamal Singh v. Mukesh Sharma decided on 10.03.2015 Hon'ble High Court of Punjab and Haryana set aside the order passed by Ld. ASJ condoning the delay in filing the case at the postcognizance stage, observed that the stage of cognizance was already over and therefore the complainant could not take shelter of proviso to Section 142(b) NI Act. The same facts applies to the present case as well. This issue was also resolved by order of the court dated 17.11.2022 wherein the application filed by complainant for condoning the delay in filing the case, at the stage of postcognizance stage, was dismissed. The said order has remained unchallenged. Thus, the complaint has been filed after the period prescribed u/s 142 NI Act and the said delay has not been condones. Thus, the complaint is bad for it being filed after the period prescribed u/s 142 NI Act.
14.11. Whether the accused has been able to rebut the presumption in so far as there are discrepancies in testimony of complainant?
Ld. counsel for accused has contended that complainant's memory is weak qua the other facts but complainant clearly remembers that he Ct. Case No. 11614/2019 Page 29 of 46 lend Rs. 27 lacs which is unbelievable, that complainant has been unable to prove the date of lending and issuance of cheque, when complainant came to know that accused was defaulter why did he lend loan to accused, he has not placed on record the third cheque of Rs. 5 lacs which was not presented by him, he has failed to show as to why he did not take cheque of balance amount of Rs. 12 lacs from accused at the time of extending loan and no written contract was executed, complainant advanced loan of more than Rs. 20,000/ against the provisions of law and also failed to reflect the same in his ITR.
14.11.1. As regards the objection of accused that complainant advanced loan in cash of more than Rs. 20,000/, it would be pertinent to note that Section 269SS of Income Tax Act was inserted to plug the loopholes and to put an end to the practice of giving false and spurious explanations by taxpayers, debarring persons from taking or accepting from any other person any loan or deposit otherwise than by account payee cheque or account payee bank draft, if the amount of such loan or deposit, is Rs. 20,000/ or more. It has been held in the case of Gajanan v. Appasaheb Siddamallappa Kaveri Cri. Rev. P. No. 2011 of 2013 by Hon'ble Karnataka High Court that "Contravention of Section 269SS of the Income Tax Act, does not make the alleged transaction void. The concerned authorities can take necessary action against the complainant for noncompliance of Section 269 of the Income Tax Act. Only on that ground, this Court cannot interfere with the impugned judgment passed by the courts below." It has also been held in the case of Sheela Sharma v. Mahendra Pal 2016 SCC OnLine Del 4696 that "Mere advancement of loan in cash, may entail consequences for the party acting in breach of Section 269 SS of Ct. Case No. 11614/2019 Page 30 of 46 Income Tax Act. That is not the concern of this Court. Whether, or not, the appellant reflected the availability of the said amount in her income tax return, is also not a matter of concern of this Court. That would again be aspect to be considered by the income tax authorities. The advancement of loan, in cash, to the tune of Rs. 10 lakhs is not prohibited in law. The transaction of advancement of loan of Rs. 10 lakhs, in cash, is not illegal. Such a transaction is enforceable at law." Thus, the argument advanced by Ld. counsel for accused challenging the legality of advancement of loan of Rs. 27 lacs in cash, does not sustain in view of above authoritative pronouncement.
14.11.2. Furthermore, CW1 has been unsure about the date of lending of the loan in question. But he explained that his memory is weak. Also, complainant deposed that he came to know that accused is defaulter in the end of year 2016 and in 2014. The present loan was advanced, as per the complaint, in September 2013. Thus, the objection of accused that why did the complainant lend him loan does not sustain. Further suggestions to CW1 were put by accused wherein accused himself suggested that in 2013 complainant came to know that accused is defaulter, to which complainant deposed that he does not remember. Taking into view the time gap between the alleged transaction and the deposition, minor inconsistencies are bound to arise, especially when it is not a single case between the parties but two more cases are pending before this court itself. Further, placing on record the third cheque which was not presented by complainant within time, is not imperative to prove the present case. The accused never crossquestioned complainant on the said aspect. The same applies to the objection by accused that why did the complainant not take cheque for balance amount of loan. No question to the said effect Ct. Case No. 11614/2019 Page 31 of 46 was put to CW1, no such defence was taken by accused during trial. Further, with respect to the issue of security cheque, the law is well settled that so long as the debt is existing, Section 138 Cr.P.C. can be invoked, as held by Hon'ble Supreme Court in the case of I.C.D.S. Ltd. v. Beena Shabeer (2002) 2 SCC 426 that:
"Section 138 of NI Act does not distinguish between a cheque issued by the debtor in discharge of an existing debt or other liability, or a cheque issued as a security cheque on the promise that on the due future date the debt which shall have crystallized by then, shall be paid. So long as there is a debt existing, in respect whereof the cheque in question is issued, in my view, the same would attract Section 138 of NI Act in case of its dishonor."
14.11.3. In the case of Sumit Bhasin v. State of NCT of Delhi & anr. Crl. M. C. No. 296/2021 and Crl. M.A. 1529/2021, Hon'ble High Court of Delhi observed that the offence u/s 138 NI Act is an offence in the personal nature of the complainant and since it is within the special knowledge of the accused as to why he is not to face trial u/s 138 NI Act, he alone has to take the plea of defence and the burden cannot be shifted to complainant. There is no presumption that even if an accused fails to bring out his defence, he is still to be considered innocent. If an accused has a defence against dishonor of the cheque in question, it is him alone who knows the defence and responsibility of spelling out this defence to the court and the proving this defence is on the accused.
Ct. Case No. 11614/2019 Page 32 of 4614.11.4. To the contrary, accused has failed to bring out a coherent defence. In his plea of defence, accused admitted that he accepted cash of Rs. 15,00,000/ from complainant as investment in his Jazeera restaurant and when the complainant offered to withdraw from the operations at Janakpuri branch, he asked for return of his money but the accused refused to do so on the ground that since it was investment and the operations at that branch were solely run by complainant, it was complainant alone who was responsible for the losses and that thereafter complainant got aggressive and threatened to misuse the cheques which he eventually misused. However, in his statement u/s 313 Cr.P.C. accused stated that he gave the restaurant to the complainant to run the same and it was decided that the complainant shall pay Rs. 15,00,000/ but complainant never gave the said amount, he gave the cheque in question as security to the complainant, the restaurant still did not work well and thereafter the disputes arose between them and the complainant did not return the cheque in issue nor gave the money.
(a) Firstly, on one hand, accused raised plea that complainant made an investment of Rs. 15 lacs in his restaurant and paid the same in cash which he accepted. On the other hand, in his statement u/s 313 Cr.P.C. accused stated that he gave his restaurant to complainant to run the same and it was decided that complainant would pay Rs. 15 lacs. Both the said versions are contradictory to each other.
(b) Secondly, in plea of defence accused admitted receiving Rs. 15 lacs in cash from complainant. Whereas in his statement u/s 313 Cr.P.C. accused denied the fact that complainant ever gave him Rs. 15 lacs, which is selfcontradictory in material aspect.
Ct. Case No. 11614/2019 Page 33 of 46(c) Thirdly, if his statement u/s 313 Cr.P.C is perused, if he gave his restaurant to complainant to run the same and the complainant failed to pay him the agreed amount of Rs. 15 lacs, why was there a need for accused to hand over security cheques to complainant. It fails to appeal to the conscience of the court as to why would accused give his restaurant as well as his cheque, when complainant has not paid him the agreed amount. Thus, clearly accused has failed to state as to for whose security was the cheque in issue given to complainant if the complainant did not pay him Rs. 15 lacs to run his restaurant.
(d) Most importantly, accused failed to crossexamine CW1 on his defence. No question was put to CW1 that whether Rs. 15 lacs was given by complainant to accused, whether CW1 invested in restaurant of accused. In fact, a suggestion was put to CW1 that accused gave security cheque to complainant to arrange loan for accused, which was totally a new defence raised by accused. Nothing of this sort was ever brought to record by accused in his plea of defence or even in his statement u/s 313 Cr.P.C. or during final arguments. Ld. counsel for accused maintained his stand that the cheque was a security cheque for investment made by complainant in the restaurant of accused which was misused by complainant. But that defence was never put to CW1 during crossexamination. The only suggestion slightly related to this defence which was put to CW1 was that accused opened a restaurant and complainant used to visit it, which does not prove the defence of accused.
14.11.5. It is well settled that if accused fails to lead evidence, he cannot rely solely upon his statement u/s 313 Cr.P.C. as it is not an evidence of accused. In the case of V.S. Yadav v. Reena Ct. Case No. 11614/2019 Page 34 of 46 MANU/DE/2430/2010, Hon'ble High Court of Delhi while reversing the order of acquittal held that statement of accused u/s 281 Cr.P.C. or Section 313 Cr.P.C. is not the evidence of accused and it cannot be read as part of evidence and where the accused does not examine himself as a witness, his statement u/s 313 Cr.P.C. cannot be read as evidence of accused and it has to be looked into only as an explanation of the incriminating circumstance and not as an evidence. There is no presumption of law that the explanation given by accused was truthful. In the case of Suresh Chandra Goyal v. Amit Singhal MANU/SC/1555/2015, Hon'ble Supreme Court relied upon the ratio laid down in V.S. Yadav case (supra) to hold that mere pleading not guilty and stating that the cheques were issued as security, would not give amount to rebutting the presumption raised u/s 139 NI Act. If mere statement u/s 313 Cr.P.C. or u/s 281 Cr.P.C. of accused pleading not guilty was sufficient to rebut the entire evidence produced by the complainant/prosecution, then every accused has to be acquitted. But it is not the law. In order to rebut the presumption u/s 139 NI Act, the accused, by cogent evidence, has to prove the circumstance under which the cheques were issued.
14.11.6. The accused may not be expected to discharge an unduly high standard of proof and a reverse onus clause requires the accused to raise a probable defence for creating doubt about the existence of a legally enforceable debt or liability for thwarting the prosecution. The standard of proof for doing so would necessarily be on the basis of preponderance of probabilities and not beyond shadow of any doubt. It has been held in the case of Basalingappa v. Mudibasappa (2019) 5 SCC 418, that during his crossexamination when financial capacity Ct. Case No. 11614/2019 Page 35 of 46 to pay Rs. 6 lakhs to accused was questioned, there was no satisfactory reply given by the complainant and thus it was a probable defence raised by accused which shifted the burden on the complainant to prove his financial capacity and other facts. However, in the instant case, the complainant has placed on record two GPAs to show the availability of funds at his disposal at the relevant time, which fact has not been controverted by accused. The accused even failed to question the complainant regarding his monthly income at the relevant time. Complainant has deposed that he was also dealing in real estate but the same was not controverted by accused even to a bit. Since the burden was upon accused, and not upon complainant, to prove that the cheque in issue was not issued in discharge of debt or other liability, accused has failed, in the instant case, to crossquestion the complainant on the vital aspects proving his defence. He has failed to enter the deposition box. He has also failed to lay down any coherent defence as his plea of defence and defence put to CW1 are contradictory. Thus, the accused has failed to prove his defence.
14.12. Now coming to the remaining case laws relied upon by the parties. Ld. counsel for complainant relied upon the case of Bir Singh v. Mukesh Kumar Cri.App.No. 230231 of 2019 decided on 06.02.2019 wherein it has been held by Hon'ble Supreme Court that Section 139 NI Act mandates that unless contrary is proved, it is to be presumed 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, such presumption being rebuttable, however the onus of proving that the cheque was not in discharge of any debt or other liability is on the accused drawer of the cheque. The above principle has been applied in the instant case as well as can be Ct. Case No. 11614/2019 Page 36 of 46 seen from paras hereinabove. Ld. counsel for complainant also relied upon the case of Devendra Kishanlal Dagalia v. Dwarkesh Diamonds Pvt. Ltd. & Ors. Cr. Appeal No. 19971998 of 2013 decided on 25.11.2013 to state that when accused was summoned, he could have challenged his summoning order but he failed to do so. In the said case, after the accused was summoned, Trial court returned the complaint for want of jurisdiction, in such facts Hon'ble Supreme Court held that once accused was summons there was no question of Magistrate going back and recalling its own order. There is no denial of the said law in the observations hereinabove. Ld. counsel for complainant also relied upon the case of P. Rasiya v. Abdul Nazer & anr. dated 12.08.2022 wherein judgment passed by Hon'ble High Court was reversed on the ground that High Court failed to consider the proposition that in offence u/s 138 NI Act the initial burden upon complainant is discharged that the cheque was issued by accused and the signature and the issuance of cheque is not disputed, the onus shifts upon accused to prove to the contrary that cheque was not for a debt or other liability, presumption u/s 139 NI Act is a statutory presumption. The said law has been squarely applied to the present case as well. Ld. counsel for complainant also relied upon the case of Barun Kumar v. State of NCT of Delhi Crl. Rev. P. 398/2018 and Crl. M.A. 8702/2018 decided on 25.06.2021, the accused has not been able to rebut the presumption u/s 139 NI Act, accused admitted his signature on the cheque, there was an acknowledgment of loan, it was held by Hon'ble High Courtof Delhi that mere ipse dixit of petitioner/accused and the statement u/s 313 Cr.P.C. without any material does not rebut the presumption cast on the petitioner/accused u/s 139 NI Act, the fact that loan has been given in violation of Section 269SS Income Tax Act does not mean that the court cannot Ct. Case No. 11614/2019 Page 37 of 46 look into the documents at all. The said law has been squarely applied to the present case as well. In Kajal v. Marwah Crl. A. 870, 1520, 1521, 1522, 1524, 348 and 1523/2013 decided on 27.03.2014, it was held by Hon'ble High Court of Delhi that even if the complainant was engaged in lending money, that would not debar her from filing a complaint u/s 138 NI Act if a cheque issued to her towards repayment of loan advanced by her is dishonored by the bank for want of funds and the drawer of the cheques fails to make payment within the prescribed time, after receipt of legal notice from the lender. While referring to Section 3 of Punjab Registration of Money Lenders Act 1938 as is applicable to Delhi, the Court observed that the said provision does not debar a money lender from instituting a complaint u/s 138 NI Act which is a remedy enforceable before a criminal court and totally independent of a civil suit. In Hiten P. Dalal v. Bratindranath Banerjee Appeal (Crl.) 688 of 1995 decided on 11.07.2001 Hon'ble Supreme Court held that the presumption mentioned in the section 139 NI Act is a presumption of law and not a presumption of fact and thus, this presumption has to be drawn in favour of the drawee and the burden to rebut the presumption with the probable defence is on the accused. The law laid down in all these case laws have been applied to the present case.
14.13. Ld. counsel for accused relied upon the case of Ajit v. Capt. Ranga Karkere 2015 (3) JCC (NI) 175 wherein the case of Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd. (2012) 5 SCC 661 was followed and prosecution against accused was declared void ab initio, without impleading the company as an accused, despite cheque being issued on behalf of company. Such law was made Ct. Case No. 11614/2019 Page 38 of 46 applicable even to the cases where judgment of conviction was pronounced much before the law was laid down in the case of Aneeta Hada (supra). Similarly, complaint against accused without impleading the company when company was defaulter, was held to be not maintainable in the case of Charanjeet Pal Jindal v. M/s L.N. Metallics 2015 (2) JCC(NI) 137. In Sunil Bharti Mittal v. CBI AIR 2015 SC 923 Hon'ble Supreme Court quashed the summoning order against managing director of company while stating that when only the company was made a party and not managing director, the liability upon managing director could not been imputed by the court while observing that the state of mind of managing directors are state of mind of company. In Anil Gupta v. Star India Pvt. Ltd. (2014) 10 SCC 373, it was held by Hon'ble Supreme Court that only drawer of the cheque falls within the ambit of Section 138 NI Act whether human being or a body corporate or even a firm, and if the complaint against the company has been quashed, the complaint can no longer be alive qua the other accused. Ld. counsel for accused relied upon the case of Himanshu v. B. Shivamurthy & ors MANU/SC/0072/2019 to state that in this case also when notice was served only upon accused but the cheque was issued by accused as director of company and the complaint was also filed only against the director without arraigning the company, petition u/s 482 Cr.P.C. was allowed. All the above cases relate to prosecution in cases of cheques issued on behalf of company. Whereas in the present case the cheque was issued by Md. Zahid being proprietor of Seven Wonders International. In view of authoritative pronouncement of Hon'ble Supreme Court in the case of Raghu Lakshminarayanan (supra), the present case does not suffer from any technical infirmity and the case laws filed by accused hereinabove does not render any assistance to the case of the accused.
Ct. Case No. 11614/2019 Page 39 of 46Further, Ld. counsel for accused relied upon the case of Vijay v. Laxman 2013(1) RCR (Criminal) 1028 to state that when the complaint is lodged without specifying the date of alleged loan, the judgment was conviction was altered by Hon'ble Supreme Court. He also relied upon the case of Devender Kumar v. Khem Chand 223 (2015) DLT 419 wherein adverse inference was drawn against the complainant despite having an agreement of loan and an affidavit as the loan amount of Rs. 1.5 lacs was doubtful and the said loan was not reflected in ITR. However, facts of each case are different in its own way. In the present case, complainant has maintained his stand that he lent Rs. 27 lacs to accused. Although he was unsure about the date of lending, but that alone cannot be ground to hold an order of acquittal of accused despite all other observations of this court hereinabove viz. proof of complainant as regards the source of money with him in the form of GPAs which have remained uncontroverted, failure of accused to lay down a coherent defence, failure of accused to put his defence to complainant during crossexamination etc. He further relied upon the case of KPO Moideenkutty Hajee v. Pappu Manjooran & anr. AIR 1996 SC 3356 wherein the rule of evidence laid down in Section 118 was discussed, as has already been recapitulated in para no.13 (supra) of the instant case.
14.14. In view of the above, although the accused has failed to successfully challenge the financial capacity of complainant and availability of funds with complainant and has raised contradictory defences at every stage of trial qua the fact whether he received Rs. 15 lacs from complainant or not, whether complainant invested in his restaurant or was the restaurant given to complainant to run the same, Ct. Case No. 11614/2019 Page 40 of 46 or whether the complainant took cheque in question to procure loan for accused or to invest in his restaurant, and has even failed to put his defence to complainant during crossexamination and failed to lead any evidence in his defence, but the fact remains that the complaint is bad in law for it being filed after the period prescribed u/s 142 NI Act.
The first legal requirement is, thus, proved in favour of accused and against the complainant.
15. The second legal requirement is:
"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 pe riod of its validity whichever is earlier."
The cheque in question Ex. CW1/A is dated 30.11.2015. The cheque returning memo Ex. CW1/B is dated 22.01.2016, which proves that the cheque in question was presented within the period of its validity. Further, defence has failed to controvert the said fact.
Thus, the second legal requirement is adjudicated in favour of complainant.
16. The third legal requirement is:
"That cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is in sufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank."Ct. Case No. 11614/2019 Page 41 of 46
Section 146 NI Act presumes the fact of dishonour of cheque upon production of bank's slip or memo having the official mark denoting that the cheque in question has been dishonoured. This is also a rebut table presumption and the upon production of such bank memo, the burden shifts upon accused to disprove the same.
It was held in Laxmi Dyechem v. State of Gujarat: (2012) 13 SCC 375 that:
"15. ... We find ourselves in respectful agreement with the decision in NEPC Micon Ltd. (supra) that the expression "amount of money .......... is insufficient" appearing in Section 138 of the Act [NI ACT] is a genus and dishonour for reasons such "as account closed", "payment stopped", "referred to the drawer" are only species of that genus. Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in Section 138, so also dishonour on the ground that the "signatures do not match" or that the "image is not found", which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act."
In the instant case, a presumption has been raised in favour of com- plainant by virtue of Section 146 NI Act that the cheque in question was dishonoured for the reason stated therein viz. Kindly contact drawer/ drawee bank and please present again. As held in Laxmi Dyechem (supra) dishonour of cheque with the said remarks also fall within the offence u/s 138 NI Act and therefore, the burden now shifts upon the accused to rebut this presumption by establishing some rea-
Ct. Case No. 11614/2019 Page 42 of 46sonable justification for the same. But the accused has admitted his signatures on the cheque in question.
Thus, the third legal requirement is adjudicated in favour of complainant.
17. The fourth legal requirement is:
"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 notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regard ing the return of the cheque as unpaid."
In the instant case, the cheque in issue was returned dishonored on 22.01.2016. The complainant sent a legal notice dated 16.02.2016 (Ex.CW1/C) addressed to the accused. Speed post receipt dated 17.02.2016 is Ex. CW1/D. No speed post tracking report has been filed on record, however the accused has admitted his address men tioned on the legal notice to be his correct address, in his statement u/s 313 Cr.P.C. Thus, the legal notice has been correctly addressed to the accused and posted within thirty days from dishonor of the cheque in issue.
The fourth legal requirement is, thus, adjudicated in favour of complainant.
18. The fifth legal requirement is:
Ct. Case No. 11614/2019 Page 43 of 46"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."
In view of admission made by accused in his statement u/s 313 Cr.P.C. that the legal notice bears his correct address, the legal notice has been, thus, properly addressed to the correct address of accused and by virtue of presumption u/s 27 General Clauses Act also accused is deemed to have received the legal notice, if the notice has been sent to correct address by post.
18.1. Even otherwise, law expects a person pleading nonreceipt of any demand notice to prove his bona fide by making the payment of the cheque amount within 15 days of receiving court summons. This is crystallized by the verdict of Hon'ble Supreme Court in the case titled as C.C. Alavi Haji v. Palapetty Muhammed & anr.: (2007) 6 SCC 555:
"17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of Ct. Case No. 11614/2019 Page 44 of 46 summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and section 114 of the Evidence Act."
18.2. In the case at hand, despite issuance of summons and appear ance of accused before the court, accused has failed to pay the cheque amount to the complainant and thus is precluded from raising the plea of nonservice of demand notice.
18.3. Also, it is an undisputed fact and a matter of record that the ac cused has failed to make the payment till date let alone making pay ment within 15 days of receipt of notice.
Thus, the fifth legal requirement is adjudicated in favour of complainant.
19. All the legal requirements constituting an offence u/s 138 NI Act being cumulative in nature, the fact that the first legal requirement has not been proved in favour of complainant, the ingredients necessary to bring home the guilt of accused remain incomplete. Accordingly, accused Md. Zahid proprietor of M/s Seven Wonder Ct. Case No. 11614/2019 Page 45 of 46 International is acquitted for the alleged offence u/s 138 NI Act.
20. Bonds under Section 437A Cr.P.C. are accepted for a period of six months from today.
Announced in the open court on 20.03.2023 (Aakanksha) Metropolitan Magistrate(NI Act)07 South West District, Dwarka Courts, New Delhi Ct. Case No. 11614/2019 Page 46 of 46