Delhi District Court
Indiabulls Credit Services Ltd vs Banwari Singh on 4 October, 2012
IN THE COURT OF SH. AKASH JAIN, METROPOLITAN
MAGISTRATE (NI ACT)01, DWARKA COURTS, NEW DELHI
CC NO 3072/12
Unique case ID no. : 02405R0895212007
Indiabulls Credit Services Ltd.
Through its Authorized Representative
Registered office at : F60, Second Floor,
Malhotra Building, Connaught Place,
New Delhi110001. ......................... Complainant
VERSUS
Banwari Singh
S/o Mahtab
R/o 950, SectorIII, M.B. Road,
Pushp Vihar, near Ambedkar,
Nagar Depot, New Delhi17.
Also at:
Department : India Metereological Department
Designation : Peon
India Metereological Department,
Lodhi Road, New Delhi17. ................................ Accused
P.S.: Connaught Place
U/S:138 r/w 142 NI Act
a) Date of institution : 04.01.2007
b) Date of reserving the judgment : 22.09.2012
c) Date of pronouncement of judgment : 04.10.2012
d) Offence complained of : Section 138 of Negotiable
Instruments Act.
e) Plea of accused : Pleaded not guilty and claimed
CC NO. 3072/12 Page no. 1 of 16
trial.
f) Final Judgment : Acquitted
: JUDGMENT :
1.Vide this judgment, I shall dispose of the present complaint filed by the complainant, Indiabulls Credit Services Ltd. under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as the 'NI Act') against the accused Banwari Singh.
2. Factual matrix of the case as per complainant is that the complainant is a limited company incorporated under the provisions of Indian Companies Act, 1956. It is averred that the accused approached the complainant company for obtaining personal loan and on request made by the accused, the complainant sanctioned and disbursed loan in favour of the accused in terms of loan account no.S000009262. It is stated that the accused had promised to make timely & regular payment of scheduled EMIs to the complainant without any default, but the accused miserably failed to abide by the terms & conditions of the loan agreement in question and committed regular defaults in payment of EMIs. In such circumstances, the accused in discharge of his legal liability issued a cheque bearing no. 376308 dated 02.11.2006 for a sum of Rs.55,374/ drawn on The United Western Bank Ltd. in favour of the complainant company towards full and final settlement of his account. However, the said cheque when presented CC NO. 3072/12 Page no. 2 of 16 for encashment by the complainant was dishonoured by the bankers of accused for the reason "Insufficient Funds" vide returning memo dated 09.11.2006. Thereafter, the complainant company sent a legal notice dated 16.11.2006 through registered post with AD & UPC on 18.11.2006 to the accused intimating him about the dishonour of cheque in question and calling upon him to pay the amount covered by the cheque within 15 days of receipt of the said notice. The accused though failed to make any payment within stipulated period of time. Hence, the present complaint.
3. Perusal of the record shows that the present complaint was received by way of assignment by this court on 04.01.2007. On the basis of pre summoning evidence led by the complainant on 15.02.2007, Ld. Predecessor Court issued summons against the accused under Section 138 of NI Act. Upon service of the summons, the accused entered his appearance before the court on 15.11.2007 and was admitted to bail. Thereafter, on 14.12.2011, notice under Section 251 Cr.P.C. was served upon the accused by Ld. Predecessor Court, to which accused pleaded not guilty and claimed trial. The matter was then fixed for complainant's evidence.
4. The complainant in support of its case examined Sh. Sandeep Kumar, AR of the complainant as CW1 who while reiterating the contents of complaint placed reliance upon following documents as under : CC NO. 3072/12 Page no. 3 of 16 Ex. CW1/A : Certificate of Incorporation Ex. CW1/B1 : Power of Attorney in favour of substituted AR Ex. CW1/C : Cheque in question Ex. CW1/D : Returning memo in question Ex. CW1/E : Legal Notice dated 16.11.2006 Ex. CW1/F (colly) : Postal Receipts & UPC Ex. CW1/G : Complaint in question.
Ex. CW1/J : Statement of account of accused
Ex. CW1/K : Copy of loan agreement in question
5. CW1 was duly crossexamined by the counsel for accused. During crossexamination, CW1 stated that accused had availed the loan of Rs. 43,038/ in July, 2005 which was to be repaid in 72 installments of Rs.1454/ each. CW1 further stated that accused had paid total 13 EMIs so far to the complainant. CW1 admitted that the loan amount in question was not mentioned either in complaint or in legal demand notice. CW1 further admitted that no AD card qua service of legal notice upon accused is placed on record. CW1 stated that he does not know whether any notice was given to the accused on default of the payment of installments. CW1 further stated that the collection agent regularly visited the accused for making the payment of installment or to settle the account. CW1 denied the suggestion that cheque in question was not issued by accused in discharge of his liability. CW1 further denied the suggestion that the loan agreement and statement of account of accused are forged and fabricated by the complainant.
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6. Thereafter, complainant's evidence was closed. Statement of accused under Section 313 Cr.P.C. was consequently recorded wherein all the incriminating circumstances were put to the accused. The accused admitted to have obtained loan for a sum of Rs.43,038/ from the complainant company. However, he stated that a sum of Rs.39,000/ was actually disbursed in his account. Accused stated that loan was to be repaid in 30 installments and he had paid total 22 EMIs and the receipt of Rs.5000/ was not given to him. Accused further denied any settlement with the complainant and stated that the cheque in question is one of the 12 cheques given to the complainant as blank at the time of sanctioning of loan. Accused denied the service of legal notice upon him. Thereafter, the matter was fixed for defence evidence. Accused/DW1 in his examination in chief stated that he had availed a loan of Rs.28,000/ from the complainant and loan was to be repaid in 30 EMIs of Rs.1457/ each. DW1 further stated that three advanced EMIs were deducted at the time of disbursement of loan and so far he had paid 22 EMIs. DW1 also stated that at the time of sanctioning of loan, 12 blank signed cheques were taken by the complainant from him for the purpose of security & the cheque in question being one of those cheques is misused by the complainant. DW1 further stated that on the date of issuance of cheque in question, his liability was not to the extent of cheque amount as he had never entered into any settlement with the complainant. Accused/DW1 got duly crossexamined & discharged.
CC NO. 3072/12 Page no. 5 of 16 Thereafter, defence evidence got closed by the accused and the matter was fixed for final arguments. The court heard the final arguments on behalf of both the parties and carefully perused the record.
7. Ld. Counsel for the complainant argued that each and every ingredient of offence under Section 138 NI Act is proved by them beyond reasonable doubt. It is argued that the accused in his evidence and statement recorded under Section 313 Cr.P.C. admitted the factum of taking loan from the complainant and committing default in repayment of the same. It is further argued that the accused has failed to rebut the presumptions as contemplated by Section 118 (b) & 139 NI Act.
8. The counsel for accused on the other hand argued that the cheque in question is one of the blank signed security cheques given by accused to the complainant at the time of disbursement of loan. It is argued that on the date mentioned on cheque in question, the liability of the accused was not to the extent of amount mentioned in the cheque. It is also argued that no alleged settlement of loan account in question was carried out between the parties.
9. With respect to amount of loan actually sanctioned to accused by complainant and number of installments fixed thereto, it may be noted that the accused himself admitted to have availed loan for a sum of Rs.43,038 CC NO. 3072/12 Page no. 6 of 16 from the complainant in his statement under Section 313 Cr.P.C. Accused also admitted the installment amount of Rs.1,454/ payable by him to complainant each month. A bare perusal of the amount admittedly sanctioned to the accused makes it clear that merely 30 installments of Rs.1,454/ could not be fixed by the parties for repayment of loan inclusive of interest. Even otherwise, a careful perusal of loan agreement Ex. CW1/K makes it clear that the loan amount of Rs.43,038/ was payable by the accused in 72 EMIs of Rs.1,454/ each. It is well settled vide Section 91 and 92 of Evidence Act, 1872 that when terms of contract between parties are reduced in form of a document, then the document itself is the proof of terms of such contract and no amount of oral evidence shall be admissible between the parties for contradicting, varying, adding or subtracting the terms of such contract. Thus, it stands proved that loan amount for a sum of Rs.43,038/ was sanctioned to the accused by complainant which was repayable by accused in 72 installments of Rs.1,454/ each. It is though relevant to note that complainant had admittedly neither mentioned the loan amount in complaint nor in the legal demand notice. It is an admitted fact that the cheque in question was admittedly issued by the accused in favour of complainant and the same when presented for encashment, was returned unpaid/ dishonored with the remarks "Insufficient Funds".
10. The accused has primarily raised two defences mentioned herein CC NO. 3072/12 Page no. 7 of 16 below :
i) That the accused never entered into any alleged settlement with the complainant and the cheque in question was given by him to the complainant in blank signed at the time of sanctioning of loan. As such, the cheque was not issued by the accused in discharge of any legal debt or other liability towards the complainant.
ii) That the legal demand notice dated 16.11.2006 was never received by the accused.
11. With respect to the first defence raised by the accused, it would be apposite to refer to the provisions of section 118 and 139 of NI Act. Section 118 (a) provides that, unless the contrary is proved, it is to be presumed that the Negotiable Instrument (including a cheque) had been made or drawn for consideration. Under section 139 of NI Act, the Court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part of a debt or liability. Thus, in complaints under Section 138 the court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused.
12. It is pertinent here to note the case of Hiten P. Dalal Vs. CC NO. 3072/12 Page no. 8 of 16 Bratindranath Banerjee, 2001 Crl. L.J 4647 wherein Hon'ble Supreme Court while dealing with sections 138 and 139 of NI Act held that whenever a cheque was issued to the complainant for a specific amount, there is a presumption that it is towards discharge of legally enforceable debt. In the event of dispute, the burden is on the accused to prove that there is no subsisting liability as on the date of issuing of cheque and the proof must be sufficient to rebut the presumption and mere explanation is not sufficient. So, there is obligation on the part of the Court to raise the presumptions under Sections 118 and 139 of the NI Act in every case where the factual basis for raising of the presumption had been established.
13. However, it is not out of place here to refer to the ratio of judgments in M.S. Narayana Menon v. State of Kerala, AIR 2006 SC 3366 and Krishna Janardhan Bhat v. Dattatraya G. Hegde, 2008 AIR (SC) 1325, on the point that it is not necessary that the rebuttal is always essentially by leading separate contrary evidence and it would suffice if the accused can demonstrate from the crossexamination of the complainant that the burden to prove contrary is discharged. So far as, presumption as to issuance of cheque for consideration and in discharge of debt, the accused need not disprove the complainant case in its entirety. He can discharge his burden on the preponderance of probabilities though direct or circumstantial evidence for which he can rely on evidence adduced by the complainant.
CC NO. 3072/12 Page no. 9 of 16
14. In the present case, the main defence of the accused is that on the date mentioned on cheque in question, the liability of the accused was not to the extent of cheque amount in question. Moreover, no settlement is stated to have taken place by the accused with the complainant in lieu of which cheque in question is alleged to have been given. Also, the cheque in question is a security cheque given by the accused to the complainant at the time of sanctioning of loan.
15. Now, perusal of statement of account of accused Ex. CW1/J makes it abundantly clear that on the date of issuance of cheque i.e. 02.11.2006, about 8 EMIs had been paid by the accused to the complainant. But, complainant could not elucidate through the said statement filed on record, as to how liability to the tune of cheque amount in question was calculated against the accused. It is contended by the complainant that accused issued cheque in question to the complainant in discharge of his admitted liability towards full and final settlement of his loan account. The complainant though failed to elaborate as to how settlement took place between the parties qua cheque amount in question. Complainant failed to show as to whether any notice was sent by them to accused elucidating the outstanding amount payable by the accused. Complainant also failed to place on record any proof of settlement allegedly arrived at between the parties.
CC NO. 3072/12 Page no. 10 of 16
16. Coming to the defence raised by accused that the cheque in question was not given by him in discharge of any legally recoverable debt but it was issued in blank signed for the purpose of security at the time of disbursement of loan, it may be stated that mere admission of the signatures on cheque by accused is not sufficient to fasten criminal liability upon him. The onus to prove outstanding liability and alleged settlement lies upon the complainant. The complainant though failed to explain as to how payment of installments was admittedly received by them on 02.12.2006, 09.01.2007 10.02.2007, 07.05.2007 and 30.06.2007 after alleged settlement with the accused. Statement of account of accused Ex. CW1/J clearly illustrates the acceptance of aforesaid payments by the complainant from accused as EMIs even after alleged settlement of the loan account in question. It is highly improbable if not impossible that a person would pay the installments which are also accepted by financial institution as EMIs after taking the cheque for full and final settlement qua entire loan account in question.
17. All these circumstances raise serious doubts on the veracity of the claim of the complainant thereby probablising the stand of the accused that the cheque in question was not issued in the manner as has been alleged by the complainant and in fact the same might have been issued for security purposes which is later on filled up by complainant. The law in relation to cheques issued for security purposes is discussed in judgments hereinbelow:
CC NO. 3072/12 Page no. 11 of 16
18. In M.S Narayanan Menon Vs. State of Kerala and Others. 2006 SCC 39 , it has been held by Apex Court that :
"..........If the defence is accepted as probable the cheque therefore cannot be held to have been issued in discharge of the debt as for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of section 138 of N.I Act...."
19. In Shanku Concretes Pvt. Ltd. Vs. State of Gujrat 2000 Cri.L.J 1988 (Gujrat) a loan of Rs.15,00,000/ was taken by accused, who issued 7 post dated cheques as collateral security and it was observed by Hon'ble Gujrat High Court that no offence u/s 138 N.I. Act is made out in para 13 and 14 as under :
"...13. The above view further strengthens from the agreement executed between the parties. It is amply clear in the agreement that accused shall repay amount after six months of the execution of agreement and it is also made clear that for due performance of the contract. The intention of the parties is clear from this averments that the cheques were issued as the collateral security for the due performance (vernacular matter omitted.) of the contract, by which the Company and the Director i.e. accused No. 2 bound themselves to repay the said amount. It is, therefore, clear that cheques were not issued to discharge any existing debt.
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14. This Court relies on the decision cited by Mr. Majmudar of the High Court of Madras (supra), wherein a principle is laid down that to attract Section 138 of the Negotiable Instruments Act, it must be pointed out that there was subsisting liability or debt on the date when the contract was entered into. In that given case before the High Court of Madras, the contract expressly made it clear that the cheques were handed over as security. In this case, it is clear from the agreement entered into between the parties that after borrowing the money, making a statement to repay the same at some future date, the cheques were issued for due performance. Therefore, the transaction from its very nature or from the intention of the parties, as reflected in the agreement executed between the parties, is purely of a civil nature, for which a civil suit has already been filed. The very fact that the payment was agreed to some future date and there was no debt or liability on the date of delivery of the cheques, will take the case out of the purview of the Section 138 of the Negotiable Instruments Act...."
20. In Sam Daniel Vs. John 2005 Comp Case 17 (Madras High Court) it was observed by Hon'ble Madras High Court in para 9 and 10 that dishonour of cheque given as collateral security does not make out an offence u/s 138 N.I. Act :
"...9. Strict liability under Section 138 can be enforced only when the cheque is issued in discharge of any legally enforceable debt or other liability, partly or CC NO. 3072/12 Page no. 13 of 16 wholly. Where a cheque is issued not for the purpose of discharge of any debt or other liability, return of such cheque unpaid will not meet with the penal consequences and the maker of the cheque shall not, therefore, be liable for prosecution.
10. The Explanation to Section 138 provides that a debt or liability under this section means only a legally enforceable debt or other liability. In common parlance, a debt is something owed to another, a liability, an obligation, a chose in action, which is capable of being assigned by creditor to some other person. A debt due means that a particular liability is in existence. Thus in cases for an offence of dishonour of cheque, it would be relevant to examine the materials/evidence as to whether there is a "debt payable" and whether the cheque was drawn for that dischargeable debt. While there may be a debt payable in existence, that alone is not sufficient to prove that the cheque was drawn in discharge of that amount. Where the accused raised the point that the cheque in question was not intended to be in appropriation of the debt or to be used for a discharge of the debt, but was issued only as a collateral safeguard, there cannot be presumption under Section 138 of the Negotiable Instruments Act..."
21. Keeping in view the aforesaid legal propositions, it is clear that dishonour of a cheque given as security does not make out an offence under Section 138 NI Act and the very fact that the payment was agreed to some CC NO. 3072/12 Page no. 14 of 16 future date and there was no debt or liability on the date of delivery of cheque, will take the case out of the purview of section 138 N.I. Act. Penal liability under Section 138 N.I Act can be enforced only when the cheque is issued in discharge of any legally enforceable debt or other liability, partly or wholly. Where a cheque is issued not for the purpose of discharge of any debt or other liability, dishonour of such cheque will not meet with the penal consequences and the drawer of the cheque shall not, therefore, be liable for prosecution.
22. In the present case, the accused has managed to show that he did not have the legal liability or debt to the tune of cheque amount in question i.e. Rs.55,374/ towards the complainant on the date mentioned on the cheque i.e. 02.11.2006, as such, the accused has successfully rebutted the presumption of section 139 and section 118 NI Act and has successfully proved his defence that the cheque in question was given as a security cheque and not in discharge of any legal debt or liability. In lieu of successful proving of first defence by the accused, the second defence raised by him need not be elaborated.
Final Order:
To hold a person guilty of committing a criminal offence under section 138 of NI Act, all the ingredients of the said offence should be CC NO. 3072/12 Page no. 15 of 16 proved against the accused but in the present case one of the main ingredients i.e. whether the cheque in question was issued in discharge of any legal debt or other liability is not proved against the accused, therefore, there is no need of considering whether complainant has proved other remaining ingredients of offence under section 138 NI Act against the accused.
In view of the aforesaid discussion, this court is of the considered opinion that the complainant has failed to prove its case against the accused.
All the ingredients of Section 138 of Negotiable Instruments Act have not been duly proved on record. Accordingly, accused Banwari Singh S/o Sh.
Mehtab is hereby acquitted of the offence u/s 138 Negotiable Instruments Act.
B/B and S/B stands discharged.
Announced in the open (AKASH JAIN) Court on 04.10.2012 MM01 (NI Act) Dwarka Courts, New Delhi CC NO. 3072/12 Page no. 16 of 16