Delhi District Court
Rajesh Kataria vs . Sanjay Gupta on 21 September, 2021
IN THE COURT OF MS. AAYUSHI SAXENA
METROPOLITAN MAGISTRATE (SOUTH) 01,
N.I. ACT, SAKET COURTS : NEW DELHI
CC No.26390/2017
Rajesh Kataria Vs. Sanjay Gupta
1. Complaint Case number : 26390/2017
2 Name of the complainant : Rajesh Kataria,
S/o Sh. Bhim Singh Kataria,
R/o WZ-758, Narayna, New
Delhi-110028
3. Name and address of the : Sanjay Gupta
accused S/o Late Sh. Bhagwan
Swaroop,
R/o Plot No.1/2, Naya Khand
III, Indira Puram, Ghaziabad,
Uttar Pradesh
Also at:
Plot No.14, Flat No. GF-4,
Gyankhand-I, Indirapuram,
Ghaziabad, Uttar Pradesh.
4. Offence complained of or : Under Section 138 of the
proved Negotiable Instruments Act,
1881.
5. Plea of the accused : Pleaded not guilty and
claimed trial.
6. Final Order : Conviction
7. Date of Institution : 13.12.2017
CC No.26390/2017
Rajesh Kataria Vs. Sanjay Gupta Page 1 of 28
8. Date of Reserving the : 24.08.2021
Judgment
9. Date of pronouncement : 21.09.2021
JUDGMENT
1. The instant complaint is in respect of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter "the NI Act")
2. Briefly stated the chain of facts leading to filing of the present complaint, as has been averred in the present complaint is as follows:
2.1 That since the accused and the complainant were having friendly relations with each other and as such the accused approached the complainant in the month of August,2016 for a friendly loan of Rs. 20,00,000/- only (Rs.
Twenty Lakhs only) in order to incur the expenses in renovating shop/showroom of the accused with the assurance that he will repay the said loan amount after a period of six months from December,2016 in installments.
2.2 That accordingly, complainant gave the said amount of Rs. 20,00,000/- to the accused in four installments i.e. first on 29.08.2016 for Rs. 5,50,000/- , then on 05.09.2016 for Rs. 5,70,000/-, on 07.12.2016 for Rs. 4,30,000/- and lastly on 30.12.2016 for Rs. 4,50,000/-.
CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 2 of 282.3 That it is submitted that after a period of six months, accused gave four cheques for a total sum of Rs. 5,00,000/- as part payment against the aforesaid loan amount and assured the complainant to pay the balance amount of Rs. 15,00,000/- in installments as assured by him. The cheque details are mentioned hereunder:-
S.No. Cheque no,Amount Banker Name
& Date
1. 074064, Rs 2,00,000/-, SBI Branch,
15.08.2017 Indirapuram
2. 074065, Rs 1,00,000/-, -do-
15.06.2017
3. 074066, Rs. 1,00,000/-, -do-
15.07.2017
4. 074068, Rs. 1,00,000/- -do-
15.07.2017
2.4 That at the time of handing over the aforesaid cheques
the accused specifically requested the complainant to firstly present the cheques bearing no. 074066 dated 15.07.2017 for Rs. 1,00,000/- and 074068 dated 15.07.2017 for Rs. 1,00,000/- for encashment. The accused also assured the complainant that the said cheques will certainly be honoured on presentation.
2.5 That accordingly the complainant presented the two cheques bearing no. 074066 dated 15.07.2017 for Rs. 1,00,000/- and 074068 dated 15.07.2017 for Rs. 1,00,000/- for encashment through its banker i.e. State Bank of India, Green Park Ext, New Delhi. However, the same were dishonored vide two separate return memos of the same date i.e. 13.10.2017 with remarks CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 3 of 28 "Signatures Differ"
2.6 That thereafter, the complainant informed the accused about the aforesaid dishonour of the cheques. The accused felt guilty and visited the house of the complainant and received back two cheques bearing nos. 074064 dated 15.08.2017 for Rs. 2,00,000/- and 074065 dated 15.06.2017 for Rs. 1,00,000/- with the assurance that he will make the payment of the said cheques i.e. cheque nos. 074064 dated 15.08.2017 for Rs. 2,00,000/- and 074065 dated 15.06.2017 for Rs. 1,00,000/-. He also assured the complainant to make payment of both dishonored cheque nos. 074066 dated 15.07.2017 for Rs. 1,00,000/- and 074068 dated 15.07.2017 for Rs. 1,00,000/- . However the accused failed to do so.
2.7 That, the counsel for the complainant namely Sh. Bhagwan Das issued legal notice dated 10.11.2017 through Registered Post on the available address of the accused, wherein accused was instructed to pay a total sum of Rs2,00,000/- (Rs. Two Lakhs only) to the complainant in lieu of the dishonored cheque nos. 074066 dated 15.07.2017 for Rs. 1,00,000/- and 074068 dated 15.07.2017 for Rs. 1,00,000/-. In the said legal demand notice, the accused was further informed that if he fails to pay the said demanded amount within a period of 15 days from the receipt of notice, then the complainant shall be constrained to initiate legal action against the accused.
2.8 That as per the tracking report of the legal demand notice dated 1011.2017 was duly served on him on 13.11.2017.
2.9 On receiving the same, the accused failed to honour CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 4 of 28 the cheque within the statutorily prescribed period and also did not reply to the notice sent in the manner contemplated under Section 138 of the Act.
2.10 Following these developments, the complainant was constrained to file the present complaint (under Section 200 of the Code of Criminal Procedure) against the accused for the offence punishable under Section 138 of the Act.
3. Pursuant to filing of the said complaint, the complainant, filed his pre-summoning evidence by way affidavit Ex CW-1/1 and has relied upon various documents viz. Original cheques dated 15.07.2017, Ex.CW1/A and Ex.CW1/B, cheque return memos dated 13.10.2017 Ex.CW-1/C and Ex. CW-1/D, legal notice dated 10.11.2017 Ex.CW-1/E, postal receipt Ex.CW-/F and tracking report Ex.CW1/G.
4. Ld. Predecessor of this Court took cognizance of the offence under section 138 NI Act vide order dated 15.12.2017 and ordered for issuance of summons for attendance of the accused.
5. Thereafter, the Accused entered appearance on 30.07.2018 when he was admitted to bail.
6. On that very date, notice under Section 251 Code of Criminal Procedure, 1973 (hereinafter referred to as 'Cr.P.C.') was given to the accused and he was asked whether he pleaded guilty or claimed trial. In reply to this, he pleaded not guilty and claimed trial. In his statement of defence recorded at that very time, he, inter-alia, stated to have taken loan of Rs. 2 lakhs from the CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 5 of 28 complainant in 2016. The said loan was taken without interest. Furthermore, it was stated by him that the cheques in question were given to the complainant as blank security cheques at the time of taking loan. It was also stated by him that the loan amount had been repaid to the complainant by way of four cash installments of Rs.50,000/- each. The said money was given to the son of the complainant and a friend of the complainant. It was also stated by him that the cheques in question were not returned back to the accused on the pretext that the same had been misplaced. However, the accused stated that he did not receive the legal demand notice dated 10.11.2017.
7. As the statement of defense of accused revealed a specific defense, hence he was allowed to cross examine the complainant witness under section 145(2) NI Act.
8. Given the nature of the allegations, Ld. Predecessor Court had directed that the case shall be tried as a Summons case under Chapter XX of Cr.P.C.
9. Admission denial of documents was also done on that very date.
9.1 During the course of the trial, the complainant CW1 relied on the the affidavit Ex.CW1/1 filed by him at the pre summoning stage and adopted the same in his examination in chief. He also relied upon the documents already exhibited as Ex.CW1/A to Ex.CW1/G. The said witness was cross-examined by the Ld. counsel for the accused.CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 6 of 28
Thereafter, CW2 Mrs. Prem Lata Kataria was examined, cross examined and discharged on 13.09.2019 and CE was closed on that very date.
9.2 After closure of complainant's evidence on 13.09.2019, statement of the accused under Section 313 Cr.P.C. was recorded on 11.10.2019 whereby circumstances appearing against him in evidence were put to him. While reiterating his said defence, additionally it was stated, inter- alia that the complainant himself removed the blank cheques from his cheque book and cheques in question do not bear his signatures. He further stated that he did not issue the cheques in question to the complainant.
9.3 Pursuant thereto, the case was fixed for defence evidence. On 16.03.2020, DW-1, the accused, DW2 Ms. Preeti Gupta and DW3 Sh. Harikesh Singh were examined, cross examined and discharged on that very date and DE stood closed on the same date.
9.4 Thereafter arguments were heard at length on behalf of both the parties. Counsel for the complainant had also filed written submissions.
10. Before delving into the facts of the present case, it is necessary to look at the legal framework regarding Section 138 NI Act. The Hon'ble Supreme Court of India in Kusum Inglots & Alloys Ltd and Ors v. K Pennar Peterson Securities Ltd and Ors., (2000) 2 SCC 745 has clearly CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 7 of 28 laid down the ingredients which are to be satisfied for making out a case under Section 138 NI Act, which are being reproduced hereunder:
(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;
(ii) that cheque has been presented to the bank within a period of six months(Reduced to three months vide RBI circular dated 4.11.2011) from the date on which it is drawn or within the period of its validity whichever is earlier;
(iii) that cheque is returned by the bank unpaid either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
(iv) 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 15 days (now 30 days w.e.f. 06.02.2003) of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(v) 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;CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 8 of 28
If the aforementioned ingredients are satisfied then the person who has drawn the cheque shall be deemed to have committed an offence. In the explanation to the section clarification is made that the phrase "debt or other liability" means a legally enforceable debt or other liability.
11. Adverting now to the facts of the present case, it has been averred by the complainant in the present case that since the accused and the complainant were having friendly relations with each other and as such the accused approached the complainant in the month of August,2016 for a friendly loan of Rs. 20,00,000/- only (Rs. Twenty Lakhs only) in order to incur the expenses in renovating shop/showroom of the accused with the assurance that he will repay the said loan amount after a period of six months from December,2016 in installments. That accordingly, complainant gave the said amount of Rs. 20,00,000/- to the accused in four installments i.e. first on 29.08.2016 for Rs. 5,50,000/- , then on 05.09.2016 for Rs. 5,70,000/-, on 07.12.2016 for Rs. 4,30,000/- and lastly on 30.12.2016 for Rs. 4,50,000/-. That it is submitted that after a period of six months, accused gave four cheques for a total sum of Rs. 5,00,000/- as part payment against the aforesaid loan amount and assured the complainant to pay the balance amount of Rs. 15,00,000/- in installments as assured by him. That at the time of handing over the aforesaid cheques the accused specifically requested the complainant to firstly present the cheques in question bearing no. 074066 dated 15.07.2017 for Rs. 1,00,000/-(Ex. CW1/A) and 074068 dated 15.07.2017 for Rs.
CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 9 of 281,00,000/- (Ex CW1/B) for encashment. The accused also assured the complainant that the said cheques will certainly be honoured on presentation. However, when the complainant presented the cheques in question, bearing no. 074066 dated 15.07.2017 for Rs. 1,00,000/-(Ex. CW1/ A) and 074068 dated 15.07.2017 for Rs. 1,00,000/- (Ex. CW1/B) for encashment, the same were dishonored vide two separate return memos (Ex. CW 1/C and EX. CW1/D) with remarks "Signatures Differ". Pursuant to the said dishonor, the complainant sent a Legal notice dated 10.11.2017( Ex. CW-1/E).
11.1. At the cost of repetition I may reiterate that when the accused was given notice under Section 251 Cr. P.C on 30.07.2018, he pleaded not guilty and claimed trial and he took the defence that he had taken a loan of Rs. 2 lakhs from the complainant in the year 2016. The said loan was interest free. It was further stated by the accused that the cheques in question were given as blank security cheques to the complainant at the time of taking loan. It was also stated by him that the loan amount was repaid to the son of complainant and a friend of the complainant, by way of four installments of Rs. 50,000/- each. The accused further stated that the complainant did not return the cheques in question on the pretext that the same had been misplaced. When the statement of accused was recorded under Section 313 Cr.P.C., apart from reiterating the stand taken by him in his statement of defence under Section 251 Cr.P.C., he stated that the cheques in question were removed by the complainant himself from his cheque book. However he did not admit his signatures on the CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 10 of 28 cheques in question.
11.2 The defence taken by the accused at the stage of framing of notice under Section 251 Cr.P.C. was that cheques in question were given as blank security cheques by the accused to the complainant at the time of taking loan of Rs. 2 lakhs. The said loan amount was repaid by way of four cash installments of Rs. 50,000/- each. Further, it was stated therein that the complainant did not return the cheques in question on the pretext that the same had been misplaced. If the cheques had been misplaced by the complainant then, looking from the lens of a prudent person, the accused should have reported this factum of misplacement to the concerned authorities or should have reported it to the police. But no such steps were taken by the accused. Merely by saying that the loan was repaid and cheques in question were misplaced would not suffice. Accused hasn't done anything more than making bare statements. Now, contrary to the above mentioned line of defence, when statement of accused was recorded under Section 313 Cr.P.C. he stated that the cheques in question were removed by the complainant himself from his(i.e. accused's) cheque book. The accused has made two contradictory statements regarding how the cheques in question came in possession of the complainant. Hence, the defence put forth by the accused doesn't seem to be reliable.
11.3 Now, coming to the receipt of legal demand notice(Ex. CW1/E) , which has been denied by the accused under Section 251 Cr.P.C. as well as his statement under Section 313 Cr.P.C. However, the tracking report (Ex.CW1/G) of the legal demand notice dated 10.11.2017 (Ex.CW1/E) shows that the said notice CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 11 of 28 was duly "delivered". It is not the defence of the Accused that the address mentioned thereon (i.e. Ex.CW1/E)) is incorrect. It is noteworthy that when the accused was given notice under Section 251 Cr.P.C. as also when his statement under Section 313 Cr.P.C. was recorded, he had given the same address as mentioned in the legal demand notice i.e. Plot no 1/2, Naya Khand-III, Indirapuram, Ghaziabad, U.P. Section 27 of the General Clauses Act, 1897 provides the meaning of the words "service by post". It reads as follows:
"Section 27- Where any [Central Act] or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression serve or either of the expressions give or send or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post."
The Hon'ble Supreme Court in C. C. Alavi Hazi Vs. Palapetty Mohd. & Anr." reported in (2007) 6 Supreme Court Cases 555 , has, inter alia, held as follows: -
"9. It is, thus, trite to say that where the payee dispatches the notice by registered post with correct address of the drawer of the cheque, the principle incorporated in Section 27 of the G.C. Act would be attracted; the requirement of CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 12 of 28 Clause (b) of proviso to Section 138 of the Act stands complied with and cause of action to file a complaint arises on the expiry of the period prescribed in Clause (c) of the said proviso for payment by the drawer of the cheque. Nevertheless, it would be without prejudice to the right of the drawer to show that he had no knowledge that the notice was brought to his address." It was further held in this case that 'Section 27 General Clauses Act, 1897 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement refused or not available in the house or house locked or shop closed or addressee not in station, due service has to be presumed."
In light of the above mentioned legal principles as also the fact that the correctness of the address has not been disputed by the accused, it stands proved that the legal CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 13 of 28 demand notice (Ex. CW-1/E) dated 110.11.2017 was duly served on the accused.
11.4 Despite the receipt of the said legal demand notice, the accused failed to reply to the same. In this context, reference here can be made to the case of Kalu Ram Vs. Sita Ram 1980 RLR (Note) 44 wherein it was held that "if the plaintiff before filing suit makes serious assertions in a notice to the defendant then the defendant must not remain silent by ignoring to reply, if he does so then adverse inference may be raised against him ". Also in the case of L.C. Goyal v/s Mrs. Suresh Joshi [Civil Appeal No. 2271 of 1998 decided on 12.03.1999] "The complainant sent two notices on behalf of M/s. Siemens' Union to the appellant wherein she inter alia alleged, that a sum of Rs.25,102/- was misappropriated by the appellant under the pretext of payment of the court fee for the suit filed by the plaintiffs, that the appellant did not press the application for injunction, and that the appellant misled the complainant as regards the progress of the case. These notices were not replied to by the appellant". In the face of these facts it has been held by Hon'ble Apex Court that this was a material circumstance against the appellant when, receipt of the notices sent to him have been admitted."
Coming now to the facts of the present case, a perusal of legal demand notice, in this context is essential. The said notice contained serious accusations against the accused i.e. CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 14 of 28 for the repayment of loan amount of Rs. 20,00,000/- the accused issued four cheques (totaling to Rs.5,00,000/-) , two of which are the cheques in question. The two cheques in question(of Rs 1,00,000/- each) on presentment were dishonored with reason 'Drawer's Signature Differs'. This factum of dishonor was brought to the notice of the accused, pursuant to which the accused visited the house of the complainant and apart from other things, assured the complainant to make payment of both the dishonored cheques in question. Even after having received such information, the accused was unperturbed and did not approach the complainant nor did he write any letter to the complainant. No prudent mind can be left with any semblance of doubt that the accused did not choose to dispute the facts stated in the legal demand notice.
11.5 Now, during the trial, when the accused was given notice under Section 251 Cr.P.C., he took the defence that the cheques in question were given to the complainant as blank cheques and the said cheques do not bear his signature. The cheques in question bearing no. 074066 and 074068 were presented to the Bank concerned within the period of their validity and were returned unpaid vide return memos dated 15.07.2017 for the reason of "Drawer's Signature Differs". In this context, it is pertinent to mention here the judgment rendered by Hon'ble Supreme Court in Laxmi Dyechem vs. State of Gujarat & Ors [(2012) 13 CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 15 of 28 SCC 375] wherein it was held that :
"1 5 . The above line of decisions leaves no room for holding that the two contingencies envisaged under Section 138 of the Act must be interpreted strictly or literally. 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 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. This Court has in the decisions referred to above taken note of situations and contingencies arising out of deliberate acts of omission or commission on the part of the drawers of the cheques which would inevitably result in the dishonour of the cheque issued by them. For instance this Court has held that if after issue of the cheque the drawer closes the account it must be presumed that the amount in the CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 16 of 28 account was nil hence insufficient to meet the demand of the cheque. A similar result can be brought about by the drawer changing his specimen signature given to the bank or in the case of a company by the company changing the mandate of those authorised to sign the cheques on its behalf. Such changes or alteration in the mandate may be dishonest or fraudulent and that would inevitably result in dishonor of all cheques signed by the previously authorised signatories. There is in our view no qualitative difference between a situation where the dishonour takes place on account of the substitution by a new set of authorised signatories resulting in the dishonour of the cheques already issued and another situation in which the drawer of the cheque changes his own signatures or closes the account or issues instructions to the bank not to make the payment. So long as the change is brought about with a view to preventing the cheque being honoured the dishonour would become an offence under Section 138 subject to other conditions prescribed being satisfied. There may indeed be situations where a mismatch between the signatories on the cheque drawn by the drawer and the specimen available with the bank may result in dishonour of the cheque even when the drawer never intended to invite such a dishonour. We are also conscious of the fact that an authorised signatory may in the ordinary course of CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 17 of 28 business be replaced by a new signatory ending the earlier mandate to the bank. Dishonour on account of such changes that may occur in the course of ordinary business of a company, partnership or an individual may not constitute an offence by itself because such a dishonour in order to qualify for prosecution under Section 138 shall have to be preceded by a statutory notice where the drawer is called upon and has the opportunity to arrange the payment of the amount covered by the cheque. It is only when the drawer despite receipt of such a notice and despite the opportunity to make the payment within the time stipulated under the statute does not pay the amount that the dishonour would be considered a dishonour constituting an offence, hence punishable. Even in such cases, the question whether or not there was a lawfully recoverable debt or liability for discharge whereof the cheque was issued would be a matter that the trial Court will examine having regard to the evidence adduced before it and keeping in view the statutory presumption that unless rebutted the cheque is presumed to have been issued for a valid consideration."
In the case at hand, elucidating from the principles laid out by Hon'ble Apex Court, it has been already mentioned above that accused admittedly received the legal demand notice dated 10.11.2017 sent on behalf of the CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 18 of 28 complainant but even after receiving the said notice, the accused neither responded to the notice nor made any payment within the statutory period of fifteen days and only thereafter, complaint was filed by the complainant under Section 138 of the Act against the accused. Hence, the said dishonour would be considered a dishonour constituting an offence under Section 138 NI Act.
12. Now, once it has been established that the cheque was duly executed and signed by the accused, we must shift our focus towards the presumption under Section 118 and 139 NI Act.
12.1 As per the said Section 139 NI Act, it shall be presumed that the cheque was issued by the accused/drawer for the discharge, in whole or in part, of debt or other liability. The said proposition has been dealt in a catena of judgments of Hon'ble Supreme Court in APS Forex Services Pvt. Ltd. v. Shakti International Fashion Linkers and Ors ., [AIR 2020 SC 945]; Rohitbhai Jivanlal Patel v. State of Gujarat and Ors ., [AIR 2019 SC 1876]; Basalingappa v. Mudibasappa , [(2019) 5 SCC 418 ("Basalinga case")]; Kumar Exports v. Sharma Carpets , [(2009) 2 SCC 513]. In Basalinga case, the Hon'ble Apex Court has held that:
"23. We having noticed the ratio laid down by this Court in above cases on Sections118(a) and 139, we CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 19 of 28 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.
(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".
12.2 It has been categorically held in Bir Singh v CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 20 of 28 Mukesh Kumar [(Criminal Appeal Nos 230-231 OF 2019)] that :
"21. In passing the impugned judgment and order dated 21-11- 2017, the High Court mis-construed Section 139 of Negotiable Instruments Act, which mandates that unless the 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. Needless to mention that the presumption contemplated under Section 139 of the Negotiable Instruments Act, is a rebuttable presumption. 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".
12.3 In K.N. Beena vs. Muniyappan and Another {SLP (Crl) 969 of 2001] , Hon'ble Apex Court held that:
"in view of the provisions of Section 139 of the Negotiable Instruments Act read with Section 118 thereof, the Court had to presume that the cheque had been issued for discharging a debt or liability. The said presumption was rebuttable and could be rebutted by the accused by proving the contrary. But mere denial or rebuttal by the accused was not enough. The accused had to prove by cogent evidence that there was no debt or liability. This Court clearly CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 21 of 28 held that the High Court had erroneously set aside the conviction, by proceeding on the basis that denials/averments in the reply of the accused were sufficient to shift the burden of proof on the complainant to prove that the cheque had been issued for discharge of a debt or a liability. This was an entirely erroneous approach. The accused had to prove in the trial by leading cogent evidence that there was no debt or liability".
12.4 The Hon'ble Delhi High Court in V.S.Yadav v. Reena [172 (2010) DLT 561], where the accused had pleaded that no loan was ever taken and yet the security cheques were not returned by complainant; noted that:
"In order to rebut the presumption under Section 139 N.I. Act, the accused, by cogent evidence, has to prove the circumstance under which cheques were issued. It was for the accused to prove if no loan was taken why he did not write a letter to the complainant for return of the cheque. Unless the accused had proved that he acted like a normal businessman/prudent person entering into a contract he could not have rebutted the presumption under Section 139 N.I. Act. If no loan was given but cheques were retained, he immediately would have protested and asked the cheques to be returned and if still cheques were not returned, he would have served a notice as complainant. Nothing was proved in this CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 22 of 28 case."
12.5 In light of the legal proposition discussed above, it is now imperative to examine as to whether the accused has brought any cogent evidence to rebut the presumption raised against him. Pertinently, when the accused was given notice under Section 251 Cr.P.C., he admitted that he had taken an interest free loan of Rs 2 Lakhs from the complainant in the year 2016. The cheques in question were given to the complainant as blank security cheques at the time of taking loan. The said loan amount was repaid to the complainant by way of four cash installments of Rs. 50,000/- each. The loan amount was given to the son of the complainant and to a friend of the complainant. It is pertinent to note here that no receipt of the repayment of loan has been filed by the accused. The accused had to prove by cogent evidence that no debt or liability remained due towards the complainant. Mere denial or rebuttal by the accused was not enough. Hence, this defence taken by the accused seems unreliable in light of the legal principles discussed above as also the factual scenario of the present case.
12.6 Now, the accused also stated during the stage of framing of notice u/s 251 Cr.P.C. that the complainant did not return the cheques in question on the pretext that the same had been misplaced. If the story put forth by the accused is to be believed, when the accused came to know that the cheques had been misplaced by the complainant, he should have CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 23 of 28 approached the authorities for reporting the incident. But he chose to not report the same. Then at the stage of recording of statement under Section 313 CrPC, he stated that the complainant had himself removed blank cheques from his cheque book. It is noteworthy that the accused has taken inconsistent pleas throughout the proceedings. On one hand, he stated that he himself handed over the cheques in question to the complainant and on the other hand he stated that the complainant had removed the cheques from his cheque book. When the accused was examined as DW-1, he deposed that he was close friends with the complainant and that the complainant used to visit his showroom regularly. He further deposed that signed cheques were lying in his office drawer and that the complainant had stolen the said cheques from the showroom, regarding which he came to know only when he received summons from the court. Now this deposition of the accused also does not seem to be plausible as it has been already discussed above, that the legal demand notice (Ex. CW 1/E) was duly served on the accused and even after receipt of the same, he chose to keep quiet. Neither did he approach the complainant nor did he report this to the police. This fact of not reporting the said incident has also been admitted by DW-1 in his deposition, that no police complaint was registered against the four stolen cheques. At this instant, the testimony of DW-2(i.e. wife of the accused) is noteworthy. During her cross examination, DW-2 deposed that her husband(i.e. the CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 24 of 28 accused) had lodged a police complaint regarding the stolen cheques however she was not aware about the place where complaint was lodged. This statement of DW-2 seems to be an afterthought as the accused had already stated that no police complaint was lodged and no document was placed on record to justify the statement.
One more thing must be taken note of here. DW-1 deposed that signed cheques were lying in his drawer and 4 cheques were stolen by the complainant from his showroom. So he at this stage that the cheques were already signed. But when accused was given notice under Section 251 Cr.P.C., he stated that cheques in question do no bear his signature. The contradictory pleas taken by the accused at various stages do not seem reliable hence they must be rejected at the outset. As has been already discussed above, the cheques in question were duly executed by the accused. 12.7 DW-1 deposed that there was demonetization on 06.11.2016, so it was not possible for the complainant to give such a huge amount in new currency. When DW-1 was cross examined by Ld. counsel for the complainant, a suggestion was put to him that demonetization was declared on 08.11.2016 and the complainant had given the amount prior to demonetization, to which he replied " the complainant never gave any amount to me". This is totally contradictory to the defence taken by the accused at the stage of framing of notice under Section 251 Cr.P.C., wherein he admitted that he had taken a loan of Rs.
CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 25 of 282,00,000/- from the complainant, which also also repaid. This has not been reiterated by DW-1, rather a completely different story has been cooked up by him and it is an afterthought, which also does not seem to be a reliable one. 12.8 It was stated by the accused when he was given notice under Section 251 CrPC, that the cheques in question were given as blank security cheques to the complainant. In this context the Hon'ble High Court of Delhi in Suresh Chandra Goyal v. Amit Singhal, Crl. L.P, 706/2014 has succinctly observed 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 premise 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 138of NI Act in case of its dishonour."
Additionally, the Hon'ble High Court of Delhi in the aforesaid decision also referred to the judgments of the Hon'ble SC in ICDS Ltd. v. Beena Shabeer & Anr. [(2002) 6 SCC 426]; and Hon'ble High Court of Bombay in Sai Auto Agencies through its partner Dnyandeo Ramdas Rane v. Sheikh Yusuf Sheikh Umar, [2011 (1) Crimes 180 ("Sai Auto Agencies Case")] to buttress the aforesaid observation. In fact, CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 26 of 28 the Hon'ble High Court of Bombay in Sai Auto Agencies Case (supra) noted that:
"9. Even if blank cheque has been given towards liability or even as security, when the liability is assessed and quantified, if the cheque is filled up and presented to the bank, the person who had drawn the cheque cannot avoid the criminal liability arising out of Section 138 of the Negotiable Instruments Act."
Merely by saying that cheque was issued as a security cheque will not solve the purpose. Therefore, the defence of the cheque being a security cheque does not by itself rebut the presumption.
12.9. It was also argued on behalf of the accused that demonetization took place on 8.11.2016, so how could the complainant advance an amount of Rs. 4,30,000/- on 07.12.2016 and Rs. 4,50,000/- on 30.12.2016 to the accused as there was cash crunch in the market. This argument advanced on behalf of the accused pales into insignificance as the accused has not been able to rebut the presumption raised against him.
13. A conspectus of the above discussion shows that the accused has not taken a uniform stand as to why and how the cheques in question (Ex.CW1/A and Ex.CW1/B) came in possession of the complainant. If we look at this from the lens of a prudent person, then the whole story put forth by the accused seems to be sham and must be rejected. There CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 27 of 28 seems to be no iota of truth in the defence taken by the accused. The accused has not been unable to prove any probable defence and has failed to rebut the presumptions raised under Sections 118 and 139 of the NI Act.
14. Therefore, accused is held guilty and convicted for commission of offence punishable under Section 138 of the Negotiable Instrument Act, 1881.
15. Let the convict be heard separately on quantum of sentence. Copy of this judgment be given free of cost to convict.
Digitally signed by AAYUSHI SAXENA AAYUSHI Announced in the open Court SAXENA Date: 2021.09.21 17:11:24 on 21.09.2021 +0530 (Aayushi Saxena) Metropolitan Magistrate-01 (South), NI Act/Saket/New Delhi/21.09.2021 CC No.26390/2017 Rajesh Kataria Vs. Sanjay Gupta Page 28 of 28