Delhi District Court
• Certified Copy Of The Complaint Cc No. ... vs . on 28 February, 2022
IN THE COURT OF SH. P. BHARGAV RAO, M.M.01, N.I. ACT, WEST DISTRICT,
TIS HAZARI, DELHI
C.C. No. 15028/2016
PS Hari Nagar
DLWT020012982011
Praveen Kumar
s/o Sh. Rajinder Kumar Gupta
R/o RZ29, Raghu Nagar, Pankha Road
(Kapoor TentValiRoad),
New Delhi
....Complainant
Versus
Nippun Jasuja
s/o Lt. Sh. R. K. Jasuja
R/o NIL59AB, Malviya Nagar,
New Delhi110017
.....Accused
Date of institution : 02.07.2011
Offence complained of: 138 NI Act
Date of final arguments: 12.07.2021
Date of Decision: 28.02.2022
Plea of guilt: Plead not guilty
Decision: Convicted
JUDGMENT:
The present complaint has been filed by the complainant against the accused under section 138 Negotiable Instruments Act, 1881 (hereinafter referred as the "Act").
C.C. No. 15028/16 Dated 28.02.2022 Pages 1 Complainant's Version:
1. Complainant avers that the accused took a friendly loan from the complainant amounting to Rs. 5,00,000/ on 15.10.2009. The total loan amount of Rs. 5,00,000/ was required to be returned in a period of one and a half year. In order to discharge his legal liability, the accused had issued a cheque to the complainant bearing no. 859127 amounting to Rs. 5,00,000/ dated 21.04.2011 drawn on HSBC Bank Limited, F43, South Extension PartI, New Delhi110049. The loan was given in the presence of Sh. Bharat Kohli common friend of both accused for the treatment of mother of the accused. Consequently, the complainant presented the impugned cheque with its Banker, State Bank of India, Hari Nagar, New Delhi110064 which got dishonoured vide return memo dated 27.04.2011 with remarks "Account closed".
2. Thereafter, the complainant sent a legal demand notice dated 24.05.2011 on address of the accused.
3. Upon failure of the accused to make payment of the cheque in question within the stipulated time of 15 days, the complainant has filed the present complaint u/s 138 of the Act.
4. The complainant examined himself in presummoning evidence and after considering the complaint and entire documents on record, summon was issued by this Court against the accused on 05.11.2011.
Notice against the accused:
5. Notice was framed against the accused on 09.04.2012 and the accused pleaded not guilty and claim trial.
Plea of defence of the accused:
6. The accused had taken the following plea in his defence:
"I plead not guilty and claim trial.
I had applied for loan through the complainant but I was not disbursed the loan and I gave documents and the cheque towards C.C. No. 15028/16 Dated 28.02.2022 Pages 2 processing of the loan. I have no legal liability towards the complainant as alleged by him."
7. Thereafter, an application u/s 145(2) was filed by the accused which was allowed by this Court vide order dated 07.07.2012.
Complainant's evidence:
8. The complainant examined himself as CW1 reiterating the statements made in the complaint. He also relied upon the documents Ex. CW1/A to CW1/F. • Original cheque in question is Ex. CW1/A • Original return memo in question is Ex. CW1/B • Copy of legal demand notice is Ex.CW1/C • Original speed post received is Ex. CW1/D • Original DTDC Courier receipt is Ex.CW1/E • Proof of delivery of Legal Demand Notice Ex.CW1/F • Certified copy of the complaint CC No. 5801/10 titled Surender Singh vs. Nippun Jasuja as Ex. CW1/DA • Affidavit of the complainant as witness in the aforementioned compliant CC No. 5801/10 as Ex. CW1/DB • Evidence by way of Affidavit of CW2 as Ex. CW2/1
9. Thereafter, the complainant as CW1 was duly crossexamined by the Ld. Counsel of the accused. Complainant examined Bharat Kohli as CW2 and was duly cross examined by Ld. Counsel of the accused. No other witness was examined by complainant. CE was closed by this Court vide order dated 24.02.2015.
Statement of the accused
10. Statement of the accused was recorded under section 313 Code of Criminal Procedure (hereinafter referred as "Cr.P.C") on 04.11.2016 wherein all the incriminating evidences were put up before the accused.
C.C. No. 15028/16 Dated 28.02.2022 Pages 3
11. Accused stated that he had no liability towards the repayment of Rs. 5 lakhs as he had not taken any friendly loan from complainant. He further stated that the said cheque was misused by the complainant as he wanted to gain wrongfully from him. The complainant without informing him presented the cheque to the HSBC Bank for clearance and his saving bank account in HSBC Bank and the account was not closed by him or by his instructions rather it was closed by the bank officials. The accused admitted the receipt of the legal demand notice. He further stated that during that time his elder brother late Vipin Jasuja was admitted in Apollo Hospital for blood cancer treatment. Though, he knew that the legal notice for Rs. 5 lacs was nothing but a concocted story, he could not reply to the same as he was only the person to look after his brother.
Defence Evidence:
12. No witness was examined by the accused in support of his defence. DE was closed on 06.02.2018 after giving several opportunities to lead DE.
Ld. Counsel for the accused relies on the following judgments :
(i) In the Hon'ble Court of Bombay in Sanjay Mishra v/s Kanishka Kapoor @ Nikki(Date of decision 24th February 2009).
(ii) John K. Abraham V/s Simon C. Abraham & Anr. Reported as 2014 (1) JCC (NI) 31.
(iii) Suresh V/s Narinder Gautam reported as 2015 law suit (P & H) 6807.
(iv) Karamvir V/s Ms. Anita Sharma reported as 2011 (1) DCR 135.
(v) Devender Kumar V/s Khem Chand reported as 223 (225) Delhi Law Time 419.
(vi) Sajidur Rehman v/s Rajiv Kashyap & ors reported as 2017 (3) DCR 461.
(vii) P. Venugopal v/s madan P. Sarathi reported as 2009 (1) DCR 481.
(viii) K. Prakashan v/s P. K. Surendram (appeal (crl). 1410 of 2007.
(ix) Krishna Janardaan Bhat v/s Dattatraya G. Hegde (2008) (Crl. L. J. 1172 (AC).
C.C. No. 15028/16 Dated 28.02.2022 Pages 4
(x) Mehendra Gulabchand Kochar v/s Sakharam Ramdas Patil reported as 2011 (1) Dcr
254.
Final arguments were heard on behalf of both the parties via video conferencing. I have heard the both the Ld Counsels and have given my thoughtful consideration to the material appearing on record.
The Law relating to Sec. 138 NI Act:
13. Before proceeding on the merits of the case, it is considered important to lay down the basic provisions of law with respect to section 138 of the Act which are as follows:
14. Section 138 of Negotiable Instruments Act, 1881 makes dishonour of cheques an offence. The Hon'ble Supreme Court in the case of Krishna Janardhan Bhat v. Dattatraya G. Hegde AIR 2008 SC 1325 held that the procedural requirements of section 138 are:
• There is a legally enforceable debt.
• The drawer of the cheque issued the cheque to satisfy part or whole of the debt.
• The cheque so issued has been returned due to insufficiency of funds.
15. In order to establish an offence u/s 138 NI Act, following ingredients must be fulfilled by the complainant :
(i) The cheque was drawn by a person on account maintained by him for payment of money and the same is presented for payment within a period of 03 months from the date on which it is drawn or within the period of its validity;
(ii) The cheque was drawn by the drawer for discharge of any legally enforceable debt or other liability;
(iii) The cheque was returned unpaid by the bank due to either insufficiency of funds in the account to honour the cheque or that it exceeds the amount arranged to be paid from that account on an agreement made with that bank;
C.C. No. 15028/16 Dated 28.02.2022 Pages 5
(iv) A demand of the said amount has been made by the payee or holder in due course of the cheque by a notice in writing given to the drawer within 30 days of the receipt of information of the dishonor of cheque from the bank;
(v) The drawer fails to make the payment of the said amount of money within fifteen days from the date of receipt of notice.
Points for Determination:
i. Whether the accused in the present case was in receipt of legal demand notice?
ii. Whether presumption under section 118(a) read with section 139 of the NI Act can be raised in favour of complainant in the present case?
iii. If the reply to the above question is in affirmative, whether the accused successfully rebutted the presumption u/s 118(a) r/w Section 139 of the NI Act through preponderance of probabilities?
iv. If the reply to the above question is in affirmative, whether the complainant could prove his case beyond reasonable doubt?
I shall be deciding the abovementioned points of determination separately.
(I) Whether the accused in the present case was in receipt of legal demand notice?
16. Ld Counsel for the accused submits that the notice was not sent on the correct address. He relies on the decision of the Hon'ble Supreme Court in P. Venogopal vs. Madan P. Sarthi 2009(1) DCR 481 and the judgment of the Hon'ble Bombay High Court in Mahendra Gulabchand Kochar vs. Sakharam Ramdas Patil, 2011 (1) DCR 254. At this stage, it is pertinent to mention Sec. 58 of the Indian Evidence Act, 1872 which provides that the facts admitted need not be proved. In the instant case, the accused during the framing of notice u/s 251 CR.P.C and statement u/s 313 Cr.P.C admitted the receipt of legal demand notice.
(II) Whether presumption under section 118 read with section 139 NI Act can be raised in the favour of complainant in the present case?
C.C. No. 15028/16 Dated 28.02.2022 Pages 6
17. The Hon'ble Supreme Court in Kumar Exports vs. Sharma Carpets (2009) 2 SCC 513, while discussing the contours of section 118(a) r/w 139 of the N I Act, has held interalia the following:
"14. Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
15. Applying the definition of the word "proved" in section 3 of the Evidence Act to the provisions of sections 118 and 139 of the Act, it becomes evident that in a trial under section 138 of the Act a presumption will have to be made that every negotiable intstrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under section 118 and 139 of the Act help him shift the burden on the accused. The presumption will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists."
18. In the instant case, the accused at the time of framing of notice u/s 251 and statement recorded u/s 313 Cr.P.C has admitted the issuance of cheque to the complainant albeit the accused contends that the cheque was given for the purpose of arranging loan.
19. Ergo, this court is of the considered view that the statutory presumptions under section 118(a) and 139 of the NI Act would be raised in favour of the complainant. In the instant case, since, the accused has admitted the execution of impugned cheque, the aforementioned statutory presumptions would be raised in favour of the complainant C.C. No. 15028/16 Dated 28.02.2022 Pages 7 regarding the fact that the impugned cheque has been drawn for consideration and issued by the accused in discharge of legally enforceable debt.
(III) Whether the accused has successfully rebutted the presumption u/s 118(a) r/w Section 139 of the Act through preponderance of probabilities?
20. In order to create doubt in the complainant's claims regarding existence of a legally enforceable debt, the accused has primarily adopted the following defence:
• The loan was not disclosed in the complainant's income tax return, ergo is an unaccounted money and also the complainant did not disclose the source of funds.
• The accused had applied for loan through the complainant but no loan was disbursed. Ergo, no legally enforceable debt existed at the time of issuance of cheque to the complainant; and • The accused had issued a blank cheque as a security which has been misused by the complainant.
• The complainant has cheated and impersonated himself as Tilu Gupta and fraudulently obtained the cheque in question from the accused.
• The accused does not have any friendly and family relations with the complainant.
• No documents were executed between the parties for the friendly loan.
• The complainant and the witness CW2 Bharat Kohli took contradictory stand during the crossexamination.
I shall be dealing with these defences separately.
(a) Defence that alleged loan amount being unaccounted cash cannot be recovered.
21. Ld. Counsel for the accused argues that advancing a loan amount of more than Rs. 20,000/ in cash is not permissible as per the provisions enshrined in section 269SS of Income Tax Act, 1961(hereinafter referred as "ITA"). He argued that since, the instant C.C. No. 15028/16 Dated 28.02.2022 Pages 8 alleged loan transaction involved a sum of Rs. 10,00,000/, therefore, it would be considered as illegal loan which cannot be recovered in a complaint filed u/s 138 of the Act. He has put reliance on the decision of the Hon'ble Delhi High Court in the decisions of Sanjay Mishra vs. Kanishka Kapoor @ Nikki, 2009 (5) BomCR 464, Devender Kumar vs. Khem Chand 223 (2015) Delhi Law Times, 419 and Sajidur Rehman Vs. Rajiv Kashyap & Ors. 2017(3) DCR 461.
22. Before examining the aforesaid objections raised by the accused, it is prudent to discuss the relevant provisions and case laws on this aspect.
Section 269SS of the ITA prohibits any person from taking or accepting from any other person a loan, deposit or other specified sum of more than Rs. 20,000 in cash. It reads as under:
"No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed], if,--the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or the amount or the aggregate amount referred to in clause(a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more"
23. The Hon'ble Supreme Court in the case of Krishna Janardan Bhat (supra) has discussed section 269SS of ITA in the realm of section 138 of the Act.
Relevant extract of the judgment is reproduced below:
"19. The courts below failed to notice that ordinarily in terms of Section 269SS of the Income Tax Act, any advance taken by way of any loan of more than Rs. 20,000/ was to be made by way of an account payee cheque only".
C.C. No. 15028/16 Dated 28.02.2022 Pages 9
24. It should be noted that the Hon'ble Supreme Court in the Rangappa case vs. Sri Mohan (2020) 11 SCC 441 has expressly overruled the Krishna Janardan Bhat case (supra) to a limited extent that presumption under section 139 of the Act would also include within its ambit the presumption regarding existence of legally enforceable debt. Although, the Apex Court did not specifically deal with the issue of advancing of loan amount of more than Rs. 20,000/ in cash, it nonethless upheld the conviction of accused in the case which involved loan transaction of Rs. 45,000/ in cash. At this stage, it would be prudent to refer to decision of the Hon'ble Bombay High Court in the case of Krishna P. Morajkar v. Joe Ferrato 2013 SCC online Bom 862, wherein it was held that the Hon'ble Supreme Court has impliedly overruled Krishna Janradan Bhat case (supra) on the aspect that loan of more than Rs. 20,000/ could not be advanced in cash. Observations made by the Hon'ble Supreme Court in Krishna Janardan Bhat case (supra) regarding loan transaction of more than Rs.
20,000/ in cash was made in peculiar facts and circumstances. The said observation cannot be considered as a blanket prohibition on loan transactions of more than Rs. 20,000/ in cash.
25. A bare reading of the provision enshrined in section 269SS of the ITA would suggest that there is prohibition in accepting or taking loan by a debtor for an amount of more than Rs. 20,000/ in cash. It is more of a regulatory provision in nature which regulates the mode of accepting deposits or loans. It does not per se declare all transactions in cash above the threhold of Rs. 20,000/ illegal. No similar prohibition has been made regarding advancing of such loan by the lender or creditor. If the loan of more than Rs. 20,000/ in cash has been accepted by the debtor then he cannot seek protection u/s 269SS to argue that the said loan transaction is illegal and nothing could be recovered from him. At this stage, I also find support from Rangappa case (supra) and Krishna P. Mojakar (supra) wherein transactions of more than Rs. 20,000 / in cash loan were upheld by the Hon'ble Courts.
26. Therefore, I am of the view that there is no blanket prohibition on advancing a loan of more than Rs. 20,000/ in cash. It may be considered as illegal transaction in certain circumstances wherein source of fund is not clear, loan advanced in cash has not been disclosed in income tax return or book of accounts etc. However, loan transaction involving smaller amounts which is common in general practice could not be automatically treated as illegal. Courts cannot remain oblivious of the fact that loan transactions in cash especially C.C. No. 15028/16 Dated 28.02.2022 Pages 10 between the family members and friends are very common. Rendering all such transactions illegal would frustrate the very basic purpose of section 138 of the Act and could prove to be haven for unscrupulous debtors.
(b) Defence that the loan transaction was not disclosed in ITR.
27. Further, coming on to the another leg of argument that a loan transaction not disclosed in income tax return of the complainant would amount to unaccounted income, and, therefore, could not be recovered u/s 138 of the Act, Ld. Counsel for the accused relies on the decision of the Hon'ble Bombay High Court in the Sanjay Mishra case (Supra) wherein the Hon'ble Court has dealt with the issue of recoverability of loan involving unaccounted transaction. It was held that if amount has been given on loan then non mentioning of said amount in income tax return will adversely affect the complainant and it cannot be said that it is a legally recoverable debt. However, the Hon'ble Bombay High Court has subsequently in Krishna P. Mojakar case (supra) has held that section 138 of the Act would be attracted even if the loan transaction is given in cash and not accounted in the income tax return of complainant. Relevant extract of the judgment is reproduced below:
"With utmost humility, I have to state that I have not come across any provision of Income Tax Act, which makes an amount not shown in the income tax returns unrecoverable. The entire scheme of the Income Tax Act is for ensuring that all amounts are accounted for. If some amounts are not accounted for, the person would be visited with the penalty or at times even prosecution under the Income Tax Act, but it does not mean that the borrower can refuse to pay the amount which he has borrowed simply, because there is some infraction of the provisions of Income Tax Act. Infraction of the provisions of Income Tax Act would be a matter between the revenue and the defaulter and advantage thereof can not be taken by the borrower. In my humble view, to say that the amount not disclosed in the income tax return becomes irrecoverable would itself defeat the provisions of section 138 N I Act."
28. Ld. Counsel for the accused also relies on the decision of the Hon'ble High Court of Delhi in Devender Kumar vs. Khem Chand 223 (2015) Delhi Law Times, 419 where the Hon'ble High Court held as under :
C.C. No. 15028/16 Dated 28.02.2022 Pages 11 "The petitioner could not, on the other hand, satisfy the requirement of law in discharging onus in the second instance regarding the plea of the respondent of no liability or nonexistence of a legally enforceable debt. The advance of loan of such amount is required to be disclosed under the I.T.R. return (referred to Section 269 SS of the Income Tax Rules and Section 271D of the Income Tax Act."
29. Ld. Counsel for the accused further relies on the decision of the Hon'ble High Court of Delhi in Sajidur Rehman Vs. Rajiv Kashyap & Ors. 2017(3) DCR 461 wherein the Hon'ble High Court held as under :
"The absence of any evidence to show the solvency of the respondent for him to have advanced loan to the petitioner leads to the presumption that there was no existing debt. There is no documentary evidence to show that such a huge amount of loan was advanced to the petitioner. It is difficult to accept the proposition that such amount of loan would be paid on oral agreement."
30. Perusal of the aforementioned decisions of the Hon'ble Court(s) suggests that the Courts have generally inclined in treating a loan not disclosed in the income tax return as unaccounted money which could not be recovered u/s 138 of the Act. However, I am of the view that if the source of the same can reasonably be proved/explained by the complainant, then, such transactions in the absence of any other reasons, ought not to be automatically considered as unaccounted money.
31. At this stage, reference may be sought from the decision of Hon'ble Delhi High Court in the case of Guddo Devi @ Guddi vs. Bhupender Kumar, Crl. Rev. P. 1246/2019, wherein while discussing the applicability of section 269SS of ITA in a complaint filed u/s 138 of the Act, the Hon'ble Court has held the following:
"The contention that the debt owed by the petitioner was rendered unenforceable by virtue of the provisions of the Income Tax Act, 1961 is also unmerited.
Section 269SS of the Income Tax Act, 1961 prohibits making of any payment in cash above a sum of Rs. 20,000/. Thus, any person C.C. No. 15028/16 Dated 28.02.2022 Pages 12 violating the same would attract imposition of penalties under the said Act. However, the same does not appear the said debt unenforceable or precludes the lender from recovering the same."
32. Therefore, it is clear from the aforementioned authorities that there is no blanket prohibition on advancing a loan of more than Rs. 20,000/ in cash and nonfiling of ITR returns would attract imposition of penalties under the Income Tax Act, 1961. Ergo, the contention of the accused does not hold water.
(c) Defence that the complainant has not come to the court with clean hands.
33. Ld. Counsel for the accused submitted during the final arguments that the complainant has committed forgery and cheating upon the accused by impersonating himself as one Tillu Gupta for arranging loans. The said Tillu Gupta/complainant took two signed blank security cheques along with one another security cheque in the name of the payee. Apart from the cheques, the accused also handed over other legal documents for obtaining the loan from the Bank. Out of the three cheques handed over to the said Tillu Gupta, the first case filed against the accused with the case title as 'Surender Singh Vs. Nippun Jasuja' and during the trial of the said case, the accused came to know that the complainant and the Tillu Gupta are one and the same person. The third cheque of the accused was misused by one Avtar Singh Soni for Rs. 5,60,000/ for which the accused sent the reply to the legal demand notice. It is further argued that the complainants in their complaints alleged against the accused that the cheque bearing no. 859128 was issued for Rs.10,50,000/ for the loan amount received for the treatment of accused's ailing mother in March 2009 for the duration of seven months. The seven months would end in October, 2009. As stated by the complainant that the accused did not pay back the loan amount to the complainant. When the loan amount of Rs.10,50,000/ remained unpaid by the accused then it was alleged that another loan of Rs.5,00,000/ was given by Parveen Kumar Gupta to the accused vide cheque No. 859127 of HSBC Bank Ltd. for the treatment of accused's ailing mother. As stated by the complainants when the first and second loan of Rs.10,50,000/ and Rs.5,00,000/ remained unpaid by the accused, then the third loan was allegedly issued for Rs.5,60,000/ on 15th C.C. No. 15028/16 Dated 28.02.2022 Pages 13 March 2011 for a period of 30 months which ends on 20th April 2013. This is a sheer case of cheating and forgery.
34. The contentions raised by the Ld. Counsel for the accused are highly improbably. At the outset, the parties in the other two cases are different and the proceedings and the outcome of those cases have no bearing on the present case. Even it is presumed that the complainant in the present case appeared as a witness in one of the cases, the deposition in that case should have been shown to the complainant during the crossexamination to contradict. There is nothing on record which shows that the complainant was confronted with his statement in other case as a witness. Now, at the stage of final arguments, even if the complainant made any statement in any other case, the cannot be read in evidence. Secondly, it is also highly improbable that the accused despite knowing that Tillu Gupta and Praveen Kumar Gupta are one and the same, did not lodge any complaint or register an FIR against the complainant. He did not commence any legal proceedings against the complainant for recovery of the alleged legal documents in the possession of the complainant even after receipt of the legal demand notice in this case. Ergo, the contention raised by the accused does not hold water.
35. Secondly, it is contended by the Ld. Counsel for the accused that the accused does not have any kind of friendly and family relations with the complainant. It is averred by the Ld. Counsel during the final arguments that during the the cross examination of the complainant on 26.07.2012, the accused deposed that the accused has "three brothers in total out of which two are living abroad besides one sister". However, the accused had only one elder brother who passed away in August 2011 and accused also has two elder sister's and not one sister as alleged by the complainant. He mentioned categorically that "I did not had any information regarding nature of disease or ailment suffered or the place or hospital where the mother of the accused was admitted". As alleged by the complainant, he provided huge amount of loan of Rs.10,50,000/ and Rs.5,00,000/ but he is absolutely unaware of exact nature of accused's mother ailment or whether she is in the hospital or not. If the complainant had close 'family and friendly relations' with the accused then he would know that accused's mother was C.C. No. 15028/16 Dated 28.02.2022 Pages 14 covered completely under the health scheme of CGHS where the entire treatment of the patient is free of cost.
36. The said contention is also not tenable as the onus of proving the said fact is on the accused. At this stage, it is pertinent to note that the standard of proof which is required from the accused to rebut the statutory presumption under section 118 read with section 139 of the Act is prepondereance of probabilities. The accused is not required to prove his case beyond reasonable doubt. This onus on the accused can be discharged from the materials available on record and from the circumstantial evidences. The Hon'ble Supreme Court in M.S Narayan Menon @ Mani vs. State of Kerala, Appeal (Crl) 1012 of 1999 has interalia held the following:
"The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies"
37. Further, it should also be noted that the standard of proof in order to rebut the statutory presumption may be inferred from the materials on record and circumstantial evidences. It is not always mandatory for the accused to examine its own witnesses in order to rebut the said statutory presumption. At this point, reliance may be placed on the decision of the Hon'ble Supreme Court in the case of Krishna Janardhan Bhat (supra), wherein the Hon'ble Court has categorically held the following:
"32. accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. As accused has a constitutional right to remain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different.
34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove defence on the part of an accused is "preponderance of probabilities". 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 he relies."
C.C. No. 15028/16 Dated 28.02.2022 Pages 15
38. This principle has been reiterated by the Hon'ble Supreme Court in Rangappa vs. Sri Mohan (2010) 11 SCC 441 wherein while discussing the scope and ambit of statutory presumption under section 139 of the Act, the Hon'ble Court has held the following:
"27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendantaccused cannot be expected to discharge an unduly high standard of proof.
28. In the absence of compelling justifications, reverse onus clause usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally recoverable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the material submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
39. Thus, section 139 of the Act puts the burden on the accused to prove his defence. However, the accused has to prove his defence on the balance of probabilities and not beyond reasonable doubt. Accused can prove his defence by drawing inferences from the materials already on record (including complainant's evidences), circumstances of the case and also leading his own evidences. If the accused successfully creates doubts in the complainant's claim about the existence of legally enforceable debt then the burden of proof shifts back to the complainant who is the required to prove the guilt of the accused beyond reasonable doubt. Reference can be taken from the decision of the Hon'ble Supreme Court in the case of C.C. No. 15028/16 Dated 28.02.2022 Pages 16 Bharat Barrel & Drum Manufacturing Company vs. Amin Chand Pyarelal 1999 (3) SCC 35, wherein it was held:
"Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the nonexistence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non existence of the consideration can be either direct or by bringing on record preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading evidence as the existence of negative evidence is neither possible not contemplated and even if led, it is to be seen with a doubt..."
40. Now coming to the facts of the present case, the onus is on the accused to prove the fact that the accused has one brother and two sisters and that the mother was accused was a CGHS beneficiary. Nothing is brought on record by the accused to prove the said facts nor even any suggestion was given during crossexamination in this regard. Ergo, mere assertions at the time of final arguments will not assume the character of evidence.
(d) Defence that no documents furnished by the complainant for the loan transaction.
41. Ld. Counsel for the accused contends that the complaint is completely silent on how such a huge amount of loan was advanced to the accused in the absence of any records. He further argues that the complainant has not even mentioned the exact date on which such a huge amount of loan was advanced to the accused.
C.C. No. 15028/16 Dated 28.02.2022 Pages 17
42. Perusal of the crossexamination of the complainant dated 26.07.2012 shows that the complainant deposed "I have not executed any loan documents or issued any receipt from the accused except the cheque in question. (Vol.) the accused sought assistance from me for treatment of his ailing mother so I did not take any documents or acknowledgment from the accused."
43. Perusal of the record further shows that though there is no document on record to prove the said loan transaction between the complainant and the accused, however, the complainant has able to prove the transaction through an eye witness i.e. CW2 Bharat Kohli. CW2 during his cross examination dated 28.05.2016 categorically deposed "The loan of Rs. 5 lakhs was advanced to the accused on 15.10.2009 in the residence of the complainant (rented or owned) by him in my presence." Both the complainant and the CW2 stood the test of crossexamination and remained unshaken. Nothing has been brought on record by the accused that CW2 was not present during the transaction. Further, as regards to the date of loan transaction is concerned, the complainant in his compliant has specifically mentioned the date of loan transaction as 15.10.2009. CW2 in his evidence by way affidavit i.e Ex. (CW2/1) and during his crossexamination dated 28.05.2016 categorically mentioned the date as 15.10.2009. Ergo, the contention of the accused that the complainant has not mentioned the date of transaction is not tenable.
44. Further, Ld. Counsel for the accused contends that the complainant during cross examination dated 26.07.2012 deposed that "Accused informed that he is into property business." however, the accused was never ever in the property business. He argues that the primal burden in the complaint case is always on the complainant to at least establish such case as would entail the presumptions under section 118 and 139 of the Act which would thereafter shift the burden / onus on the accused to rebut such presumptions. As already discussed above, the onus of proof is on the accused to rebut the presumption by preponderance of probabilities.
45. Perusal of the record shows that no documentary evidence has been brought on record by the accused to prove the fact that the accused is not into property business. In fact, even no C.C. No. 15028/16 Dated 28.02.2022 Pages 18 suggestion was given to the complainant in this regard. Therefore, the said ground cannot be taken at the time of final arguments.
(e) Defence that the source of fund not disclosed by the complainant.
46. Ld. Counsel for the accused relies on the decision of the Hon'ble High Court of Punjab & Haryana in Suresh vs. Narender Gautam, 2015 LawSuit (P&H)6807 wherein the accused was acquitted on the ground that there were lot of doubts regarding the existence of actual transaction between the parties and genuineness of the claim of the applicant. The applicant therein had taken altogether different stand in his crossexamination from the stand taken by him in his compliant and examination in chief.
47. With utmost respect, it is mentioned that the facts of the Suresh case (Supra) are distinguishable from the facts of the present case. In Suresh case (Supra) the amount was given in the presence of an eyewitness however, neither the eye witness was produced as a witness to prove the complaint nor any receipt or statement of account was produced before the trial court. However, in the present case, the complainant has produced an eye witness CW2 who also stood the test of crossexamination. Ergo, the aforementioned case is not applicable to the facts of the present case.
48. Ld. Counsel for the accused further relies on the judgment of the Hon'ble Supreme Court in "John K. Abraham Vs. Simon C. Abraham & Another" (SLP(Crl) No. 9505 of 2011) wherein it has been held:
"It has to be stated that in order to draw the presumption under section 118 read alongwith 139 of the Negotiable Instruments Act, the burden was heavily upon the complainant to have shown that he had required funds for having advanced the money to the accused; that the issuance of the cheque in support of the said payment advanced was true and that the accused was bound to make the payment as had been agreed while issuing the cheque in favour of the complainant."
C.C. No. 15028/16 Dated 28.02.2022 Pages 19
49. Ld. Counsel for the accused also relies on the judgment of the Hon'ble Supreme Court in "K. Prakashan Vs. P.K. Surenderam" (appeal (Crl.) 1410 of 2007 wherein the Hon'ble Supreme Court held:
"The burden on the complainant is stronger and he has to prove his case beyond all reasonable doubts. The financial capacity of the complainant also needs to be established in appropriate cases to prove the case of the complainant. Where the complainant is not found to be a man of means and where he has not even charged any interest, the reason for seeking a huge loan amount by the accused is also not disclosed; in such cases trial court would not be wrong to give benefit of doubt to the accused."
50. The argument is not sustainable as perusal of the record shows that in the present case, alleged loan transaction between the complainant and accused involved an amount of Rs. 5,00,000/ in cash. In his crossexamination the complainant has categorically stated that he is an income tax assessee and files his income tax. He further discloses his source of fund by deposing during his cross examination that "I handed over Rs. Five Lacs to the accused in cash. I took Rs. Two lacs from my friend Bharat Kohli and Rs. 2.25 lacs from my father and remaining Rs. 75000/ were with me as my savings and hand in cash." Further, CW2 during his crossexamination deposed "The said loan of Rs. 5 lakhs was paid in cash by the complainant to the accused and out of Rs. 5 lakhs, Rs. 2 lakhs was paid by me to the complainant". It is not the case of the accused that the complainant is a man of no means whatsoever. Therefore, I am of the considered opinion that source of fund / solvency of the complainant is sufficiently proved/explained. No suspicion could be raised against the complainant on this aspect.
(f) Defence that the cheque was given as a security cheque to the complainant.
51. With respect to the contention that the cheque was issued as security by the accused, it should be noted that the statutory presumptions under 118(a) r/w 139 of the Act also arises even if the cheque is issued by the accused as security for the repayment of a legally enforceable debt or other liability. It is for the accused to prove that the cheque in such cases C.C. No. 15028/16 Dated 28.02.2022 Pages 20 was not issued in discharge of any legal liability. Reference can be taken from the decision of the Hon'ble Supreme Court in the case of M/S Womb Laboratories Pvt Ltd vs Vijay Ahuja Criminal Appeals No. 13821383 of 2019 has categorically held that handing over of the cheques by way of security per se would not extricate the accused from the discharge of liability arising from such cheques. At this stage, I also find support from the decision of the Hon'ble Delhi High Court in the case of Suresh Chandra Goyal vs. Amit Singhal Crl. L.P 707/2014 wherein the Hon'ble Court has held the following:
"28. There is no magic in the word "security cheque", such that, the moment the accused claims that the dishonoured cheque (in respect whereof a complaint under section 138 of the Act is preferred) was given as a "security cheque", the Magistrate would acquit the accused. The expression "security cheque" is not a statutorily defined expression in the NI Act. The NI Act does not per se carve out an exception in respect of a 'security cheque' to say that a complaint in respect of such a cheque would not be maintainable."
52. In the case in hand, merely stating that the cheque was issued as a security for the loan would not be of any help to the accused.
(g) Contradictions in the statements made by the complainant and CW2.
53. The Ld. Counsel for the accused brought some inconsistencies in the statements of the complainant i.e. firstly, the complainant in his compliant mentions the place of transaction to be Hari Nagar however, during the cross examination, the complainant states the place of loan transaction to be Raghu Nagar. In this regard, the statement of the complainant evidence should be read as a whole. It is correct that the complainant deposed during cross- examination that the loan transaction took place at Raghu Nagar, however it was deposed by the complainant during the cross-examination on 26.07.2012. "I was residing at address mentioned in the complaint for a few months on account of renovation in my other residence at Hari Nagar." Further, this court takes judicial notice of the fact that the Hari Nagar and Raghu Nagar are adjoining areas within 5 Kms.
54. Secondly, it is contended that the complainant does not know in which hospital the mother of the accused was admitted. Per contra, Ld. Counsel for the complainant submits that the complainant being a friend of the accused put the medical condition of the mother of the C.C. No. 15028/16 Dated 28.02.2022 Pages 21 accused at priority instead of inquiring of the hospital where she was admitted. Persual of the record shows that both CW1 and CW2 deposed during their crossexamination that the loan was given for the treatment of the mother of the accused. It is not unnatural that in an emergency medical situation, a friend would lend a helping hand immediately rather than inquiring about the hospital or CGHS facility of the patient.
55. Thirdly, complainant made contrary statements during cross examination in the civil case of the cheque in question is also proceeding in the court of ADJ01/SouthWest at Dwarka courts, New Delhi. Fourthly, complainant in his complaint did not mention that the loan amount was disbursed at Rz29, Raghu Nagar, Sagar Pur. Later on complainant improved his statement in order to get his case shifted to Dwarka Courts. In his CW1, complainant mentioned that "I was residing at address mentioned in the complaint for a few months on account of renovation in my other residence at Hari Nagar. I have not disclosed the change of address to the Court. It is correct that loan transaction with the accused took place at my house at Raghu Nagar". Later on, during the cross examination in the court of ADJ01 South/west, Dwarka courts complainant retraced from his earlier statement and mentioned that "At that time renovation was in progress at my residence therefore it was paid at the residence of one of my friend namely Mr. Sajjad Khan at RZ29, Kapoor Tentali Gali, Raghu Nagar, near DabriSagarpur, New Delhi. At that time I was living in Raghu Nagar."
56. With regard to the above contradictions, the cases were filed along with the written arguments during final arguments. It is well settled that the documents filed along with final arguments cannot be read in evidence.
57. Fifthly, Bharat Kohli in his cross examination dated 28.05.2016 states that "The loan of Rs.5 lakhs was advanced to the accused on 15.10.2009 in the residence of the complainant (rented or owned) by him in my presence. The said loan of Rs.5 lakhs was paid in cash by the complainant to the accused." As alleged by the complainant, the only eye witness to the loan transaction gives statement contrary to the complainant's statement. Ld. Counsel for the accused relies on decision of the Hon'ble High Court of Punjab and Haryana in Karamvir vs. C.C. No. 15028/16 Dated 28.02.2022 Pages 22 Ms Anita Sharma, CRM No. 212MA of 2009 (O&M) wherein the Hon'ble High Court upholding the decision of acquittal of accused oberved:
"8. The trial court dismissed the compliant by coming to the conclusion that the date of advancing loan had not been mentioned in the complaint and in whose presence the loan was advanced. "
The court also observed that no document was executed and no interest was charged. It has also come into evidence that husband of accused had taken loan from lot of people and was involved in a case of cheating. CRM No.212MA of 2009 4. There was no business transaction between the parties. There is no documentary evidence on record to show how he get that much money.
Regarding the money, the complainant could not give a satisfactory reply in the crossexamination. He also could not tell when he got the loan from the society. He also could not tell the date when he made the payment to the accused. According to the accused, her husband was involved in a case of cheating. The complainant promised to help him. The cheque was issued in order to pay money to the complainant for that purpose. When case was registered against the husband of the accused, the accused directed the bank to stop payment of the cheque. Ld. Counsel has not been able to point out any infirmity in the impugned order nor has he been able to point out any glaring misappreciation of evidence. Moreover, Ld. Counsel has failed to convince how the loan was advanced in the month of November to purchase the car when the car was purchased on 28th October, 1998. Secondly, the car was purchased from PASCO Auto Mobiles, financed by Finance Company that means the cheque was not to discharge legal debt or liability. Regarding payment of Rs. 1 lac, no receipt is on the file. No date and time is mentioned when the loan was advanced and in whose presence".
C.C. No. 15028/16 Dated 28.02.2022 Pages 23
58. It is humbly submitted that the facts in the present case are different from the case referred to. As far as the statement given by CW2 with respect to the presence of the accused at the complainant's residence is concerned, there is no contradiction. Both CW1 and CW2 stood the crossexamination and remained unshaken that the transaction had taken place at the residence of the complainant.
59. Lastly, CW2 in his evidence by affidavit Ex. CW2/1 deposed that the complainant had taken a sum of Rs. 2 lacs from him and returned the same in monthly installments of Rs. 20,000/ per month, however, during his crossexamination dated 28.05.2016, he deposed that the complainant returned the sum of Rs. 2 lacs in two or three months and that the complainant in his complaint mentions CW2 as common friend whereas CW2 during his crossexamination states that he met the accused only once. In this regard, it must be kept in mind that the CW2 has otherwise supported the case of the complainant completely and his testimony in relation to the fact that the accused had been provided money by the complainant in his presence has not been shaken during crossexamination. While it is correct that CW2 has deposed that he had met the accused at the house of the complainant once, the said testimony is not fatal and is not a material contradiction since the CW2's primary testimony is to the effect that he has witnessed the money transaction between the complainant and the accused and there is no discrepancy in relation to the said testimony. Ergo, on evaluation of the entire contradictions brought out by the Ld. Counsel for the accused, this court is of the considered view that they are not material contradictions that entitle the accused to defenestrate the entire claim of the complainant.
60. On evaluation of the entire defence pleas, this court is of the considered view that with respect to the source of funds, security cheque and ITR, the contention of the accused does not hold water. The accused has not succeeded in creating a reasonable doubt. Ergo, the accused has failed to rebut the presumption u/s 118 (a) read with Sec 139 of the NI Act by establishing a probable defence on a standard of preponderance of probabilities. Therefore, the accused has failed to create any reasonable doubt in the complainant's claim and failed to prove that no loan was advanced by the complainant to accused.
C.C. No. 15028/16 Dated 28.02.2022 Pages 24 Conclusion :
61. On evaluation of the entire evidence, this court finds that a legally enforceable debt existed in favour of the complainant in the present case, impugned cheque was given by the accused in discharge of debt which got dishonoured. Execution of cheque is admitted by the accused. The accused failed to make payment to the complainant even after receiving the legal demand notice.
Decision:
62. In view of the above discussion, the accused is convicted for the offence under section 138 of the Act.
63. Let the accused be heard on the quantum of sentence on 15.03.2022.
Copy of this judgment be given to the accused dasti.
Digitally signed by P P BHARGAV BHARGAV RAO
RAO Date: 2022.03.03
19:12:45 +0530
Announced in the open court on (P. BHARGAV RAO)
28.02.2022 MM01/NI Act/WEST/THC/DELHI
28.02.2022
It is certified that this judgment contains 25 pages and each page bears my signature.
Digitally signed by P P BHARGAV BHARGAV RAO
RAO Date: 2022.03.03
19:12:58 +0530
(P. BHARGAV RAO)
MM01/NI Act/WEST/THC/DELHI
28.02.2022
C.C. No. 15028/16 Dated 28.02.2022 Pages 25