Delhi District Court
Complainant vs Deepak on 22 July, 2023
M/s. Hero Fincorp Ltd. v. Deepak
IN THE COURT OF MS. CHHAVI BANSAL
LD. MM (NI ACT) DIGITAL COURT-03, SOUTH DISTRICT,
SAKET COURT, NEW DELHI.
M/S HERO FINCORP LTD.
Corporate Office at:
9,Basant Lok, Vasant Vihar,
New Delhi-11057
.... Complainant
VERSUS
DEEPAK
S/o Sh. Rajbir Singh
H. No.-48 Harbans Farm Pooja Vihar,
Salarheri (128) Ambala Cantt,
Ajay Karyana Store, Ambala
Haryana-133001
.... Accused
Complainant Case no. 3919/2021
CNR No. DLST020130102021
Title Hero Fincorp Ltd v. Deepak
Date of Filing of Complaint 09.09.2021
Date of Institution of complaint 10.09.2021
Date of Final Arguments 13.07.2023
Date of Pronouncement of 22.07.2023
Judgment
Offence Involved Under Section 138 NI Act
Plea of the Accused Pleaded not guilty
Final order Acquitted
Digitally signed
CHHAVI by CHHAVI
BANSAL
BANSAL Date: 2023.07.22
15:36:44 +0530
CC No. 3919/2021 Page No. 1/13
M/s. Hero Fincorp Ltd. v. Deepak
JUDGMENT
1. The complainant has filed the present case under Section 138 Negotiable Instruments Act, 1881 (hereinafter referred to as "NI Act") seeking prosecution of the accused regarding the alleged dishonour of the cheque in question issued in discharge of the legal liability of the accused.
2. The Brief Factual Matrix, as per the case of the complainant, is as follows:
2.1. That the Complainant is a duly registered company under the Companies Act, 1956, and that the present complaint was filed through its AR Mr. Aishverya Shandilya so authorized in terms of Power of Attorney dated 24.07.2017. However, during proceedings, the AR of the complainant was substituted vide order dated 08.09.2022 and Mr. Paras Gupta was substituted as the AR being so authorized vide Special Power of Attorney dated 12.08.2021 Ex. CW- 1/A1.
2.2. That the accused approached the complainant company seeking the used car refinance loan which the complainant granted for vehicle Ciaz bearing No. HR78B6879 and the complainant provided the loan through Agreement no. AMBRUC00100004322655 dated 27.07.2019 vide Loan account ID 5732358 for 66 monthly installments.
2.3. That the accused issued the cheque bearing no. 535293 dated 02.07.2021 for an amount of Rs. 9,32,691/- Ex. CW-1/B to the complainant in discharge of his liability towards the complainant. 2.4. That the said cheque was presented but the same returned dishonoured vide return memo dated 05.07.2021 for the reason 'Other Reason' Ex.CW-1/C. 2.5. That the complainant was constrained to issue a Demand Notice dated 30.07.2021 Ex CW-1/D but the accused did not make payment of the cheque amount within the statutory period, compelling the complainant to file the present case. Digitally signed by CHHAVI CHHAVI BANSAL BANSAL Date:
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3. After the complaint was filed, cognizance was taken and the accused entered appearance on 24.02.2022. On 22.03.2022, the matter was referred to mediation but the same returned unsettled vide Mediation Order dated 05.05.2022 Ex M.
4. On 05.07.2022, Notice u/s 251 of the Code of Criminal Procedure (hereinafter referred to as, "Cr.PC") was framed upon the accused to which the accused pleaded not guilty and claimed trial. At the time of framing of notice, accused admitted that the cheque in question bore his signatures but stated that he did not receive the demand notice Ex CW- 1/D from the complainant, even though the address at which the demand notice was issued was his correct address. The accused then stated the following in his defence:
"I do not owe the cheque amount to the complainant. The complainant has misused the security cheque that I had given to the complainant."
5. As part of Complainant's Evidence, the AR of the complainant Mr. Paras Gupta stepped into the witness box as CW-1 and stated in his cross examination that he did not know if the accused had applied for a loan of Rs.4,75,000/- on 29.01.2018 and that CW1 was deposing only regarding the loan which is the subject matter of the present complaint. When CW1 was shown the loan documents dated 13.01.2018 Ex.CW1/1xD1, CW1 stated that he did not know if the said documents were issued by the complainant company because the complainant stamps the document that it issues. When CW1 was asked if the accused had paid 17 instalments of Rs.11,820/- each in respect of the loan of Rs.4,75,000/-, CW1 replied that he did not have any knowledge regarding any previous loan which the Digitally signed by CHHAVI CHHAVI BANSAL BANSAL Date:
2023.07.22 15:37:01 +0530 CC No. 3919/2021 Page No. 3/13 M/s. Hero Fincorp Ltd. v. Deepak accused may have taken. CW1 was then put the statement of account Ex.CW1/1xD2 and the statement of account Ex.CW1/1xD3. CW1 denied the suggestion that the complainant did not supply the copy of the loan documents to the accused. CW1 also stated that he did not know if arrears of previous loans were adjusted against new loan liabilities as part of company policy.
6. CW1 stated that no blank cheques were taken from the accused for securing the loan but CW1 volunteered to state that four PDCs were taken from the accused for the purpose of ECS process and account confirmation, and that the said PDCs bore the amount, date, and name of the payee along with signatures of the accused. CW1 stated that the cheque placed on record Ex.CW1/B is not among the four PDCs that the complainant took from the accused, and that all the four PDCs were for Rs.23,300/-. CW1 stated that the cheque in question Ex. CW-1/B was received by the complainant in June 2019 and CW1 volunteered to state that the same was issued for the purpose of settlement of the loan. CW1 denied the suggestion that the complainant did not disburse loan of Rs.9,47,449/- on 27.07.2019. CW1 stated that a loan recall notice was issued to the accused in December 2020, as per which an amount of Rs.10,43,180/- was due on part of the accused. However, CW1 later stated that the loan recall notice issued in December 2020 has not been placed on record. CW1 stated that the accused paid a total of 7 EMIs is to the complainant.
7. CW1 stated that no written settlement was arrived at between the parties and that such fact is not mentioned in the complaint. However, CW1 volunteered to state that the accused approached the complainant for an oral settlement in June 2021 after the accused received the loan recall notice. CW1 stated that out of the seven instalments that the accused paid CHHAVI BANSAL CC No. 3919/2021 Page No. 4/13 Digitally signed by CHHAVI BANSAL Date: 2023.07.22 15:38:25 +0530 M/s. Hero Fincorp Ltd. v. Deepak the first instalment was paid through cheque and the other instalments were paid through ECS/NACH. CW1 denied the suggestion that the cheque Ex. CW 1/ B was one of the security cheques which the complainant took from the accused. CW1 stated that no receipt was signed regarding the settlement offer to the accused by the complainant and CW1 volunteered to state that there was no receipt because the settlement was oral. CW1 stated that the cheque amount is calculated after adjusting the waiver amount offered to the complainant from the foreclosure amount. CW1 denied the suggestion that the complainant has misused the security cheque of the accused to file the present complaint.
8. Thereafter, the complainant closed his evidence and the matter was listed for recording of Statement of the Accused u/s 313 r/w 281 Cr.P.C. In the said statement, the accused stated that he did not owe the cheque amount to the complainant, that he had paid 17 installments of Rs. 11,820/- to the complainant against the first loan of Rs. 4,36,000/- approximately, and that the loan was sanctioned for 4,75,000/- but the accused received only Rs. 4,36,000/- after deductions in January 2018. Accused further stated that he took second loan from the complainant for Rs. 9,26,000/- in July/August 2019 in regard to which the accused paid four installments to the complainant till December 2019, that the vehicle of the accused got destroyed in an accident in December 2019, that the accused paid three more installments to the complainant even after destruction of his vehicle. Accused further stated that his liability towards the complainant would be around Rs. 4,50,000/- approximately and not to the extent to the cheque amount. Accused further stated that no oral agreement took place between himself and the complainant and that the cheque in question issued as a blank signed security cheque alongwith CHHAVI Digitally signed by CHHAVI BANSAL BANSAL 15:37:17 +0530 Date: 2023.07.22 CC No. 3919/2021 Page No. 5/13 M/s. Hero Fincorp Ltd. v. Deepak three other such cheques at the time of taking the loan from the complainant. Vide the same statement, accused opted to not lead any defence evidence and thus the matter was listed for final arguments.
9. In the Final Arguments advanced on 13.07.2023, both the parties reiterated their central contentions. It was argued on behalf of the complainant that the liability of the accused can be seen through the loan agreement Ex. CW-1/H and the statement of account Ex. CW-1/I, that the accused has not disputed the factum of taking loan from the complainant, and that no suggestions were put to the AR of the complainant when he was cross-examined as CW-1 regarding the absence of liability on part of the accused. It was further argued that all the essential ingredients of the offence u/s 138 NI Act stand fulfilled in the present case. Written arguments were also filed by the complainant, and it was prayed that the accused be convicted in light of the aforesaid arguments and evidence.
10. Per contra, it was argued on behalf of the accused that the accused does not have legally enforceable liability against the complainant, that CW-1 stated that the complainant received the cheque for settlement of the loan account from the accused in June 2019 while it is the own case of the complainant that the loan was sanctioned to the accused in July 2019, that there are other discrepancies in the case of complainant when juxtaposed with the evidence placed on record, that the complainant has not filed any copy of the loan recall notice which it stated to have issued to the accused, that the complainant has failed to demonstrate how the cheque amount was due from the accused as on the date of the cheque, and that the stance of the complainant that the complainant entered into an oral settlement with the accused is not plausible given that the complainant is a big company. Written arguments were also filed on behalf of the accused. It CHHAVI Digitally signed by CHHAVI BANSAL BANSAL Date: 2023.07.22 15:37:23 +0530 CC No. 3919/2021 Page No. 6/13 M/s. Hero Fincorp Ltd. v. Deepak was finally prayed that the accused be acquitted since the accused has discharged his burden u/s 139 NI Act, and since the complainant has not been able to prove its case beyond reasonable doubt.
11. Submissions heard. Record perused.
12. Section 138 of the NI Act reads as under:
138 Dishonour of cheque for insufficiency, etc., of funds in the account. --Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that 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 that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless--
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation.-- For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability. Digitally signed by CHHAVI CHHAVI BANSAL Date:
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13. Thus, there are five essential ingredients which ought to be fulfilled to establish culpability for an offence u/s 138 NI Act:-
I. The cheque is drawn by a person on an account maintained by them for payment of money and the same is presented for payment within a period of three 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; 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 thirty days of the receipt of information of the dishonour of cheque from the bank; V. The drawer fails to make payment of the said amount of money within fifteen days from the date of receipt of notice.
14. Moreover, Section 139 NI Act reads as under:
139. Presumption in favour of holder.--It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
15. Section 139 thus raises a crucial presumption in favour of the complainant. In view of Section 139, the burden falls upon the accused to show that the cheque once admitted was not issued in discharge of any legally enforceable debt or liability. The contours of Section 139 NI Act have been established in a catena of judgments, and it is no more res integra that Section 139 NI Act casts CHHAVI BANSAL a reverse onus upon the accused to show that the accused had no Digitally signed by CHHAVI BANSAL Date: 2023.07.22 15:37:36 +0530 CC No. 3919/2021 Page No. 8/13 M/s. Hero Fincorp Ltd. v. Deepak liability towards the complainant qua the cheque for which the complainant seeks to prosecute the accused, and that the presumption under Section 139 NI Act is essentially rebuttable in nature.
16. In Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16, the Hon'ble Supreme Court of India held as under:
"22. Because both Sections 138 and 139 require that the court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras v. A. Vaidyanatha Iyer [AIR 1958 SC 61 : 1958 Cri LJ 232] it is obligatory on the court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. "It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused." (Ibid. at p. 65, para 14.) Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter, all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact.
23. In other words, provided the facts required to form the basis of a presumption of law exist, no discretion is left with the court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, "after considering the matters before it, the court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists" CHHAVI Digitally signed by CHHAVI BANSAL BANSAL Date: 2023.07.22 15:37:42 +0530 CC No. 3919/2021 Page No. 9/13 M/s. Hero Fincorp Ltd. v. Deepak [ Section 3, Evidence Act] .
Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the 'prudent man'." (emphasis supplied)
17. Furthermore, in Rangappa v. Sri Mohan, (2010) 11 SCC 441, the Hon'ble Apex Court went ahead to observe as under:
"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 defendant- accused cannot be expected to discharge an unduly high standard of proof.
28. In the absence of compelling justifications, reverse onus clauses 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 enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some Digitally signed CHHAVI by CHHAVI BANSAL BANSAL Date: 2023.07.22 15:37:49 +0530 CC No. 3919/2021 Page No. 10/13 M/s. Hero Fincorp Ltd. v. Deepak cases the accused may not need to adduce evidence of his/her own."
18. Thus, in view of the settled position of law as discussed above, the complainant has to establish its case by satisfying the ingredients of Section 138 NI Act, while the accused can dispute the main case of the complainant or discharge its burden by rebutting the presumption codified u/s 139 NI Act.
19. In order to satisfy the central ingredient u/s 138 NI Act, i.e. the existence of legal liability, the case of the complainant needs to be examined. The complainant claims a cheque amount of Rs. 9,32,691/- from the accused on account of unpaid dues of the car loan Ex. CW-1/H. The statement of account of the accused maintained by the complainant has also been placed on record as Ex. CW-1/I. It is the case of the complainant that the liability of the cheque amount arises on the basis of the account statement Ex. CW-1/I.
20. However, perusal of said account statement Ex. CW-1/I shows no entry or balance amount as on the date of the cheque Ex. CW-1/B i.e. as on 02.07.2021. Primarily, the account statement which has been filed for the period 21.07.2019 till 13.10.2022 shows the net receivables figure in the tabular column of the first page of the statement Ex. CW-1/I to be Rs. 8,38,928/-, which is not the same as the cheque amount of Rs. 9,32,691/- on the cheque Ex. CW-1/B. There is no other entry in the account statement which can highlight how the complainant was owed the cheque amount by the accused as on 02.07.2019. Digitally signed by CHHAVI CHHAVI BANSAL Date:
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21. Further, as per CW-1, an oral settlement was entered between the parties and the accused gave the cheque Ex. CW-1/B to the complainant pursuant to such settlement. This fact is conspicuously absent from the complaint filed. It seems implausible that the complainant, which is a reputed financing company, would enter into oral settlements and take cheques from its customers without executing any documents or issuing any receipts. Even otherwise, no proof was given regarding the fact that any oral settlement took place between the parties as no witnesses to the purported settlement were examined. Moreover, it is the case of the complainant that the accused issued the cheque Ex. CW-1/B in June 2019 and it is also the case of the complainant that the loan in question was taken in July 2019. Therefore, there is an apparent contradiction in the own case of the complainant.
22. Therefore, there is no document or evidence to show how the accused owed the cheque amount to the complainant as on the date of the cheque. Further, the story of the complainant that the accused approached the complainant and was orally asked to settle the loan by handing over the cheque Ex. CW-1/B does not inspire confidence given the lack of evidence regarding the oral settlement and the implausibility of a big company like the complainant offering any oral settlement without issuing any settlement letter or receipt regarding the cheque. The contradiction in the statement of CW-1 that the loan was offered in July 2019 but the accused gave the cheque Ex.CW-1/B for the settlement of the same loan in June 2019 itself is a major contradiction which has not been explained during the cross-examination of the AR or even during final arguments.
CHHAVI Digitally signed by CHHAVI BANSAL BANSAL 15:38:00 +0530 Date: 2023.07.22 CC No. 3919/2021 Page No. 12/13 M/s. Hero Fincorp Ltd. v. Deepak Notably, even the loan recall notice mentioned by the AR of the complainant in his cross-examination has not been placed on record.
23. The offence under Section 138 NI Act is a technical offence. The complainant, in order to succeed in the prosecution u/s 138 NI Act, must show how the accused owes the cheque amount to the complainant as on the date on which the cheque was issued by the accused in favour of the complainant. Since there is no positive evidence on record to throw sufficient light upon how the cheque amount came to be calculated, it can be concluded that the complainant has failed to show how the total cheque amount of Rs. 9,32,691/- is due and payable by the complainant, and thus the complainant has failed to satisfy the central ingredient of the offence under Section 138 NI Act viz, existence of the legal liability of the cheque amount on part of the accused towards the complainant.
24. In view of the aforesaid discussion, this court holds the considered view that the complainant has not been able to conclusively show how the cheque amount was due and payable on part of the accused as on the date of the cheque. Thus, Accused Deepak stands acquitted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881.
Digitally signedAnnounced in the open Court on 22.07.2023.
by CHHAVI
CHHAVI BANSAL
Date:
BANSAL 2023.07.22
15:38:04
+0530
(Chhavi Bansal)
MM (NI Act) Digital Court-03 (South)
Saket Courts: New Delhi
22.07.2023
CC No. 3919/2021 Page No. 13/13