Delhi District Court
Sree Gokulam Chit & Finance Co. Pvt. Ltd. vs . Abhishek Pathak Cc No. 30753/2018 Page ... on 14 February, 2020
IN THE COURT OF MR. MRIDUL GUPTA, METROPOLITAN MAGISTRATE,
SOUTH-WEST, DWARKA, DELHI
In Re:
CNR No. DLSW02-035475-2018
CC No. 30753/2018
Sree Gokulam Chit & Finance Co. Pvt. Ltd.
Office at
1st floor, District Center,
Janak Puri, New Delhi-110058
Through its AR
Sh. Man Chand, Legal Assistant
office at:-
No.1/E/18, 1st floor, Jhandewalan Extn.
New Delhi-110092
............Complainant
Versus
Abhishek Pathak
S/o Sh. Naveen Pathak
R/o WZ-24, Sant Nagar,
Tilak Nagar,
New Delhi-110018
.............Accused
(1) Offence complained of or
proved : 138 N.I. Act
(2) Plea of accused : Pleaded not guilty
(3) Date of institution of case : 17.09.2018
(4) Date of conclusion of arguments: 06.02.2020
Sree Gokulam Chit & Finance Co. Pvt. Ltd. Vs. Abhishek Pathak CC No. 30753/2018 Page no. 1 of 11
(5) Date of Final Order : 14.02.2020
(6) Final Order : Convicted
JUDGMENT
1. Vide this judgment I shall dispose of the complaint filed by the complainant under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the 'Act ').
2. Brief facts relevant for the decision of the case are as under:-
The complainant is company incorporated under the Indian Companies Act, 1956. The complainant is engaged in chit fund business and it is alleged that accused joined Chit Fund transaction with the complainant for sum of Rs. 2,00,000/-. After bidding the chit, accused received prize amount of Rs. 1,57,250/-. However, after getting the entire prize chit amount, accused became highly irregular in repayment of the subscription/installments. It is alleged that accused committed default of amount of Rs. 50,988/- towards the chit. It is alleged that in discharge of his liability towards the chit fund transaction, accused issued one cheque of Rs. 50988/- i.e. cheque in question bearing no. 091642 dated 12.07.2018 drawn on Punjab National Bank, Pahar Ganj, Delhi to complainant towards repayment of loan, with an assurance of its encashment. The complainant presented the cheque in his account maintained at South Indian Bank Ltd., Janak Puri, Delhi, which was returned with the remarks "Funds Insufficient" vide bank return memo dated 16.07.2018. Thereafter, complainant served a legal notice dated 02.08.2018 upon the accused through his counsel demanding the said amount. Despite service of aforesaid notice, neither any reply was sent nor the money was repaid by the accused. Thereafter, complainant has filed the present complaint case with the submission that accused be summoned, tried and punished according to law.
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3. In its pre-summoning evidence, AR of complainant examined himself on affidavit Ex. CW-1/8. He reiterated the contents of complaint and placed on record, copy of minutes of proceedings of Board of Directors of complainant company authorizing him as AR as Ex. CW-1/1, original cheque bearing no. 091642 dated 12.07.2018 drawn on Punjab National Bank, Pahar Ganj, Delhi as Ex. CW-1/2, cheque returning memo dated 16.07.2018 as Ex. CW-1/3, legal demand notice dated 02.08.2018 as Ex. CW-1/4, receipts of speed post as Ex. CW-1/5,tracking report as Ex. CW-1/6 and the complaint as Ex. CW-1/7.
4. Upon appreciation of pre-summoning evidence, accused was summoned for an offence punishable under Section 138 of the Act and notice under Section 251 Cr.P.C. for this offence was framed upon accused on 14.08.2019 to which he pleaded not guilty and claimed trial. He admitted his signature on the cheque in question, however, denied filling in all the remaining details in the cheque. He also denied receipt of legal demand notice. He stated that he had subscribed to chit fund of complainant company and received amount of Rs. 157250/- as prize amount to the chit. He had given cheque in question as blank signed cheque at time of subscription. He had defaulted in making of installments and had liability of Rs. 50988/- towards the chit. However, he was facing financial difficulty and needed some time to make the payment.
5. Thereafter, it was noted that in the notice U/s 251 Cr.P.C, accused had merely pleaded not guilty and had taken no specific defence. Accused had admitted his liability to the tune of amount of cheque in question and also that he gave cheque in question to complainant after signing the same. The only plea taken was of financial difficulty which did not disclose any plausible defence. No plea of defence was disclosed by the accused. Therefore, in view of the decision of the Hon'ble High Court of Delhi in Rajesh Aggarwal Vs. State & Anr., Crml. MC No. 1996/2010, DOD 28.07.2010, the right of accused to cross examine the complainant was closed vide court order.
6. Thereafter, statement of accused under Section 313 Cr.P.C. was recorded Sree Gokulam Chit & Finance Co. Pvt. Ltd. Vs. Abhishek Pathak CC No. 30753/2018 Page no. 3 of 11 in which all the incriminating evidence were put to him to which accused reiterated the stand taken by him in answer to notice U/s 251 Cr.P.C.
7. In his statement under Section 313 Cr. P.C,accused stated that he wants to lead defence evidence. However, on 18.11.2019, it was stated by accused that he did not want to lead any defence evidence and his separate statement to that effect was recorded. Thus, defence evidence was closed.
8. Thereafter, matter was listed for final arguments. It was argued by the Ld. counsel for the complainant that this is a fit case for conviction of the accused as all the essential ingredients of Section 138 of the Act read with Section 139 of the Act have been fulfilled and that the same has been aptly demonstrated by the complainant before the court. It was argued that accused admitted his signatures on the cheque in his plea of defence recorded at the time of framing of notice under Section 251 Cr.P.C as well as in his statement U/s 313 Cr.P.C. He argued that accused never gave reply to the legal demand notice. He also argued that accused had admitted his liability towards the complainant to the tune of amount of cheque in question. It was argued that accused failed to raise the probable defence to disprove the case of complainant and to rebut the presumption under Section 139 NI Act. Therefore, accused be convicted for the offence under Section 138 of the Act.
9. Per contra, on behalf of accused, Ld. Counsel reiterated the submissions made by him in his plea of defence at the time of framing of notice under Section 251 Cr.P.C and in his statement under Section 313 Cr.P.C. It was stated that the accused had made some payment to complainant after filing of present case. Furthermore, Ld. Counsel for accused stated that accused was still willing to make the payment regarding the cheque to the complainant, however, needed more time for the same.
10. I have perused the entire record as well as evidence led by the complainant as well as by the accused.
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11. Before appreciating the facts of the case in detail for the purpose of decision, let relevant position of law be discussed first:-
For the offence under Section 138 of the Act to be made out against the accused, the complainant must prove the following points, that:-
1. the accused issued a cheque on account maintained by him with a bank.
2. the said cheque had been issued in discharge, in whole or in part, of any legal debt or other liability.
3. the said cheque has been presented to the bank within a period of three months from the date of cheque or within the period of its validity.
4. the aforesaid cheque, when presented for encashment, was returned unpaid/dishonoured.
5. the payee of the cheque issued a legal notice of demand to the drawer within 30 days from the receipt of information by him from the bank regarding the return of the cheque.
6. the drawer of the cheque failed to make the payment within 15 days of the receipt of aforesaid legal notice of demand.
12. The Act raises two presumptions in favour of the holder of the cheque i.e. Complainant in the present case; firstly, in regard to the passing of consideration as contained in Section 118 (a) and secondly, a presumption that the holder of cheque receiving the same of the nature referred to in Section 139 discharged in whole or in part any debt or other liability.
Section 118 of the N.I Act provides :
"Presumptions as to negotiable instruments: Until the contrary is proved, the following presumptions shall be made: (a) of consideration - that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration;"
Section 139 of the N.I Act further provides as follows:
"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 Sree Gokulam Chit & Finance Co. Pvt. Ltd. Vs. Abhishek Pathak CC No. 30753/2018 Page no. 5 of 11 debt or other liability".
13. For the offence under Section 138 of the Act, the presumptions under Sections 118(a) and 139 have to be compulsory raised as soon as execution of cheque by accused is admitted or proved by the complainant and thereafter burden is shifted to accused to prove otherwise. These presumptions shall be rebutted 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 etc. A presumption is not in itself evidence but only makes a prima facie case for a party for whose benefit it exists. Presumptions both under Sections 118 and 139 are rebuttable in nature. Same was held by the Hon'ble Supreme Court of India in Hiten P. Dalal v. Bratindranath Banerjee [(2001) 6 SCC 16].
14. In the present case, accused has admitted his signatures on the cheque in question, in the notice U/s 251 Cr.P.C and his statement U/s 313 Cr.P.C. Reference can be made to Judgment of Apex Court in Rangappa v. Mohan, AIR 2010 SC 1898,that, "Once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under Section 139 of the Negotiable Instruments Act has to be raised by the Court in favour of the complainant."
Also in the case of K. Bhaskaran Vs. Sankaran Vaidhyan Balan 1999 (4) RCR (Criminal) 309, it has been held by the Hon'ble Supreme Court as under:
"As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the court to presume that the holder of the cheque received it for the discharge of any debt or liability."
It has been held in M/s. Kumar Exports v. M/s. Sharma Carpets, [2009 A.I.R. (SC) 1518] that the accused may rebut these presumptions by leading direct evidence and in some and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the Sree Gokulam Chit & Finance Co. Pvt. Ltd. Vs. Abhishek Pathak CC No. 30753/2018 Page no. 6 of 11 statutory notice and evidence adduced by the complainant during the trial. Further, the burden may be discharged by the accused by showing preponderance of probabilities and the onus on the accused is not as heavy as it is on the complainant to prove his case. In light of aforestated legal position, let us carry out a scrutiny of the evidence led at the trial.
15. In the present case, the complainant by way of an affidavit led his own evidence testifying that cheque was issued to it in discharge of liability towards the chit. The cheque in question, dishonour memo of the cheque and legal demand notice were exhibited on record.
16. In the present case, accused has admitted subscription to Chit Fund of complainant for sum of Rs. 2,00,000/-. Accused has also admitted that he received prize amount of Rs. 157250/- from the chit. Accused has also admitted that currently he is in default of Rs. 50,988/- towards the chit subscription/ installments amount i.e the amount of cheque in question. The only defence taken by the accused is that he had given the cheque in question as blank signed security cheque at time of subscription to chit fund of complainant company. However, due to financial difficulty he could not repay the amount to complainant.
17. However, the said defence version as put forth by the accused does not bring out any credible defence whatsoever. Firstly, mere financial difficulty cannot be ground to escape admitted liability. Secondly, even if cheque in question was given as security cheque, same does not serve as a plausible defence. In this regard, the law relating to security cheques needs to be examined. Reliance in this regard can be placed upon decision of Hon'ble High Court of Delhi in Credential Leasing & Credits Ltd. vs Shruti Investments & Anr. CRL. L.P. 558/2014, DoD 29.06.2015, wherein it was held as under:
"27. Thus, the "debt or other liability" has to be a legally enforceable debt or other liability. Neither the main provision of Section 138, nor the explanation suggest that the debt or other liability should be in existence on the date of issuance of the cheque, i.e. on the date of its delivery to the drawee or someone on his behalf or, on the date Sree Gokulam Chit & Finance Co. Pvt. Ltd. Vs. Abhishek Pathak CC No. 30753/2018 Page no. 7 of 11 that the cheque bears. The only reference to time in the Section, is the point of time when the cheque is returned unpaid by the drawers bank.
28. In my view, therefore, the scope of Section 138 NI Act would cover cases where the ascertained and crystallised debt or other liability exists on the date that the cheque is presented, and not only to case where the debt or other liability exists on the date on which it was delivered to the seller as a post-dated cheque, or as a current cheque with credit period. The liability, though, should be in relation to the transaction in respect whereof the cheque is given, and cannot relate to some other independent liability. If, on the date that the cheque is presented, the ascertained and crystallised debt or other liability relatable to the dishonoured cheque exists, the dishonor of the cheque would invite action under Section 138 NI Act. There could be situations where, for example, an issue may be raised with regard to the quality, quantity, deficiency, specifications, etc. of the goods/services supplied, or accounting. It would have to be examined on a case to case basis, whether an ascertained or crystallised debt or other liability exists, which could be enforced by resort to Section 138 NI Act, or not."
18. The Apex Court in Sampelly Satyanarayana Rao v Indian Renewable Energy Development Agency Limited, Crl App. No. 867/16, DoD 19.09.2016, also held as follows:
"We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in Indus Airways (supra) with reference to the explanation to Section 138 of the Act and the expression "for discharge of any debt or other liability" occurring in Section 138 of the Act. We are of the view that the question whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction. If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise."
Thus the legal position which emerges is that regard must be had to the nature of the transaction as well as whether a crystallized and ascertained debt or liability exists on the date of the cheque, and the same has to be examined on the basis of facts and circumstances of each case.
19. In present case, accused has admitted existence of liability to the tune of amount of cheque in question on the date of cheque in question, as discussed Sree Gokulam Chit & Finance Co. Pvt. Ltd. Vs. Abhishek Pathak CC No. 30753/2018 Page no. 8 of 11 above. In this regard it is also pertinent to note that any payment made by accused to complainant after filing of present case cannot operate to the prejudice of case of complainant as far as the merits of the case are concerned. In view of the above dicta, it is clear that the cheque in question is for the crystallized and established liability, towards repayment of loan, existing on date of cheque, and the dishonor of the cheque would invite action under Section 138 NI Act. Mere submission that the cheque in question was handed as security cheque at time of subscription to chit fund is not sufficient to rebut the statutorily presumptions.
20. Regarding the averment of the cheque being blank signed security cheque, once the accused has admitted his signatures on the cheque he cannot escape his liability on the ground that the same has not been filled in by him. When a blank cheque is signed and handed over, it means that the person signing it has given implied authority to the holder of the cheque, to fill up the blank which he has left. Otherwise also it has been clearly laid down in Section 20 of Negotiable Instruments Act 1881, that where one person signs and delivers to another a Negotiable Instrument either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives, "prima facie authority to the holder thereof to make or complete, as the case maybe, upon it a negotiable instrument". In the case of Satish Jayantilal Shah v. Pankaj Mashruwala and Anr. 1996 Cri. L. J. 3099, it has been held that:
"no law provides that in case of any negotiable instruments entire body has to be written by maker or drawer only."
In the case of Moideen v. Johny 2006 (2) DCR 421, it has been held that when a blank cheque is issued, the drawer gives an authority to the person to whom it is issued, to fill it up at the appropriate stage with necessary entries and to present it to the bank.
21. The accused has also alleged that legal demand notice was not received by him. However, the address of the accused as mentioned in legal demand notice is WZ-24, Sant Nagar, Tilak Nagar, New Delhi-110018, which is same as address of accused in notice under section 251 Cr.P.C and statement under Sree Gokulam Chit & Finance Co. Pvt. Ltd. Vs. Abhishek Pathak CC No. 30753/2018 Page no. 9 of 11 Section 313 Cr.P.C. Also accused did not lead any evidence and has not brought on record anything to show that he was not residing at address mentioned in legal notice, at time of legal notice. The legal notice is accompanied by postal receipt and tracking report. The above shows that legal notice was sent at correct address of accused. Once the legal notice is proved to be sent by post to correct address of accused then the presumption u/s 27 of General Clauses Act, 1897 arises and it shall be presumed unless proved contrary, that legal notice sent to address of accused was delivered to him. In M/s Darbar Exports and Ors. Vs. Bank of India, 2003 (2) SCC (NI) 132 (Delhi), the court held that a presumption of service of notice is to be drawn where the notice is sent through registered post as well as UPC on correct address. In the light of the same the legal notice is deemed to have been served upon the accused. The accused has failed to adduce any evidence to rebut the presumption of due service. As such, the legal notice stood served upon the accused but no payment was made despite the service nor any reply sent to the same. In Rangappa v. Mohan (supra), the Apex Court held:
"Furthermore, the very fact that the accused had failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version."
Moreover as per the dicta of Apex Court in C.C. Alavi Haji vs Palapetty Muhammed & Anr, 2007 Cr. L.J. 3214, If the accused did not receive the legal notice, he could have made payment of the cheque amount within 15 days of receipt of summons from this court and could have prayed for rejection of the complaint, but this course of action has not been adopted by accused. Hence the defence of non-service of legal notice is without substance.
22. In view of the above, this court is of the considered opinion that apart from not raising a probable defence, the accused was not able to contest the existence of a legally enforceable debt or liability. The complainant disclosed the existence of a legally enforceable debt or liability vide the cheque in question, return memo, legal notice and other documents brought on record. However the accused has failed to rebut the presumption in favour of complainant either on the basis of Sree Gokulam Chit & Finance Co. Pvt. Ltd. Vs. Abhishek Pathak CC No. 30753/2018 Page no. 10 of 11 material available on record or by adducing any defence evidence. Therefore, complainant has successfully proved his case beyond reasonable doubt.
23. Accordingly, the accused is convicted for the offence under Section 138 of Negotiable Instruments Act, 1881.
24. Let the convict be heard on quantum of sentence.
25. Copy of Judgment be supplied to the convict free of cost.
MRIDUL Digitally signed by
MRIDUL GUPTA
GUPTA Date: 2020.02.14
15:50:04 +0530
ANNOUNCED IN THE OPEN COURT (MRIDUL GUPTA)
TODAY i.e. 14th FEBRUARY 2020 METROPOLITAN MAGISTRATE
DWARKA DISTRICT COURTS/ DELHI
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