Delhi District Court
Supreme Court In Rangappa vs . S.Mohan Arising Out Of Slp (Crl) ... on 24 December, 2011
IN THE COURT OF VIPLAV DABAS
METROPOLITAN MAGISTRATE
DISTRICT-NORTH, TIS HAZARI COURTS, DELHI
M/s Narang Leasing & Finance Date of institution of case: 20.01.2004
VS Date of decision of case : 24.12.2011
Mr. Sanjay Samrat
Unique ID No.02401R5323162004
CC.NO.151/A/2010
P.S.-Daryaganj
U/S 138 Negotiable Instrument Act
JUDGMENT
1. Date of the commission of offence : 20.01.2004
2. Name & address of the complainant : M/s Narang Leasing & Finance
having Regd. Office at
3728, Netaji Subhash Marg,
3rd Floor, Daryaganj,
New Delhi
3. Name & address of the accused : Sh. Sanjay Samrat
S/o Sh.Dharmpal Singh
R/o H.No.57, Sector-5,
Pushp Vihar,
New Delhi
4. Offence complained of : U/s.138 of Negotiable Instruments Act
5. Plea of accused & examination if any : Pleaded not guilty.
Examination u/s.313 Cr.PC
Examination u/s 315 Cr.P.C
No other defence evidence was led.
6. Final order : Acquitted
7. Date of such order : 24.12.2011
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BRIEF FACTS AND REASONS FOR DECISION OF THE CASE
1. By way of the present judgment, this court shall decide the complaint case under section 138 Negotiable Instruments Act, 1881 (as amended upto date) filed by the partner of the complainant Sh. Dinesh Narang M/s Narang Leasing & Finance against the accused Sh. Sanjay Samrat.
2. Brief facts necessary for the disposal of the present case as per the allegations in the complaint, are as follows :-
The complainant is a registered partnership firm and engaged in the business of finance and use to give vehicles on hire-purchase and lease basis. On 11.11.2000, the accused Sh. Sanjay Samrat along with Ms. Anita Singh and Smt. Ramwati approached the complainant for taking a Maruti Zen Car on hire-purchase basis. The complainant gave vehicle Maruti Zen car of 1999 Model bearing Engine number 0364431 chasis number 0371241 with Registration No. DL-6CE- 8842 on hire purchase basis in terms of Hire Purchase Agreement executed by the accused on 11.11.2000. Under the aforesaid Hire Purchase Agreement accused agreed to pay the total Hire money of Rs. 2,59,000/- payable in 36 monthly installments and the interest on late payment of the installments. The above mentioned two persons namely Ms. Anita Singh and Smt. Ramwati stood as Guarantors and they signed the Hire Purchase Agreement dated 11.11.2000 for due performance of the Agreement on the part of the accused. The accused did not adhere to the schedule of payment and defaulted in payment of monthly installments and interest and as on 30.062002 a sum of Rs. 89,433/- towards unpaid hire installments, Rs. 21,244/- for additional hire purchase for late payment and expenses and a sum of Rs. 89,433/- towards installments still to fall, was due and in all Rs. 2,00110/- was due against the accused.
The complainant reported the matter to Sh. D.L. Bhargava, Advocate for his sole adjudication of disputes in terms of arbitration clause contained in the hire purchase agreement. After giving notice of the arbitral proceedings, the Ld. Arbitrator gave his Award dated 24.05.2003 directing the accused and his guarantors to pay a sum of Rs. 1,10,677/- towards unpaid hire installmnets and incidental charges besides return of the vehicle or to pay Rs. 1,00,000/- in lieu thereof.
2/27That the accused failed to pay the above amount but on the warning given by the complainant, the accused issued nine cheques of Rs. 7,194/- each for a total amount of Rs 64,746/- drawn on Oriental Bank of Commerce, Panchsheel Park, New Delhi towards discharging the above liability of abritral award. However, on presentation of the same, the cheques were dishonoured vide cheque returning memo dated 13.12.2003, 15.12.2003 and 17.12.2003 with remarks " INSUFFICIENT FUNDS". The complainant has thereafter given legal notice of demand dated 02.01.2004 to the accused which was sent by Registered Post & UPC thereby calling upon the accused to make the payment of the cheques. It is alleged that accused has failed to pay any sum in response to the legal notice of demand. As a result of which the complainant filed the instant complaint for prosecution of the accused u/s 138 of the Negotiable Instruments Act, 1881.
3. After considering the entire material and documents on record, summons were issued my Ld. Predecessor against the accused vide order dated 27.01.2005 for the offence u/s 138 of the Negotiable Instruments Act, 1881. On appearance of the accused, a separate notice u/s.251 of the Code of Criminal Procedure, 1973 was served upon the accused on 20.04.2007 to which accused pleaded not guilty and claimed trial.
4. In order to prove the case, Sh. Dinesh Narang, Partner of complainant M/s Narang Leasing & Finance got himself examined as CW1 and reiterated the contents of the complaint on oath before this court by filing an affidavit in evidence which is EX.CW-1/A, wherein the documents relied upon by the complainant were exhibited as EX.CW-1/1 to EX.CW-1/29 respectively.
Sh. Dinesh Narang, Partner of the complainant was cross examined by learned counsel for the accused and discharged. Thereafter, the complainant evidence was closed on statement of Ld. Counsel for complainant.
5. After that the statement of accused was recorded u/s 313 of the Code of Criminal Procedure, 1973 in which all the incriminating evidence alongwith exhibited documents were put to the accused Sh. Sanjay Samrat. The accused admitted that the aforesaid cheques Ex.CW1/5 to Ex.CW1/13 were issued and signed by him which 3/27 were undated. Accused stated that he had already paid the amount in cheques to the complainant in 2001. It was further stated by the accused that the complainant had filed arbitration proceedings against him and proceeded ex-parte against him without issuing any notice and filed execution proceedings against him. The accused denied the receiving of legal notice and submitted that the complainant has misused the cheques and filed false complaint.
6. Opportunity for leading the defence evidence was given to accused. The accused got himself examined u/s. 315 Code of Criminal Procedure, 1973 after the application u/s.315 Code of Criminal Procedure, 1973 was allowed by this court on 17.03.2011. Accused was examined, cross examined and discharged. Opportunity for examining other witness if any, was granted to the accused, which the accused did not avail and defence evidence was closed on statement of accused. Thereafter, the case was fixed for final arguments.
7. The court heard the arguments advanced by the learned counsels for both the parties at length and perused the entire record of the case file as well as evidence on record. Written arguments filed on behalf of the complainant were also perused.
Legal Discussion
8. Before proceeding further, it would be appropriate to quote the Hon'ble Supreme Court in Rangappa Vs. S.Mohan arising out of SLP (Crl) No.407/2006 (2010) NSC 373 decided on 07.05.2010.
"Ordinarily in cheque bouncing cases, what the courts have to consider is whether the ingredients of the offence enumerated in section 138 of the Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by section 139 of the Act."
8.1. In order to bring home the conviction of the accused, the complainant has to prove the ingredients of the offence complained of. The main ingredient of Section 138 of the Negotiable Instruments Act, 1881 are as follows:
4/27(a) The accused issued cheque on an account maintained by him with a bank.
(b) The said cheque has been issued in discharge of any legal debt or other liability.
(c) The cheque has been presented to the bank within the period of six months from the date of the cheque or within the period of its validity.
(d) When the aforesaid cheques were presented for encashment, the same were returned unpaid/dishonoured.
(e) The payee of the cheque issued a legal notice of demand within 30 days from the receipt of information by him from the bank regarding the return of the cheque.
(f) The drawer of the cheque failed to make the payment within 15 days of the receipt of the aforesaid legal notice of demand.
If the aforesaid ingredients are satisfied then the drawer of the cheque shall be deemed to have committed an offence punishable u/s. 138 of the Negotiable Instruments Act, 1881.
Offence u/s 138 of Negotiable Instrument Act involves a reverse onus clause and the reverse onus can be rebutted by raising a mere preponderance of probability.
8.2. Nature and Extent of Rebuttal
a) A three judges bench of Hon'ble Supreme Court while dealing with presumptions under Prevention of Corruption Act has observed in Trilok Chand Jain vs State Of Delhi 1977 AIR 666 as under:
"The presumption however, is not absolute. It is rebuttable. The accused can prove the contrary. The quantum and the nature of proof required to displace this presumption may vary according to the circumstances of each case. Such proof may partake the shape of defence evidence led by the accused, or it may consist of circumstances appearing in the prosecution evidence itself, as a result of cross-examination or otherwise. But the degree and the character of the burden of proof which s. 4(1) casts on an accused person to 5/27 rebut the presumption raised thereunder, cannot be equated with the degree and character of proof which under s. 101, Evidence Act rests on the prosecution.. While the mere plausibility of an explanation given by the accused in his examination under s. 342, Cr.P.C. may not be enough, the burden on him to negate the presumption may stand discharged, if the effect of the material brought on the record, in its totality, renders the existence of the fact presumed, improbable. In other words, the accused may rebut the presumption by showing a mere preponderance of probability in his favour; it is not necessary for him lo establish his case beyond a reasonable doubt- see Mahesh Prasad Gupta v. State of Rajasthan.
Another aspect of the matter which has to be borne in mind is that the sole purpose of the presumption under s. 4(1) is to relieve the prosecution of the burden of proving a fact which is an essential ingredient of the offences under s. S (1) (2) of the Prevention of Corruption Act and s. 161, Penal Code. The presumption therefore can be used in furtherance of the prosecution case and not in derogation of it. If the story set up by the prosecution inherently militates against or is inconsistent with the fact presumed, the presumption will be rendered sterile from its very inception, if out of judicial courtesy it cannot be rejected out of hand as still born."
b) To what extent a mere reliance upon the presumptions of law can help the complainant is the question is being discussed in the following paragraphs:-
Hon'ble High Court of Bombay in Peter Mascarenhas Vs. Monsabre Ashley Oswald Dias, CCC X-2010(4) 234 has dealt with the above aspect in great detail. This was also a case of friendly loan of Rs. 12 lakhs which the complainant had lent to the accused after collecting the same from several other persons. Complainant had examined the persons from who he collected the amount. There was also an agreement executed by the accused person. However, after a detailed factual and 6/27 legal discussion, Hon'ble High Court has acquitted the accused primarily on the ground that complainant has failed to discharge his onus to establish accumulation of money. It has been observed therein that:
"In juxtaposition though the Complainant was faced with the aforesaid material which has come through the cross examination of Cw.2, Cw.3 and Cw.4, the Complainant did not choose to lead any further evidence to discharge the burden of proving the existence of the liability when the burden again shifted to him. Applying the principles that the Complainant has to prove the offence beyond reasonable doubt but the Accused has to only probabilise his defence, in my view, the test has been satisfied by the Accused then the Complainant. The Complainant as can be seen has not led any further cogent evidence to prove the factum of the lending of the money to the Accused and thereby has not discharged the burden which had shifted to him on account of the evidence which has come in cross examination of the Complainant and his witnesses."
c) Hon'ble Supreme Court in K. Prakashan vs P.K. Surenderan decided on 10 October, 2007 has also dealt with the aspect of friendly loan and scope of presumptions of law. The facts of the case were:
"3. Respondent herein allegedly, on diverse dates, advanced a sum of Rs. 3,16,000/- to the appellant who issued a cheque for the said amount on 18.12.1995. The said cheque was dishonored on the ground of insufficient fund. Allegedly, when the matter was brought to the notice of the appellant, he undertook to remit the amount on or before 30.01.1996. The cheque was again presented but the same was not enchased on the ground payment stopped by the drawer.
5. The complainant in support of its case led evidence to show that he had advanced various sums on the following terms: On 31-1-94 a sum of Rs. One lakh; on 8-6-94, Rs. 86,000/-; on 12-6-94, Rs. 28,000/-; on 23-4-95, Rs. 50,000/- on 18-6-95, Rs. 40,000/- and on 7-8-95, Rs. 12,000/-.7/27
6. Defence of the appellant, on the other hand, was that he had issued blank cheques for the purpose of purchase of spare parts, tyres, etc. in connection with the business of transport services run in the name of his brother. The blank cheques used to be returned by the sellers of spare parts, etc. when the amounts were paid. According to the appellant, the complainant lifted the impugned cheque book put in the bag and kept in his shop. Appellant in support of his case examined the Bank Manager of the Bank concerned. "
Hon'ble High Court having reversed the judgment of acquittal, accused approached the Hon'ble Supreme Court. Hon'ble Supreme Court has observed therein that:
"14. The learned Trial Judge had passed a detailed judgment upon analysing the evidences brought on record by the parties in their entirety. The criminal court while appreciating the evidence brought on record may have to weigh the entire pros and cons of the matter which would include the circumstances which have been brought on record by the parties. The complainant has been found to be not man of means. He had allegedly advanced a sum of Rs. 1 lakh on 13.01.1994. He although had himself been taking advances either from his father or brother or third parties, without making any attempt to realize the amount, is said to have advanced sums of Rs. 86,000/- on 8.06.1994. Likewise he continued to advance diverse sums of Rs. 28,000/-, Rs. 50,000/-, Rs. 40,000/- and Rs. 12,000/- on subsequent dates. It is not a case where the appellant paid any amount to the respondent towards repayment of loan. He even did not charge any interest. He had also not proved that there had been any commercial or business transactions between himself and the appellant. Whey the appellant required so much amount and why he alone had been making payments of such large sums of money to the appellant has not been disclosed. According to him, he had been maintaining a 8/27 diary. A contemporaneous document which was in existence as per the admission of the complainant, therefore, was required to be brought on records. He failed to do so. He also did not examine his father and brothers to show that they were men of means and in fact advanced a huge sum to him only for the purpose of grant of loan by him to the appellant. The learned Trial Court not only recorded the inconsistent stand taken by the complainant in regard to the persons from whom he had allegedly borrowed the amount, it took into consideration the deposit of the cheques in the bank commenting: Ext. D1 the counterfoil of the cheque book issued to the accused from that bank, was proved through him. It contains the counterfoils of the cheques 782451 to 782460. Ext. D2 is the pass book issued to the accused from that bank. SW1 is the Branch Manager of Syndicate Bank,Koyilandy. He would say that in Ext. P4 ledger extract, cheque No. 782460 reached the bank for collection on 30.12.93. The net transaction in that account was in the year 1996. Cheque No. 782451 reached the bank on 8.1.96. Ext. D1 shows that is the first cheque in that book. 782460 is the lost cheque in that book. If the lost cheque i.e. 782460 reached the bank for collection on 30.12.93 in normal and reasonable course the first cheque i.e. 782451 might have been issued even prior to that date. Case of the complainant is that Ext. P1 cheque was given to him by the accused on 5.10.95 and the cheque was dated 18.12.95. Ext. P4, D1 and D2 substantiate the case of the accused that the allegation of the complainant that Ext. P1 cheque was given to him on 18.12.95 is not genuine."
Hon'ble Supreme Court has observed therein that:
The High Court, as noticed herein before, on the other hand, laid great emphasis on the burden of proof on the accused in terms of Section 139 of the Act.
The question came up for consideration before a Bench of this Court in M.S. Narayana Menon (supra) wherein it was held:
9/27"38. If for the purpose of a civil litigation, the defendant may not adduce any evidence to discharge the initial burden placed on him, a fortiori even an accused need not enter into the witness box and examine other witnesses in support of his defence. He, it will bear repetition to state, need not disprove the prosecution case in its entirety as has been held by the High Court."
A presumption is a legal or factual assumption drawn from the existence of certain facts. It was furthermore opined that if the accused had been able to discharge his initial burden, thereafter it shifted to the second respondent in that case.
The said legal principle has been reiterated by this Court in Kamala S. v. Vidhyadharan M.J. and Another [(2007) 5 SCC 264] wherein it was held:
"The Act contains provisions raising presumption as regards the negotiable instruments under Section 118(a) of the Act as also under Section 139 thereof. The said presumptions are rebuttable ones. Whether presumption stood rebutted or not would depend upon the facts and circumstances of each case."
The nature and extent of such presumption came up for consideration before this Court in M.S. Narayana Menon Alias Mani V. State of Kerala and Anr. [(2006) 6 SCC 39] wherein it was held :
"30. Applying the said definitions of proved or disproved to the principle behind Section 118(a) of the Act, the court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration dos not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.10/27
"This Court clearly laid down the law that standard of proof in discharge of the burden in terms of Section 139 of the Act being of preponderance of a probability, the inference therefore can be drawn not only from the materials brought on record but also from the reference to the circumstances upon which the accused relies upon. Categorically stating that the burden of proof on accused is not as high as that of the prosecution, it was held; Presumption drawn under a statute has only an evidentiary value. Presumptions are raised in terms of the Evidence Act. Presumption drawn in respect of one fact may be an evidence even for the purpose of drawing presumption under another. "
Reliance is also placed upon a decision of this Court in Goaplast (P) Ltd. v. Chico Ursula DSouza and Another [(2003) 3 SCC 232] wherein this Court opined:
"The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. This presumption coupled with the object of Chapter XVII of the Act which is to promote the efficacy of banking operation and to ensure credibility in business transactions through banks persuades us to take a view that by countermanding payment of post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. A contrary view would render Section 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of ones own wrong. If we hold otherwise, by giving instructions to banks to stop payment of a cheque after issuing the same against a debt or liability, a drawer will easily avoid penal consequences under Section
138. Once a cheque is issued by a drawer, a presumption under Section 139 must follow and merely because the drawer issued notice to the drawee or to the bank for stoppage of payment it will not preclude an action under Section 138 of the Act by the drawee or the 11/27 holder of the cheque in due course. This was the view taken by this Court in Modi Cements Ltd. v. Kuchil Kumar Nandi. On same facts is the decision of this Court in Ashok Yeshwant Badave v. Surendra Madhavrao Nighojakar. The decision in Modi case overruled an earlier decision of this Court in Electronics Trade & Technology Development Corpn. Ltd. v. Indian Technologists & Engineers (Electronics) (P) Ltd. which had taken a contrary view. We are in respectful agreement with the view taken in Modi case. The said view is in consonance with the object of the legislation. On the faith of payment by way of a post-dated cheque, the payee alters his position by accepting the cheque. If stoppage of payment before the due date of the cheque is allowed to take the transaction out of the purview of Section 138 of the Act, it will shake the confidence which a cheque is otherwise intended to inspire regarding payment being available on the due date. "
No exception to the aforementioned legal principle can be taken. What, however, did not fall for consideration in the aforementioned case was as to how the said burden can be discharged.
It is now trite that if two views are possible, the appellant court shall not reverse a judgment of acquittal only because another view is possible to be taken. The appellate courts jurisdiction to interfere is limited. [See M.S. Narayana Menon (supra) and Mahadeo Laxman Sarane & Anr. v. State of Maharashtra, 2007 (7) SCALE 137]. The High Court furthermore has not met the reasons of the learned Trial Judge. It proceeded on the premise that the appellant had not been able to discharge his burden of proof in terms of Section 139 of the Act without posing unto itself a further question as to how the said burden of proof can be discharged. It furthermore did not take into consideration the legal principle that the standard of proof upon a prosecution and upon an accused is different. "
Hon'ble Supreme Court in Kamala S vs Vidyadharan M.J. & Anr Appeal (crl.) 233 of 2007, decided on 20.02.2007 observed that :12/27
"The Act contains provisions raising presumption as regards the negotiable instruments under Section 118(a) of the Act as also under Section 139 thereof. The said presumptions are rebuttable ones. Whether presumption stood rebutted or not would depend upon the facts and circumstances of each case.
This Court clearly laid down the law that standard of proof in discharge of the burden in terms of Section 139 of the Act being of preponderance of a probability, the inference therefor can be drawn not only from the materials brought on record but also from the reference to the circumstances upon which the accused relies upon......."
Hon'ble Supreme Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde 2008 AIR SCW 738 has observed that:
"30. The proviso appended to the said section provides for compliance with legal requirements before a complaint petition can be acted upon by a court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability.
31. The courts below, as noticed herein before, proceeded on the basis that Section 139 raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct.
32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his 13/27 burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of the 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 a defence on the part of the 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.
45. We are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This however, shall not mean that the courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have been rebutted. Other important principles of legal jurisprudence, namely, presumption of innocence as a human right and the doctrine of reverse burden introduced by Section139should be delicately balanced. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same."
d) It may be pertinent to mention here that a three judges bench of the Hon'ble Supreme Court in Rangappa Vs. S. Mohan (2010) 11 SCC 441 has considered the dictum of Krishna Janardhan Bhat (supra) and overruled the view so far as 14/27 existence of liability is concerned, however, has not dissented with other parameters observed and laid down in the said case. It has been observed therein that:
"14. In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. "
e) This court is of the opinion that an accused has a right to rebut the presumption by placing reliance upon the circumstances brought and material placed by the complainant. Hon'ble Supreme Court in Rangappa Vs. S. Mohan (2010) 11 SCC 441 has further held that:
"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 accused/defendant cannot be expected to discharge an unduly high standard or proof. 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 cases the accused may not need to adduce evidence of his/her own."15/27
9. Version of Accused The Accused was in need of money for marriage of his sister, so he approached the complainant for loan. Complainant advanced a sum of Rs. 1 lac only as loan to the accused. Accused issued blank, undated, and signed cheques including cheques in question as advance cheques, at the time of execution of agreement, which have been misused by complainant. Accused deposed that amount mentioned in the cheques has already been paid by the accused in year 2001. After clearing the loan amount the accused demanded the cheques back but the complainant did not return the same despite assurance. The accused denied to have ever entered into hire purchase agreement with the complainant and stated that blank loan agreement signed by him as well as his gaurantour was handed over to L.R Sh.Narang, partner of the complainant. Accused denied to have issued the cheques in question towards discharge of arbital award.
10. Now let us deal with the each ingredient of the section 138 of the Negotiable Instruments Act, 1881 to see whether the case against the accused has been proved or not.
By virtue of the affidavit filed at the time of pre-summoning evidence, wherein legal demand notice and postal receipts have been duly exhibited , requirement of proviso (b) & (c) appended to Section 138 of the Negotiable Instrument Act, 1881 stands satisfied (presumption of law arising under section 27 General Clauses Act is bound to arise). By virtue of Cheque Returning Memos, dishonour stands proved vide section 146 Negotiable Instrument Act, 1881. (Moreover, the accused has not controverted any of the above presumptions by even giving any suggestion in the cross examination of the complainant to negate the aforesaid presumptions). Nine cheques Ex.CW1/5 to Ex.CW1/13 dated 12.12.3003, 13.12.2003 and 15.12.2003 had been presented on 12, 13 and 15 Dec., 2003, which is within six months of date of issuance and was returned unpaid on 13.12.2003 ,15.12.2003 and 17.12.2003 vide return memos Ex.CW1/17 to Ex.CW1/25 due to the reason "FUNDS INSUFFICIENT". Notice dated 02.01.2004 Ex.CW1/26 was dispatched on 03.01.2004 which is within 30 days of dishonor of cheques in question. The complaint has been filed on 17.01.2004 which is prior to the arising of the cause of action, which in the present 16/27 complaint arose on 20.01.2004 but the cognizance was taken on 27.01.2005 and thus, the defect in the pre-mature filing of the present complaint was cured as the accused got ample time till 19.01.2004 (the day when the 15 days time expired), to make the payment of the cheques amount as per the mandate of section 138 of the Negotiable Instruments Act, 1881.
11. By virtue of mandatory presumptions of law arising under section 118 and 139 of the Negotiable Instruments Act, 1881 legal liability can be treated as proved. It is pertinent to mention that the mandatory presumptions extend to the existence of legally enforceable debt or liability. (See a three judges bench decision of Hon'ble Supreme Court in Rangappa Vs. S. Mohan arising out of SLP (Crl) No.407/2006; (2010) NSC 373 decided on 07.05.2010.
12. Complainant has primarily relied upon the mandatory presumption of law in respect of legal liability. The issuance of cheque being admitted, signatures admitted & dishonor being proved presumption u/s 118 and 139 of the Negotiable Instruments Act, 1881 has to arise. So, it must be presumed that the liability as alleged was existing at the time when cheques were given.
13. Now it has to be seen whether the accused has been able to rebut the aforesaid presumption or not:
It is a settled law that accused is entitled to discharge the onus placed on him even on the basis of materials brought on record by the complainant. It is not obligatory on the accused to separately adduce evidence or to enter into witness box if he can successfully gather the material from the evidence of complainant which would sufficiently disprove the presumptive facts by a rising a mere preponderance of probability without resorting to proof beyond reasonable doubt, particularly in relation to the pre-existence of legal liability of the debt for the discharge of which cheque was given. In the present case, the accused has relied on the material brought by the complainant and has preferred to lead defence evidence by deposing as defence witness u/s 315 Cr.P.C.17/27
13.1. In tune with the suggestions put to the complainant during his cross examination, the Accused deposed in his examination in chief that he was in need of money for marriage of his sister, so he approached the complainant for loan.
Complainant advanced a sum of Rs. 1 lac only as loan to the accused. It is further deposed by the accused that blank, undated, and signed cheques including cheques in question were issued by the accused, as advance cheques, at the time of execution of agreement, which have been misused by complainant. Accused deposed that amount mentioned in the cheques has already been paid by the accused in year 2001. This version of the accused was not rebutted as even a suggestion in this regard was not given on behalf of complainant. Accused affirmed during his cross examination that he requested the complainant for loan and denied to have approached the complainant for financing the vehicle. By asking this question and from the answer given by the accused, complainant got accused's version affirmed that the accused took the loan and did not enter into hire purchase agreement as per complainant's version. Accused deposed in his chief that he handed over a blank agreement bearing his own and his guarantors' signatures to Sh.L.R.Narang, partner of the complainant, who gave the accused a cheque of Rs.1.0 lac. This version of the accused is affirmed by the complainant in his cross examination by admitting that he can not tell the series of cheques but the same were not handed over at the time of advancement of loan of Rs.1.0 lac. The denial regarding handing over the cheques at the time of advancement of loan of Rs.1.0 lacs infers that the complainant subscribed to the factum of advancement of a loan of Rs.1.0 lac as the complainant did not say anything by explaining or volunteering that loan of Rs.1.0 lac was never advanced. This factum is further substantiated from the voluntary clarification of the complainant in his cross examination that one cheque was given to the accused and the cheque was for an amount of Rs.1.0 lac or 75000/- but the complainant do not remember the exact amount of the cheque. Accused stated in his examination in chief that 14 cheques of Rs.7194/- each without name and date bearing his signatures were given by the accused to the complainant. This testimony of the accused has gone un-rebutted as no suggestion to impeach the same was put to 18/27 the accused during his cross examination. Accused deposed that Rs.75000/- was paid in cash to accused after advancement of loan and the complainant did not issue any receipt for the same. It is further deposed that five cheques out of fourteen cheques issued for Rs.7194/-each were honored on its presentation. This defence of the accused has not only gone un-rebutted but the complainant admitted in his cross examination that he received Rs.75,000/- from the accused after advancement of loan and that no receipt was issued in respect of payment. It means that the complainant admitted and subscribed to this testimony of the accused.
The aforediscussed omissions of complainant to rebut and active admissions of the accused's version amount to affirmation of accused's version by the complainant.
13.2 Accused deposed that after clearing the loan amount accused demanded the cheques back but the complainant did not return the same despite assurance. Accused further deposed that amount in cheques is not due against him. This testimony of the accused was also not rebutted by the complainant either by leading any evidence or by even putting a suggestion which amounts to admission of accused's version that no amount is due in respect of the cheques in question and cheques have been misused by the complainant which falsify the complainant's version that the cheques in question were issued by the accused towards discharge of arbitral award.
13.3. Accused specifically denied that he approached the complainant for financing of CAR No. DL-6CE-8842. Accused's version of issuing cheques in question as advance cheques while taking loan and not entering into hire purchase agreement is further substantiated from the following facts:-
Complainant admitted that the agreement exhibited CW1/3 was not signed by any witness but complainant placed carbon copy of hire purchase agreement on record during his cross examination, which is having the signature of firm's employee namely Anil as witness. The complainant upon being asked about signatures of Anil admitted that the signatures of Anil were obtained later on by the firm. Perusal of 19/27 photocopy, EX.CW1/3 reveals that signatures of Anil were not present on it. When asked whether Anil signed on the original agreement or photocopy, the witness gave evasive reply by stating that he is not aware and by again saying that he does not remember. It shows that the complainant has forged the alleged hire purchase agreement and has not approached the court with clean hands which probablises the defence of handing over of blank signed loan agreement which has been fabricated into hire purchase agreement. When the complainant can dare to file forged and fabricated documents before the court the possibility of fabricating & manufacturing of hire purchase agreement becomes highly probable. Further, the complainant admitted that the vehicle was not hypothecated. Non hypothecation means that there was no hire purchase agreement in existence which shows that version of accused is probable and that he approached for a loan of Rs.1.0 lac for the marriage of his sister and not for hire purchase agreement against which cheques in question were issued as advance cheques which are being misused by complainant.
13.4 The falsity of complainant's version and fabrication of hire purchase agreement is further evident from the fact that the complainant admitted that the seal of partner was affixed only on original agreement but perusal of Ex.CW1/3 (photocopy) reveals that said stamp is also affixed on photocopy. It further shows that if the aforesaid deposition of complainant is believed then Ex.CW-1/3 (photocopy) is also fabricated document. It follows from the aforesaid discussion that the accused handed over a blank document/agreement bearing his and his guarantors signatures, which has been fabricated by complainant by filling it up later, according to his convenience. So, the complainant's documents do not support the version of hire purchase agreement & probablise the accused version of taking a loan of Rs.1.0 lac against which cheque in question were issued as advance cheque.
13.5 Complainant admitted at one place that he did not remember when the cheque in question were received by him, whereas in later part the complainant improved his version that the cheques were issued in lieu of arbitral award passed by the court.
This Flip flop creates serious doubt on the version of the complainant as to the issuance of the cheques after passing of arbitral award, whose benefit must go to the accused.
20/2713.6. Further, it is the case of the complainant that the accused issued the cheques in question towards discharge of awarded amount after the complainant warned him of instituting the execution proceedings. In his cross examination, the complainant said that the cheques were issued in lieu of awarded amount. Complainant did not say that cheques were issued for part payment of arbitral award. The awarded amount is Rs.1,10,677/- while the cheques are for an amount of Rs.64,746/-. It is very strange and unbelievable that the complainant accepted the cheques for sum of Rs.64746/- while the awarded amount was Rs.1,10,677/- despite the fact that the accused issued the cheques under the influence of warning as per complainant's version. The complainant could have compelled the accused to issue the cheque for entire amount as the accused was under the influence of complainant's warning as per complainant's version. Complainant got it admitted by the accused during his cross examination that the cheques were handed over without any force or pressure. This suggestion and its answer shatter the complainant's version of giving warning to the accused under influence of which accused allegedly issued the cheques as warning implies some sort of pressure which the accused denied to be present while answering the aforesaid suggestion. So, when the existence of warning stands disproved then the story of issuance of cheques under the influence of the warning after passing of arbitral award also stands disproved and the version of the accused that the cheques in question were issued as advance cheques voluntarily while entering into the loan agreement and not towards discharge of arbital award stands substantiated.
13.7. It is also very strange and unbelievable that the accused issued cheques to the complainant for the same amount all drawn on the same bank bearing dates falling after a gap of one or two days each as no reasonable person would do so. It is further beyond imagination that three cheques for equal amount drawn on same bank account bearing the same date are issued by accused to the same person. No person would issue three cheques as above, while the same purpose can be fulfilled by a single cheque of that date for entire amount covering the three cheques and no reasonable person would accept such cheques as single cheque would suffice the purpose. It shows that undated cheques issued by accused bearing his signatures 21/27 were lying blank with the complainant and complainant abruptly filled these cheques without permission of the accused and thus misused the same. Though issuance of blank singed cheques can not come to the rescue of the accused in normal circumstances but in highly suspicious circumstances as herein before discussed the misuse of blank signed cheques by financier becomes a relevant fact benefit of which must go to the accused.
13.8. Complainant admitted that signatures of the accused are written by one pen and other parts of the cheques including dates have been written by a different pen. Complainant admitted that cheques were presented on the same day when they were issued. Three cheques were issued on 12.12.2003, another three on 13.12.2003 and the remaining three on 15.12.2003. Usually while issuing completely filled up cheques, the same pen is used and it is rarity that two different pens are used for this purpose, as people are very particular in filling the cheque, sensing the fear of rejection of the same. Still if it is assumed that the accused used two different pens to sign & fill up different parts of single cheque then it is impossible to believe that he used two different pens on all the nine cheques and on all the three dates when the cheques were issued. It may have been so in one or two case but such a thing happening in all cases implies that some other person on behalf of complainant has filled up the undated cheques which were issued in blank by the accused bearing his signature only & thus misused the cheques under the garb of arbitral award.
13.9. It is also beyond the understanding of a reasonable or prudent man that despite having an arbitral award that too ex-parte award, the complainant approached the accused to warn him of filing execution proceedings. In such circumstances a prudent man would have never approached the accused & had directly gone for execution. Moreso when the accused had already defaulted in making payments, the question of taking cheques from a defaulter against whom an exparte arbital award is in force seems to be highly unreasonable & renders the complainant's version unbelievable and improbable.
Complainant's version is that nine cheques of Rs.7194/- each were issued by the accused but perusal of the record reveals that the cheque No 2645 dated 15.12.2003 Exb.CW1/13 is drawn for Rs.7195/- and some alteration is visible on the 22/27 amount written in words as the word five has been over written and changed to four. The pay in slip Exb. CW1/16 has also been falsely filled for Rs.7194/- while the banker issued the memo for Rs.7195 in respect of this cheque. This is major contradiction in the complaint and cheques filed by the complainant which falsifies the version that cheques in question for Rs.7194/- each were issued towards discharge of arbitral award.
Complainant is himself not sure as to whether the cheques are for an amount of Rs 64,746/- or Rs 64,747/- which is reflected from para 6 of complaint, wherein the complainant mentioned that the accused issued nine cheques for a sum of Rs 7,194/- each (totaling Rs 64746/-), while in para 11, the complainant mentioned that the accused failed to pay the cheque amount of Rs 64,747/-. This is a material contradiction in the complainant's case, which indicates that the complainant has misused the cheques issued by the accused as advance cheques.
The documents Ex.CW1/3 relied upon by the complainant proves to be the last nail in the coffin as the schedule of payment reflects installment of Rs.7194 & 7195 both. It indicates that the cheques in question were issued in blank by the accused, at the time of loan agreement in the year 2000 and the same have been filled up according to installment schedule by the complainant which falsify the complainant's version of issuance of cheques in question by the accused after passing of arbitral award.
13.10. Alleged hire purchase agreement Exb.CW1/3 brought by the complainant on record shows that the monthly installment of Rs.7195/-, 7194/- and 7192/- were to be paid by the accused over a period of 36 months commencing from 10.12.2000. As per clause III of the aforesaid agreement installment were to be paid in cash or by demand draft. But the agreement does not prescribe for the payment to be made by way of cheques. However the complainant admitted during his cross examination that the accused used to pay the monthly payment through cheques and four-five cheques were encashed. This admission fortifies the version of the accused as to issuance of cheque at the time of execution of blank agreement. Complainant's version is that nine cheques of Rs.7194/- each were issued on 11, 12, 15 December 2003 towards discharge of arbitral award of Rs.1,10,677/-. Perusal of agreement exb.CW1/3 reveals that installment to be paid during the year 2003 till 10.12.2003 23/27 were all of 7194/- each and last one was of Rs.7192/-. It is not the case of the complainant that the cheques in question were issued for payment of installments but the same were issued towards discharge of arbitral award passed after the accused defaulted in making the payment in installment as per hire purchase agreement. It is not only strange but unbelievable also that the complainant accepted the cheques for amounts equal to the installment payable during the time as per installment schedule and did not ask for a single cheque for the entire arbitral award, despite the accused already having defaulted in making payments. It is not a mere co-incidence that the cheques allegedly issued by the accused are bearing the same amount as mentioned in the installment schedule but considering the afore discussed points, which probablize that the accused had not issued the cheques after passing of arbitral award, so the complainant was left with no other option but to misuse the blank undated cheques already delivered by the accused which, the financier as a matter of practice, usually fill in the amounts as per the installment schedule immediately after delivery of cheques.
14. Perusal of cheque no.2645 dated 15.12.2003 reveals that an amount of Rs. 7195/- is mentioned in figures and the word five in the amount written in words column has been changed to four so that cheque amount becomes 7194/- instead of Rs.7195/- as written in the figures column. It means that the accused deliberately changed the amount of this cheque to 7194/-. This fact is further evident from the pay in slip Exb.CW1/16 duly proved by the complainant through his affidavit wherein an amount of Rs.7194/- is mentioned against this cheque. It can not be said that the amount of Rs.7194/- is written due to a typographical, accidental or inadvertent error as the total amount in the pay in slip Exb.CW1/16 is mentioned as 21582/- which has been correctly calculated after adding the amount in three cheques of Rs.7194/- each. Had the complainant considered the said cheque of Rs.7195/- then at least this amount must have been mentioned in the pay in slip against the said cheque. That the said cheque had been altered to appear to be a cheque of Rs.7194/- is further substantiated from the notice, complaint and the affidavit wherein the complainant clearly mentioned that the accused issued nine cheques of Rs.7194/- each. So, the complainant considered this cheque to be of Rs 7,194/-
24/27It is pertinent to mention section 18 of the Negotiable Instrument Act, which provides that when the amount is stated differently in figures and words, the amount stated in words shall be the amount undertaken or ordered on demand. So, the cheque Exb.CW1/13 is to be considered to have been issued for 7194/- (the amount mentioned in words). The total amount demanded by way of legal notice of demand should be Rs.64,746/- while the notice has been given demanding a sum of Rs. 64,747/- which is an amount more then that covered by the nine cheques in question. It is settled law that the payee or the holder in due course must demand payment of the amount covered by the cheque. If the demand is for a lesser amount or an higher amount not covered by the cheque then the prosecution must fail as the statutory requirement of the provision is not fulfilled [1997(1) Civil Court Cases 603(Calcutta):
1997(2) All India Criminal LR(Calcutta) 0664: 1995(3) Civil LJ 0897: 1995(3) RCR(CRL.) 0646: 1996(2) Banking Cases 0515: 1997(1) Crimes 0127: 1995 CRL.L.J.3412: 1996(4) CCR0174: 1997(1) CCR 0249: 1996(2) KLT 0886: 1995(2) CHN 0037: 1996 CCLR 0040]. The notice in this case which has been issued for an amount more than the amount of cheque is defective notice which goes to roots of the case and amounts to no notice of at all. So, notice which is an essential ingredient of Section 138 of Negotiable Instrument Act for completion of offence is inherently defective which amounts to no notice at all and the complaint is liable to be dismissed on this ground also.
15. Considering the above discussion, it is thus clear that version of the accused that blank, undated, and signed cheques including cheques in question were issued by the accused as advance cheques at the time of execution of agreement which have been misused by complainant, that the cheques were not issued towards discharge of arbitral award and that the amount mentioned in the cheques has already been paid by the accused in year 2001, is tenable and probable.
16. No doubt complainant was well within his right to rely upon mandatory presumptions of law. However, the same are rebuttable even by showing a preponderance of probability and if certain defects are established by the accused, the complainant should try other ways to support his case. In the present case, 25/27 however, the complainant did not make such efforts on his own peril. The complainant has to bear the consequences. No blemishes in the story of the accused can give a right to the complainant to claim that his story should be preferred. It is well settled law hat if from the facts and circumstances two views are possible, the one which makes no interference in life and liberty i.e. the one which goes in favour of the accused should be preferred.
17. From the above discussion, this court is of the considered opinion that accused has successfully rebutted the mandatory presumptions of law arising in favour of the complainant. Viewed from any angle, as complainant failed to discharge the burden which was shifted on him, no criminal liability could be fastened upon the accused. Accordingly, the complaint is hereby dismissed.
18. This court accordingly returns a finding of not guilty.
19. The accused is hereby acquitted. Surety is discharged. Bail Bond/Surety Bond is cancelled. Endorsement be cancelled and FDR be returned, if any. Original documents, if any be returned after retaining its photocopy on record. File be consigned to Record Room.
Announced in the open court VIPLAV DABAS
today i.e. 24.12.2011 Metropolitan Magistrate
North/Delhi
24.12.2011
26/27
CC No.151/A/10
24.12.2011
Present:- Complainant with Ld. Counsel.
Accused with Ld. Counsel.
Vide separate judgment of even date announced in open court the accused is acquitted. Complaint is hereby dismissed. Surety is discharged. Bail Bond/Surety Bond is cancelled. Endorsement be cancelled and FDR be returned, if any. Original documents, if any be returned after retaining its photocopy on record.
File be consigned to Record Room.
VIPLAV DABAS MM/North/Delhi 24.12.2011 27/27