Delhi District Court
Moongipa Capital Finance Ltd. vs . Indu Mittal Cc No. 5001798/16 Page No. 1 ... on 30 October, 2018
IN THE COURT OF MR. MRIDUL GUPTA, METROPOLITAN MAGISTRATE,
SOUTH-WEST, DWARKA, DELHI
In Re:
CNR No. DLSW02-006192-2016
CC No. 5001798/16
Moongipa Capital Finance Ltd.
Regd. Office at 18/14,
W.E.A. Pusa Lane, Karol Bagh,
New Delhi - 110005
Through its Manager/Authorised Representative
Sh. Vimal Kumar Mehta ............Complainant
Versus
Indu Mittal
W/o Sh. Kuldeep Mittal,
R/o House No. A-15, A/1,
Second Floor, G.T.Road,
Mansarover Park,
Shadara, Delhi .............Accused
(1) Offence complained of or
proved : 138 N.I. Act
(2) Plea of accused : Pleaded not guilty
(3) Date of institution of case : 03.06.2016
(4) Date of conclusion of arguments: 06.10.2018
(5) Date of Final Order : 30.10.2018
(6) Final Order : Convicted
Moongipa Capital Finance Ltd. Vs. Indu Mittal CC No. 5001798/16 Page no. 1 of 12
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 company alleges that it is an NBFC registered with RBI as such, engaged in business of finance and loans. It is alleged that the accused Indu Mittal stood as guarantor of one Sh. Kuldeep Mittal for loan of Rs. 3,00,000/- taken by the latter from complainant company as per loan agreement dated 07.10.2014. The loan was to be repaid in 24 EMIs of Rs. 21,500/- each. However as on 09.04.2016, the borrower Mr. Kuldeep Mittal, was in debt of a sum of Rs. 1,76,983/- towards the complainant company and had failed to pay the outstanding liability. Thus accused as guarantor for the said loan was also sent final demand notice dated 09.04.2016 for payment of outstanding dues.
Thereafter in discharge of her liability as guarantor for the loan, accused issued one cheque of Rs. 1,62,000/- i.e. cheque in question bearing no. 241821 dated 16.04.2016 drawn on State Bank of India, SSI Branch, Shahdara, Delhi to complainant in satisfaction of loan, with an assurance of its encashment. The complainant presented the cheque in his account maintained at Jammu and Kashmir Bank, Sector 7, Dwarka, Delhi, which was returned with the remarks "Not Sufficient" vide bank return memo dated 22.04.2016. Thereafter, complainant served a legal notice dated 26.04.2016 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.
3. In its pre-summoning evidence, Sh. Vimal Kumar Mehta, Manager and AR Moongipa Capital Finance Ltd. Vs. Indu Mittal CC No. 5001798/16 Page no. 2 of 12 of complainant company examined himself on affidavit Ex. CW-1/A. He reiterated the contents of complaint and placed on record, copy of complainant company's Memorandum and Articles of Association and registration certificate with ROC as Ex. CW-1/1, certificate of registration as NBFC with RBI as Ex. CW-1/2 (OSR), board resolution and SPA in favor of AR of complainant as Ex. CW-1/3 and Ex. CW-1/4, loan agreement dated 07.10.2014 as Ex. CW-1/5 (OSR), loan recall cum final demand notice as Ex. CW-1/6, speed post receipt as Ex. CW-1/6A, and tracking report as Mark-B, statement of account of borrower of loan as Ex. CW-1/7 and Ex. CW-1/7A, certificate u/s 65B of Indian Evidence Act, as Ex CW-1/8, cheque of Rs. 1,62,000/- i.e. cheque in question bearing no. 241821 dated 16.04.2016 drawn on State Bank of India, SSI Branch, Shadara, Delhi as Ex. CW-1/9, cheque returning memo dated 22.04.2016 as Ex. CW-1/10, legal demand notice dated 25.04.2016 as Ex. CW-1/11, receipts of speed post and courier as Ex. CW-1/12 and Ex. CW-1/13 and tracking report as Mark-A.
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 23.01.2017 to which she pleaded not guilty and claimed trial. She admitted her signature on the cheque in question but stated that the contents were not filled in by her. She admitted that she stood as guarantor for loan of Rs. 3,00,000/- taken by one Sh. Kuldeep Mittal. She admitted that address mentioned in the legal notice is her old address where she used to reside till March, 2015. However, she denied receipt of the legal demand notice.
5. The accused moved an application to cross-examine the AR of complainant. AR of the complainant as CW-1 was duly cross examined by the accused. No other witness was produced by the complainant company and he closed its evidence by giving a separate statement to this effect. Thereafter, statement of accused under Section 313 Cr.P.C. was recorded in which all the incriminating evidence were put to her to which accused stated that she had not issued the cheque in discharge of loan liability. She stated that the cheque is Moongipa Capital Finance Ltd. Vs. Indu Mittal CC No. 5001798/16 Page no. 3 of 12 signed by her, however all the remaining details in the cheque have not been filled by her. She stated that she had given 3-4 blank signed cheques as security when she stood as guarantor for the loan taken by her husband. She stated that the said cheques have been misused by complainant. She denied receipt of the legal notice.
6. Accused preferred to lead evidence in her defence. She examined herself as DW-1. Husband of accused Sh. Kuldeep Mittal, borrower of loan was examined as DW-2. Both the defence witnesses were cross examined at length by counsel for the complainant. Accused did not produce any other witness and vide her statement defence evidence was closed.
7. Thereafter, matter was listed for final arguments. It was argued by the AR of 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 her signatures on the cheque in her plea of defence recorded at the time of framing of notice under Section 251 Cr.P.C as well as in her statement U/s 313 Cr.P.C. It was also argued that accused admitted her signature as guarantor on the loan agreement for present loan. 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.
8. Per contra, on behalf of accused, the submissions made by her in her plea of defence at the time of framing of notice under Section 251 Cr.P.C and in her statement under Section 313 Cr.P.C. were reiterated. Ld. Counsel for accused argued that evidence of complainant suffered from material lapses and was not sufficient to establish the case against accused. He submitted that complainant has failed to prove its case beyond reasonable doubt and accused is entitled to be acquitted of offence u/s 138 of the Act.
Moongipa Capital Finance Ltd. Vs. Indu Mittal CC No. 5001798/16 Page no. 4 of 12
9. I have perused the entire record as well as evidence led by the complainant as well as by the accused.
10. 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.
11. 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;"
Moongipa Capital Finance Ltd. Vs. Indu Mittal CC No. 5001798/16 Page no. 5 of 12 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 debt or other liability".
12. 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].
13. In the present case, accused has admitted her signatures on the cheque in question, in the notice U/s 251 Cr.P.C and in her statement U/s 313 Cr.P.C. She did not deny her signature on the cheque either in cross-examination of complainant, or in defence evidence. 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."
Moongipa Capital Finance Ltd. Vs. Indu Mittal CC No. 5001798/16 Page no. 6 of 12 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 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.
14. The complainant company by way of an affidavit led its own evidence testifying that cheque was issued to it by the accused as guarantor of the loan taken by Sh. Kuldeep Mittal, in discharge of loan liability. The relevant documents from Ex. CW-1/1 to Ex. CW-1/13 and Mark-A, as detailed hereinabove were placed on record. The account statements of the borrower were Ex. CW-1/7 and Ex. CW-1/7A, showing computation of outstanding dues of Rs. 1,76,983/-, as against the loan, and the loan recall notice Ex. CW-1/6, regarding the same was sent to the borrower as well as the guarantor i.e. the accused.
15. It is admitted that loan of Rs. 3,00,000/- was disbursed to Sh. Kuldeep Mittal. In her cross examination as DW-1, accused admitted that she signed on the loan agreement dated 07.10.2014, Ex.CW1/5 (OSR) as the guarantor of the borrower for the loan in question. It is also admitted by the accused that the cheque in question was signed by her, however the particulars of the same are not filled by her. It is also proved that the cheque in question was presented within six months of date of issuance. It is further proved that on presentation the cheque in question, it returned dishonored vide return memo for the reasons "Not Sufficient". Further, the authority of the AR was not disputed by the accused.
16. In the present case, the primary defence taken by the accused is that the loan taken by her husband from complainant company has been repaid by him and the blank signed cheques of accused given as security at the time of taking Moongipa Capital Finance Ltd. Vs. Indu Mittal CC No. 5001798/16 Page no. 7 of 12 loan have been misused by the complainant. It is also the defence of the accused that the EMI's for repayment of loan were made in cash and no receipt was issued by the complainant company for the same. It is also the defence that the loan was finally settled for payment of Rs. 90,000/- in cash to complainant company for which again no receipt was issued. The cross-examination of AR of complainant was also conducted on these lines whereby suggestions that cheque in question was given as blank signed security cheque by accused at time of the loan agreement as guarantor and that no receipt was issued for repayment of EMI's, were denied by AR of complainant.
17. However perusal of evidence shows that though husband of accused also testified as DW-2 to the same effect, in his cross-examination, he admitted that he did not have any document regarding settlement of loan with complainant company nor did he make any written request to them for issuance of NOC for the loan. Moreover though it is the defence that receipts were not issued to accused/borrower of repayment of EMI's, the AR of complainant i.e. CW-1, in his cross-examination, upon being called to do so, produced the carbon copies of several receipts issued in favor of borrower upon repayment of EMIs as Ex. CW- 1/D1 (Colly, OSR). The same weakens this defence of accused. Furthermore the account statement of the borrower Ex. CW-1/7 and Ex. CW-1/7A, showing the pending dues of Rs. 1,76,983/- against the loan, which amount was also specified in loan recall notice sent to accused, was never disputed or denied as incorrect by the accused throughout trial, nor was any other evidence adduced by accused to dispute or discredit the contents of the same.
18. It is further admitted that no complaint was filed against complainant company for misuse of cheque in question. If the cheque was in fact misused, there is no explanation, as to why, when the cheque got dishonored, accused did not file any complaint or take any legal recourse against the complainant. Moreover, if as per defence version, the blank signed cheque was not returned to accused even after repayment of loan, there is no explanation or evidence as to any stop payment instructions of the cheque, issued by accused to bank. The Moongipa Capital Finance Ltd. Vs. Indu Mittal CC No. 5001798/16 Page no. 8 of 12 cheque in question has been dishonored for reason "Not Sufficient" only and not for any other reason(Ex. CW-1/10). In light of above, the version of accused that loan in question was settled in full and final upon repayment in cash is not credible as same is not supported by any material or document whatsoever. Moreover as discussed above, the defence of misuse of blank signed cheque is also not a credible defence.
19. Even otherwise, if for the sake of argument, it is considered that the accused gave blank signed cheque to the complainant, once accused has admitted his signatures on the cheque he cannot escape his liability on the ground that the particulars have not been filled in by him, or that signatures on cheque and the contents are filled in different writings and inks. When such a cheque containing blanks 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. 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. Thus, the accused can not dispute the contents of the cheque in question.
20. As far as the averment that no case has been filed by complainant company against Sh. Kuldeep Mittal, borrower of the loan and a case has been Moongipa Capital Finance Ltd. Vs. Indu Mittal CC No. 5001798/16 Page no. 9 of 12 filed against the second guarantor, Sh. Himanshu Kalia for the same loan, the same are also not valid grounds of defence. As regards the first line of defence, it is relevant to have a glance at some of the provisions of Indian Contract Act, 1872. Section 128 of the Contract Act provides that liability of the surety is co- extensive that of the principal debtor, unless it is otherwise provide by the contract. Further, section 137 of the Contract Act provides that mere forbearance of the part of creditor to sue the principal debtor or to enforce any other remedy against him does not discharge the surety. Moreover the terms of the loan agreement dt. 07.10.2014, Ex. CW-1/5 (OSR) also state in clause 15 that in event of non-payment of dues by borrower, the same shall be payable by the guarantor. Thus the accused cannot escape his liability on the ground that the amount due under the loan could not be recovered from the principal borrower. As regards the second line of defence, the accused did not specify as to what is the nature of proceedings pending against Himanshu Kalia, the second borrower of loan, nor did she produce any document in this regard. Even otherwise, there is no principle of contract law which bars simultaneous proceedings for recovery of loan amount from two guarantors, subject to actual recovery of the amount. Moreover as per Section 138 of Indian Contract Act, 1872, where there are co-sureties, a release by the creditor of one of them does not discharge the others; neither does it free the surety so released from his responsibility to the other sureties. Thus the surety against whom the recovery is effected can enforce his right to contribution from co-surety, subject to the contract. Hence this defence of accused is also not valid.
21. The accused has also admitted in the notice U/s 251 Cr.P.C that the address mentioned in legal demand notice under section 138 of the Act was the one they were residing at till March 2015. However, it is worth noting that the address of the accused as mentioned in legal demand notice is the same address as that in notice under section 251 Cr.P.C., and her bail bonds i.e. H No. A-15A/1, Second Floor, G.T. Road, Mansarovar Park, Shahdara, Delhi. Moreover the accused has not brought on record any evidence to show that she was not residing at above address at time of legal notice. The above shows that legal notice was sent at correct address of accused. Moreover the loan recall notice Ex.
Moongipa Capital Finance Ltd. Vs. Indu Mittal CC No. 5001798/16 Page no. 10 of 12 CW-1/6 stating outstanding dues of Rs. 1,76,983/- as against the loan, was also sent on the same address and shown to have been delivered on accused vide tracking report Mark-B. Once the notices are 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 the notices sent to address of accused were 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."
The decisions in Santosh Mittal v. Sudha Dayal, 2014 (8) AD (Delhi) 268, and G.L. Sharma v. Hemant Kishor 2015 (2) AD (Delhi) 340, are also to the same effect.
22. 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.
23. 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 complaint disclosed the existence of a legally enforceable debt or liability vide the cheque in question, return memo, legal Moongipa Capital Finance Ltd. Vs. Indu Mittal CC No. 5001798/16 Page no. 11 of 12 notice and other documents brought on record. However, accused failed to rebut the presumption in favour of complainant either on the basis of other material available on record or by adducing any defence evidence. There is sufficient material on record to conclude that complainant has successfully proved his case beyond reasonable doubt.
24. Accordingly, the accused is convicted for the offence under Section 138 of Negotiable Instruments Act, 1881.
25. Let the convict be heard on quantum of sentence.
26. Copy of Judgment be supplied to the convict free of cost.
Digitally signed by MRIDUL MRIDUL GUPTA
GUPTA Date: 2018.10.30
16:25:47 +0530
ANNOUNCED IN THE OPEN COURT (MRIDUL GUPTA)
TODAY i.e. 30th OCTOBER 2018 METROPOLITAN MAGISTRATE
DWARKA DISTRICT COURTS/ DELHI
Moongipa Capital Finance Ltd. Vs. Indu Mittal CC No. 5001798/16 Page no. 12 of 12