Delhi District Court
Ashish Sharma vs . Vijay Kumar Upadhyay on 21 August, 2021
IN THE COURT OF SH. FAHAD UDDIN, MM-04, SHAHDARA DISTRICT,
KARKARDOOMA COURT, DELHI.
ASHISH SHARMA VS. VIJAY KUMAR UPADHYAY
Case No. : 2170/16
PS : Harsh Vihar
U/s : 138 N.I Act
a) Registration no. of the case : 2170/16
b) Name & address of the : ASHISH SHARMA
complainant S/o SH. SALEK CHAND SHARMA
R/o 380, MANDOLI EXTN.,
Delhi- 110093.
c) Name & address of accused : VIJAY KUMAR UPADHYAY
S/o Sh. HARIRAM UPADHYAY
R/o Plot No. 218, Khasra No. 706,
Ground Floor, Gali No. 2,
Near Aman Vihar Police Station,
Pratap Vihar-III, Kirari,
Delhi- 110086.
d) Date of Commission of offence : 12.05.2016 & 18.05.2016
e) Offence complained off : U/s 138 N.I Act
f) Plea of the accused : Pleaded not guilty/claimed trial
g) Final Order : Convicted
h) Date of such order : 21.08.2021
Date of Institution : 13.07.2016
Final Arguments heard on : 18.03.2021
Judgment Pronounced on : 21.08.2021
Judgment
1. Vide this judgment, I shall dispose off the present case filed by the complainant
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namely Ashish Sharma against the accused Vijay Kumar Upadhyay under section 138
NI Act. Brief facts giving rise to the present case may be mentioned as under:-
Facts of the Case:
It is the case of the complainant that the complainant (Ashish Sharma) and accused (Vijay Kumar- Upadhyay) were previously known to each other and thus the accused approached to the complainant to borrow a loan of Rs 5,00,000/- from the complainant and in lieu of the said loan, the accused offered to mortgage his plot no. 218, khasra no. 706, ground floor, Gali no.2, Pratap Vihar-III, Amar Vihar, Kirari, Delhi-86. The complainant agreed and gave an amount of Rs 5,00,000/- (Rupees Five Lakhs only) as loan to the accused. Out of the said amount Rs 4,00,000/- were given through RTGS vide cheque no. 00002 dated 25.09.2014 and the remaining amount of Rs 1,00,000/- was paid in cash to the accused by the complainant. It is mentioned in the complaint that at the time of borrowing the said loan amount of Rs 5,00,000/- , the accused assured and promised that he will repay the said amount on or before 25.03.2015. At the time of borrowing the said loan amount on 25.09.2014, the accused executed an agreement and promised to give original documents of the aforesaid plot within 2-3 days but on demand by the complainant, the accused stated that the original documents of the said plot were in possession of his mother , who had gone to her parental home and after her return , the documents of the said plot will be handed over to the complainant. It is stated in the complaint that the complainant made so many requests and demanded but the accused neither gave the said original documents of the plot nor repaid the said loan amount of Rs 5,00,000/- to the complainant upto promised period i.e. 25.03.2015.
2. It is the case of the complainant that upon insisting by the complainant to the accused, the accused issued a cheque bearing no. 453303 dated 05.05.2016 for Rs 1,00,000/- and another cheque bearing no. 453304 dated 16.05.2016 for Rs 4,00,000/- both drawn on Syndicate Bank, Paschim Vihar , New Delhi in discharge of his legal liability for the said loan amount. Further at the time of issuing the said cheques, the accused had assured that both the cheques shall be honoured/encashed as and when Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 2 of 26 presented. But when the complainant presented both the said cheques before his banker i.e. Bank of Baroda, Mandoli Branch , Delhi for encashment , the said two cheques were returned unpaid/dishonoured with remarks 'funds insufficient' on 12.05.2016 and 18.05.2016 but the cheque return memos were received by the complainant on 25.05.2016. Thereafter the complainant contacted to the accused and claimed the amount covered by the two cheques but the accused refused and did not pay the said amount. A legal demand notice dated 04.06.2016 was also issued by the complainant to the accused through his counsel but despite this, the accused failed to pay the amount within the stipulated period and hence due to non- payment by the accused, the complainant has filed the present case against the accused before this Court.
3. Notice U/s 251 Cr.P.C The complainant led pre-summoning evidence by way of affidavit and vide order dated 28.07.2016, the Court took cognizance of the offence U/s 138 NI Act against the accused and summons were directed to be issued against the accused. The accused entered appearance in compliance of summons and after supply of documents in terms of section 207 Cr.P.C, notice U/s 251 Cr.P.C was framed against the accused for commission of the offence U/s 138 NI Act vide order dated 09.01.2019. In the notice framed U/s 251 Cr.P.C against the accused, the accused pleaded not guilty and claimed trial. The accused admitted his signatures on both the cheques in question but stated that the cheques in question were given in blank signed condition alongwith two other blank signed cheques to the complainant since he had taken a loan of Rs 4,00,000/- from the complainant which the accused has already repaid. The accused stated that he had also mortgaged his property papers with the complainant which has been returned by the complainant to him. The accused further stated that the cheques in question have been misused and he is not liable for cheque amount to the complainant.
4. Complainant Evidence:
To prove his case against the accused, the complainant Ashish Sharma Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 3 of 26 examined only one witness i.e. complainant himself as CW-1 and adopted his pre- summoning evidence led by way of affidavit which is Ex. CW-1/1. In the said affidavit the complainant reiterated and reaffirmed all the facts mentioned in his complaint on oath which have already been mentioned in the preceding paragraphs and the same are not being repeated herein for the sake of brevity. The complainant also relied upon the following documents against the accused:-
(i) Original cheque bearing no. 453303 dated 05.05.2016 for a sum of Rs 1,00,000/- is Ex. CW-1/A.
(ii) Original cheque bearing no. 453304 dated 16.05.2016 for a sum of Rs 4,00,000/- is Ex. CW-1/B.
(iii) Cheque return memo dated 12.05.2016 for cheque no. 453303 for a sum of Rs 1,00,000/- is Ex. CW-1/C.
(iv) Cheque return memo dated 18.05.2016 for cheque no. 453304 for a sum of Rs 4,00,000/- is Ex. CW-1/D.
(v) Legal notice dated 04.06.2016 issued on behalf of the complainant to the accused is Ex. CW-1/E.
(vi) Original postal receipt dated 04.06.2016 is Ex. CW-1/F.
(vii) Tracking report showing delivery of notice at the given address of the accused on 06.06.2016 is Ex. CW-1/G.
(viii) Agreement/Ikrarnama entered into between the parties for loan transaction is Ex. CW-1/H.
5. In his cross examination , the complainant stated that he knew accused Vijay Kumar Upadhyay since 2013 as they both brought Kawad from Haridwar, Uttrakhand. He stated that it is correct that when the documents regarding payment was executed on 25.09.2014, he received four blank cheques from the accused Vijay Kumar Upadhyay. He stated that he had mentioned in his complaint regarding receipt of four blank cheques. The witness was also confronted with his complaint and affidavit Ex. CW-1/1 where it was not so mentioned. CW-1 stated that cheque no. 453301 was presented in clearing on 16.12.2014 and same was returned unpaid as the accused was not maintaining sufficient fund in his account. He stated that he did not remember the cheque bearing no. 453302 for sum of Rs 70,000/- was presented by him in clearing on 08.06.2015 or not and same was dishonoured due to no sufficient fund. CW-1 denied the suggestion that after dishonor of above-said both cheques, accused paid to him Rs 4,00,000/- in cash on Sept 2015. He further Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 4 of 26 denied that after he received money, he returned the documents. CW-1 stated that accused never gave any property documents to him. During cross examination, the witness was also confronted with Ex. CW-1/H where it was mentioned that the accused had pledged his property documents with the complainant. In his further cross examination, CW-1 stated that it is correct that it had been mentioned that he had received the property document in Ex. CW-1/H, however the accused had not given the property documents as he had come to his office and promised to give the property documents after returning from the house. However, the accused did not give any property documents. CW-1 denied the suggestions that accused had returned the money and when asked for cheques , he told him that the cheques had been misplaced or that the complainant misused the blank cheques of accused for extortion of money or that the complainant filed a false case against the accused or that accused is not liable to pay the cheque amount. No other material fact was deposed to by CW-1 and after conclusion of cross examination of CW- 1/complainant, no other witness was examined on behalf of the complainant and the complainant evidence was closed on 14.08.2019 and the matter was fixed for recording statement of the accused U/s 313 Cr.P.C.
6. Statement of Accused.
On 11.09.2019, the statement of the accused U/s 313 Cr.P.C was recorded whereby the entire incriminating evidence was put to the accused. In his statement U/s 313 Cr.P.C the accused denied his liability and stated that he had given four security cheques bearing no. 453301,453302, 453303 and 453304 at the time of executing the agreement dated 25.09.2014 and he had handed over his property documents to the complainant in lieu of the agreement. The accused stated that the complainant had presented the cheque bearing no. 453301 for Rs 4,00,000/- which was dishonoured by his bank i.e. syndicate bank on 16.12.2014. After dishonor of the cheque, the accused made the payment of Rs 4,00,000/- to the complainant in the last week of December 2014 and the complainant after receiving the payment had returned his property documents to him. The accused stated that he had requested Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 5 of 26 the complainant to return remaining three cheques to him but he tried to avoid the accused on one pretext or the other. The cheques in question were security cheques and were misused by the complainant. The accused stated that the complainant had also misused cheque bearing no. 453302 for Rs 70,000/- which was presented in clearing in his bank on 08.06.2015 and was dishonored by the bank. Therefore , the accused again approached the complainant to return all the security cheques but the complainant gave evasive reply at every time. The accused thus stated that he has no legal liability against the complainant. Initially the accused did not wish to lead DE in the present case but later on due to application moved on behalf of the accused, the request of the accused to lead DE was allowed vide order dated 11.01.2021.
7. Defence Evidence:
To disprove, the case of the complainant , the accused got examined two witnesses DW-1 and DW-2. DW-1 is Vijay Kumar Upadhyay, the accused himself who stated in his examination in chief by way of affidavit (Ex. DW-1/1) that the accused had taken Rs 4,00,000/- (four lakhs) as friendly loan from the complainant and the accused handed over the property documents (original GPA with photostate copy of complete chain) to the complainant and also accused handed over 4 blank cheques to the complainant as security bearing no. 453301,453302,453303 & 453304 and it was agreed that the complainant shall return entire property documents and the said cheques at the time of making payment by the accused to the complainant of the borrowed amount i.e. Rs 4 lacs. DW-1/accused stated that the complainant used cheque bearing no. 453301 on 16.12.2014 by filling up Rs 4 lacs and on 08.06.2015 cheque no. 453302 by filling up Rs 70,000/-. When this fact came into the knowledge of the accused in the month of June 2015, the accused met with the complainant and asked the reason to the complainant but the complainant did not give any satisfactory answer and asked to make the payment. Then finding no option, the accused returned the complainant amount in cash and took back his properties original documents from the complainant and the complainant did not return these cheques bearing no. 453303 & 453304 and Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 6 of 26 avoided the same on the ground that the cheques have been misplaced and he will return these two cheques as and when they will be available to the complainant. In his examination in chief, DW-1/accused stated that the complainant with malafide intention and motive to extort money from the accused has filled the cheques bearing no. 453303 & 453304 and misused these cheques. DW-1/accused further stated that he never issued the cheque in question at any point of time against any alleged liability of loan as shown by the complainant and the said cheques were misused by the complainant to extort money from the accused as the cheques were given to the complainant for security purpose against the loan and except the signatures on the cheques no other particulars were filled up by the accused. The accused stated that the complainant has misused these cheques and filed a false and frivolous case. The accused stated that he never received any notice regarding alleged demand at any point of time. The accused relied on the documents i.e. Copy of GPA as Ex. DW-1/A (OSR) and copy of passbook as Mark A. In his cross examination, DW-1/accused stated that it is correct that all the four cheques given by him to the complainant got dishnoured in his account. DW-1 stated that the said cheques were given for security purpose. He stated that it is correct that he had not mentioned in his affidavit regarding the date of return of Rs 4,00,000/- to the complainant as stated by him. DW-1 denied the suggestion that he had not mentioned the date in his affidavit as he had not returned Rs 4 lacs to the complainant. DW-1 further stated that he had not obtained any receipt from the complainant regarding payment of Rs 4 lacs as stated by him. DW-1 denied the suggestion that he had not obtained any receipt from the complainant since he had not paid the amount of Rs 4 lacs to the complainant. DW-1 further stated in his cross examination that he got to know that the complainant had misused his cheque after the complainant had deposited the cheque in his account in December 2014. He stated that it is correct that he had not filed any case/complaint/notice against the complainant regarding misuse of the cheque by the complainant before any authority. He denied the suggestion that he had not taken any legal action against the complainant as he had not returned the amount of Rs 4 lacs to the complainant.
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8. During cross examination, the attention of the witness was also drawn to the document Ex. CW-1/H and the witness/accused stated that in the said agreement the correct address of accused is mentioned. However, he stated that he had not received the court summons in the present case at his given address and he came to know about the present case telephonically and thereafter he appeared before the court. The witness again stated that he did not remember if the summons might have delivered at his given address. The witness/DW-1 further stated that he did not remember, if legal notice dated 04.06.2016 Ex.CW-1/E was delivered at his given address. He stated that he cannot say whether it was delivered or not. DW-1 denied the suggestion that at the time of availing loan from the complainant, he had promised to deposit the property documents later on since he had mortgaged the same with some other person. DW-1 stated that it is correct that all the four cheques were handed over by him to the complainant. DW-1 stated that the cheques were handed over in blank signed condition. He further stated that it is correct that the complainant had paid Rs 4 lacs to him as loan vide his account. DW-1 stated that he knew the complainant 1-2 years prior to the transaction. No other material fact was deposed to by DW-1 and after conclusion of cross examination, DW-1 was discharged.
9. DW-2 is Jai Prakash Jatav, Staff from Canara Bank, Paschim Vihar, Delhi, who is a summoned witness and who brought the summoned record which is statement of account of accused namely Vijay Kumar Upadhyay for the period 01.01.2014 till 01.01.2020 and the same is Ex. DW-1/2 on court record. The witness, DW-2 stated that he has no personal knowledge of the case.
In his cross examination, the witness/DW-2 stated that he had not brought any authority letter for appearance as a witness in the court since he had appeared on the basis of the summons issued by the court. DW-2 stated that the statement of account produced by him before the court bears the signatures of the branch manager. The branch manager had signed the statement of account in his presence.
Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 8 of 26 DW-2 denied the suggestion that since he had not placed authority to depose before the court so he was not entitled to depose before the court. No other material fact was deposed to by DW-2 and after conclusion of cross examination, DW-2 was discharged and DE was closed vide separate statement of accused given on 24.02.2021.
10. Final Arguments:
Final arguments were also addressed by both the parties. In the final arguments addressed by Ld. Counsel for the complainant, the Ld. Counsel for the complainant submitted that on the basis of the evidence (oral as well as documentary) and in the facts and circumstances of the case, the complainant has been able to prove beyond reasonable doubt his case against the accused and the accused be convicted and punished in accordance with law for the offence U/s 138 NI Act.
11. On the other hand in the final arguments addressed and filed by the Ld. Counsel for the accused, the Ld. Counsel for the accused submitted that the accused took a loan of Rs 4 lacs from the complainant and at the time of obtaining such loan the accused mortgaged his property documents to the complainant and at that time accused also gave 4 security cheques to the complainant. In the month of December 2014, the complainant presented one of the security cheque of Rs 4 lacs in the account of the accused which was dishonored and thereafter accused approached the complainant and returned the abovesaid Rs 4 lacs to the complainant and after receiving the amount, the complainant returned the property documents of accused which were mortgaged to him by the accused at the time of taking loan and when accused asked to return the abovesaid security cheques, then the complainant on one pretext or the other did not return the abovesaid security cheques and the complainant misused the said cheques and filed the present case. It is stated on behalf of the accused that the complainant in his evidence exhibited a document i.e. loan agreement which is Ex. CW-1/H and it is particularly stated in the document that the accused mortgaged his property document to the complainant for Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 9 of 26 obtaining the said loan. It is submitted on behalf of the accused in the final arguments that the complainant has not approached the Court with clean hands as the complainant has not mentioned in his complaint about the four security cheques and in the cross examination, the complainant has admitted this fact. The complainant returned the mortgaged documents to the accused after receiving the payment of Rs 4 lacs but at that time , the complainant did not return the said security cheques to the accused and same has been misused by the complainant. The accused got examined the witness in defence from his bank to show that the two of the security cheques of accused were presented by the complainant in the month of December 2014 and June 2015 and after bouncing the first cheque , the accused returned the loan amount of Rs 4 lacs to the complainant. When the complainant presented second cheque in the month of June and after bouncing the same, when the accused approached the complainant in this regard, the complainant said that he has also to pay the interest on the loan amount of Rs 4 lacs and it is the only reason that the loan agreement was made of Rs 5 lacs instead of Rs 4 lacs. It is also stated on behalf of the accused that the presumption under section 114 (i) of Evidence Act operates in his favour as the property documents Ex. DW-1/A are in possession of the accused and they are itself , the receipt of repayment in the hands of the accused. Thus, the accused has successfully made his defence on the basis of preponderance of probabilities and rebutted the presumption under section 139 NI Act and he is entitled to be acquitted in the present case.
Submissions Heard. Record perused.
12. Findings:
On the basis of the arguments addressed by the Counsels for the parties and the evidence led before this Court (oral as well as documentary), the findings of this court are as under:-
It is the case of the complainant that the complainant and accused were known to each Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 10 of 26 other and thus the accused approached to the complainant to borrow a loan of Rs 5,00,000/- from the complainant and in lieu of the said loan the accused offered to mortgage his plot no. 218, khasra no. 706, ground floor, Gali no. 2, Pratap Vihar-III, Amar Vihar, Kirari, Delhi-86. The complainant agreed and gave an amount of Rs 5,00,000/- (Rupees five Lakh only) as loan and out of the said amount Rs 4,00,000/- was given through RTGS vide cheque no. 00002 dated 25.09.2014 and the remaining amount of Rs 1,00,000/- was paid in cash to the accused by the complainant. At the time of borrowing the said loan amount of Rs 5,00,000/- , the accused assured and promised that he will repay the said amount on or before 25.03.2015. On 25.09.2014 at the time of borrowing the said loan amount of Rs 5,00,000/-, the accused executed an agreement and promised to give original documents of the said plot within 2-3 days but on demand by the complainant, the accused stated that the original documents of the said plot are in possession of his mother, who had gone to her parental home and after returning her, the documents of the said plot will be handed over to the complainant. In this regard, the complainant made so many requests but the accused neither gave the said original documents of the plot nor repaid the loan amount of Rs 5,00,000/- to the complainant upto promised period i.e. 25.03.2015. Thereafter upon insisting by the complainant, the accused issued a cheque bearing no. 453303 dated 05.05.2016 for Rs 1,00,000/- and cheque bearing no. 453304 dated 16.05.2016 worth Rs 4,00,000/- both drawn on Syndicate bank, Paschim Vihar, New Delhi in discharge of his legal liability. At the time of issuing the said cheques, the accused also assured that both the cheques will be encashed as and when presented. The complainant presented both the said cheques before his banker i.e. Bank of Baroda, Mandoli Branch for encashment but the said cheques could not be encashed and returned unpaid with remarks "funds insufficient" on 12.05.2016 and 18.05.2016 but the cheque returning memos were received by the complainant on 25.05.2016. The complainant also sent a legal demand notice on 04.06.2016 through his counsel but the accused failed to make payment to the complainant and hence the present complaint U/s 138 NI Act has been filed by the complainant against the accused U/s 138 NI Act before this Court.
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13. At this stage for reference, Section 138 NI Act may be reproduced as under:-
138. Dishonour of cheque for insufficiency etc. of funds in the account.-Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for [a term which may be extended to two years] or with fine which may extend to twice the amount of the cheque or with both:
Provided that nothing contained in this section shall apply unless- a the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
b the payee or the holder in due course of the cheque, as the case may be makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of cheque [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and c the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be , to the holder in due course of the cheque within fifteen days of the receipt of the said notice.
Explanation- For the purposes of this section "debt or other liability" means a legally enforceable debt or other liability.
Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 12 of 26 Section 142 N.I Act 1881 may also be reproduced as under:-
142. Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974)- (a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138;
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section
138."
14. The object underlying Section 138 of the Negotiable Instruments Act is to promote and inculcate faith in the efficacy of banking system and its operations giving credibility to Negotiable Instruments in business transactions and to create an atmosphere of faith and reliance by discouraging people from dishonouring their commitments which are implicit when they pay their dues through cheques. The provision was intended to punish those unscrupulous persons who issued cheques for discharging their liabilities without really intending to honour the promise that goes with the drawing up of such a negotiable instrument.
Following acts constitute an offence under section 138:-
i Drawing of the cheque ;
ii Presentation of the cheque to Bank,
iii Returning the cheque unpaid by the drawee Bank,
iv Giving notice in writing to the drawer of the cheque demanding
payment of the cheque amount, and,
v Failure of the drawer to make payment within 15 days of the receipt
of the notice.
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15. In the case of "Indian Bank Association and others vs. Union of India and Ors". [Writ Petition (Civil) No. 18 of 2013 decided on 21.04.2014 by the Hon'ble Supreme Court of India], it was observed that:-
The objectives of the proceedings of Section 138 of the Act are that the cheques should not be used by persons as a tool of dishonesty and when cheque is issued by a person, it must be honoured and if it is not honoured, the person is given an opportunity to pay the cheque amount by issuance of a notice and if he still does not pay, he must face the criminal trial and consequences.
16. The object of bringing Section 138 on statute appears to be to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. Despite civil remedy, Section 138 intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a book and induce the payee or holder in due course to act upon it. Section 138 draws presumption that one commits the offence if he issues the cheque dishonestly. It is seen that once the cheque has been drawn and issued to the payee and the payee has presented the cheque and thereafter, if any instructions are issued to the bank for non-payment and the cheque is returned to the payee with such an endorsement, it amounts to dishonour of cheque and it comes within the meaning of Section 138.
17. The object and the ingredients under the provisions, in particular, Sections 138 and 139 of the Act cannot be ignored. Proper and smooth functioning of all business transactions, particularly, of cheques as instruments, primarily depends upon the integrity and honesty of the parties. In our country, in a large number of commercial transactions, it was noted that the cheques were issued even merely as a device not only to stall but even to defraud the creditors. The sanctity and credibility of issuance of cheques in commercial transactions was eroded to a large extent. Undoubtedly, dishonour of a cheque by the bank causes incalculable loss, injury and inconvenience Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 14 of 26 to the payee and the entire credibility of the business transactions within and outside the country suffers a serious setback. Parliament, in order to restore the credibility of cheques as a trustworthy substitute for cash payment enacted the aforesaid provisions. The remedy available in a civil court is a long-drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee.
18. Now coming to the facts of the present case, the present case has been filed15 by the complainant Ashish Sharma against the accused Vijay Kumar Upadhyay for dishonor of two cheques bearing no. 453303 dated 05.05.2016 for Rs 1,00,000/- (One Lakh only) and cheque bearing no. 453304 dated 16.05.2016 for Rs 4,00,000/- (four lakhs only) on account of " insufficient funds". The said two cheques were returned unpaid vide returning memo dated 12.05.2016 & 18.05.2016. As per the case of the complainant, the said two cheques were issued by the accused in favour of the complainant to discharge his liability for Rs 5,00,000/- as the accused had allegedly taken a loan of Rs 5,00,000/- from the complainant on 25.09.2014 which was to be paid upto 25.03.2015 by the accused as per the agreement between the parties. To prove his case against the accused, the complainant has got examined only one witness i.e. CW-1/Complainant himself (Ashish Sharma), who tendered his evidence by way of affidavit which is Ex. CW-1/1. In the said affidavit, the complainant Ashish Sharma has reiterated & reaffirmed all the facts as stated in the complaint and mentioned in above paragraphs on oath and as such the same are not being repeated herein for the sake of brevity. Further to prove his case against the accused, the complainant has relied upon documentary evidence which is Ex. CW-1/A to Ex. CW- 1/H. Original cheque bearing no. 453303 dated 05.05.2016 for Rs 1,00,000/- is Ex. CW- 151/A, original cheque bearing no. 453304 dated 16.05.2016 for Rs 4,00,000/- is Ex. CW-1/B, return memo dated 12.05.2016 for cheque no. 453303 is Ex. CW-1/C, return memo dated 18.05.2016 for cheque no. 453304 is Ex. CW-1/D, legal notice dated 04.06.2016 issued on behalf of the complainant to the accused at his given address regarding the dishonor of the said two cheques and for raising demand of Rs 5,00,000/- is Ex. CW-1/E, postal receipt dated 04.06.2016 for issuance of legal notice to the Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 15 of 26 accused is Ex. CW-1/F, computerized tracking report showing delivery of notice to the accused on 06.06.2016 is Ex. CW-1/G & written agreement executed between the complainant and accused for loan of Rs 5,00,000/- is Ex. CW-1/H.
19. In his cross examination, CW-1/Complainant namely Ashish Sharma has stated that he knew accused Vijay Kumar Upadhyay since 2013 as they both brought Kawad from Haridwar, Uttarakhand. He stated that it is correct that when the documents regarding payment was executed on 25.09.2014, he had received four blank cheques from the accused person. He stated that he had mentioned in his complaint regarding receipt of four blank cheques. The witness was also confronted with complaint and affidavit Ex. CW-1/1 and it was found that the said fact was not mentioned in the complaint. CW-1 further stated that cheque no. 453301 was presented in clearing on 16.12.2014 and same was returned unpaid as the accused was not maintaining sufficient fund in his account. He stated that he did not remember the cheque bearing no. 453302 for sum of Rs 70,000/- was presented by him in clearing on 08.06.2015 or not and same was dishonoured due to not sufficient fund. CW-1 denied the suggestion that after dishonor of above said both cheques , the accused paid to him Rs 4,00,000/- in cash on September 2015. He further denied that after he received money, he returned the documents. CW-1 specifically stated that the accused had never given any property documents to him. In his cross examination, CW-1 was also confronted with the document CW-1/H wherein it is mentioned that the accused had pledged his property documents with the complainant, however, CW-1 again stated that the accused had not given the property documents as he had come to his office and promised to give the property documents after returning from the house but the property documents were not given. CW-1/Complainant further denied the suggestion that the accused had returned the money and when asked for cheques , he told him that the cheques had been misplaced or that he has misused the blank cheques of accused for extortion of money.
20. On the other hand, it is the case of the accused that the cheques in question Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 16 of 26 were given in blank signed condition alongwith two other more blank signed cheques to the complainant as the accused had taken a loan of Rs 4,00,000/- from the complainant which he has already repaid. It is the case of the accused that he had mortgaged his property papers with the complainant which has been returned by him. The cheques in question have been misused by the complainant and he is not liable for cheque amount mentioned in the cheques in question. The accused has emphatically mentioned in the written arguments filed on his behalf that he only took a loan of Rs 4 lacs from the complainant and at the time of obtaining such loan the accused mortgaged his property documents to the complainant and at that time accused also gave 4 security cheques to the complainant. In the month of December 2014, the complainant presented one of the security cheque of Rs 4 lacs in the account of the accused which was dishonored and thereafter accused approached the complainant and returned the abovesaid Rs 4 lacs to the complainant and after receiving the amount, the complainant returned the property documents of accused which were mortgaged to him by the accused at the time of taking loan and when accused asked to return the abovesaid security cheques, then the complainant on one pretext or the other did not return the abovesaid security cheques and the complainant misused the said cheques and filed the present case. It is stated on behalf of the accused that the complainant in his evidence exhibited a document i.e. loan agreement which is Ex. CW-1/H and it is particularly stated in the document that the accused mortgaged his property document to the complainant for obtaining the said loan. It is submitted on behalf of the accused in the final arguments that the complainant has not approached the Court with clean hands as the complainant has not mentioned in his complaint about the four security cheques and in the cross examination, the complainant has admitted this fact. The complainant returned the mortgaged documents to the accused after receiving the payment of Rs 4 lacs but at that time , the complainant did not return the said security cheques to the accused and same has been misused by the complainant.
21. To disprove, the case of the complainant, the accused side has got examined two witnesses. DW-1 namely Vijay Kumar Upadhyay (accused himself) and DW-2 Jai Prakash Jatav who was a summoned witness. In his examination in Chief by way of Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 17 of 26 affidavit i.e. Ex. DW-1/1, the accused reiterated and reaffirmed on oath that he had taken only Rs 4,00,000/- from the complainant and handed over the property documents to the complainant and also handed over 4 blank cheques to the complainant as security bearing no. 453301,453302, 453303 & 453304 and it was agreed between the parties that the complainant shall return the entire property documents and these cheques at the time of making payment by the accused to the complainant of the borrowed amount i.e Rs 4 lacs. But the complainant used the cheque bearing no. 453301 on 16.12.2014 by filling up Rs 4 lacs and on 08.06.2015 cheque no. 453302 by filling Rs 70,000/. When this fact came into the knowledge of the accused in the month of June 2015, the accused met with the complainant and asked the reason to the complainant but the complainant did not give any satisfactory answer and asked to make his payment. Then finding no option, the accused returned the complainant amount in cash and took back his properties original documents from the complainant. However, the complainant did not return the cheque bearing no. 453303 & 453304 and later on with malafide motive to extort money from the accused has misused the said cheques. The accused has stated in his examination in chief that he never issued the cheques in question to the complainant at any point of time against any alleged liability of loan as shown by the complainant and the complainant has misused these cheques to extort money from the accused. The cheques in question were given to the complainant for security purpose against the loan and except the signatures on cheques no other particulars were filled up by the accused. To support his case the accused has relied on two documents i.e. (i) copy of GPA dated 16.02.2008/Property documents Ex. DW-1/A (OSR) and (ii) copies of entry of passbook for the period 31.07.2013 till 30.11.2015 as Mark A.
22. In his cross examination, DW-1/Accused has stated that it is correct that all the four cheques given by him to the complainant got dishonored in his account as the said cheques were given for security purpose. He stated that it is correct that he has not mentioned in his affidavit regarding the date of return of Rs 4,00,000/- to the complainant as stated by him. DW-1/Accused stated that he had not obtained any Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 18 of 26 receipt from the complainant regarding payment of Rs 4 lacs. He stated that he got to know that the complainant had misused his cheque after the complainant had deposited the cheque in his account in December 2014. He stated that it is correct that he had not filed any case/complaint/notice against the complainant regarding misuse of the cheque by the complainant before any authority. He denied the suggestion that at the time of availing loan from the complainant, he had promised to deposit the property documents later on as he had mortgaged with some other person. In his further cross examination, DW-1/Accused stated that all the four cheques were handed over by him to the complainant, however, the cheques were handed over in blank signed condition. He further stated that the complainant had paid Rs 4 lacs to him as loan vide his account and he knew the complainant 1-2 years prior to the transaction.
23. Another witness summoned by the accused and examined was DW-2 Jai Prakash Jatav, Sub-Staff from Canara Bank , Paschim Vihar, Delhi who brought the summoned record which is statement of account of the accused Vijay kumar Upadhyay for the period 01.01.2014 till 01.01.2020 which is Ex. DW-1/2 on court record.
24. It may be noted that in the case of "Uttam Ram v. Devinder Singh Hudan & Anr." 1, the Hon'ble Supreme Court of India pleased to observe that:-
A negotiable instrument including a cheque carries presumption of consideration in terms of Section 118(a) and under Section 139 of the Act. Sections 118(a) and 139 read as under:
"118. 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;....
1CRIMINAL APPEAL NO. 1545 OF 2019 (ARISING OUT OF SLP (CRL) NO. 3452 OF 2019).
Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 19 of 26
139. Presumption in favour of holder.--It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."
25. There is the mandate of presumption of consideration in terms of the provisions of the Act. The onus shifts to the accused on proof of issuance of cheque to rebut the presumption that the cheque was issued not for discharge of any debt or liability in terms of Section 138 of the Act. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 20 of 26 may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act."
26. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof."
27. Section 139 introduces an exception to the general rule as to the burden of proof and shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the prosecution to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law and presumptions of fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact as held in Hiten P. Dalal [Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 :
2001 SCC (Cri) 960] .
28. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 21 of 26 evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
29. Now if the present case is seen in light of the abovesaid observations, this Court is of the view that the complainant has been able to prove his case against the accused U/s 138 NI Act. At the cost of repetition, it may be said that the present case has been filed by the complainant against the accused for dishonor of two cheques bearing no. 453303 dated 05.05.2016 for Rs 1,00,000/- (One Lakh only) and cheque bearing no. 453304 dated 16.05.2016 for Rs 4,00,000/- (four lakhs only) on account of "
insufficient funds". The said two cheques were returned unpaid vide returning memo dated 12.05.2016 & 18.05.2016. As per the case of the complainant , the said two cheques were issued by the accused in favour of the complainant to discharge his liability for Rs 5,00,000/- as the accused had allegedly taken a loan of Rs 5,00,000/- from the complainant on 25.09.2014 which was to be paid upto 25.03.2015 by the accused as per the agreement between the parties.
30. The defence of the accused is that the cheques in question were given in blank signed condition alongwith two other more blank signed cheques to the complainant as he had taken a loan of Rs 4,00,000/- from the complainant which the accused has already paid. The accused stated that he had also mortgaged his property papers with the complainant which has been returned by the complainant. The cheques in question have been misused and he is not liable for the amount as mentioned in the cheques in question. The said counter-story of the accused that he only took a loan of Rs 4 lacs from the complainant does not seem to be probable as in the documents Ex.
Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 22 of 26 CW-1/H in which the transaction entered into between the parties has been recorded shows that the accused had taken a loan of Rs 5,00,000/- from the complainant on 25.09.2014, out of which Rs 4,00,000/- were given vide cheque bearing no. 000002 and Rs 1,00,000/- was given in cash and it was agreed between the parties that the said amount shall be paid by the accused upto 25.03.2015. The said document Ex. CW-1/H bears the signature of both the parties as well as the attesting witness. The accused has no where denied his signatures on the document Ex. CW-1/H. Further the documents Ex. DW-1/2 i.e. statement of account of the accused clearly show that Rs 4,00,000/- were received by the accused in his account from the complainant on 25.09.2014 and all the four cheques 453301, 453302, 45303 & 453304 for Rs. 4,00,000/-, 70,000/- ,1,00,000/- & Rs 4,00,000/- were dishonored in the account of the accused due to "insufficient funds". Even though the accused has maintained that he had repaid the amount of Rs 4,00,000/- to the complainant and in return obtained his property papers Ex. DW-1/A (OSR) but the accused has neither disclosed the source of such payment, nor any date has been mentioned to show that on any particular date the said payment was made by the accused as alleged. Further no independent witness has been examined on behalf of the accused to support the fact of payment as alleged by the accused. However, In his cross examination, the accused has clearly admitted that he had given the four cheques to the complainant as security and the said cheques were got dishonored in his account. The accused admitted that he had not obtained any receipt from the complainant regarding payment of Rs 4 lacs as stated by him. The accused further admitted that he had not filed any case/complaint/notice against the complainant regarding misuse of the cheque by the complainant before any authority. He further admitted that all the four cheques were handed over by him to the complainant and the cheques were in blank signed condition and that the complainant had paid him Rs 4 lacs as loan vide his account.
31. On the other hand the documents relied upon by the complainant i.e. Ex. CW- 1/A to Ex. CW-1/H show that the accused had taken a loan of Rs 5,00,000/- from the complainant. Out of Rs 5,00,000/- , Rs 4,00,000/- were given through RTGS and Rs Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 23 of 26 1,00,000/- in cash. Ex. CW-1/H Ikararnama records the transaction between the parties. It shows that the loan of Rs 5,00,000/- was taken on 25.09.2014 by the accused which was to be repaid upto 25.03.2015. The Ikrarnama bears the signature of both the parties and the witness as mentioned in the documents. Ex. CW-1/C & Ex. CW-1/D show that cheque bearing no. 453303 for Rs 1,00,000/- was got dishonored on 12.05.2016 & cheque bearing no. 453304 for Rs 4,00,000/- was dishonored on 18.05.2016.Both the cheque were dishnoured for the reason "Funds Insufficient" in the account of the accused. Further after issuance of legal notice dated 04.06.2016 the accused failed to make payment to the complainant of the amount covered by the cheques in question.
32. The argument of the accused that he had returned the loan amount to the complainant and received back the mortgaged papers does not seem to be reliable and trustworthy as no factum of payment has been proved by the accused nor any receipt filed on record nor any independent witness got examined to prove this fact of payment to the complainant of the loan amount. The statement of account of accused shows that after dishonour of first cheque of Rs. 4,00,000/-, the accused was not having sufficient amount in his account to repay the loan amount. Further all the four cheques were dishonoured due to "funds insufficient" in his account. Further despite the allegation of misuse of cheques by the complainant no objection was ever raised by the accused regarding the conduct of the complainant as admittedly the accused never filed any case/complaint/notice against the complainant. Thus, for these reasons the stand of the accused seem to be unbelievable and the instance of the complainant seem to be probable that the accused had never deposited his property documents despite repeated demands made by the complainant.
33. Another argument of the accused that all the four cheques were given only as security is of no help to the accused in the facts and circumstances of the present case since the distinction sought to be made between issuance of cheque for repayment of debt and issuance of cheque as a security for repayment of debt is illusory Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 24 of 26 in law. Any cheque whether issued towards repayment of debt or liability as a security, if dishonoured , the drawer of a cheque incurs liability of prosecution under section 138 of the Negotiable Instruments Act. Unlike the other securities , the cheque even if it is issued as security for repayment it is very much a negotiable instrument and with implied instruction for deferred presentation on future date, if the debt is unpaid as per the agreed terms. The cheque upon the default of the terms if presented and dishonoured, it very much amounts to an offence under section 138 of the Negotiable Instruments Act..
34. The contention that the cheque was issued only as security is preposterous. The cheque whether issued for payment of debt or as security makes no distinction in law. The cheque is a negotiable instrument, it may be that sometimes the cheque is issued with a request on the part of the drawer to defer the presentation of the cheque for sometime, to enable the drawer to make payment by cash and take back the cheque or allow time to arrange funds for encashment of cheque. When the amount is not paid as per oral understanding , the payee is well justified to present the cheque for encashment. The cheque even if it is issued as a security for payment, it is negotiable instrument and encashable security at the hands of the payee. Therefore merely because the drawer contends that it is issued as security is not a ground to exonerate the penal liability under section 138 of the NI Act.
35. Lastly the accused in his statement of defence has categorically mentioned that both the cheques in question were signed by him and given to the complainant. Due to these reasons since the accused has failed to show that he had made payment of loan amount to the complainant even of Rs 4,00,000/- as per the accused after the dishonour of the first cheque and on the other side, the complainant has been able to prove issuance of both the cheques by the accused to the complainant, that both the cheques were got dishonored vide return memo dated 12.05.2016 & 18.05.2016 Ex. CW-1/C & Ex. CW-1/D, that the accused failed to make payment of cheque amount despite issuance of legal demand notice dated 04.06.2016 and the accused had Case No. 2170/16 Ashish Sharma Vs. Vijay Kumar Upadhyay Page No. 25 of 26 obtained a loan of Rs 5,00,000/- from the complainant vide written agreement on 25.09.2014 Ex. CW-1/H, this court is of the view that the complainant has been able to prove his case against the accused on the basis of presumptions raised U/s 118 NI Act and 139 NI Act as well as testimony of CW-1 and documentary evidence Ex. CW-1/A to Ex. CW-1/H and Ex. DW-1/2 and the accused has failed to rebut the presumptions raised in favour of the complainant U/s 118 and 139 NI Act as no receipts for payment have been placed on record by the accused to show that he had made payments to the complainant of the loan amounts at any point of time nor any specific date of repayment given nor any witness examined to support this fact and due to which it may be inferred that the accused is not liable to pay the cheque amounts to the complainant. On the contrary, the documentary evidence placed on record by the complainant show that the cheques in question were issued to the complainant by the accused. Even, if they were given as security for the loan amount obtained by the accused, the complainant could very well use the same in the event of non-payment/default for payment by the accused. Hence, in the considered opinion of this Court, the ingredients of section 138 NI Act are fulfilled. The complaint has been filed within the period of limitation and the accused is held guilty of the commission of the offence U/s 138 NI Act and is convicted accordingly.
Judgment pronounced in the open Court.
Put up for order on sentence on 01.09.2021.
Digitally signed by FAHADDictated & Announced in Open Court FAHAD UDDIN
Location: Shahdara
District, Karkardooma
Dated 21.08.2021
UDDIN Courts, Delhi
Date: 2021.08.21 14:54:38
+0530
( Fahad Uddin)
MM-04/SHD/Karkardooma Courts
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