Delhi District Court
Morajkar vs . Joe Ferroa' Decided On 19.07.2013, ... on 8 August, 2018
IN THE COURT OF SHRI PUNEET NAGPAL, MM (NI ACT)-01,
SOUTH-WEST DISTRICT: NEW DELHI
New CC No. 566/15
Unique case ID No. 4991457/2016
Under Section 138 of N.I. Act
In the matter of:
RAJESH
s/o Shri Randhir Singh
R/o Shop no.3-4, PRO 439 C,
Ground Floor,
Khasra No.35,
Old Lal Dora, Najafgarh,
New Delhi -110 043.
... Complainant
Versus
VIKASH KUMAR
s/o Shri Joginder Singh
R/o H. No.9371, Gali Malkhan Singh
Gaushala Road,
Kishan Ganj,
Delhi - 110 006.
... Accused
Date of Institution : 19.11.2015
Date on which judgment was reserved : 21.06.2016
Date of Judgment : 08.08.2018
JUDGMENT
1. Shorn off unnecessary details, the case of the complainant as narrated in the complaint is that the complainant knows the accused and is having friendly relations with him. It has been averred in the complaint that on 30.07.2015, the accused requested the complainant for a friendly loan of Rs.2 lacs for a period of two months. Keeping in view the friendly relations with the accused, the complainant agreed to advance the required sum of Rs.2 lacs after arranging the same from his personal resources and from friends and relations. The said loan amount was advanced in cash on 01.08.2015. At the time of advancement of loan, the accused executed a pronote in favour of the complainant with an assurance that the loan amount shall be repaid alongwith interest @ 2% per annum. The said pronote is Ex.CW1/A. It is the version of the complainant that on 01.10.2015, the complainant approached the accused and requested him to repay the friendly loan of Rs.2 lacs alongwith the interest. However, the accused showed his inability to repay the interest amount. At the same time, the accused agreed to repay the principle amount of Rs.2 lacs and for the same the accused issued a cheque no.291252 dated 01.10.2015 for sum of Rs.2 lacs drawn on State Bank of India, Karol Bagh, New Delhi Ex.CW1/B (hereinafter called as cheque in question) to the complainant and assured the complainant that the cheque shall be honoured at the time of its presentation.
2. The complainant presented the cheque in question for encashment which to the despair of the complainant, got dishonoured on presentation with the remarks ''Funds Insufficient'' vide cheque return memo dated 05.10.2015 (Ex.CW1/C). Thereafter, the complainant immediately contacted the accused and demanded the payment of the cheque amount. However, the accused failed to pay the same. This constrained the complainant to send a legal notice dated 02.11.2015 (Ex.CW1/D) to the accused. The said legal notice went unheeded and this led to the filing of the present case.
3 Cognizance of the offence under Section 138 NI Act was taken against the accused and summons were issued. The accused entered appearance. Notice under Section 251 CrPC was framed against the accused on 08.02.2016 to which he pleaded not guilty. At that stage, no plea of defence was recorded. However, an application 145(2) NI Act was filed by the accused seeking permission to recall the complainant and cross examine him. In the said application, the defence as was disclosed by the accused was that he had taken loan of Rs.50,000/- from one firm namely Karan Financer and at the time of taking of the said loan, he had handed over three blank signed cheques including the cheque in question as security and the cheque in question has been misused by the complainant.
EVIDENCE OF THE COMPLAINANT
4. The complainant chose to examine himself as complainant's witness and appeared as CW1 and adopted the contents of the affidavit tendered by him at presummoning stage.
5. The complainant was recalled for cross-examination. However, nothing substantial could be elicited from the cross examination of the complainant which could support the defence of the accused or create doubts on the credibility of the witness. In his cross-examination, the complainant testified that he is into business of clothes. The complainant testified that out of the loan amount of Rs.2 lacs, sum of Rs.1 lac was his own savings and sum of Rs.1 lac was borrowed by him from his friend namely Rakesh Singh. The complainant testified that at the time of advancement of the loan, the accused had executed a promissory note exhibited as Ex.CW1/A and had issued the cheque in question. It was categorically testified by the complainant that the cheque in question was duly filled up at the time when the same was handed over to the complainant. It was also testified that the transaction took place in presence of one Mr. Gyanender Singh (who later appeared as CW2). The witness denied any acquaintance with persons namely Karan, Sumit and Kishan. The witness also denied that the present complaint has been filed by him in connivance with persons namely Karan, Sumit and Kishan.
6. The complainant chose to examine one Gyanender Singh who appeared as CW2. The said witness deposed that he knows both the complainant as well as the accused. As the accused was having a shop of garments in Karol Bagh. It was testified by CW2 that the complainant had advanced sum of Rs.2 lacs in cash to the accused in his presence. He also deposed that the promissory note Ex.CW1/A bears his signature as a witness and the accused had appended signatures on Ex.CW1/A in his presence. In his cross-examination, the witness deposed that he knows the complainant as the complainant is also in the business of ready-made garments for past four years. The witness also denied any relationship / acquaintance with persons namely Karan, Sumit and Kishan.
7. In his statement under section 313 CrPC, the accused admitted the fact of receipt of legal demand notice sent by the complainant. The accused also admitted that the promissory note Ex.CW1/A bears his signature. However, the accused submitted that the cheque in question was not issued to the complainant, but was issued to one Karan Financer as security cheque in respect of a daily loan of Rs.50,000/-. The accused also denied acquaintance with CW2.
DEFENCE OF THE ACCUSED 8 The version of facts as discernible from the avernments made in the application filed by the accused under section 145(2) NI Act, from cross-examination of complainant CW1, from statement of accused recorded under Section 313 CrPC and from the testimony of the accused (DW1) are that the accused has denied the factum of taking of any loan from the complainant. The version of the accused is that the cheque in question was issued as a security cheque to one Karan Financer, from whom he had taken loan of Rs.50,000/-. The accused has deposed that he has no knowledge as to how the cheque in question reached into the hands of the complainant.
9. The accused in his testimony as DW1, has deposed that the accused used to maintain a diary showing the repayment of loan to Karan Financer. The said diary has been exhibited as Ex.DW1/A1. In his cross-examination, the accused testified that he has made a complaint against Karan Financer at Police Station Karol Bagh. However, the accused admitted that he has not placed on record the copy of the said complaint. Accused also admitted that till date, he has not filed any complaint with any authority against the complainant in respect of the misuse of the cheque. At the same time, the accused also admitted that he has not issued any stop payment instructions to his banker. At the same time, it was also admitted by the accused that he has no written record to show that he had taken loan from Karan Financer or that the cheque in question alongwith two other cheques in blank signed condition were issued to Karan Financer. It was also admitted by the accused that he has no proof to show that the complainant and the Karan Financer are associates.
10. The factual position being thus, now let us quickly run through the legal benchmark which is to be satisfied in order to constitute an offence u/s 138 NI Act-:
(i) that the person must have drawn a cheque on an account maintained by him in a bank for payment of certain amount of money to another person from out of that account.
(ii) that a cheque should have been issued for discharge, in whole or in part, or any debt or other liability.
(iii) that the cheque has been presented to the bank within a period of six months from the date on which it was drawn or within the period of its validity whichever is earlier.
(iv) that cheque is returned by the bank unpaid because of the amount of money standing to the credit of the 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 the bank.
(v) that the payee or the holder in due course of the cheque makes a demand for the payment of said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of the information by him from the bank regarding the return of the cheque as unpaid.
(vi) the drawer of the said cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
11. Being cumulative, it goes without saying that it is only when, all the aforementioned ingredients are satisfied, that a person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the NI Act.
12 As the service of legal demand notice, has been admitted by the accused, on analysis of the facts and the legal position stated above, the court finds the parties to be at variance on one primary issue i.e. whether the cheque in question was issued by the accused to discharge his liability to repay the loan amount of Rs.2 lacs to the complainant.
EXISTENCE OF LEGALLY ENFORCEABLE DEBT OR LIABILITY.
13 Let us briefly recapitulate that the accused has admitted that the cheque in question bears his signature and the same is drawn on the bank account maintained in his name. However, it is the case of the accused that the cheque in question was issued as a security cheque in a blank signed condition to one Karan Financer and not to the complainant as he had taken a daily loan of Rs.50,000/- from the said Karan Financer. Therefore, once the accused admits that the cheque in question bears his signature and the cheque in question is drawn on a bank account maintained by him, a factual basis is established, to invoke the presumption of cheque having been issued in discharge of a legally sustainable liability and drawn for a good consideration arises by virtue of Section 118 (a) read with Section 139 of NI Act.
14 It is an established proposition of law 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 139 NI Act has to be raised in favour of the complainant. It is a mandatory presumption though the accused is entitled to rebut the said presumption. In a catena of judgments, it has been laid down by the Hon'ble Apex court that such presumption in favour of the complainant cannot be rebutted by a mere plausible explanation but more than a plausible explanation by way of rebuttal evidence.
15. Let us analyze, whether the accused has succeeded in rebutting the presumption as contemplated under section 139 read with 118 (a) of NI Act.
16. In my opinion, the accused has not succeeded in rebutting the presumption of legal liability or even probablizing her defence. The defence of the accused is that he has not taken the alleged loan of Rs.2 lac from the complainant, and neither has he issued the cheque in question to the complainant. The version of the accused is that the cheque in question has been handed over to one Karan Financer. It is pertinent to mention that the accused has not disclosed the proprietor / partners who are running the firm by name of Karan Financer. At the same time, the accused has not taken any steps to summon anyone, from the firm Karan Financer, to whom the accused had allegedly handed over the cheque in question and who could have been the best witness to depose in favour of the accused and substantiate the defence of the accused. This reeks of culpability and adverse inference deserves to be drawn against him. Therefore, in my opinion, the defence of the accused of handing over of the cheque in question to Karan Financer, is a figment of imagination.
17. At the stage of final arguments, it was also argued on behalf of the accused that as per the testimony of the complainant, sum of Rs.1 lac was borrowed by the complainant from his friend Mr Rakesh Singh and the same was used to advance the alleged loan of Rs.2 lacs to the accused. However, the complainant has failed to examine the said Rakesh Singh and therefore, non-examination of Rakesh Singh is fatal to the case of the complainant. This argument advanced on behalf of the accused is specious as the complainant has examined Shri Gyanender Singh as CW2, who has deposed that the complainant had indeed advanced sum of Rs.2 lacs in cash in his presence to the accused. Therefore, enough and cogent evidence has been adduced by the complainant to prove the fact that sum of Rs.2 lacs was indeed advanced to the accused. Despite cross- examination, nothing could be elicited from CW2, which could create doubts on the credibility and the veracity of CW2 Gyanender Singh.
18. Ld. Counsel for the accused has also argued that the accused has been able to prove his defence of having taken loan of Rs.50,000/- from Karan Financer and of repaying the same to Karan Financer as the accused has brought on record one diary Ex.DW1/A which shows that the accused has made payments to Karan Financer and this probablizes the defence of the accused. On the other hand, Ld. Counsel for the complainant has argued that the said diary i.e. Ex.DW1/A, was being maintained by the accused himself and not even on a single page of the said diary (Ex.DW1/A), any signatures or stamp of Karan Financer can be found and therefore, the said diary Ex.DW1/A is a forged document. I am in concurrence with the above mentioned submission of ld. Counsel for the complainant that Ex.DW1/A, is a forged document as the fact of having possession of a diary containing the record of alleged payment by the accused to Karan Financer, was disclosed by the accused at the fag end of trial. Prior to his testimony as DW1, the accused has not disclosed regarding the same at any prior stage of trial. At the same time, the said diary is not having any seal / signatures of any person on behalf of Karan Financer and therefore, the diary Ex.DW1/A, cannot be relied upon by this court.
19. At the same time, I am not inclined to believe the testimony of the accused (DW1) as the accused has admittedly not filed any complaint against Karan Financer or against the complainant for the misuse of the cheque in question. Nothing rankles more in the human heart than a brooding sense of injustice and therefore, the conduct of the accused in remaining indolent and not filing any complaint against the complainant or Karan Financer reeks of culpability. This suspicion on the veracity of the testimony of the accused gets further murkier as admittedly, no 'Stop Payment' instructions were issued by the accused to his banker in respect of the cheque in question. The accused has admitted in his cross-examination that he does not have any proof to show that he had taken any loan from Karan Financer or that the cheque in question alongwith two other blank signed cheques were handed over to Karan Financer at the time of taking of alleged loan of Rs.50,000/- from Karan Financer. Thus, apart from the interested testimony of the accused, there is not even an iota of evidence to prove and substantiate the defence taken by the accused.
20. On the other hand, the complainant has brought on record loan agreement Ex.CW1/A, which bears the signatures and the thumb impression of the accused. Perusal of Ex.CW1/A clearly shows that the accused had taken a friendly loan of Rs.2 lacs from the complainant. Though, the accused has denied that the Ex.CW1/A does not bear his signatures. However, CW2 Gyanender Singh has categorically testified that the accused had appended his signatures on Ex.CW1/A in his presence. At the same time, a naked eye perusal of the signatures on the loan agreement Ex.CW1/A and on the cheque in question Ex.CW1/B, clearly shows that the signatures appended on Ex.CW1/A, are of the accused.
21. As a last ditch effort, at the stage of final arguments, Ld. Counsel for the accused has submitted that admittedly the alleged loan amount of Rs.2 lacs has been advanced by the complainant, in cash and the complainant has also admitted in her cross-examination he has not disclosed the fact of advancement of loan of Rs.2 lacs in his income tax returns. Thus, it has been argued on behalf of the accused that the loan amount is an unaccounted income and therefore, the same is irrecoverable and as the same cannot be termed as a legally enforceable debt in view of the bar laid down by Section 269 S. S of the Income Tax Act, 1961. Therefore, it has been argued that the present complaint under section 138 NI Act for recovery of such income is not maintainable.
22 This argument advanced by Ld. Counsel for the accused is devoid off merits as it is a settled law that even if, the loan amount has not been disclosed by any person in his / her income tax returns, the same would be inconsequential. It is now fairly settled that the mandate of section 269 S.S. of the Income Tax Act extends only to the taker or receiver of the loan and not the giver. A bare perusal of section 269 S.S. of the Income Tax Act, 1961 shows that no person can accept any loan or deposit of Rs.20,000/- or more otherwise then, by way of an account payee cheque or an account payee draft.
23. Consequences of contravention of section 269 S.S. of the Income Tax Act have been provided in section 271 D of Income Tax Act, 1961, which provides, that if, a loan or deposit is accepted in contravention of provisions of section 269 S.S. of the Income Tax Act, then a penalty equivalent to the amount of such loan, or deposit may be levied by the Joint Commissioner. Hence, even on a bare reading of these provisions, it is manifest that the bar relates to the receiving or taking of loan and not giving the same.
24 This aspect is very succinctly highlighted by Hon'ble High court of Bombay in the decision tilted as 'Krishna P. Morajkar vs. Joe Ferroa' decided on 19.07.2013, 2013 SCC online Bombay 862, which reads as follows:
''18. The Ld. Counsel for the respondent submitted that the observations of the Supreme Court in para 14 of the Judgment in Rangappa (supra) shows that the Supreme Court had not in any way casts any doubt on the correctness of the decision in Krishna Janardhan Bhat (supra), as it was based on specific facts and circumstances therein. Therefore, he submitted that observations in Krishna Janardhan Bhat (supra), about non-compliance of provisions of section 269 S.S. of the Income Tax Act and implications of section 271 D of Income Tax Act would still stand as good law. The Ld. Counsel for the appellant submitted that even these observations would stand impliedly over ruled. He pointed out that what was held in Krishna Janardhan Bhat (supra), was that advance taken by way of loan of more than Rs.20,000/- was only to be made by way of an account payee cheque. He submitted that in Rangappa (supra), the Supreme Court was specifically considering the case of an advance of Rs.45,000/- made in cash and yet the Supreme court had upheld the conviction recorded. Thus, even those observations based on the provisions of section 269 S.S. and section 271 D of the Income Tax Act made in Krishna Janardhan Bhat (supra), would stand impliedly overruled. I am entirely in agreement with Ld. Counsel for the appellant because the Supreme court in Rangappa (supra) had specially noted the judgment in Krishna Janardhan Bhat (supra), that advance of more than Rs.20,000/-
was to be made only by way of an account payee cheque, and yet the Supreme Court accepted the case of the complainant who claimed to have made an advance of Rs.45,000/- in cash and proceeded to uphold the conviction, even though the case rested on the fact that the cash advance of sum more than Rs.20,000/- was made. Thus, on this aspect, also, Krishna Janardhan Bhat (supra), stood impliedly overrule by Rangappa (supra), and the Judgment is to be held rendered on the facts of that case, not laying down the law. Therefore, judgments, which follow Krishna Janardhan Bhat (supra), can be safely ignored.
19. There is another aspect of the matter. The Ld. Counsel for the respondent pointed out that in Krishna Janardhan Bhat (supra), attention of the Supreme Court was possibly not drawn to the actual wording of section 269 S.S. of the Income Tax Act. He submitted that section 269 S.S. of the Income Tax Act, in fact, does not cast any burden upon a person making advance in cash to record it in his returns and does not prevent any such cash advanced from being made. ........................''.
A plain reading of section 269 S.S. shows that no person can accept any loan or deposit of a sum of Rs.20,000/- or more otherwise then by way of an account payee cheque or account payee draft. It does not say that a person cannot advance more than Rs.20,000/- in cash to other person. It is clear that the restriction on cash advances was infact on the taker and not the person who makes the advance. The penalty for taking such advance or deposit in contravention of provisions of section 269 S.S. was to be suffered by the one who takes the advance. Therefore, it is obviously impermissible to invoke these provisions for preventing a person from recovering the advance which he has made..............''.
25. It is clear from the above that non disclosure of an advance would not make the same non recoverable as it is incumbent on the person taking the advance to disclose the loan and not the person giving the same.
26. What further fortifies this conclusion is the decision of Hon'ble High court of Delhi in the case of Mukesh Gupta vs P. K. Bajaj, CS (OS), number 1615/2003 decided on 20.11.2006, wherein the court, in a civil suit for recovery, quite categorically held, that even assuming a non disclosure in tax returns, merely that, would not render the contract of loan void and loan irrecoverable relevant excerpts from the decision are as follows:-
''36. On issue no.02 framed vide order dated 02.02.2006, suffice would it be note as held in report published as 2002 (8) SCC 31, Nutan Kumar & Ors vs Iind Additional District Judge & Ors., unless a statute specially provides that a contract contrary to the provisions of the statute would be void, the contract would remain binding between the parties and can be enforced between the parties themselves. Consequences, if any, other in law, would follow.
''37. The Ld. Counsel for the defendant could not show any statutory provisions under the Income Tax Act, 1961, or any other law which stipulates that a loan transaction not recorded in the Income Tax Returns, or a loan transaction which is in violation of section 69A, 69B or section 269 S.S. of the Income Tax Act, would be void.
38. I accordingly hold that the suit is not barred under section 69A, 69B or section 269 S.S of the Income Tax Act.....''.
27 It is, therefore, clear that the claim does not become irrecoverable on account of alleged violation of section 269 S. S. of the Income Tax Act.
28. Therefore, in my opinion, the accused has not succeeded in rebutting the presumption of legal liability even on the scale of preponderance of probabilities. The defence of the accused cannot be termed as a plausible defence.
29 Furthermore, it has already been proved on record that the legal notice was validly issued to the accused and the accused has failed to reply the same. The non reply of the legal notice, is also circumstances that is to be marshalled against the accused.
30. The sheer lack of even an iota of material on record, to this effect, leads to the irresistible conclusion of the defence of the accused being sham and nothing but a complete lie.
31. Therefore, all factors, cumulatively seen, go on to show that the accused has miserably failed to probablize the defence set up by him with respect to the cheque amounting to Rs.2 lacs (Ex.CW1/B). The presumption of legal liability under Section 118 (a) read with Section 139 of the NI Act has gone unrebutted. The complainant has successfully proved the basic ingredients of the offence under Section 138 of the NI Act.
32. Resultantly, the accused Vikas Kumar stands convicted for the offence under Section 138 of the NI Act.
33 Let the convict be heard on quantum of sentence.
34. Let a digitally signed copy of the Judgment be supplied to the accused, free of cost and a copy of the Judgment be placed on the case file.
Digitally signed by PUNEET PUNEET NAGPAL Date: NAGPAL Decided on 08.08.2018 2018.08.08 16:29:02 +0530 Announced in open court. (PUNEET NAGPAL) MM (NI Act)-01/SW/DWK New Delhi