Delhi District Court
17. The Hon'Ble Supreme Court In Kumar ... vs . Sharma Carpets (2009) 2 Scc on 2 September, 2022
IN THE COURT OF SH. P. BHARGAV RAO, M.M.01, N.I. ACT, WEST DISTRICT,
TIS HAZARI, DELHI
C.C. No.5696/17
PS Patel Nagar DLWT020122432017
Sh. Ramesh Chander Bhatia
S/o Late Sh. L. C. Bhatia
R/o 12/30, East Patel Nagar,
New Delhi08
....Complainant
Versus
Tejinder Singh Pahwa
C/o J107, First Floor,
Rajouri Garden
New Delhi110027
.....Accused
Date of institution : 06.09.2017
Offence complained of: 138 NI Act
Reserved for judgment: 23.07.2022
Date of Decision: 02.09.2022
Plea of guilt: Plead not guilty
Decision: Convicted
C.C. No. 5696/17 Dated 02.09.2022 Pages 1
JUDGMENT:
The present complaint has been filed by the complainant against the accused under section 138 Negotiable Instruments Act, 1881 (hereinafter referred as the "Act").
Complainant's Version:
1. The accused was having good friendly relations with the complainant since long. That the accused on account of good friendly relations and long acquaintance with the complainant, had approached him somewhere in the month of April 2017 for a friendly loan of Rs. 5,00,000/ (Rs. Five Lakhs only) for his smooth functioning of business for a period of 1015 days only. That on various requests and persuasions, the complainant agreed to provide the friendly loan of Rs. 5,00,000/ to the accused and accordingly paid him Rs.
3,00,000/ on 18.04.2017 and Rs. 2,00,000/ on 19.04.2017 in cash. That in the month of May 2017, the accused towards repayment of the aforesaid friendly loan amount, issued four cheques bearing No. 241574 dated 05.05.2017, 241575 dated 03.05.2017, 241576 dated 06.05.2017 of Rs. 1,00,000/ each and 241577 dated 04.05.2017 of Rs. 2,00,000/ all drawn on Canara Bank, East Patel Nagar, New Delhi. The complainant presented two cheques bearing no.241576 amounting to Rs. 1,00,000/ dated 06.05.2017 and cheque bearing no.241577 amounting to Rs.2,00,000/ dated 04.05.2017 both drawn on Canara Bank, East Patel Nagar, New Delhi110008. Consequently, the complainant presented the impugned cheques with its Banker, OBC, East Patel Nagar, New Delhi which got dishonoured vide return memos dated 01.08.2017 with remarks "Funds insufficient".
2. Thereafter, the complainant sent a legal demand notice dated 16.08.2017 on address of the accused.
3. Upon failure of the accused to make payment of the cheque in question within the stipulated time of 15 days, the complainant has filed the present complaint u/s 138 of the Act.
4. The complainant examined himself in presummoning evidence and after considering the complaint and entire documents on record, summon was issued by this Court against the accused on 13.09.2017.
C.C. No. 5696/17 Dated 02.09.2022 Pages 2 Notice against the accused:
5. Notice was framed against the accused on 02.07.2018 and the accused pleaded not guilty and claim trial.
Plea of defence of the accused:
6. The accused had taken the following plea in his defence:
"I plead not guilty and claim trial.
"The complainant and I have friendly relations and the complainant stays near my office. During the demonetization complainant handed over Rs. 5 lacs in previous currency denomination and request me to convert the same. I handed over four duly filled cheques with date left blank to the complainant. I intimated him my inability to convert the amount as my CA and wife had asked me to not conduct this exercise. The complainant kept pressurizing me to convert the money I returned the cash before 30.01.2017. Complainant has misused the cheques in question.
7. Thereafter, accused was permitted to crossexamine the complainant on 02.07.2018.
Complainant's evidence:
8. The complainant examined himself as CW1 reiterating the statements made in the complaint. He also relied upon the documents Ex. CW1/1 to CW1/8.
• Copy of bank statement of account is Ex. CW1/1(OSR) • Original cheques are Ex. CW1/2 and Ex.CW1/3 • Original return memos are Ex. CW1/4 and Ex. CW1/5 • Copy of legal demand notice is Ex.CW1/6 • Original postal receipt is Ex. CW1/7 • Tracking report is Ex.CW1/8 • Statement of account of complainant is Ex.CW1/D1(OSR) and Ex.CW1/D 2(OSR) • ITR of the complainant is Ex.CW1/D3 C.C. No. 5696/17 Dated 02.09.2022 Pages 3
9. Thereafter, the complainant as CW1 was duly crossexamined by the Ld. Counsel of the accused. No other witness was examined by complainant. CE was closed by this Court vide order dated 26.06.2019.
Statement of the accused
10. Statement of the accused was recorded under section 313 Code of Criminal Procedure (hereinafter referred as "Cr.P.C") on 18.07.2019 wherein all the incriminating evidences were put up before the accused.
11. Accused stated that after the demonetization in the year 2016, complainant had come to him and given him Rs. 5 lacs in the old currency for the purpose of getting the money exchange with the new currency notes. Accused had given the cheques to the complainant for repayment of the said amount. Thereafter, accused decided to return Rs. 5 lacs in old currency to the complainant and accused did so after two days of receiving the amount from the complainant. Thereafter, complainant did not return his cheques and told him that the cheques were misplaced. The cheques were misused by the complainant. Accused had admitted that he received the legal demand notice. Accused did not reply to the same as he was assured by the complainant that nothing adverse could happen. The complainant has filed a false case against him and this case has been filed to victimize him so that the complainant can extort money.
Defence Evidence:
12. The accused examined himself as DW1, Ms. Parminder Kaur as DW2, Sh. Birender Kumar, Senior Manager as DW3 and Sh. Varun Mohan, Senior Manager, HDFC Bank as DW4, Sh Rajesh Kumar, Peon of Canara Bank as DW5. He also relied upon the documents. DE was closed by this court on 07.06.2022.
Certified copy of bank statement of Sh. Ramesh Chand Bhatia account no.00162010002320 for the period 01.04.2014 to 31.05.2017 is Ex.DW3/1 C.C. No. 5696/17 Dated 02.09.2022 Pages 4 Certified copy of bank statement of Sh. Ramesh Chand Bhatia account no.00162010002320 for the period 01.04.2014 to 31.05.2017 is Ex DW4/1 Certified copies of the statement of account of accused having account no.2010101024882 for the relevant period 01.11.2016 to 31.05.2017 is Ex. DW5/1 Final arguments were heard on behalf of both the parties. I have heard the both the Ld Counsels and have given my thoughtful consideration to the material appearing on record.
The Law relating to Sec. 138 NI Act:
13. Before proceeding on the merits of the case, it is considered important to lay down the basic provisions of law with respect to section 138 of the Act which are as follows:
14. Section 138 of Negotiable Instruments Act, 1881 makes dishonour of cheques an offence. The Hon'ble Supreme Court in the case of Krishna Janardhan Bhat v. Dattatraya G. Hegde AIR 2008 SC 1325 held that the procedural requirements of section 138 are:
• There is a legally enforceable debt.
• The drawer of the cheque issued the cheque to satisfy part or whole of the debt.
• The cheque so issued has been returned due to insufficiency of funds.
15. In order to establish an offence u/s 138 NI Act, following ingredients must be fulfilled by the complainant :
(i) The cheque was drawn by a person on account maintained by him for payment of money and the same is presented for payment within a period of 03 months from the date on which it is drawn or within the period of its validity;
(ii) The cheque was drawn by the drawer for discharge of any legally enforceable debt or other liability;
C.C. No. 5696/17 Dated 02.09.2022 Pages 5
(iii) The cheque was returned unpaid by the bank due to either insufficiency of funds in the account to honour the cheque or that it exceeds the amount arranged to be paid from that account on an agreement made with that bank;
(iv) A demand of the said amount has been made by the payee or holder in due course of the cheque by a notice in writing given to the drawer within 30 days of the receipt of information of the dishonor of cheque from the bank;
(v) The drawer fails to make the payment of the said amount of money within fifteen days from the date of receipt of notice.
Points for Determination:
i. Whether the accused in the present case was in receipt of legal demand notice?
ii. Whether presumption under section 118(a) read with section 139 of the NI Act can be raised in favour of complainant in the present case?
iii. If the reply to the above question is in affirmative, whether the accused successfully rebutted the presumption u/s 118(a) r/w Section 139 of the NI Act through preponderance of probabilities?
iv. If the reply to the above question is in affirmative, whether the complainant could prove his case beyond reasonable doubt?
I shall be deciding the abovementioned points of determination separately.
Points for Determination:
(I)Whether the accused in the present case was in receipt of legal demand notice?
16. The accused during the framing of notice and statement u/s 313 CrPC stated that he has not received the legal demand notice, however, during the statement of accused u/s 313 CrP.C r/w Section 281 CrP.C he specifically replied that he has received the above legal notice.
(II) Whether presumption under section 118 read with section 139 NI Act can be raised in the favour of complainant in the present case?
C.C. No. 5696/17 Dated 02.09.2022 Pages 6
17. The Hon'ble Supreme Court in Kumar Exports vs. Sharma Carpets (2009) 2 SCC 513, while discussing the contours of section 118(a) r/w 139 of the N I Act, has held interalia the following:
"14. Section 139 of the Act provides that 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.
15. Applying the definition of the word "proved" in section 3 of the Evidence Act to the provisions of sections 118 and 139 of the Act, it becomes evident that in a trial under section 138 of the Act a presumption will have to be made that every negotiable intstrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under section 118 and 139 of the Act help him shift the burden on the accused. The presumption will live, exist and survive and shall end 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. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists."
18. In the instant case, the accused at the time of framing of notice u/s 251 has admitted the issuance of cheque.
19. Ergo, this court is of the considered view that the statutory presumptions under section 118(a) and 139 of the NI Act would be raised in favour of the complainant. In the instant case, since, the accused has admitted the execution of impugned cheque, the aforementioned statutory presumptions would be raised in favour of the complainant C.C. No. 5696/17 Dated 02.09.2022 Pages 7 regarding the fact that the impugned cheque has been drawn for consideration and issued by the accused in discharge of legally enforceable debt.
(III) Whether the accused has successfully rebutted the presumption u/s 118(a) r/w Section 139 of the Act through preponderance of probabilities?
20. In order to create doubt in the complainant's claims regarding existence of a legally enforceable debt, the accused has primarily adopted the following defence:
Complainant admits that the cheques were undated.
No document was executed at the time of giving loan nor two eye witnesses have been examined.
No specific date is mentioned in the complaint when the cheques in question was handed over to the accused. The loan was given in the month of May and June, 2017 and the accused had no urgency as no marriages happened in these months.
The cash was returned to the complainant.
21. I shall be dealing with these defences separately. However, before delving into the facts of the case, it is pertinent to note that the standard of proof which is required from the accused to rebut the statutory presumption under section 118 read with section 139 of the Act is preponderance of probabilities. The accused is not required to prove his case beyond reasonable doubt. This onus on the accused can be discharged from the materials available on record and from the circumstantial evidences. The Hon'ble Supreme Court in M.S Narayan Menon @ Mani vs. State of Kerala, Appeal (Crl) 1012 of 1999 has interalia held the following:
"The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies"
22. Further, it should also be noted that the standard of proof in order to rebut the statutory presumption may be inferred from the materials on record and circumstantial C.C. No. 5696/17 Dated 02.09.2022 Pages 8 evidences. It is not always mandatory for the accused to examine its own witnesses in order to rebut the said statutory presumption. At this point, reliance may be placed on the decision of the Hon'ble Supreme Court in the case of Krishna Janardhan Bhat (supra), wherein the Hon'ble Court has categorically held the following:
"32. accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. As accused has a constitutional right to remain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different.
34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove defence on the part of an accused is "preponderance of probabilities". Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies."
23. This principle has been reiterated by the Hon'ble Supreme Court in Rangappa vs. Sri Mohan (2010) 11 SCC 441 wherein while discussing the scope and ambit of statutory presumption under section 139 of the Act, the Hon'ble Court has held the following:
"27. 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 defendantaccused cannot be expected to discharge an unduly high standard of proof.
28. In the absence of compelling justifications, reverse onus clause usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the C.C. No. 5696/17 Dated 02.09.2022 Pages 9 accused is able to raise a probable defence which creates doubts about the existence of a legally recoverable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the material submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
24. Thus, section 139 of the Act puts the burden on the accused to prove his defence. However, the accused has to prove his defence on the balance of probabilities and not beyond reasonable doubt. Accused can prove his defence by drawing inferences from the materials already on record (including complainant's evidences), circumstances of the case and also leading his own evidences. If the accused successfully creates doubts in the complainant's claim about the existence of legally enforceable debt then the burden of proof shifts back to the complainant who is the required to prove the guilt of the accused beyond reasonable doubt. Reference can be taken from the decision of the Hon'ble Supreme Court in the case of Bharat Barrel & Drum Manufacturing Company vs. Amin Chand Pyarelal 1999 (3) SCC 35, wherein it was held:
"Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the nonexistence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non existence of the consideration can be either direct or by bringing on record preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading evidence as the existence of C.C. No. 5696/17 Dated 02.09.2022 Pages 10 negative evidence is neither possible not contemplated and even if led, it is to be seen with a doubt..."
25. Keeping in mind, the pronouncements laid down by the Hon'ble SC in the aforementioned cases, let us now examine the defence of the accused one by one :
(a) Complainant admits that the cheques were undated.
26. It is well settled that if the accused is issuing a cheque after signing the same to the complaint albeit blank, he is giving implied authority to the complainant to fill the blank details and to present the cheque on or after the date mentioned in the cheque. Therefore, aforementioned statutory presumptions can be raised in favour of the complainant even in case of blank cheque also.
27. Reference can be taken from the recent decision of the Hon'ble Supreme Court in the case of Bir Singh vs. Mukesh Kumar (2019) 4 SCC 197 wherein the Apex Court while upholding the validity of blank signed cheque and post dated cheque in a proceeding u/s 138 of the Act has interalia held the following:
"36. The proposition of law which emerges from the judgments referred to above is that the onus to rebut the presumption under Section 139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Negotiable Instruments Act.
37. 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 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.
38. If a signed blank cheque is voluntarily presented to a payee,towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence."
C.C. No. 5696/17 Dated 02.09.2022 Pages 11
28. In the present case, the accused has not adduced any evidence to prove that the date was later filled by the complainant. Even if it is presumed that the date in the cheque in question was later filled by the complainant, in view of the aforesaid discussion, the accused has given an implied authority to the complainant to fill the date and the accused cannot take the plea that the cheque was undated at the time of handing over of the cheque.
(b) No document was executed at the time of giving loan nor two eye witnesses have been examined.
29. Ld. counsel for the accused argues that allegedly a huge loan of Rs. 5 lacs was given to the accused, however, no document was executed between the parties. Further, the complainant during his crossexamination deposed that the loan was given in the presence of his wife and daughter, however, the complainant did not examine his wife and daughter to prove the fact of giving loan which casts doubt on the version of the complainant. The contention of the Ld. Counsel for the accused is not tenable as the presumption u/s 139 NI Act is in favour of the complainant and the complainant is not required to bring other documents or to examine any witness as the initial presumption is in the favour of the complainant and the question of bringing the documents or eye witnesses would arise only once the initial presumption u/s 139 NI Act is duly rebutted by the accused.
30. In the present case, the complainant has adduced his statement of account Ex.
CW1/D1 which clearly shows that the accused withdrew an amount of Rs. 3 lacs on 18.04.2017 and Rs. 2 lacs on 19.04.2017 in cash. The said entry shows that the complainant had the financial capacity to give a loan of Rs. 5 lacs. Further, the complainant has also produced his ITR for the year 201819 Ex. CW1/D3 wherein the amount of Rs. 5 lacs has been mentioned as friendly loan to the accused.
(c) No specific date is mentioned in the complaint when the cheques in question was handed over to the accused. The loan was given in the month of May and June, 2017 and the accused had no urgency as no marriages happened in these months.
31. Ld. counsel for the accused contends that the complainant did not mention in his complaint as to when the cheque in question was handed over to the complainant and the loan C.C. No. 5696/17 Dated 02.09.2022 Pages 12 was given in the month of May and June, 2017 and the accused had no urgency as no marriages happened in these months. Ld. Counsel for the accused argues that the complainant has taken contradictory stand in his complaint and crossexamination with respect to the handing over of cheques. He argues that in complaint the complainant deposes that the accused issued cheques in May, 2017, however, in his crossexamination dated 26.01.2019 the complainant deposes that the cheques were taken after 12 days from 18.04.2017 and 19.04.2017. The said argument is not maintainable as the accused has admitted taking of Rs. 5 lacs from the complainant during his statement u/s 251 Cr.P.C and u/s 313 r/w 281 Cr.P.C. Ergo, the question of not mentioning the date of handing over and the urgency does not arise. Further, contradiction in the crossexamination is not material enough to defenestrate the entire claim of the complainant in the presence of explicit admission of the accused.
(d) The cash was returned to the complainant.
32. The accused during the entire trial took the defence that in the year 2016, complainant had approached him and gave Rs. 5 lacs in the old currency for the purpose of getting the money exchange with the new currency notes. The accused had given the cheques to the complainant for repayment of the said amount. Thereafter, the accused returned Rs. 5 lacs in old currency to the complainant after two days of receiving the amount from the complainant. The complainant did not return the cheques in question and told him that the cheques were misplaced. The accused had examined his wife DW2 to prove the fact that the amount was returned to the complainant. Perusal of the crossexamination of DW2 dated 21.12.2021 shows that the said witness has no knowledge with respect to the transaction between the complainant and accused. The relevant extract of the crossexamination is reproduced hereunder:
"It is correct that I was not present when my husband had taken Rs.5,00,000/ in cash from the complainant. It is further correct that I was not present during the course of discussion between the complainant and my husband with respect of Rs.5,00,000/ taken by my husband in cash. I do not know who was present when my husband and complainant had discussion with each other with respect to taking of Rs.5,00,000/. I also do not know who was present when my C.C. No. 5696/17 Dated 02.09.2022 Pages 13 husband had taken Rs.5,00,000/ from the complainant. We as well as complainant have been residing in the same locality at Patel Nagar so we were known to each other for a long time. My husband had not taken any amount from anyone other than complainant for converting old currency to new currency. No document was executed in writing between complainant and my husband at the time of taking Rs.5,00,000/ by my husband from the complainant. It is correct that whatever I am deposing for transaction of Rs.5,00,000/ between my husband and complainant, that was told by my husband to me and I have no personal knowledge about the said transaction. The amount of Rs.5,00,000/ is to be utilised by depositing the same in the bank for converting the old currency to new currency. The cheques in question were not handed over by husband to the complainant in my presence. I do not know the exact number of the shop where my husband had returned Rs. 5,00,000/ to the complainant. Though it was situated at Shanker Road market".
... My husband had not discussed with me anything prior to taking Rs.5,00,000/ in cash from the complainant. My husband never used to discuss financial transaction with me. Again said sometimes he used to discuss. I cannot tell any specific reason as to why my husband did not discuss with me before taking Rs.5,00,000/ from the complainant. I also cannot tell any reason why my husband discussed with me thereafter about this financial transaction between my husband and complainant".
33. It is pertinent to mention that the DW2 is an interested witness. However, it should be kept in mind that the testimony of a witness cannot be discarded merely on the ground that the witness is a close relative of the accused. In the present case, the witness DW2 does not inspire confidence of the court as she could not even tell the details of the shop where the accused had returned the amount to the complainant nor she is aware of the transaction between the complainant and the accused. Therefore, her testimony cannot be relied upon.
C.C. No. 5696/17 Dated 02.09.2022 Pages 14
34. Ergo, evaluation of the entire defence pleas shows that the accused has failed to rebut the presumption u/s 118 (a) read with Sec 139 of the NI Act by establishing a probable defence on a standard of preponderance of probabilities. Therefore, the accused has failed to create any reasonable doubt in the complainant's claim and failed to prove that no liability existed towards the complainant.
Conclusion :
35. This court finds that a legally enforceable debt existed in favour of the complainant in the present case, impugned cheque was given by the accused in discharge of debt which got dishonoured. Execution of cheque is admitted by the accused. The accused failed to make payment to the complainant even after receiving the legal demand notice.
Decision:
35. In view of the above discussion, the accused is convicted for the offence under section 138 of the Act.
36. Let the accused be heard on the quantum of sentence on 13.09.2022.
37. Copy of this judgment be given to the accused dasti. Digitally signed P by P BHARGAV BHARGAV RAO Date: 2022.09.03 RAO 17:08:14 +0530 Announced in the open court on (P. BHARGAV RAO) 02.09.2022 MM01/NI Act/WEST/THC/DELHI 02.09.2022 It is certified that this judgment contains 15 pages and each page bears my signature.Digitally signed
P by P BHARGAV
BHARGAV RAO
Date: 2022.09.03
RAO 17:08:23 +0530
(P. BHARGAV RAO)
MM01/NI Act/WEST/THC/DELHI
02.09.2022
C.C. No. 5696/17 Dated 02.09.2022 Pages 15