Delhi District Court
M/S Upvan Leasing Pvt Ltd vs Suresh Kumar Jain Cc No. 3439/10 on 31 October, 2011
IN THE COURT OF SH. RAKESH KUMAR SINGH:
METROPOLITAN MEGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.-42, TIS HAZARI COURT COMPLEX, DELHI
31.10.2011
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10
JUDGMENT u/s 264 Cr.PC.
Complainant through its AR has filed the present complaint on the basis of a dishonoured cheque for Rs.53,240/-
received from the accused which was issued in discharge of liability of loan and penalty in respect of the loan taken by the
principal borrower Kuldeep Chand. The said cheque when returned dishonoured due to insufficient funds, a notice was
sent to the accused, however the accused failed to repay the amount. Hence this complaint. AR of the complainant has
filed affidavit establishing the case. Cheque Ex. CW1/B, Memo Ex. CW1/C, Legal Notice EX. CW1/D, Registry receipts
EX. CW1/E&F, UPC EX. CW1/G, AD cards Ex. CW1/H&I, Certified true copy of resolution EX. CW1/A.
1.1. The accused pleaded not guilty and taken a defence that the cheque was given to Kuldeep Chand as security. He
admitted that the said Kuldeep Chand had taken a loan from the complainant and the accused stood surety for that loan
and that the cheque was given at that time. He wanted to lead defence evidence. However, despite being given
opportunities, the accused failed to lead any defence evidence.
Discussion
1.2. In the final arguments, ld. counsel for the accused raised certain technical issues. I have considered the said
issues and gone through the record. I am of the considered view that such technical objections can not help the accused. I
will deal with all the objections one by one.
Time barred debt:
1.3. It is the contention of the accused that loan was dated 19.06.2005 whereas cheque is date 19.04.2009 and
therefore the loan becomes time barred.
1.4. Hon'ble Supreme Court in A.V. Murthy vs B.S. Nagabasavanna AIR 2002 S.C. 985 has observed as under:
"As the complaint has been rejected at the threshold, we do not propose to express any
opinion on this question as the matter is yet to be agitated by the parties. But, we are
of the view that the learned Sessions Judge and the learned Single Judge of the
High Court were clearly in error in quashing the complaint proceedings. Under
Section 118 of the Act, there is a presumption that until the contrary is proved, every
negotiable instrument was drawn for consideration. Even under Section 139 of the
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 1
Act, it is specifically stated 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 discharge, in whole or in part, of any debt or other liability. It is also pertinent to
note that under sub-section (3) of Section 25 of the Indian Contract Act, 1872, a
promise, made in writing and signed by the person to be charged therewith, or by
his agent generally or specially authorized in that behalf, to pay wholly or in part
a debt of which the creditor might have enforced payment but for the law for the
limitation of suits, is a valid contract. Moreover, in the instant, the appellant has
submitted before us that the respondent, in his balance sheet prepared for every year
subsequent to the loan advanced by the appellant, had shown the amount as deposits
from friends. A copy of the balance sheet as on 31st March 1997 is also produced
before us. If the amount borrowed by the respondent is shown in the balance
sheet, it may amount to acknowledgement and the creditor might have a fresh
period of limitation from the date on which the acknowledgement was made.
However, we do not express any final opinion on all these aspects, as these are matters
to be agitated before the Magistrate by way of defence of the respondent.
This is not a case where the cheque was drawn in respect of a debt or liability, which
was completely barred from being enforced under law. If for example, the cheque was
drawn in respect of a debt or liability payable under a wagering contract, it could have
been said that that debt or liability is not legally enforceable as it is a claim, which is
prohibited under law. This case is not a case of that type. But we are certain that at this
stage of the proceedings, to say that the cheque drawn by the respondent was in
respect of a debt or liability, which was not legally enforceable, was clearly illegal and
erroneous."
1.5. Hon'ble Supreme Court in the above case has clarified three points:
i. On the legal issue of limitation, complaint could not have been dismissed in
view of Section-118 and 139 NI Act and that accused had to establish the contrary;
ii. Section-25(3) may be applicable;
iii. Factual situations might have been covered under Section 18 Limitation Act
as amount was shown in the balance sheet;
Clearly, the portion in the said judgment related to the balance sheet was indicating to application of Section-18
Limitation Act. Section-25(3) Contract Act was noted in alternative and not on the basis of any acknowledgement in the
balance sheet.
1.6. In my considered view, the controversy in the present case has to be resolved by taking into consideration
Section-25 of Contract Act.
Section-29(1) of The Limitation Act reads as under:
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 2
"(1) Nothing in this Act, shall affect section 25 of the Indian Contract Act,1872."
Section-25(3) Cotract Act reads as under:
"An agreement made without consideration is void, unless -
(3) it is a promise, made in writing and signed by the person to be charged therewith
or by his agent generally or specially authorised in that behalf, to pay wholly or in
part debt of which the creditor might have enforced payment but for the law for the
limitation of suits. In any of these cases, such an agreement is a contract.
Illustrations
(e) A owes B Rs. 1,000, but the debt is barred by the Limitation Act. A signs a written
promise to pay B Rs. 500 on account of the debt. This is a contract."
1.7. Under Section 25(3) a debtor can enter into an agreement in writing to pay the whole or part of a debt of which
the creditor might have enforced payment, but for the law of limitation. While, mere acknowlgedement under Section 18
of the Limitation Act, in order to be valid, must be made before the expiry of the period of limitation, a promise, under
Section 25(3) to pay the debt may be made even after the debt has become barred by the limitation. A time-barred debt can
form a good consideration because, the debt is not extinguished although the remedy is lost. Section 25(3) does not to
prove a dead right but to resuscitate the remedy to enforce the payment by a suit. The right of the lender to receive
payment and the obligation of borrower to repay never dies by lapse of time. What dies is the remedy.
Thus, even in a case where a claim for recovery through a civil suit has become barred by limitation a promise
made in writing and signed by the executant to pay becomes an agreement supported by consideration. Such an agreement
is enforceable under law.
Still further, by virtue of the provisions of Section 46 of the Negotiable Instruments Act, the delivery of a cheque
completes the transaction. By the factum of delivery, the written promise matures into an enforceable contract. This is so
despite the fact that the limitation for recovery of the amount may have expired before the making of the written promise.
The delivery of the cheque to the drawee creates a right to recover the money. On the cheque being dishonoured the
person concerned becomes liable for prosecution. The execution of the cheque is an acknowledgement of a legally
enforceable liability and when it is dishonoured the consequences of prosecution and punishment follow.
1.8. Hon'ble Supreme court in K.P.O. MOIDEENKUTTY HAJEE vs PAPPU MANJOORAN & ANR. 1996
SCALE (2)784 has observed:
".....Take for instance, a pronote executed for a time-barred debt. It is still a valid
consideration......"
1.9. Reliance placed upon Pranjan Kumar Jain vs Ravi Malhotra 2010(2) DCR 104, Zaheeda Kazi vs Mrs. Sharina
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 3
Ashraff Khan 2008(1) DCR 287, S. Kamatchi & Ors vs M/s Arkaa Medicament 2010(1) DCR 109, Kamalaksha Laxman
Prabhu vs S.G. Mayekar, 2009(1) DCR 426 can not help the accused.
S. Kamatchi(supra) apart from being distinct on its fact runs directly counter to the earlier decision of the same
Hon'ble High Court in A.R.M. Nizmathuallah vs Vaduganathan 2008 CriLJ 880;
Zaheeda Kazi(supra) and Kamalaksha(supra) heavily relied upon Smt. Ashwini Satish Bhat vs Shri Jeevan
Divakar Lolienkar 2000 (5) BomCR 9 which did not consider Section-25(3) Contract Act. Whereas Purushottam Maniklal
Gandhi vs Manohar K. Deshmukh And Anr 2007 (4) BomCR 404 after having considered Ashwini Satish Bhat(supra) and
Section-25(3) Contract Act held the complaint maintainable.
1.10. So far as Pranjan Kumar Jain(supra) is concerned, the same is entirly based upon application of Section-18
Limitation Act. This judgment relied upon Vijay Polymers Pvt. Ltd. & Anr. vs. Vinnay Aggarwal 162 (2009) DLT 23.
Vijay Polyners(supra) discussed only Section-18 Limitation Act and relied upon Ashwini Satish Bhat(supra).
I have already indicated that Ashwini Satish Bhat(supra) does not consider Section-25(3) Contract Act. Division
bench of the Hon'ble High Court of Kerala after noticing the dismissal of the SLP in Sasseriyil Joseph vs. Devassia 2001
Crl.LJ 24 has discussed the judgment in A.V. Murthy(supra) and overruled its earlier decision in Sasseriyil
Joseph(supra). Division Bench of Hon'ble High Court of Kerala in Ramakrishnan vs Parthasaradhy III (2003) BC 241
has held that:
"21. Mr. Benny Gervacis points out that the decision of this Court in Joseph's case has
the imprimatur of the Supreme Court. The Petition for Special Leave to Appeal
(Crl.)No. 1785 of 2001was dismissed vide order dated September 10, 2001. He
submits that their Lordships had heard the counsel for both sides and disposed of the
matter by a speaking order. It reads: "We have heard learned counsel for the petitioner.
We have perused the judgment of the High Court of Kerala in Criminal Appeal No.
161of 1994 confirming the judgment/order of acquittal passed by the Addl. Sessions
Judge, Thalassery in Criminal Appeal No. 212 of 1992 holding inter alia that the
cheque in question having been issued by the accused for due which was barred by
limitation the penal provision under Section 138 of the Negotiable Instruments Act is
not attracted in the case. On the facts of the case as available on the records and the
clear and unambiguous provision in the Explanation to Section 138 of the Negotiable
Instruments Act the judgment of the lower appellate court as confirmed by the High
Court is unassailed. Therefore, the Special Leave Petition is dismissed." On this basis
it is contended that the correctness of the view in Joseph's case cannot be doubted. On
the other hand, Mr. Mathew John points out that the subsequent decisions of the
Supreme Court militate against the contention raised by the counsel for the petitioner.
22. The matter appears to have been considered by their Lordships of the Supreme
Court in A.V. Murthy v. B.S. Nagabasavanna (2002 (2) SCC 642). On a perusal of the
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 4
judgment, we find that the matter was considered by the Supreme Court in the context
of the provisions contained in the Negotiable Instruments Act as well as those of the
Contract Act. However, the issue of limitation was left open. But what deserves
mention is that even though the learned Sessions Judge had quashed the proceedings
as the limitation in recovering the money had expired and the order had been upheld
by the Karnataka High Court, yet, their Lordships had reversed the decision. This is
indicative of the fact that the accused was not entitled to escape liability to suffer
penalty merely on account of the fact that the limitation for recovery of the amount
had expired before the date of the issue of the cheque. When examined in this light,
the dismissal of the SLP in Joseph's case cannot be said to be the enunciation of law
which may be binding under Article 141. In fact, a perusal of the order shows that it
was wholly on "the facts of the case as available on the records" that their Lordships
had dismissed the Special Leave Petition."
1.11. Be that as it may. Pranjan Kumar Jain(supra) and Vijay Polyners(supra) can not help the accused in the peculiar
facts of this case which are noted hereinafter. In the present case, there is no necessity to discuss Section-18 or 19 of the
Limitation Act. By virtue of Section-29(1) Limitation Act, Section-25 Contract Act has been saved. If a case falls under
Section-25(3) Contract Act, then only the requirement of that section has to be fulfilled and not of Section-18 Limitation
Act. It is now well settled law that statutory provisions have to prevail.
1.12. Certain distinct features of the present case have to be noted:
i.Accused has admitted that he stood surety for the principal borrower for a loan of Rs.
30,000/-;
ii.Accused has not taken the defence that the amount was paid by the principal
borrower;
iii.Accused is a surety and not the principal borrower;
iv.Amount of cheque was for principal amount + penalty amount;
v.Accused has not led any evidence to controvert the stand of the complainant
meaning thereby that no contrary facts have been brought on record by the accused.
The position is similar to that in the A.V. Murthy(supra) where Hon'ble Supreme
Court had declined to accept the quashing order on the legal issue of limitation. It
would be another thing if accused brought on record such material to establish the fact
that the can not come under the purview of Section-25(3) Contract Act;
vi.Till the time of disposal of this complaint, law in respect of liability is changed.
Now, Hon'ble Supreme Court vide its three judges bench decision has explained that
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 5
even the existence of legally enforceable debt or liability is also a mandatory
presumption(see discussion on law points hereinafter).
1.13. Contention of accused is rejected.
1.14. The second contention that a surety can not be made liable is being noted only for a
summary rejection in view of Hon'ble Supreme Court decision in I.C.D.S. Ltd. v. Beena Shabeer
and Anr.2002 Crl.L.J. 3935.
1.15. Since evidence of complainant has remained unimpeached, it was for the accused to controvert the stand of the
complainant in respect of liability. Accused has failed to dispute any material or circumstance brought on record by the
complainant. Requirements of Section-138 NI Act being satisfied in the present case, the complaint is bound to succeed in
the absence of any contrary material.
1.16. Complainant has established its case by way of affidavit supported by documentary proof discussed above. The
mandatory presumptions of law arising under Section-118, 139, 146 NI Act and Section-27 General Clauses Act are in
favour of the complainant. Accused has failed to rebut the mandatory presumptions of law.
1.17. The complaint has to succeed.
The Procedure:
2. Hon'ble High Court of Delhi has laid down the procedure for trial of the offences punishable U/s 138 NI Act in
the case title Rajesh Aggarwal Vs. State decided on 28.07.2010 as follows:
"17. The summary trial procedure to be followed for offences u/s 138 N.I.
Act would thus be as under:
Step I : On the day complaint is presented, if the complaint is accompanied
by affidavit of complainant, the concerned MM shall scrutinize the complaint
& documents and if commission of offence is made out, take cognizance &
direct issuance of summons of accused, against whom case is made out.
Step II : If the accused appears, the MM shall ask him to furnish bail bond to
ensure his appearance during trial and ask him to take notice u/s 251 Cr.
P.C. and enter his plea of defence and fix the case for defence evidence,
unless an application is made by an accused under section 145(2) of N.I. Act
for recalling a witness for cross examination on plea of defence.
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 6
Step III : If there is an application u/s 145(2) of N.I. Act for recalling a
witness of complainant, the court shall decide the same, otherwise, it shall
proceed to take defence evidence on record and allow cross examination of
defence witnesses by complainant.
Step IV : To hear arguments of both sides.
Step V : To pass order/judgment."
Retrospective effect of the amended provisions:
Law in respect of retrospective effect of amended provisions in the NI Act has already been settled by
the Hon'ble Supreme Court holding that Section-143 to 147 NI Act shall be applicable even to the cases pending on the
date when these provisions came into effect.
It is apt to quote Hon'ble Supreme Court in M/s Mandvi Co-op Bank Ltd vs Nimesh B thakore,
(2010) 3 SCC 83:
"28. Mr. Ranjit Kumar also made a feeble attempt to contend that the provisions of
sections 143 to 147 inserted in the Act with effect from February 6, 2003 would
operate prospectively and would not apply to cases that were pending on that date. The
High Court has considered the issue in great detail and has rightly taken the view that
the provisions of sections 143 to 147 do not take away any substantive rights of the
accused. Those provisions are not substantive but procedural in nature and
would, therefore, undoubtedly, apply to the cases that were pending on the date
the provisions came into force. We are fully in agreement and in order to buttress the
view taken by the High Court we will only refer to a decision of this court."
In case titled Gurpreet Singh Vs. M/s. Ranbaxy Laboratories Ltd. & decided on 02 August, 2010, Hon'ble High
Court of Delhi has observed and held as under:
"3. I have perused the orders passed by learned MM after summoning of accused. A
perusal of these orders would show that the learned MM proceeded with the case
as if it was a summon trial case and after issuing notice asked the complainant to
again lead evidence despite the fact that the evidence by way of affidavit of
complainant was already on record. The Legislature has specifically made offence
under Section 138 of the Negotiable Instruments Act as a summary trial and once the
accused is summoned, he has to state his plea and state his defence in terms of Section
263 (g) read with Section 251 Cr.P.C. The summary trial proceedings can be converted
to summon trial case only under two circumstances, firstly when the Court comes to a
conclusion that the sentence of one year would be inadequate and it was a case where
sentence of more than one year may be required to be awarded, secondly when the MM
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 7
is of the view for some reason (to be recorded) that the case should be tried as a
summon trial. In the present case none of the two things happened. The learned MM
did not pass an order as to why the case was to be converted to a summon trial. The
learned MM was bound to follow procedure of summary trial and was bound to treat
the affidavit and evidence already filed by the complainant on record as the evidence
sufficient to convict the accused unless accused had pleaded a tenable defence and
accused was prepared to prove the defence. The learned MM therefore went wrong
in posting the case repeatedly for complainant's evidence, without asking the
accused/petitioner as to what was the his defence. Since the learned trial court
committed a grave error in treating this case as a summon trial case, the order of
learned MM suffered from jurisdictional error and was liable to be set aside in
revision............Directions are hereby given to learned MM to treat the present case as a
summary trial case and the complainant's evidence, already given during inquiry at pre-
summoning stage should be treated as evidence at post-summoning stage in terms of
Section 145 of Negotiable Instruments Act and in terms of Section 263(2) of Cr.P.C
(summary trial proceedings) and the petitioner should be asked to lead evidence in
defence. (See judgment titled "Rajesh Aggarwal v State and another Crl.M.C. 1996 of
2010 decided on 28th July, 2010)."
In M/S. KALUCHA PAPER HOUSE & ANR. Vs. M/S. MAHAVIR PAPERS & ANR. Criminal M.C. No.3687
of 2009 & C.M. Appl. No.12526 of 2009 decided on 02.08.2010, Hon'ble High Court of Delhi has held that:
"2. Both the above cited cases relied upon by the petitioners are of the period when
amendment to Negotiable Instruments Act had not been made and the cases under
Negotiable Instruments Act were summon trial cases. However, after the amendment in
Negotiable Instruments Act, the cases under Negotiable Instruments Act are summary
trial cases and in view of the judgment of this court passed in Criminal M.C. No.1996
of 2010 titled Rajesh Aggarwal Vs. State & Anr. dated 28th July, 2010, the procedure
being followed by learned Metropolitan Magistrate in this case was not a correct
procedure. The witnesses of the complainant could not have been recalled unless
the petitioner had made an application under Section 145 (2) of Negotiable
Instruments Act and had taken a specific plea why he was not liable to pay the
cheque amount. The procedure being following by the learned trial court of
repeatedly fixing the complaint case again for evidence was, therefore, faulty and not
in accordance with provisions of summary trial as given in Criminal Procedure Code
and Negotiable Instruments Act.
3. I consider that the trial under Section 138 of Negotiable Instruments Act is
mandatorily to be proceeded in a summary manner and it is the accused who has to
disclose his defence and make an application before the trial court as to why he wants
to recall the complainant or other witnesses for cross-examination. The evidence
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 8
adduced before summoning has to be considered sufficient during trial and unless an
application is made under Section 145 (2) of the Negotiable Instruments Act, there is
no provision for re-examining complainant witnesses. I, therefore, consider that this
case is required to be sent back for trial according to law as laid down by this court in
Rajesh Aggarwal's case (supra)."
Hon'ble High Court of Delhi in Ishan Systems Pvt. Ltd. & Ors. Vs. Vijaya Bank, Crl.MC 3871/2010, dt.
27.01.2011, has observed that:
"3. This Court in Rajesh Agarwal v State & Another 171(2010) DLT 51 had
made it categorically clear that when summons are issued by the court of MM
under Section 138 NI Act, the accused at the time of taking notice under Section
251 Cr.P.C. has to disclose his defence to the court of MM and if the accused
does not want to lead evidence in support of his defence, the court will decide the
complaint on the basis of evidence of complainant and on the basis of defence
raised by the accused, whether the accused was liable to be convicted or not. The
proceedings under Section 138 of NI Act are summary in nature and the accused
has to disclose to the court of MM his defence and the court of MM is competent
enough to decide whether the accused is liable to be convicted under Section on
138 NI Act or not in light of defence raised by him. The accused instead of
disclosing his defence to the court of MM cannot approach this Court and disclose his
defence to this Court and ask to quash the complaint under Section 138 of NI Act in
view of the defence disclosed to this Court. In India, we have division of work in the
courts. The High Court cannot transport the cases triable by the Magistrate to itself
in the garb of exercising jurisdiction under Section 482 Cr.P.C and start deciding
whether a complaint under Section 138 NI Act was maintainable or not. In fact, the
Magistrates are appointed for this very purpose only. It is the MM who has to exercise
this jurisdiction and to decide, after disclosure of defence by the accused, whether the
complaint was maintainable or not. It is only when the accused is not satisfied with
the decision of the Magistrate, the remedy of appeal, revision etc lies. No accused can
ask the High Court to transport the complaint to itself and adjudicate upon whether
the complaint was maintainable in light of the defence raised by him for the first time
before the High Court, when he could very well raise the same defence before the
court of learned MM."
In ORG INFORMATICS LTD. Vs STATE & ANR. Crl. M. C. No.2409/2011 decided on 01.08.2011 Hon'ble
High Court of Delhi has held that:
11. At the outset, it may be pertinent here to mention that although Section 482 Cr.P.C.
starts with a non obstante clause and reiterates powers of the High Court to pass any
order to prevent the abuse of process of law or to pass any such order to secure the
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 9
ends of justice, is not conditioned or curtailed by any provision but still Court has the
discretion to see whether the invocation of Section 482 Cr.P.C. is justified or not. It
means that even if a party has preferred a revision petition under Section 397 Cr.P.C.,
he can still prefer a petition under Section 482 Cr.P.C. if the ingredients for the
application of Section 482 Cr.P.C. are satisfied, namely, the fact that the situation is
such which would warrant the interference by the High Court for the purpose of
preventing the abuse of processes of law or to secure the ends of justice. In the
instant case, I do not find that there is any possibility of interference by the High
Court as there is no abuse of processes of law nor does any order require to be passed
that is contrary to the one which has been passed by the Sessions Court which directed
the petitioners to seek a recall of witnesses under Section 145 (2) of the Negotiable
Instrument Act for the purpose of establishing his defence. It may also be pertinent
here to mention that Section 397 sub clause 3 of Cr.P.C. prohibits a party from filing a
second revision petition. The present petitioners have already chosen to file a petition
before the Sessions Court and having done so, they are prohibited from filing a second
revision petition even though it has been termed as a petition under section 482
Cr.P.C. Having said so, a perusal of the provisions under Section 143 read with
Section 145 of the Negotiable Instrument Act would make it amply clear that the
concern of the legislature, while incorporating Section 143 and 145 by way of
amendment w.ef. 06.02.2003, was essentially to curtail the delay which was occurring
in the disposal of these complaints under Section 138 of the Negotiable Instrument
Act. The mandate of the law was that the case should be tried summarily as far as
possible and further, the trial should be conducted on day to day basis and preferably
be disposed of within a period of six months. In the instant case, the entire effort of
the petitioners seems to be to scuttle the trial and indulge in dilatory tactics. The
petitioners had already brought the matter before the High Court earlier in the first
round and when, it was disposed of by Hon'ble Mr. Justice A. K. Pathak on
29.09.2010. In the present case also the learned Additional Sessions Judge has
specifically observed that no prejudice is likely to be caused to the petitioners in the,
the trial proceeds according to summary procedure and the only thing that is to be
done by the present petitioner is to file their statement of defence and then seek a
recall of the complainant/respondent witness for the purpose of cross-examination as
the complainant has already made a statement that the evidence which has been filed
by way of affidavit at the stage of pre summoning may also be treated as evidence at
the stage of post summoning and therefore, in my considered view the only purpose of
filing the present petition is to indulge in dilatory tactics, which cannot be permitted
by the Court. The plea that the learned Trial Court has reviewed its own order or that
the judgment title Rajesh Agarwal case (Supra) has been applied retrospectively have
already been dealt with by the Sessions Court. I feel that it need not be gone into
afresh by this Court. "
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 10
Clearly, it is immaterial that the case was instituted prior to the pronouncement of judgment in Rajesh
Agarwal (supra). As long as evidence by way of affidavit given at the pre summoning stage is available on record, the
same can be read in evidence in the trial by virtue of Section-145(1) NI Act and therefore accused has to disclose and
prove his defence. Provisions being procedural in nature can apply with retrospective effect as held by the Hon'ble
Supreme Court in Mandavi (supra) and matter can not be fixed for post summoning complainant's evidence as held by the
Hon'ble High court of Delhi in Gurpreet Singh (supra) and M/s Kalucha Papers(supra).
In view of these authoritative pronouncements, I am inclined to hold that no one can claim that the case
was instituted prior to the pronouncement of judgment in Rajesh Agarwal (supra), ratio of Rajesh Aggarwal (Supra)
cannot be made applicable to the present proceedings. The ratio has to be applied.
3. Consequentely, this judgment.
Discussion on Legal provisions:
4. There are some mandatory presumptions of law arising in favour of the complainant. The same may be
summarized as under:
4.1 Section-118 of Negotiable Instruments Act reads 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, endorsed,
negotiated or transferred, was accepted, endorsed, negotiated or transferred for
consideration;"
Presumptions are:
i. Cheque was drawn for consideration;
ii. Cheque was transferred for consideration;
iii. Cheque was accepted for consideration.
4.2. Section-139 of Negotiable Instruments Act reads as under:
"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."
Presumptions are:
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 11
i. Holder of the cheque has lawfully received the cheque, meaning thereby that the
holder was in lawful possession of the cheque;
ii. The cheque was given in discharge of any debt or liability;
iii. Legally enforceable debt or liability was in existence at the time of issuance of the
cheque;
(contrary view has been overruled by the three judges bench of Hon'ble Supreme Court in
Rangappa vs S. Mohan (2010) 11 SCC 441) with the observation:
"14. In light of these extracts, we are in agreement with the
respondent-claimant that the presumption mandated by
Section 139 of the Act does indeed include the existence
of a legally enforceable debt or liability. To that extent,
the impugned observations in Krishna Janardhan Bhat
(supra) may not be correct. However, this does not in any
way cast doubt on the correctness of the decision in that
case since it was based on the specific facts and
circumstances therein.")
iv. The cheque was of the nature as described in section-138;
v. The cheque was drawn by the person who was maintaining the account pertaining
to the cheque;
vi. Amount of money mentioned in the cheque was intended to be given;
4.3. Section-146 of Negotiable Instruments Act reads as under:
"146. Bank's slip prima facie evidence of certain facts.-
The court shall, in respect of every proceeding under this Chapter, on production of
bank's slip or memo having thereon the official mark denoting that the cheque has
been dishonoured, presume the fact of dishonour of such cheque, unless and until such
fact is disproved."
Presumptions are:
i. The cheque has been dishonoured;
ii. The cheque has been so dishonoured for the reason mentioned in the memo.
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 12
4.4. Section-27, General Clauses Act reads as under:
"27. Meaning of service by post -
Where any (Central Act) or Regulation made after the commencement of this Act
authorizes of requires any document to be served by post, where the expression
"serve" or either of the expressions "give" or "send" or any other expression in used,
then, unless a different intention appears, the service shall be deemed to be effected by
properly addressing pre-paying and posting by registered post, a letter containing the
document, and unless the contrary is proved, to have been effected at the time at
which the letter would be delivered in the ordinary course of post."
Presumptions are:
i. Letter has been served upon the accused;
ii. The same is served within the normal reasonable time;
iii. The content of the letter was within the knowledge of the accused. (see a three
judges bench decision of Hon'ble Supreme Court if India in Harcharan Singh vs
Shiv Rani & Ors. AIR 1981 SC 1248).
In this respect, a three judges bench of Hon'ble Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed
and Another (2007) 6 SCC 555 has held that:
"17. It is also to be borne in mind that the requirement of giving of notice is a clear
departure from the rule of Criminal Law, where there is no stipulation of giving of a
notice before filing a complaint. Any drawer who claims that he did not receive the
notice sent by post, can, within 15 days of receipt of summons from the court in
respect of the complaint under Section 138 of the Act, make payment of the
cheque amount and submit to the Court that he had made payment within 15
days of receipt of summons (by receiving a copy of complaint with the summons)
and, therefore, the complaint is liable to be rejected. A person who does not pay
within 15 days of receipt of the summons from the Court along with the copy of the
complaint under Section 138 of the Act, cannot obviously contend that there was no
proper service of notice as required under Section 138, by ignoring statutory
presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the
Evidence Act. In our view, any other interpretation of the proviso would defeat the
very object of the legislation. As observed in Bhaskarans case (supra), if the giving of
notice in the context of Clause (b) of the proviso was the same as the receipt of notice
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 13
a trickster cheque drawer would get the premium to avoid receiving the notice by
adopting different strategies and escape from legal consequences of Section 138 of the
Act.
18. In the instant case, the averment made in the complaint in this regard is: Though
the complainant issued lawyers notice intimating the dishonour of cheque and
demanded payment on 4.8.2001, the same was returned on 10.8.2001 saying that the
accused was out of station. True, there was no averment to the effect that the notice
was sent at the correct address of the drawer of the cheque by registered post
acknowledgment due. But the returned envelope was annexed to the complaint and it
thus, formed a part of the complaint which showed that the notice was sent by
registered post acknowledgment due to the correct address and was returned with an
endorsement that the addressee was abroad. We are of the view that on facts in hand
the requirements of Section 138 of the Act had been sufficiently complied with and the
decision of the High Court does not call for interference."
On denial of consideration:
5. Without any doubt, in a criminal case, the prosecution has to stand on its own lags. No blemishes in the story of
the accused will give a right to the complainant to claim that he has establish his case. Even accused can always rely upon
the material and circumstances brought on record by the complainant. However, there must be something more than a bare
denial or a mere explanation.
5.1. It is a settled law that a mere denial of passing off consideration is not sufficient. In Bharat Barrel & Drum
Manufacturing Company v. Amin Chand Pyarelal, (1993) 3 SCC 35 (Para. 12) it has been held that:
"Upon consideration of various judgments as noted herein above, 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 non-existence 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 improbably 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 the 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
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 14
upon the defendant to disprove the existence of consideration by leading direct evidence as
the existence of negative evidence is neither possible nor contemplated and even if led, is to
be seen with a doubt. The bare denial of the passing of the consideration apparently does
not appear to be any defence. Something which is probable has to be brought on record
for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the
presumption, the defendant has to bring on record such facts and circumstances upon
consideration of which the court may either believe that the consideration did not exist
or its non-existence was so probable that a prudent man would, under the
circumstances of the case, act upon the plea that it did not exist."
5.2. In the present case, no such circumstances have been brought on record which suggest the inference that
consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the
case, act upon the plea that it did not exist.
5.3. Further, a mere explanation given by the accused is also not sufficient. In case titled V S Yadav vs Reena CrLA
No. 1136/2010 decided on 21.09.2010, Hon'ble High Court of Delhi has observed that:
"3. The appellant had taken a stand that no reply to the notice of legal demand
was sent by the respondent, instead, envelopes with blank sheets in it were sent by
the respondent. In her examination under Section 281 Cr. P.C. she did not deny
issuance of cheques, but, took a defence that cheque were issued as security for
seeking loan but no loan was advanced and the cheques were therefore without
consideration. The learned MM observed that conviction under Section 138 of
N.I. Act cannot be made acting on evidence of complainant and considering the
presumption under Section 139 of N.I. Act. The complainant has to prove beyond
reasonable doubt the debt or liability of the accused. Learned MM observed
that complainant had not specified the date of giving loan and a reasonable
man would remember the date of giving substantial sum of money as loan to
other and this blissful forgetness of the date by the complainant raised doubt
about the liability of the accused, more so, in view of the stand taken by the
accused that the cheques were issued as security and the same were never
returned.
*******
5. It must be borne in mind that the statement of accused under Section 281 Cr. P.C. or under Section 313 Cr. P.C. is not the evidence of the accused and it cannot be read as part of evidence. The accused has an option to examine himself as a witness. Where the accused does not examine himself as a witness, his statement under Section 281 Cr. P.C. or 313 Cr. P.C. cannot be read as evidence of the accused and it has to be looked into only as an explanation of the incriminating circumstance and not as evidence. There is no presumption of law that M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 15 explanation given by the accused was truthful. In the present case, the accused in his statement stated that he had given cheques as security. If the accused wanted to prove this, he was supposed to appear in the witness box and testify and get himself subjected to cross examination. His explanation that he had the cheques as security for taking loan from the complainant but no loan was given should not have been considered by the Trial Court as his evidence and this was liable to be rejected since the accused did not appear in the witness box to dispel the presumption that the cheques were issued as security. Mere suggestion to the witness that cheques were issued as security or mere explanation given in the statement of accused under Section 281 Cr. P.C., that the cheques were issued as security, does not amount to proof. Moreover, the Trial Court seemed to be obsessed with idea of proof beyond reasonable doubt forgetting that offence under Section 138 of N.I. Act was a technical offence and the complainant is only supposed to prove that the cheques issued by the respondent were dishonoured, his statement that cheques were issued against liability or debt is sufficient proof of the debt or liability and the onus shifts to the respondent/ accused to show the circumstances under which the cheques came to be issued and this could be proved by the respondent only by way of evidence and not by leading no evidence.
*******
7..............The Trial Court in this case turned a blind eye to the fact that every accused facing trial, whether under Section 138 of N.I. Act or under any penal law, when charged with the offence, pleads not guilty and takes a stand that he has not committed the offence. Even in the cases where loan is taken from a bank and the cheques issued to the bank stand dishonoured, the stand taken is same. Mere pleading not guilty and stating that the cheques were issued as security, would not give amount to rebutting the presumption raised under Section 139 of N.I. Act. If mere statement under Section 313 Cr. P.C. or under Section 281 Cr. P.C. of accused of pleading not guilty was sufficient to rebut the entire evidence produced by the complainant/ prosecution, then every accused has to be acquitted. But, it is not the law. In order to rebut the presumption under Section 139 of N.I. Act, the accused, by cogent evidence, has to prove the circumstance under which cheques were issued. It was for the accused to prove if no loan was taken why he did not write a letter to the complainant for return of the cheque. Unless the accused had proved that he acted like a normal businessman/prudent person entering into a contract he could not have rebutted the presumption u/s 139 N.I. Act. If no loan was given, but cheques were retained, he immediately would have protested and asked the cheques to be returned and if still cheques were not returned, he would have served a notice as complainant. Nothing was proved in this case."
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 16 In Rajesh Agarwal vs State decided on 28.07.2010, Hon'ble High Court of Delhi has observed that:
"9. An argument is raised that the accused, under Article 21 of Constitution of India, has a right of silence in a criminal trial and therefore he cannot be forced to disclose his defence. This argument is misconceived in view of Section 106 of Indian Evidence Act. Since an offence under section 138 of Negotiable Instrument Act is technical in nature and defence which an accused can take are inbuilt, like the cheque was given without consideration, the accused was not Director at that time, accused was a sleeping partner or a sleeping Director, cheque was given as a security etc. etc., the onus of proving these defences is on the accused alone, in view of section 106 of Evidence Act. Since the mandate of Legislature is trial of such cases in a summary manner, the evidence already given by the complainant by way of affidavit is sufficient proof of the offence and this evidence is not required to be given again in terms of section 145(1) of N.I. Act and has to be read during the trial. The witnesses i.e. the complainant or other witnesses can be recalled only when accused makes an application and this application must disclose the reason why accused wants to recall the witnesses and on what point witness is to be cross examined. One must not forget that the offence under section 138 of N.I. Act is not of the kind of offence as in IPC where the State prosecutes a person for offence against the society. The offence under section 138 of N.I. Act is an offence in the personal nature of the complainant and it is an offence made under N.I. Act so that the trust in commercial transactions is not destroyed because of the dishonour of cheques. When it is within the special knowledge of the accused as to why he is not to face trial under section 138 N.I. Act, he alone has to take the plea of defence and burden cannot be shifted to complainant. There is no presumption that even if an accused fails to bring out his defence, he is still to be considered innocent. If an accused has a defence against dishonour of the cheque in question, it is he alone who knows the defence and responsibility of spelling out this defence to the court and then proving this defences is on the accused. I, therefore, consider that the proper procedure to be followed by MM is that soon after summoning, the accused must be asked to disclose his defence & his plea should be recorded. Where an accused takes no defence and simply says "I am innocent", there is no reason for the MM to recall the complainant or witnesses during summary trial and the evidence already given by the complainant has to be considered sufficient and the trial court can ask the accused to lead his evidence in defence on the plea of innocence as the evidence of the complainant is already there. In a summary trial, a complainant or his witness cannot be recalled in the court for cross examination only for the sake of pleasure. Once the complainant has brought forward his case by giving his affidavit about the issuance of cheque, dishonour of cheque, issuance of demand notice etc., he can be cross examined only if the accused makes an application to the court as to on what point he wants to cross examine the witness (es) and then only the court shall recall the witness by recording reasons thereto."
M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 17 Result:
6. I accordingly return a finding of guilt against the accused person.
7. The accused Suresh Kumar Jain is hereby convicted for the offence as punishable under Section-138 NI Act, 1881 charged in the present complaint case.
8. Let the convict be heard on the point of sentence.
9. A copy of this order be placed on the official website of the District Court.
(Rakesh Kumar Singh) MM(NI Act)-01, Central 31.10.2011 M/s Upvan Leasing Pvt Ltd vs Suresh Kumar Jain CC No. 3439/10 18