Delhi District Court
Anil Kumar vs . on 6 September, 2021
IN THE COURT OF METROPOLITAN MAGISTRATE (NI-05),
WEST, TIS HAZARI COURTS, NEW DELHI
Presided over by- Sh. Devanshu Sajlan, DJS
Case No. - 12130/2016
Unique Case ID - DLWT020047472014
No.
In the matter of :-
Anil Kumar,
S/o Sh. Jaivir Singh
R/o H.No.16/2, Shanti Nagar
Bhiwani, Haryana. ... Complainant
VS.
Sh. Mukesh Chawla,
s/o Sh. Radhey Shyam Chawla
R/o A-169, New Moti Nagar
New Delhi - 110015 ... Accused
1. Name of Complainant : Sh. Anil Kumar
2. Name of Accused : Sh. Mukesh Chawla
3. Section 138, Negotiable
Offence complained of or proved :
Instruments Act, 1881.
4. Plea of Accused : Not Guilty
5. Date of Filing : 03.12.2014
6. Date of Reserving Order : 30.03.2021
7. Date of Pronouncement : 06.09.2021
8. Convicted
Final Order :
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Argued by: Sh. Naveen Kaushik, learned counsel for the complainant.
Sh. Amit Bhatia and Sh. Simranjeet Singh, learned counsels for the accused.
TABLE OF CONTENTS
A. Factual Matrix ..................................................................................... 2
B. Pre-Summoning Evidence & Notice .....................................................4
C. Complainant's Evidence .......................................................................4
D. Statement of Accused ............................................................................ 5
E. Ingredients of Offence and Discussion ..................................................6
I. Contention 1: Loan of more than INR 20,000 in cash is prohibited
under law
II. Contention 2: The complainant did not have financial capacity to grant
the alleged loan.
IIA. Position of law - Financial capacity is relevant in cases of cash
transaction
IIB. Position of law - Financial capacity is not relevant where loan
transaction itself is otherwise established through acknowledgement
executed by the accused
IIC. Objections raised to the admissibility of Ex. CW1/1A (writing on
stamp paper acknowledging liability of the accused)
(i) Objection 1: The stamp paper does not bear the signature of the
complainant and is not notarized/ attested
(ii) Objection 2: The writing on stamp paper cannot be admitted in
evidence since the same is not duly stamped
IID. Conclusion - No need to consider the financial capacity of the
complainant in the present case considering specific documentary
evidence on record (Ex. CW1/1A).
F. Conclusion.............................................................................................. 20
__________________________________________________________________
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BRIEF STATEMENT OF REASONS FOR THE DECISION:-
A. FACTUAL MATRIX
1. The present complaint has been filed by Sh. Anil Kumar (hereinafter
"complainant") against Sh. Mukesh Chawla (hereinafter "accused") under
section 138 of the Negotiable Instruments Act, 1881 (hereinafter "NI Act").
2. The substance of allegations, as contained in the complaint, are as follows:
(a) The complainant claims that the accused, who had friendly relations with the
complainant, approached the complainant in month of June 2013 to borrow a sum
of Rs.7,00,000 for a period of one year, which was advanced by the complainant.
The loan was apparently advanced on the basis of friendly relations without any
interest. It is further alleged that in discharge of the loan liability of the same
amount, the complainant received a cheque of Rs. 7,00,000 dated 17.09.2014
drawn on Punjab National Bank, Kirti Nagar, from the accused. When the
complainant presented the cheque, the bank returned it unpaid, vide return memo
dated 19.09.2014, as no balance was available in the account. Thereafter, the
complainant sent a legal demand notice dated 13.10.2014 but the accused
allegedly failed to pay the cheque amount and therefore, the complainant filed the
present complaint.
(b) Accused's stance, on the contrary, is that he does not know the complainant and
that he had never taken any loan from him. He has contended that he had taken a
loan from a person called Mr. Bheem, to whom he had given two blank signed
cheques as security. Further, as per the accused, after repaying the loan amount to
Mr. Bheem, the accused had requested for return of his security cheques.
However, Mr. Bheem did not return his security cheques and initiated the present
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proxy litigation through the complainant.1 The accused has further contended that
a person named Mr. Suresh had filed one more complaint case against the accused
involving the other security cheque which the accused had given to Mr. Bheem,
and that the accused has already been acquitted in that case.
B. PRE-SUMMONING EVIDENCE & NOTICE
3. Pre-summoning evidence was led by the complainant and on finding a prima facie
case, the accused was summoned to face trial vide order dated 13.12.2014. On
appearance, the accused was served with the notice of accusation under Section
251, Code of Criminal Procedure, 1973 (hereinafter "CrPC") on 09.02.2016, to
which the accused pleaded not guilty and claimed trial. While the accused
admitted his signature on the cheque in question, he stated that rest of the
particulars were not filled by him. Further, the following plea of defence was
taken by the accused at this stage:
I have no financial dealing with the present complainant, and he is
dummy complainant on behalf of Sh. Suresh Kumar.
4. Thereafter, the accused moved an oral application u/s 145(2) NI Act which was
allowed on joint request of both the parties vide order dated 09.02.2016; and the
complainant was allowed to be cross-examined by the accused.
C. COMPLAINANT'S EVIDENCE
5. During the trial, the complainant has led the following oral and documentary
evidence against the accused to prove his case beyond reasonable doubt:
1
In the plea of defense taken under section 251 CrPC, the accused had stated that the
present complaint is a proxy litigation on behalf of a person named Mr. Suresh Kumar. However,
in the plea of defense taken under section 313 CrPC, the accused stated that the present complaint
case has been filed on behalf of Mr. Bheem, from whom he had taken some loan and given two
blank signed cheques as security.
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Oral Evidence
CW1 Anil Kumar (Complainant)
Documentary Evidence
Ex.CW1/1 Cheque in question bearing No.540284 dated
17.09.2014
Ex.CW1/1A Writing on stamp paper (dated 7.10.2013)
acknowledging the debt by the accused
Ex.CW1/2 Return memo dated 19.09.2014
Ex.CW1/3 Legal notice dated 13.10.2014
Ex.CW1/4 Postal Receipt and Tracking Report
Ex. CW1/5 Postal Receipt and Tracking Report
D. STATEMENT OF ACCUSED
6. Thereafter, before the start of defence evidence, in order to allow the accused to
personally explain the circumstances appearing in evidence against him, his
statement under Section 313 CrPC was recorded without oath. In reply, the
accused denied all the allegations against him and took the following plea of
defense:
I had some dealings with Mr. Bheem to whom I had given two cheques
(blank signed cheques). I had repaid full and final amount to Mr. Bheem
and asked my cheques to be returned but he did not return the cheques. I
do not know the complainant and have not taken any loan from him. I do
not know how the cheque in question reached the complainant. The said
cheque has been misused against me. One Mr. Suresh had filed one case
against me involving the another cheque which I gave to Mr. Bheem. That
case has already been dismissed in the Guhana court. The said case was
pending along with the present case in this same court which was later on
transferred to the court in Guhana.
In the said deposition, the accused's primary point was that he had taken a
loan from a person called Mr. Bheem, to whom he had given two blank signed
cheques as security. Thereafter, after repaying the loan amount to Mr. Bheem, the
accused had requested for return of his security cheques. However, Mr. Bheem
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did not return his security cheques and initiated the present proxy litigation
through the complainant.
7. The accused did not lead any evidence in his defense. However, he had moved an
application for taking on record a judgment dated 17.10.2018, passed by Sh.
Rakesh Kadian, Ld. Judicial Magistrate, Gohana Court, which pertained to a case
under section 138 NI Act against the accused filed by a person named Suresh
Kumar. The said application was allowed, and the said judgment was exhibited as
Ex X-1 (Colly). Thereafter, the matter was listed for final arguments. Sh. Naveen
Kaushik, learned counsel, argued on behalf of the complainant. Sh. Amit Bhatia
and Sh. Simranjeet Singh, learned counsels, argued on behalf of the accused. I
have heard the learned counsels on both the sides and have given my thoughtful
consideration to the material appearing on record.
E. INGREDIENTS OF OFFENCE AND DISCUSSION
8. Before dwelling into the facts of the present case, it would be apposite to discuss
the legal standards required to be met by both sides. In order to establish the
offence under Section 138 of NI Act, the prosecution must fulfil all the essential
ingredients of the offence, as highlighted below:-
First Ingredient: The cheque was drawn by a person on an account maintained
by him/her for payment of money and the same is presented for payment within a
period of 3 months from the date on which it is drawn or within the period of its
validity;
Second Ingredient: The cheque was drawn by the drawer for discharge of any
legally enforceable debt or other liability;
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Third Ingredient: 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;
Fourth Ingredient: 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 thirty days of the receipt of information of the dishonour of cheque from
the bank;
Fifth Ingredient: The drawer fails to make payment of the said amount of money
within fifteen days from the date of receipt of notice.
9. In addition to the above, the conditions stipulated under Section 142 NI Act have
to be fulfilled.
10. Notably, the first, third, fourth and fifth ingredient have been duly proved
without there being any real controversy regarding the same:
(a) The complainant has proved the original cheque, Ex. CW1/1, which the accused
has not disputed as being drawn on the account of the accused. It is not disputed
that the cheque in question was presented within its validity period. The accused's
only contention is that the cheque in question was given as a blank signed cheque
which has been filled at a subsequent date by the complainant/ his associates and
the amount in the cheque has been manipulated. However, giving a blank signed
cheque does not erase the liability under the NI Act. If a signed blank cheque is
CC No. 12130/16 Anil Kumar v. Mukesh Chawla 7 of 21
voluntarily presented to a payee, towards some payment, the payee may
subsequently fill up the amount and other particulars (Bir Singh v. Mukesh
Kumar, (2019) 4 SCC 197, ¶ 34). This, in itself, would not invalidate the cheque
(Ibid). The onus would still be on the accused to prove that the cheque was not in
discharge of a debt or liability (Ibid).
(b) The cheque in question was returned unpaid vide return memo Ex. CW1/2 due to
the reason, "Funds insufficient".
(c) The complainant has proved on record legal notice Ex. CW1/3 dated 13.10.2014
and postal receipts, along with tracking reports, Ex. CW1/4 and Ex. CW1/5. The
accused has asserted in his statement under section 251 and 313 CrPC that he did
not receive the legal notice. This assertion, again, cannot help the accused in
escaping liability under section 138 NI Act, especially keeping in mind that the
summons issued by the court were served on the accused at the same address as
mentioned in the legal notice. It is settled law that an accused who claims that s/he
did not receive the legal notice, can, within 15 days of receipt of summons from
the court, make payment of the cheque amount, and an accused who does not
make such payment cannot 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 General Clauses Act and Section 114 of the Evidence Act
(C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555, ¶ 17).
(d) The fact that the payment was not made within 15 days of the receipt of the legal
notice is also not disputed. As such, on the basis of the above, the first, third,
fourth and fifth ingredient of the offence under Section 138 NI Act stands
proved against the accused.
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11. As far as the proof of second ingredient is concerned, the complainant is required
to prove that the cheque in question was drawn by the drawer for discharging a
legally enforceable debt. In the present case, the issuance of the cheque in
question is not denied. As per the scheme of the NI Act, once the accused admits
signature on the cheque in question, certain presumptions are drawn, which result
in shifting of onus on the accused.
12. The combined effect of section 118(a) NI Act and section 139 of the NI Act is
that a presumption exists that the cheque was drawn for consideration and given
by the accused for the discharge of debt or other liability. Both the sections use
the expression "shall", which makes it imperative for the court to raise the
aforesaid presumptions once the foundational facts required for the same are
proved (Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16). Further, it
has been held by the Hon'ble Apex Court in Rangappa v. Sri Mohan, (2010) 11
SCC 441 that the presumption contemplated under Section 139 of NI Act includes
the presumption of existence of a legally enforceable debt. In order to rebut the
statutory presumption u/s 139 NI Act, the standard of proof is that of
preponderance of probabilities, by which the accused is required to raise a
probable defence. To rebut the presumption, it is open to the accused to rely on
evidence led by him/her or the accused can also rely on the materials submitted by
the complainant or the circumstances upon which the parties rely in order to raise
a probable defence (Basalingappa v. Mudibasappa, (2019) 5 SCC 418).
13. In this case, the arguments raised by the learned counsel for the accused to rebut
the presumption are discussed below.
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I. Contention 1: Loan of more than INR 20,000 in cash is prohibited under
law
14. It was argued on behalf of the accused that Section 269 SS of Income Tax Act
prohibits a loan of more than INR 20,000 in cash, and accordingly, the existence
of the said provision creates a doubt that an amount of INR 7,00,000 would have
been given in cash as loan.
15. However, it is a settled position of law that the breach of Section 269 SS of the
Income Tax Act does not make such a transaction null & void (Sheela Sharma v.
Mahendra Pal, 2016 SCC OnLine Del 4696; Dilip Chawla v. Ravinder Kumar,
2017 SCC OnLine Del 9753). To further substantiate, the penalty for breach of
Section 269 SS of the Income Tax Act is provided under Section 271D of the
Income Tax Act, which does not provide that such a transaction would be null and
void. Accordingly, the present complaint case cannot be dismissed on this
account.
II. Contention 2: The complainant did not have financial capacity to grant
the alleged loan.
16. It has been contended by learned counsel for the accused that there is nothing on
record, other than the statement of the complainant, to show that he had advanced
the alleged loan of INR 7,00,000 to the accused. He submitted that no bank
records or ITR have been placed on record. It was further argued that exhibit
CW1/1A (stamp paper acknowledging factum of debt by the accused) is a forged
document since the said stamp paper was given in blank signed format as security
for the loan taken from Mr. Bheem). The accused's entire defense in relation to
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financial capacity is reproduced hereunder:
(a) The complainant (an MBA) was only earning Rs. 40,000 per month in 2012-2013.
Therefore, it is inconceivable that he will lend a huge amount of Rs. 7 lacs.
(b) The alleged loan amount is not disclosed in the ITR even though the complainant
is an ITR payee.
(c) The complainant has deposed that he had withdrawn about 70%-80% of Rs.7 lacs
from his bank account on different dates. However, the complainant has not
furnished any bank account statement to prove his financial capacity.
(d) The complainant has admitted that in the year 2012-2013, at multiple times, he
was not even having the closing monthly balance of Rs.5000/- in his bank account
which indicates that he did not have the funds to lend money.
(e) The complainant has submitted that he had married in the year 2012 and hence, he
had a lot of gifted money as well during that year. However, he did not call his
wife as witness, who could have deposed in relation to the factum of gifted
money.
(f) The complainant deposed that he became acquainted with the accused in 2012
since he used to play cricket in the locality. It has been submitted on behalf of the
accused that it is highly improbable that a person will grant a loan of Rs. 7,00,000
to a casual acquaintance of this kind.
17. Before discussing the factual position in the present case, it is pertinent to first
discuss the position of law in relation to financial capacity.
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IIA. Position of law - Financial capacity is relevant in cases of cash
transaction
18. It is a settled position of law that in case of cash transactions, showcasing that
complainant did not have adequate financial capacity to lend money to the
accused amounts to a probable defense and can help in rebutting the presumption
that is accrued to the benefit of the complainant in cheque dishonor cases. The
relevant case law in this regard has been reproduced hereunder for reference:
(a) In Basalingappa v. Mudibasappa, (2019) 5 SCC 418: AIR 2019 SC 1983, the
Hon'ble Supreme Court has observed as follows:
During his cross-examination, when financial capacity to pay Rs. 6
lakhs to the accused was questioned, there was no satisfactory reply
given by the complainant. The evidence on record, thus, is a probable
defence on behalf of the accused, which shifted the burden on the
complainant to prove his financial capacity and other facts. (emphasis
added)
(b) In APS Forex Service Private Limited v. Shakti International Fashion Linkers:
AIR 2020 SC 945, the Hon'ble Supreme Court has clarified and explained the
issue as follows:
Now so far as the reliance is placed by Learned Counsel appearing on
behalf of the accused on the decision of this Court in the case of
Basalingappa (supra), on going through the said decision, we are of the
opinion that the said decision shall not be applicable to the facts of the case
on hand and/or the same shall not be of any assistance to the accused. In
that case before this Court, the defence by the accused was that the cheque
amount was given by the complainant to the accused by way of loan. When
the proceedings were initiated under Section 138 of the N.I. Act the
accused denied the debt liability and the accused raised the defence and
questioned the financial capacity of the complainant. To that, the
complainant failed to prove and establish his financial capacity. Therefore,
this Court was satisfied that the accused had a probable defence and
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consequently in absence of complainant having failed to prove his financial
capacity, this Court acquitted the accused. In the present case, the accused
never questioned the financial capacity of the complainant. We are of the
view that whenever the accused has questioned the financial capacity
of the complainant in support of his probable defence, despite the
presumption under Section 139 of the N.I. Act about the presumption
of legally enforceable debt and such presumption is rebuttable,
thereafter the onus shifts again on the complainant to prove his
financial capacity and at that stage the complainant is required to lead
the evidence to prove his financial capacity, more particularly when it
is a case of giving loan by cash and thereafter issuance of a cheque.
(emphasis added)
19. The crux of the aforesaid decisions of the Hon'ble Supreme Court has been
summarized by the Hon'ble Kearala High Court in Sunitha v. Sheela Antony,
2020 SCC OnLine Ker 1750
In my view, the crux of the decisions referred to above is the following :
The complainant has no obligation, in all cases under Section 138 of the
Act, to prove his financial capacity. But, when the case of the
complainant is that he lent money to the accused by cash and that the
accused issued the cheque in discharge of the liability, and if the
accused challenges the financial capacity of the complainant to
advance the money, despite the presumption under Section 139 of the
Act, the complainant has the obligation to prove his financial capacity
or the source of the money allegedly lent by him to the accused. The
complainant has no initial burden to prove his financial capacity or the
source of the money. The obligation in that regard would arise only when
his capacity or capability to advance the money is challenged by the
accused. (emphasis added)
20. Therefore, in cases in which the underlying debt transaction is a cash transaction,
the accused can raise a probable defense by questioning the financial capacity of
the complainant, and once the said question is raised, the onus shifts on the
complainant to prove his financial capacity.
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IIB. Position of law - Financial capacity is not relevant where loan
transaction itself is otherwise established through acknowledgement executed
by the accused
21. However, the aforesaid position of law is not applicable in those cases where loan
transaction itself is otherwise established, either through documentary evidence-
such as, a receipt or a loan agreement, or acknowledgement executed by the
accused, or by oral evidence of an independent witness who is found to be
credible. The Hon'ble Delhi High Court, in Sheela Sharma v. Mahendra Pal,
2016 SCC OnLine Del 4696, has also held that in case the debt transaction is
otherwise acknowledged by the accused in written, the consideration of financial
capacity is not relevant.
31. In cases where the complainant claims to have advanced a friendly loan
in cash, and where the transaction of loan is not evidenced by any other
documentary or other reliable evidence, no doubt, the aspect whether the
availability of funds in cash with the complainant/lender, and its
advancement as loan to the accused have been reflected in the income tax
returns of the complainant/lender, or not, become relevant. If, the
availability of funds, and the loan transaction itself is not so reflected, that
factor is taken note of by the Court as relevant to hold that the presumption
under Section 118 and 139 of the NI Act stands rebutted. However, these
considerations would not be relevant, where loan transaction itself is
otherwise established, either through documentary evidence-such as, a
receipt or a loan agreement, or acknowledgement executed by the
accused, or by oral evidence of an independent witness who is found to
be credible. In the present case, the loan transaction, though not recorded
in an agreement, or a receipt or acknowledgement executed by the accused,
and though not reflected in the income-tax returns of the complainant, is
evidenced by the oral testimony of CW-2, who is an independent witness
and highly credible. (emphasis added)
22. The present case is an instance of cash transaction. However, the complainant has
placed on record Ex. CW1/1A, which is a writing on a stamp paper, bearing the
signature of the accused, in which the accused has acknowledged the factum of
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taking a loan of INR 7,00,000 from the accused. The accused has not denied his
signatures (or his thumb impression) on Ex. CW1/1A. However, the accused has
raised the following objections in relation to the admissibility of Ex. CW1/1A:
II.C Objections raised to the admissibility of Ex. CW1/1A (writing on stamp
paper acknowledging liability of the accused)
(i) Objection 1: The stamp paper does not bear the signature of the
complainant and is not notarized/ attested
23. Learned counsel for the accused has submitted that the stamp paper (Ex. CW
1/1A) does not bear the signature of the complainant which makes it evident that
the same was never executed in the presence of the complainant. It has been
submitted that a blank signed stamp paper was given as security for the loan taken
from Mr. Bheem, and the same has been misused by the complainant. It has been
further submitted that the said stamp paper is neither notarised nor registered and
hence, it is not of any evidentiary value for the case of the complainant.
24. The aforesaid contention does not hold much water. An acknowledgement of debt
is neither required to be bipartite in nature, nor there is any requirement under law
for such an acknowledgement to be notarized/ registered. The stamp paper, Ex.
CW1/1A, to be worth its evidentiary value, was required to bear the signature of
the accused, which it does (along with the thumb impression). The accused has
not denied his signature or the thumb impression on the stamp paper. A similar
contention, based on similar facts, was dealt with, and rejected by the Hon'ble
Supreme Court in Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC
106:
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8. . . . The learned counsel would also argue that the complainant has
heavily relied on the stamp paper dated 21-3-2007 but then, admittedly, the
complainant had not signed on the said stamp paper; and this document,
neither notarised nor registered anywhere and only bearing the
signatures of the appellant and of the said Shri Jagdishbhai, is not of
any evidentiary value for the case of the complainant.
19.5. The acknowledgment on the stamp paper as executed by the appellant
on 21-3-2007 had been marked with different exhibit numbers in these 7
cases.
19.7 . . . We find nothing unusual or objectionable if the said writing
does not bear the signatures of the complainant. The said writing is not
in the nature of any bipartite agreement to be signed by the parties
thereto. It had been a writing in the nature of acknowledgment by the
appellant-accused about existence of a debt; about his liability to repay the
same to the complainant; about his having issued seven post-dated cheques;
about the particulars of such cheques; and about the fact that the cheques
given earlier had been washed away in the rain water logging. Obviously,
this writing, to be worth its evidentiary value, had to bear the signatures
of the accused, which it does. It is not unusual to have a witness to such a
document so as to add to its authenticity; and, in the given status and
relationship of the parties, Shri Jagdishbhai would have been the best witness
for the purpose. His signatures on this document, therefore, occur as
being the witness thereto. This document cannot be ruled out of
consideration and existing this writing, the preponderance of
probabilities lean heavily against the appellant-accused.
19.6. The fact of the matter remains that the appellant could not deny his
signatures on the said writing but attempted to suggest that his signatures
were available on the blank stamp paper with Shri Jagdishbhai. This
suggestion is too remote and too uncertain to be accepted. No cogent
reason is available for the appellant signing a blank stamp paper.
(emphasis added)
25. Therefore, in Rohitbhai, the Hon'ble Supreme Court held the writing on stamp
paper to be admissible, even though the same was neither notarized nor signed by
the complainant, on the strength of the fact that the same was duly signed by the
accused. Similarly, in the present case, an acknowledgement of debt on the stamp
paper is admissible in evidence since the accused has not denied his signature on
the said document.
CC No. 12130/16 Anil Kumar v. Mukesh Chawla 16 of 21
(ii) Objection 2: The writing on stamp paper cannot be admitted in
evidence since the same is not duly stamped.
26. It was argued on behalf of the accused that the alleged writing acknowledging the
debt (Ex. CW1/1A) has been made on a stamp paper of Rs. 10 only, and the same
cannot be admitted in evidence since the same is not adequately stamped. It was
further argued that the said alleged writing amounts to an acknowledgement of
debt along with a promise to repay the same, and hence, the same was required to
be stamped in accordance with Article 5 (agreement or memorandum of an
agreement) of Schedule 1A of Indian Stamp Act (as applicable to Delhi).
Therefore, it has been argued that in absence of the same, the said document is not
admissible in evidence in view of section 35 of the Indian Stamp Act.
27. The aforesaid argument does not merit consideration in light of the specific
provisions of the Indian Stamp Act. Under section 35, proviso "d", of the Indian
Stamp Act, it is stated that nothing herein contained shall prevent the admission of
any instrument in evidence in any proceeding in a Criminal Court, other than a
proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal
Procedure, 1898. Therefore, as per proviso "d" to section 35 of the Indian Stamp
Act, even though the instrument is not duly stamped, the same can be received in
evidence in criminal cases. Accordingly, inadequacy of stamp duty cannot be
taken as a ground in a criminal trial. The said position of law was also re-iterated
by the Hon'ble Madras High Court in S. Prakash v. A. Palaniappan, 2015 SCC
OnLine Mad 13859 : (2015) 154 AIC 519:
6.Point No. (i): The procedure for trial of cases under the Negotiable
Instruments Act is summary trial procedure and the Court has to follow the
procedure contemplated for summary trial as per the provision of Code of
Criminal Procedure. Under section 35, proviso "d", of the Indian Stamp
Act, it is stated that nothing herein contained shall prevent the admission
of any instrument in evidence in any proceeding in a Criminal Court,
CC No. 12130/16 Anil Kumar v. Mukesh Chawla 17 of 21
other than a proceeding under Chapter XII or Chapter XXXVI of the
Code of Criminal Procedure, 1898. Therefore though under section 35, no
instrument chargeable with duty shall be admitted in evidence for any
purpose by any person having by law or consent of parties authority to
receive evidence, or shall be acted upon, registered or authenticated by
any such person or by any public officer, unless such instrument is duly
stamped, having regard to proviso "d", there is ain exception to such
document being produced and admitted in evidence in any proceeding in
a criminal Court. Chapter XXI of Criminal Procedure Code, 1973 deals
with summary trial and under section 262 of the Cr. P.C., the procedure
specified in reference to the trial of summons cases shall be followed in
summary trial cases. Chapter XX deals with trial of summons cases.
Therefore, as per provisio "d" to section 35 of the Indian Stamp Act, even
though the instrument was not duly stamped, the same can be received in
evidence in criminal cases.
28. Therefore, considering the specific provision of law and the aforesaid
pronouncement, the present contention stands dismissed.
29. In conclusion, as noticed in Rohitbhai as well, there is no cogent reason given by
the accused for signing a blank stamp paper. The onus was on the accused to
disprove the stamp paper. He could have examined/ confronted Mr. Bheem in the
witness stand to prove his version. Moreover, it was open to the accused to prove
that the signatures on the stamp paper do not belong to the accused. In absence of
any witness/ document to support the version of the accused, the same cannot be
accepted as a probable defense and hence, the stamp paper (Ex. CW1/1A) stands
duly proved.
II.D Conclusion - No need to consider the financial capacity of the
complainant in the present case considering specific documentary evidence
on record (Ex. CW1/1A).
30. Since the present case falls within the category of cases where loan transaction
itself is otherwise established in the form of an acknowledgement executed by the
CC No. 12130/16 Anil Kumar v. Mukesh Chawla 18 of 21
accused, there is no need to consider the financial capacity of the accused. The
said position of law has already been discussed in paragraph 21 of this judgment
(see also Sheela Sharma v. Mahendra Pal, 2016 SCC OnLine Del 4696).
Further, in Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106 :
AIR 2019 SC 1876, the Hon'ble Supreme Court has observed as follows:
The observations of the trial court that there was no documentary
evidence to show the source of funds with the respondent to advance the
loan, or that the respondent did not record the transaction in the form of
receipt of even kachcha notes, or that there were inconsistencies in the
statement of the complainant and his witness, or that the witness of the
complaint was more in know of facts etc. would have been relevant if the
matter was to be examined with reference to the onus on the complaint to
prove his case beyond reasonable doubt. These considerations and
observations do not stand in conformity with the presumption existing in
favour of the complainant by virtue of Section 118 and Section 139 of the NI
Act. Needless to reiterate that the result of such presumption is that existence
of a legally enforceable debt is to be presumed in favour of the complainant.
When such a presumption is drawn, the factors relating to the want of
documentary evidence in the form of receipts or accounts or want of
evidence as regards source of funds were not of relevant consideration
while examining if the accused has been able to rebut the presumption
or not. (emphasis supplied)
31. Therefore, attempt of the accused to cast doubts on the financial capacity of the
accused are irrelevant in light of the fact that the documentary evidence, Ex.
CW1/1A, stands proved in addition to the cheque in question.
32. Further, regardless of the aforesaid finding, I am of the considered view that grant
of loan of Rs. 7,00,000 by a person who earns Rs. 40,000 per month is not
inconceivable. The complainant specifically submitted in his cross-examination
that in addition to the monthly salary of Rs. 40,000, he was also paid a certain
variable incentive. Moreover, with an annual salary of Rs. 4,80,000 (Rs.
40,000*12), a saving of Rs. 7,00,000 is definitely possible. Additionally, the
CC No. 12130/16 Anil Kumar v. Mukesh Chawla 19 of 21
admission of the complainant that multiple times, he was not even having the
closing monthly balance of Rs.5000/- in his bank account, does not, by itself,
amount to rebuttal of presumption by the accused, since the complainant gave a
valid explanation to the effect that he had withdrawn about 70%-80% of Rs. 7
lacs from his bank account on different dates (and the complainant was ready to
bring the bank account statement to the court, if called for). Therefore, the
complainant gave a valid explanation in relation to his financial capacity, and it
was for the accused to call for the bank account statement of the accused once the
complainant had deposed that he was ready to bring the same, if called for.
However, the accused did not call for the same, and hence, he has been unable to
rebut the presumption in the present case.
33. Accordingly, in light of the scheme of the NI Act, a statutory presumption exists
in favour of the accused which cannot be rebutted by merely stating that it is
highly unlikely that a person will grant loan to a person who is a casual
acquaintance, known for merely a year. The statutory presumption cannot be
rebutted in such a casual manner. There must be something concrete on record to
rebut the same.
34. Hence, in view of the discussion in the foregoing paragraphs, the inevitable
conclusion is that the accused has failed to rebut the onus put on him by
virtue of the presumptions enshrined in Section 118 and 139 of the NI Act.
Therefore, the second ingredient also stands proved against the accused.
F. CONCLUSION
35. To recapitulate the above discussion, the complainant has been successful in
establishing his case beyond reasonable doubt that the accused had issued the
CC No. 12130/16 Anil Kumar v. Mukesh Chawla 20 of 21
cheque in question in discharge of his legally enforceable liability. The
presumptions under Section 118 and Section 139 of NI Act were drawn against
the accused. The accused has miserably failed to rebut the said presumption by
raising a probable defence. The defence of the accused that the complainant
misused the cheque in question and there was no legal liability is not proved, even
on the standard of preponderance of probabilities.
36. Resultantly, the complaint of the complainant is allowed, and the accused,
Sh. Mukesh Chawla, is hereby convicted of the offence under Section 138 of
the Negotiable Instruments Act, 1881. Let the convict be heard separately on
quantum of sentence.
37. A copy of this judgment be given free of cost to the convict.
ORDER :- CONVICTED.
Announced in the Open (Devanshu Sajlan) Court on 06.09.2021 MM (NI Act-05), West, THC DELHI CC No. 12130/16 Anil Kumar v. Mukesh Chawla 21 of 21