Delhi District Court
Neeraj Kumar Sinha vs . P. Srikanth on 20 January, 2020
IN THE COURT IF MS. SHILPI SINGH METROPOLITAN MAGISTRATE
(SOUTH) 04 N.I. ACT, SAKET COURTS: NEW DELHI
CT No. 468131/2016
Neeraj Kumar Sinha Vs. P. Srikanth
1. Complaint Case number : 468131/2016
2. Name of the complainant: Sh. Neeraj Kumar
Sinha, S/o Sh. K. C. Sinha,
R/o 39/3, Sector1, Pushp
Vihar, New Delhi 110017.
3. Name and address of the accused: P. Srikanth, S/o Sh. C. Palani
R/o 4/34, DDA Market,
Ambedkar Nagar,New Delhi
110062.
4. Offence complained of or proved: Under Section 138 of the
Negotiable Instruments Act,
1881.
5. Plea of the accused : Pleaded not guilty and
stated that the cheque in
question was given by way of
security in a blank and
unsigned condition.
CC No. 468131/16
Neeraj Kumar Sinha V. P. Srinakth 1 / 25 20th January, 2020
6. Final Order: : Convicted
7. Date of institution : 13.12.2012.
8. Date on which reserved for
judgment : 13.01.2020
9. Date of judgment : 20.01.2020
BRIEF STATEMENT OF FACTS FOR THE DECISION
1. It is the case of the complainant that in the month of January, 2011, the accused came to the complainant's house and requested for the financial help of Rs. 3 to 4 lacs for his business purposes. On considering the need of the accused, the complainant gave a friendly loan of Rs. 2 lacs through two cheques of Rs.1 lac each bearing no. 645451 and 645452, both drawn on SBI, Pushpa Bhawan, New Delhi, to the accused. That in discharge of his legal liability to repay the said amount, the accused issued two post dated cheques bearing no. 031746 and 031751 of Rs. 1 lac each, both drawn on his bank account maintained with Standard Charted Bank, Saket, in favour of the complainant. In the month of April, 2011, on the frequent requests of the accused, the complainant gave a further interest free loan of Rs. 2 lacs through one cheque of Rs.1 lac bearing no. 645453 drawn on SBI, Pushpa Bhawan, New Delhi and Rs. 1 lac through cash to the accused. After some time, the accused offered to the complainant that if the complainant would CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 2 / 25 20th January, 2020 return the two post dated cheques bearing no. 031746 and 031751 of Rs. 1 lac each which were issued by the accused to the complainant, the accused would clear all his legal liabilities qua loan amount of Rs. 4 lacs. In good faith, the complainant returned the said two cheques bearing no. 031746 and 031751 of Rs. 1 lac each to the accused. The accused on one pretext or other, did not return the loan amount and after much persuasion, finally in the month of July 2012, in discharge of his legal liability to repay the amount of Rs. 4 lac, the accused issued a consolidated cheque for Rs. 4 lacs bearing no. 031768 (hereinafter referred to as cheque in question) dated 26.07.2012 drawn on Standard Chartered Bank, Saket, New Delhi, in favour of the complainant and sent the said cheque in question through one of his friend, namely Sh. Indu Kumar. The said cheque in question was returned unpaid with remarks "fund insufficient" vide memo dated 17.10.2012. The legal demand notice dt. 10.11.2012 was duly sent by the complainant to the accused on 10.11.2012 and the accused replied to the same and the said reply is Ex CW1/G in which the accused has denied the allegations made against him and refutes any liability on his part. Since the accused failed to pay the cheque amount within the statutory period, the complainant filed the present complaint u/s 138 of Negotiable Instruments Act (hereinafter referred to as NI Act).
2. Upon service of summons, accused entered an appearance in the present matter on 24.01.2013 and was admitted to bail. Notice u/s 251 Cr.P.C. was served upon accused on 19.08.2014, to which the accused pleaded not guilty and claimed CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 3 / 25 20th January, 2020 trial. In his statement of defence, accused stated that he has no liability towards the complainant and that the cheque in question was issued by way of security for the loan that was advanced by the complainant in April 2011. Thereafter, accused was allowed to crossexamine the complainant u/s 145 (2) NI Act. After cross examination of the complainant, the matter was fixed for recording statement of the accused u/s 313 Cr.P.C. In the said statement recorded on 06.06.2018, the accused stated that he does not have the liability of Rs. 04 lacs towards the complainant and that he has already repaid the loan amount. He also submits that the cheque in question was issued in a blank and unsigned condition towards the interest that was imposed by the complainant on the loan amount of Rs. 3,00,000/ Matter was thereafter fixed for Defence evidence. In defence evidence, accused examined himself as DW1. One bank witness was also examined as DW2, who had placed on record outward return report, the account opening form and KYC of the accused which is Ex DW2/A (colly). Thereafter, defence evidence was closed on 08.05.2019 and the matter was fixed for addressing final arguments.
Evidence
3. In order to support his case, the complainant stepped into the witness box as CW1 and tendered his affidavit Ex.CW1/1 into evidence where averments made in the complaint were reiterated. He also relied upon various documents such as Ex.CW1/A, which is receipt executed in the handwriting of accused, Ex.CW1/B which is the bank statement of the complainant, Ex.CW1/C which is CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 4 / 25 20th January, 2020 cheque in question, Ex .CW1/D cheque return memo dated 17.10.2012, Ex CW1/E and Ex.CW1/F which are postal receipt and legal notice sent by the complainant to the accused in this regard, to which the accused replied and the same is Ex.CW1/G. The complainant also examined two other witnesses. CW2 is Indu Kumar Prajapati and CW3 is Sundar Lal. CW2 has placed on record the return memo dt. 27.7.12 which is Ex CW 1/D1, an undertaking and letter written by the accused to CW2 i.e. Ex CW 2/1 & Ex CW 2/2, colly, respectively.
4. Accused on the other hand, got himself examined as DW1 and relied on document Ex DW 1/A to Ex DW 1/C i.e. cheque bearing 031746, 031751 and 034881, copy of undertaking dt. 09.3.16 i.e. Ex CW 2/DA and legal notice issued by CW2 to the accused dt. 02.8.17 i.e. Ex CW 2/DB.
5. I have heard the arguments and also gone through the record carefully.
6. In order to prove an offence under section 138 NI Act, the following ingredients are required to be fulfilled:
i. That there is a legally enforceable debt or liability;
ii. That drawer of the cheque issued the cheque to discharge in
part or whole the said legally enforceable debt or liability; iii. The cheque so issued was returned unpaid by the banker of the drawer;
CC No. 468131/16Neeraj Kumar Sinha V. P. Srinakth 5 / 25 20th January, 2020
iv. Legal demand notice was served upon the accused and the
accused failed to make the payment within 15 days of the
receipt of the said notice.
7. The object of the statute is to facilitate smooth functioning of business transactions. The provision is necessary as in many transactions cheques are issued merely as a device to defraud the creditors. Dishonour of cheque causes incalculable loss, injury and inconvenience to the payee and credibility of business transactions suffers a setback. Offence under Section 138 of the Act is primarily a civil wrong. Burden of proof is on accused in view of the presumption under Section 139 which says 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." but the standard of such proof is "preponderance of probabilities". Also, in a significant departure from the general rule applicable to contracts, Section 118 of the Act provides certain presumptions to be raised. This section lays down some special rules of evidence relating to presumptions. The reason for these presumptions is that, negotiable instrument passes from hand to hand on endorsement and it would make trading very difficult and negotiability of the instrument impossible, unless certain presumptions are made. The presumption, therefore, is a matter of principle to facilitate negotiability as well as trade.
8. Section 118 of the Act, inter alia, directs that it shall be presumed, CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 6 / 25 20th January, 2020 until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of whole or part of any debt or liability. 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 instrument 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 Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions 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.
9. The submission of the counsel for the complainant is that the presumption u/s 118 and 139 of the NI act is in his favour as the accused has admitted the receipt of sum of Rs. 3,00,000/ which was paid by the complainant to the accused through cheque however, he is disputing the sum of Rs. 1,00,000/ as it was paid in cash. He further submits that the accused has admitted the issuance of cheque in question but he disputes the signatures on the cheque. It is the contention CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 7 / 25 20th January, 2020 of the complainant that no person would issue a blank cheque which is unsigned as it would serve no purpose. On the other hand, despite granting opportunity, arguments were not addressed on behalf of the accused.
10. CW1 is the complainant. in the cross examination, CW1 submits that he became acquainted with the accused through his common friends/client and developed close relations with the accused. CW1 deposes that he did not know the purpose for which the accused required the loan, however, later he got to know that he required the money to purchase a XYLO car. It is the version of the complainant that the cheque in question was filled and signed when it was handed over to him and that he spoke to the accused orally and informed him when the cheque in question got dishonoured for the reason "drawer's signature differ". CW1 submits that the accused assured him that the cheque will be honoured if it is presented again and it is then that the complainant presented the cheque in question and it got dishonoured for reason "funds insufficient" on 17.10.2012. CW1 denied the suggestion that the cheques bearing no. 031746 and 031751 were returned to the accused as he had made the payment and he also denied the suggestion that the cheque in question was blank and unsigned when it was given to him. CW1 also disputes the fact that the accused had repaid the loan in cash and further denies the suggestion that the alleged cash loan of Rs. 1,00,000/ was never paid to the accused. CW1 also averred that the loan of Rs. 4,00,000/ given to the accused is reflected in his ITR and he also submitted that he can produce his ITR, but the only document that was placed on record to prove that the loan was advanced to the CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 8 / 25 20th January, 2020 accused is the copy of balance sheet of CW1, dated 31.03.2012 i.e mark X. Mark X only bears the seal and signature of the CA.
11. Next, CW2 was examined and he had filed his evidence by way of affidavit, Ex CW 2/1. As per CW2, he knew the accused from before and he also knew that the complainant used to represent accused as his counsel in electricity disputes. CW2 submits that the accused had informed him that he was in need of money as he wanted to purchase a commercial four wheeler vehicle and for that purpose, the accused approached the complainant and requested him to advance a loan. CW2 deposed that the complainant advanced a sum of Rs. 2,00,000/ to the accused in Jan 2011 and Rs. 2,00,000/ again in April 2011 and the accused, in order to discharge his liability, issued the cheque in question in favour of the complainant. It is the version of CW2 that the contents of the cheque were already filled by the accused and that the name of the complainant and the signature on the cheque were put infront of him. He further submits that the accused asked him to hand over the cheque in question to the complainant to discharge his liability.
12. In his cross examination, it is extracted that CW2 had also advanced a sum of Rs. 1,00,000/ to the accused prior in time. CW2 admits that an agreement was executed between him and the accused i.e Ex CW2/1 and the said agreement had two copies, however, he denies the suggestion that he took a cheque of Rs. 1,00,000/ from the accused with the condition that he will not depose against the accused in the Court. CW2 also placed on record Ex CW2/2 (colly) CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 9 / 25 20th January, 2020 and submits that the said letter was written by the accused which was to be submitted in the bank however he did not submit these letters as he had the knowledge that the accused was lying in these letter that he had misplaced his cheque book even though he was in the possession of the cheque book and the cheque in question. CW2 also admits the document CW2/DA and Ex CW2/DB and that Ex CW2/DA is the copy of Ex CW2/1. He further admits that the said document was executed on 09.03.2016 and that the handwriting at point A and the signature at point B were his.
13. Thereafter, CW3 was examined. CW3 submits that in the last week of July 2012, he was present with complainant at his house when CW2 came to hand over a duly filled and signed cheque of Rs 4,00,000/ to the complainant. He denies the suggestion that he was deposing falsely as he was complainant's friend. No other material contradiction was brought on record from his submission.
14. The defence put forth by the accused in the notice framed against him was that the cheque in question was issued to the complainant as security for the loan of Rs. 1,00,000/ but the said cheque was neither signed nor filled by him. He admits that he used to take loan from the complainant and that security cheques were issued to the complainant to ensure the payment. It is the version of the accused that the security cheques were returned to him as he had already made the payment and that the signatures on the cheque in question were forged by the complainant to misuse the cheque. In his application u/s 145 (2) NI act, the CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 10 / 25 20th January, 2020 accused reiterates the fact that the signature on the cheque in question were forged and in his statement u/s 313 CrPC, the accused submits that he had initially borrowed a sum of Rs 2,00,000/ from the complainant for which cheques were issued by way of security and on repayment of the said loan, the cheques were returned to him. He further submits that another loan of rs. 1,00,000/ was taken from the complainant through a/c for which no cheque was issued as security but the cheque in question was issued towards the payment of the interest on the loan amount and that the principal amount was already paid to the complainant. He denies that he ever received the loan amount in cash.
15. Next, at the stage of defence evidence, DW1was examined. DW1 in his examination in chief submits that he borrowed a sum of Rs. 3,00,000/ @ 3% interest from the complainant and gave two cheques of Rs. 1 lac each by way of security. He further submits that the third cheque i.e the cheuqe in question was issued to the complainant for repayment of the interest amount and since the interest was not computed, therefore, the cheque was issued in a blank and unsigned condition. Later, in his cross examination conducted on 21.08.18, the accused submits that he issued DW1/A, DW1/B and cheuqe bearing no. 034381 i.e DW1/C, for a sum of Rs. 1 lac each, in favour of the complainant by way of security for the loan that was advanced by the complainant. DW1 deposes that Ex DW1/A to DW1/C were returned to him after the loan amount was received by the complainant in cash. It is peculiar to mention here that neither the complainant talks about DW1/C in his complaint or evidence by way of affidavit and neither the CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 11 / 25 20th January, 2020 accused mentions in his examination in chief or in Ex CW1/A that he issued three cheques by way of security, rather he submitted that two cheques were issued by way of security and the third cheuqe is the cheque in question. DW1 further admits that CW2 was his family friend and that the cheque in question given to CW2 to be handed over to the complainant.
16. Another witness was examined by the accused. DW2 is the operational officer from Standard chartered bank. DW2 had placed on record the a/c opening form and the KYC of the accused which is Ex DW2/A (colly) and submits that the reason for return w.r.t the cheque in question was "drawer's signature differ" on 27.07.2012 and "funds insufficient" on 17.10.2012. Despite opportunity, the complainant chose not to cross examine the said witness.
17. On appreciating Ex CW1/A, cross examination of the complainant, defence of the accused in his chief and cross and the statement of the accused u/s 251 CrPC and 313 CrPC, it has come to the notice of this Court that the defence put forth by the accused is marred by contradictions and is not supported by a single piece of evidence. The accused has nowhere explained the issuance of Ex DW1/C. In his cross examination, he submits that DW1/C was also issued by way of security towards the loan but he has not explained as to why the said cheque was not mentioned in Ex CW1/A. Rather, in his statement u/s 313 CrPC, the accused corroborates the story of the complainant that the loan advanced in April 2011 was not evidenced by any written document.
CC No. 468131/16Neeraj Kumar Sinha V. P. Srinakth 12 / 25 20th January, 2020
18. The various contradictory statement made by the accused at the different stages of the trial were:
Reply to legal notice, Ex CW1/G:
DW1 admits in his cross examination that Ex CW1/G was sent by his counsel at his instruction. In CW1/G, the accused submits that he never approached the complainant for financial assistance but the complainant approached him to invest the surplus money that he had. He further submits that two security cheques were given to the complainant for the loan advanced by him and that the cheque in question was issued towards the loan that was advanced by the complainant through cheque bearing no. 645453, which was blank and unsigned as the interest amount was not computed by then.
Statemnet u/s 251 CrPC and 313 CrPC:
In his defence u/s 251 CrPC, the accused submits that he had taken loan from the complainant on earlier occasions too and that the cheque in question was issued towards the loan amount of Rs. 1,00,000/ that was advanced by the complainant. On the other hand, in his defence u/s 313, he submits that no cheque was issued by him to the complainant when further loan of Rs. 1,00,000/ was advanced by the complainant and that the cheque in question was issued by way of security he had already returned RS. 2,00,000/ to the complainant and the cheque in question was issued towards the interest amount on the loan of Rs. 3,00,000/ advanced by the complainant.
CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 13 / 25 20th January, 2020 Examination in chief of the accused:
In his examination in chief, DW1 submits that the cheque in question was given to one Indu Kumar in a blank and unsigned condition to be further handed over to the complainant towards the payment of interest @ 3% on the loan amount of Rs. 3,00,000/ advanced by the complainant. However, in his cross examination, DW1 submits that the amount was borrowed from the complainant to purchase a Xylo car and for other personal expenses.
19. A careful reading of Ex. CW1/E ie notice of demand and Ex CW1/G ie reply notice is in this context essential. A total and careful reading of Ex CW 1/G is essential and when so read, no prudent mind can be left with any semblance of doubt that the accused did not dispute the genuineness of the signatures in Ex CW1/C or the fact that they were handed over by the accused to the complainant. Of course, vague and non specific denials are also raised in Ex CW1/G. The document must and has to be read as a whole and when so read crucial indications are available. The accused though denies the genuineness of the signatures in Ex CW1/C and the purpose for which they were handed over, was also disputed, but the existence of some liability was not disputed as such. The accused took up a contention that the cheque was issued in a blank and unsigned condition by way of security. The complainant in his cross examination admits that the reason for dishonor was on the ground of "signature differs" on 27.07.12 and he further admits that he did not send any notice to the accused when the cheque was first CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 14 / 25 20th January, 2020 dihonoured, but he submits that he informed the accused orally and at his insistence, he presented the cheque again and the reason for dishonor on 17.10.12 was funds insufficient.
20. It is also significant to note that the accused did not raise a contention that the cheques were fraudulently, clandestinely and in a mala fide manner removed by the complainant from the possession of the accused. His only defence is that the cheque was issued in a blank unsigned condition and that the complainant has forged his signatures on the cheque in question to extort money even though he has already repaid the loan amount. It is peculiar to note that the accused has nowhere explained as to why he chose to return the loan amount in cash when he took the amount through account and also executed CW1/A. The accused had executed a written document when the loan was being advanced to him, however, he chose to keep no proof or execute any document, when he had returned the loan amount. Moreover, the accused himself corroborates the story of the complainant that the cheques which were issued by him earlier i.e Ex DW1/A to DW1/C were returned by the complainant. This substantiates the version of the complainant that the security cheques issued at the time of advancing the first loan installment of Rs 2,00,000/ by the complainant were returned to the accused. It is also interesting to note that Ex DW1/A & Ex DW1/B are undated and Ex DW1/C is dated 26.04.2011. It is the case of the accused that Ex DW1/A to Ex DW1/C were issued when the loan was advanced by the complainant. It is not in dispute CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 15 / 25 20th January, 2020 that the first installment of loan was advanced by the complainant to the accused on 02.02.2011 and it is the case of the accused that Ex DW1/A to Ex DW1/B were returned to him when he had repaid the loan of Rs. 2,00,000/. It is also not in dispute that out of the second loan installment, Rs. 1,00,000/ were advanced by the complainant on 26.04.2011. The accused submits that he returned the entire amount in 1 to 1 ½ years of the receipt and that the same was paid in two installments. If actually Ex DW1/A to Ex DW1/C were issued by way of security then they would have been undated. The fact that Ex DW1/C is dated 26.04.2011 proves that it was not issued by way of security as no prudent person would accept a dated security cheque when the loan amount was not given for any fixed period. The accused himself admits that he repaid the loan in 1 1 ½ years after the receipt and if that is to be believed, then the complainant could not have accepted a security cheque which was issued in 2011. This fact further corroborates the version of the complainant that no security cheque or written acknowledgement was given by the accused when he had advanced the second loan installment. Moreover, the accused also admits the said fact in his statement u/s 313 CrPC. However, surprisingly during the course of the trial, the accused submitted that the cheque in question was issued towards the interest on the loan amount. The stand taken by the accused was contradictory to his defence u/s 251 CrPC and to the reply of the legal notice sent by him. The less said about this weird contention raised by the accused belatedly towards the fag end of the trial, the better. A prudent person cannot for a moment accept this bizarre contention advanced by the accused towards the later stage of the trial. The evidence that is raised by the CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 16 / 25 20th January, 2020 accused, to my mind, eloquently conveys that the defence sought to be urged by the accused in the course of the trial, cannot stand scrutiny of a reasonable and prudent mind.
21. The unsubstantiated version of the accused also does go a long way to assure the Court about the acceptability of the evidence of CW1. According to the accused, the accused admits the receipt of loan of Rs. 3,00,000/ through account from the complainant. He does not dispute that he had a liability to discharge to the complainant. This is evident from the fact that Ex CW1/A and Ex CW1/B is not disputed. The accused surprisingly has not chosen to specify what, if not Rs. 4 lakh, is the amount, which he is legally liable to pay to the complainant. The accused takes a vague and evasive stand that there is unspecified liability towards the interest on the loan amount. He also failed to corroborate his version as at some places he submits that the cheque was issued for the loan amount of Rs. 1,00,000/ and at other places he submits that it was towards the uncalculated interest amount. /. Further, the accused also failed to explain as to how the interest amount was not computed when he was himself aware about the rate of interest at which the loan was advanced to him.
22. With respect to the defence of the accused that the signature on the cheque in question were forged, section 73 of the Evidence Act clothes a CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 17 / 25 20th January, 2020 Court with the requisite powers for referring to and comparing the admitted signatures. The accused admits his signature at Ex CW1/A, Ex DW1/A to DW1/C and also in DW2/A colly. It is of course true that when there is a serious dispute, Courts should not arrogate to themselves the power to decide and determine the genuineness of signatures, handwritings and thump impressions without expert opinion by its own naked eye comparison. The Court may be referred to as the expert of experts, but no finding of a Court should ordinarily rest solely on the comparison made by the Court under Section 73 of the Evidence Act in the absence of evidence of any expert. That is however,not the situation in the facts of the instant case. The reason for return in the present case on which the complaint was filed was "funds insufficient". Section 146 of NI act states that the Bank's slip is a prima facie evidence of the reason for dishonor, until and unless disproved. Though, the accused in the present case had moved an application for examination of his signature's by an expert, which was dismissed by the Ld. Predecessor of this Court, yet the accused nowhere explained as to why he did not contact his bank when the cheque was presented for the first time and why he chose not to stop the payment, when according to him he had already made the payments, even though the cheque in question was presented for the second time three months after it was presented for the first time. The accused himself admits in his cross examination that he gave Ex CW2/2 dated 05.04.2012 to the witness CW2, which were not presented in the bank at his instruction. In Ex CW2/2 colly, it is stated by the accused that he has lost his cheques bearing no. 031766 to 031770, which included the cheque in question. The accused failed to explain as to why he wanted to CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 18 / 25 20th January, 2020 inform the bank that the cheque in question was lost when he himself admits the issuance of cheque to the complainant and he further failed to explain as to why he chose not to inform his bank when he was aware that the cheque has been presented once and it got dishonoured for the reason "drawer's signature differ". DW1 did not bother to explain why he slept over his right for three months when he was aware that complainant has misused his cheque in question. The above stated discussion proves the mala fide intention of the accused.
23. It is next contended that at any rate it has not been established that the cheques had been issued for the due discharge of a legally enforceable debt/liability. In the present case, the issuance of cheque is not in dispute and neither is the accused denying the receipt of loan. It is not the law at all that in a prosecution under Section 138 of the Negotiable Instruments Act, the complainant must establish the original cause of action in meticulous details. That is precisely why the presumption under Section 139 of the Negotiable Instruments Act has been incorporated in addition to the presumption under Section 118 of the Evidence Act which was already there. Once the signature, execution and handing over of the cheque is satisfactorily proved by the evidence by the complainant, presumption under Section 139 of the N.I. Act comes into play and the same holds the field until the accused discharges the burden on him at least by the inferior standard of preponderance of possibilities and probabilities as applicable in a civil case.
CC No. 468131/16Neeraj Kumar Sinha V. P. Srinakth 19 / 25 20th January, 2020
24. Ex CW1/A and CW1/B produced by the complainant themselves show that there has been a monetary transaction between the parties and there was liability for the accused to the complainant. This, therefore, is an eminently fit case where the presumption under Section 139 of the N.I. Act must come into play. The onus must switch to the accused to discharge his burden.
25. The accused laboriously contends that the CW2 himself demolished the case of the complainant and that this must persuade this Court to throw overboard the entire case of the complainant. It is true that the accused has brought out contradictions in the version of CW2 but he has not proved by these contradictions that he has returned the loan amount. Rather he himself admits the issuance of cheque to the complainant and that it was given to CW2 to be further handed over to the complainant. In view of the matter, notwithstanding the innocuous inconsistency between the real nature of the transactions and the pleadings in the complaint and the notice and the version of CW2, I am unable to agree that the burden on the accused under Section 139 of the N.I. Act has been discharged.
26. The defence of the accused that the Banker having chosen to dishonour the cheques on the twin grounds, i.e. "signatures differ and funds CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 20 / 25 20th January, 2020 insufficient", Section 138 of the Negotiable Instruments Act can have no application at all, holds no water. In order to be a cheque, the instrument must be a Bill of Exchange. In order to be a Bill of Exchange, it must bear the signature of the drawer. Inasmuch as the Bank has returned the cheques with the endorsement that the signature of the drawer differs, the cheques cannot be reckoned as cheques and the consequent dishonour is not dishonour of a cheque and cannot attract culpability under Section 138 of the Negotiable Instruments Act, is the defence of the accused.
27. The question has already been concluded by binding decisions of Courts. The Supreme Court in the decisions in Goaplast Pvt. Ltd. v; Chico Ursula D'Souza, (2003) 3 SCC 232 and N.E.P.C. Micon Ltd. v. Magma Leasing Ltd. AIR 1999 SC 1952, has taken the view that notwithstanding the fact that where cheques were dishonoured for the reasons "stop payment" and "account closed", it is open to the Court to come to a finding that the real reason was insufficiency of funds and consequently conviction can be entered under Section 138 of the Negotiable Instruments Act.
28. I have no hesitation to agree straightaway that if it is proved that the signatures are not genuine and there has been no valid execution, the cheques will CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 21 / 25 20th January, 2020 be no cheques at all and consequently culpability under Section 138 of the Negotiable Instruments Act will not be attracted. But the crucial question is whether that contention can be accepted. The very important question is whether that question can be decided by the Court or the Court must reckon itself as a prisoner of the endorsement made by the Banker.
29. In paragraph 3 of Dalmia Cement (Bharat) Ltd. v. Galaxy Traders and Agencies Ltd., (2001) 6 SCC 463, it was held by the Hon'ble Supreme court;
"3. The Act was enacted and Section 138 thereof incorporated with a specified object of making a special provision by incorporating a strict liability so far as the cheque, a negotiable instrument, is concerned. The law relating to negotiable instrument is the law of commercial world legislated to facilitate the activities in trade and commerce making provision of giving sanctity to the instruments of credit which could be deemed to be convertible into money and easily passable from one person to another. In the absence of such instruments, including a cheque, the trade and commerce activities, in the present day world, are likely to be adversely affected as it is impracticable for the trading community to carry on with it the bulk of the currency in force. The negotiable instruments are in fact the instruments of credit being convertible on account of legality of being negotiated and are easily passable from one hand to another. To achieve the objectives of the Act, the Legislature has, in its wisdom, thought it proper to make such provisions in the Act for conferring such privileges to the mercantile instruments contemplated under it and provide special penalties and procedure in case the obligations under the instruments are not dis charged. The laws relating to the Act are, therefore, required to be interpreted in the light of the objects intended to be achieved by it despite there being deviations from the general law and the procedure provided for the redressal of CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 22 / 25 20th January, 2020 the grievances to the litigants. Efforts to defeat the objectives of law by resorting no innovative measures and methods are to be discouraged, lest it may affect the commercial and mercantile activities in a smooth and healthy manner, ultimately affecting the economy of the country."
30. The Banker may not readily make an endorsement that the funds are insufficient. Expressions "refer to drawer", etc. are skilfully employed by the Banker to avoid inconvenience to a valued customer even when funds are insufficient. Culpability under Section 138 of the Negotiable Instruments Act cannot obviously be left entirely to the Banker who makes the endorsement while dishonouring the cheques. The Court in order to effectively implement the scheme under Section 138 of the Negotiable Instruments Act must reserve for itself, the power to decide the real reason that prompted the Banker to dishonour the cheques. The reason given by the Banker may be relevant. But it is for the Court on the basis of the materials available before it come to a definite conclusion as to what was the actual and the real cause for dishonour. It is in this context that the Courts will be obliged, notwithstanding the nature of the endorsements made by the Banker, to go into the question and decide what the real cause of dishonour is. Furthermore, DW2/A colly proves that in fact, the account of the accused had no sufficient funds to honour the cheque in question on the date when it was presented. It has already been stated that the reason for dishonor in this case was 'Funds insufficient'. In these circumstances, the mere fact that the obliging Banker had added one more convenient reason cannot be permitted to frustrate and CC No. 468131/16 Neeraj Kumar Sinha V. P. Srinakth 23 / 25 20th January, 2020 stultify the working of the legislative scheme under Section 138 of the Negotiable Instruments Act. This contention that the endorsement by the Banker has to be treated as sacrosanct and the Court is bound to accept the same cannot be accepted at all. The challenge on this ground is in these circumstances, is rejected.
31. In fact a careful reading of the notice of demand and pleadings of the complainant clearly show that the signatures were affixed by the accused in the presence of CW2. The accused himself admits that he gave the cheque in question to CW2, now it belies logic as to why the accused will give a blank cheque to someone which is unsigned to be handed over to the complainant for security. A blank signed cheque is definitely a security cheque, but by no stretch of imagination can it be inferred that a blank unsigned cheque will act as a security cheque and that a prudent person will accept the same. The accused himself replied in the legal notice that the signatures are forged, this means the accused was aware about the reason for dishonor on both instances even before filing of the complaint. Yet, the accused chose not to inform his bank to stop the payment or take any action against the complainant. This proves mala fide and an intention on the part of the accused to cheat the complainant.
CC No. 468131/16Neeraj Kumar Sinha V. P. Srinakth 24 / 25 20th January, 2020
32. In view of the above, I have no hesitation in holding that the defence as advanced by the accused is a sham defence, the accused has not been able to point out any improbability in the case of the complainant. Therefore, in my opinion, the accused has not succeeded in rebutting the presumption of legal liability even on the scale of preponderance of probabilities. The accused has failed to punch holes in the case of the complainant. The complainant has, with the aid of, inter alia, evidence led and the presumption of legal liability under Section 118 read with Section 139 of the NI Act, in his favour, successfully proved the basic ingredients of the offence under Section 138 NI Act.
33. Resultantly, the accused P. Srikanth, S/o Sh. C. Palani stands convicted for the offence under Section 138 NI Act. Let the convict be heard separately on the quantum of sentence. Bonds u/s 437A Cr.P.C. have already been furnished on behalf of the accused.
Dictated and announced (SHILPI SINGH)
in the open court on MM04/NIAct/South/Saket
20.01.2020 New Delhi
CC No. 468131/16
Neeraj Kumar Sinha V. P. Srinakth 25 / 25 20th January, 2020