Delhi District Court
Hon'Ble High Court Of Bombay In Case Of ... vs . Purshottam (2009). on 29 August, 2019
IN THE COURT OF MS. TARUNPREET KAUR, MM03 (NI ACT)
SOUTHWEST DISTRICT: NEW DELHI
C.C No. 32632017
CNR No. DLSW020046552017
Under Section 138 of Negotiable Instruments Act, 1881
In the matter of :
Kamta Prasad Garg
S/o late Sh. Budharam Garg,
R/o B34, Mohan Garden, Uttam Nagar,
New Delhi110059. .......Complainant
versus
Sarjeet Khan
S/o Sh Bhikari Khan,
Proprietor of M/s A R S Tomato Company,
Shop No. 66, Subzi Mandi, Keshopur
Tilak Nagar, Delhi.
Also at : R/o H NO. A28, A Block, Hastsal Vihar,
Uttam Nagar, New Delhi110059.
.......Accused
Offence complained of / proved : Under Section 138
Negotiable Instruments Act,
1881.
Plea of the accused : Pleaded not guilty
Date of Institution : 28.02.2017
Final Order / Judgment : Convicted
Date of pronouncement : 29.08.2019
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J U D G M E N T:
1. The present complaint has been filed under Section 138 of the Negotiable Instruments Act, 1881. The facts in brief as averred in the complaint are that:
(i) On account of friendly relations, the accused approached the complainant for a friendly loan of Rs.5,00,000/ on 30.01.2013. Consequently, the complainant advanced the said loan amount to the accused by way of cheque bearing no. 898117 dated 30.01.2013 drawn on Canara Bank, Uttam Nagar, New Delhi.
(ii) A receiptcumdeclaration was executed with respect to the alleged aforementioned loan transaction, according to which the accused agreed to repay the said loan amount with an interest @ 24 % per annum within 12 months from the date of signing the said declaration. Also, the accused gave five post dated cheques (bearing no. 020435 - 020439) for Rs.1,10,000/ each as security.
(iii) Thereafter, in order to discharge the liability of the aforementioned loan of Rs.5 lakhs, the accused gave two cheques of Rs.1 lakh each and the principal amount as on 25.10.2013 was Rs.3 lakhs. 2 of 19
(iv) Then, on 25.02.2014 the complainant gave another friendly loan of Rs.50,000/ at an interest of 24% per annum to the accused through a cheque. On 16.08.2014 the complainant gave yet another friendly loan of Rs.2.5 lakhs to the accused at the same rate of interest. This loan too was advanced by way of cheque. Thus, the total outstanding principal amount payable by the accused as on 16.08.2014 was Rs.6 lakhs and, by 31.12.2016 the liability of the accused towards the complainant with respect to the loan (which was allegedly taken on several occasions) along with the interest on the principal amount was Rs.9,74,000/.
(v) At request of the complainant, the accused issued cheque bearing no.995710 dated 09.01.2017 for a sum of Rs.9,74,000/ drawn on Yes Bank, Vishal Enclave, New Delhi. However, upon presentation, the aforesaid cheque got dishonoured vide return memo dated 11.01.2017 with remarks 'Account dormant'. The complainant allegedly then issued legal notice dated 31.01.2017 to the accused demanding the payment of cheque amount and in spite of service of said notice, the accused failed to make the payment of cheque amount and hence, committed an offence under Section 138, Negotiable Instruments Act.
2. In the presummoning evidence, evidence by way of affidavit Ex.CW1/A was filed on behalf of complainant. The complainant reiterated all the 3 of 19 averments made in his complaint and in support of the allegations made in his complaint, he relied upon the following documents:
(i) Cheque bearing no.995710 dated 09.01.2017 for a sum of Rs.9,74,000/ drawn on Yes Bank, Vishal Enclave, New Delhi (Ex.CW1/7).
(ii) Cheque return memo dated 11.01.2017 issued by Canara Bank, Uttam Nagar reflecting that the aforesaid cheque was dishonoured for the reason "Account dormant" (Ex.CW1/8).
(iii) Legal Notice dated 31.01.2017 addressed to the accused on behalf of the complainant demanding the payment of cheque amount within fifteen days from the receipt of said notice (Ex.CW1/8).
(iv) Postal and courier receipts reflecting the fact that the aforesaid legal notice was dispatched to the accused on 31.01.2017 (Ex.CW1/9), (Ex.CW1/10) and (Ex.CW1/12).
(v) Envelops containing the legal notice received back unserved with the report 'left' and 'no such person' (Ex.CW1/11) and (Ex.CW1/13 colly).
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(vi) Internet generated tracking report reflecting the service of legal notice (Ex.CW1/14).
(vii) Five cheques given by the accused to the complainant which were not presented for encashment (Ex.CW1/1 to Ex.CW1/5).
(viii) Receiptcumdeclaration executed between the parties (Ex.CW1/6).
3. Upon consideration of the complaint and documents annexed therewith and upon examination of the complainant, the cognizance of offence under Section 138 Negotiable Instruments Act, 1881 was taken and process was issued against the accused. The accused appeared before this court and was admitted to bail.
4. Notice under Section 251 Cr.P.C. was framed against the accused to which, he did not plead guilty and claimed trial. The accused stated that he had taken a loan of Rs.10 lakhs from the complainant and had issued the cheques drawn on Axis Bank towards the repayment of the same. He further stated that the cheque in question 5 of 19 was given in a blank signed manner as guarantee only. He further stated that he has already repaid an amount of Rs.10,30,000/ to the complainant by way of installments. He further stated that he has a liability of Rs.2,50,000/ only towards the complainant and this outstanding amount is the interestamount. He further stated that he did not receive the legal notice.
5. An application under Section 145(2), Negotiable Instruments Act was moved on behalf of the accused seeking permission for recalling and cross examination of complainant witnesses. The said application was allowed and the complainant was cross examined.
6. The complainant got himself examined as CW1 in post summoning evidence. He was duly cross examined by the counsel for accused. Thereafter, the complainant did not lead further CE and accordingly, the CE was closed.
7. Thereafter, the accused was examined in accordance with provisions of Section 313 Cr.P.C. wherein he stated that he had taken a loan of Rs.10 lakhs from the complainant and the same was taken in three installments of Rs.5 lakhs, Rs.3 lakhs and Rs.2 lakhs. He further stated that he gave 11 installments of Rs.50,000/ each and 6 of 19 24 installments of Rs.20,000/ each to the complainant towards the repayment of the said loan amount. He further stated that the amount of interest is yet to be paid by him to the complainant. He further stated that he had given 5 cheques (Ex.CW1/1 to Ex.CW1/5) as security and that he had also executed a receiptcumdeclaration (Ex.CW1/6). He further stated that the cheque in question was also issued as security and that it was a blank signed cheque. He further stated that he did not receive the legal notice.
8. The accused opted to lead defence evidence wherein, he stepped into the witness box as DW1 and also summoned a defence witness, Sh. Mohd. Sher Khan as DW2. Thereafter, the accused did not lead further evidence and accordingly, DE was closed.
9. Final Arguments were heard. In addition to adducing the final arguments orally, submissions in writing were also filed on behalf of the complainant. During the final arguments, it was submitted by Ld. Counsel for the Complainant that all the ingredients of the offence under Section 138 Negotiable Instruments Act are made out and accordingly the accused be convicted. He further argued that the dishonour of the cheque in question and signature on the same have been admitted by the accused. He 7 of 19 further argued that the accused has failed to prove that the cheque in qusetion was given as security only.
9.1. He further argued that the accused has not been able to rebut the presumption raised against him under the Negotiable Instruments Act. He further argued as to why no complaint was filed by the accused against the complainant if any fraud was committed against him by the latter. He further argued that no evidence was led by the accused on the point if he had asked the complainant for returning the cheques allegedly issued by him as security. He further argued that the receiptcum declaration (Ex.CW1/6) clearly states that the loan advanced to the accused was a friendly loan.
10. On the other hand, Ld. Counsel for accused argued that the complainant failed to establish the guilt of the accused and accordingly, the accused be acquitted. He further argued that the complainant has just calculated the interest and has added the same to the principal amount. He further argued that the cheque in question, along with five of other cheques, were given to the complainant as security, which, however, were never returned to the accused. He further argued that the complainant is a money lender and that the complainant admitted in his cross examination that he has filed a compliant under section 138 Negotiable Instruments Act against one Lalit Verma also. 8 of 19 He further argued that section 3 of The Punjab Registration of Money Lender's Act, 1938 is applicable upon Delhi also, according to which the money lent cannot be recovered if the lender does not have a license to lend. In order to render support to his submissions, the Ld. Counsel for the accused relied upon a judgment by the Hon'ble High Court of Bombay in case of Anil Vs. Purshottam (2009).
10.1. He further argued that the loan in the present case was not a friendly loan as the complainant charged an exhorbitant rate of interest, i.e, 24 % per annum. He further argued that the accused has had a consistent stand throughout that he has already repaid the principal amount, which stands proved through the testimony of defence witness, DW2. He further argued that the complainant has not produced any record before the court showing the amount which has been repayed to him by the accused. Also, he relied upon the authority laid down by the Hon'ble Supreme Court in case titled M/s Kumar Exports Vs. M/s Sharma Carpets.
11. In order to establish an offence under Section 138 of the Negotiable Instruments Act, the following ingredients are to be established by the complainant:
(i) Cheque must have been drawn by the accused on an account maintained by him with a banker.
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(ii) Cheque must have been drawn for payment of any amount of money to another person for discharge, in whole or in part, of any debt or other liability.
(iii) Said cheque is returned unpaid by bank for the reason that either the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank.
(iv) The cheque must have been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
(v) The payee or holder in due course makes a demand for payment by giving notice in writing to the drawer of the cheque within 30 days of receipt of information by him from the bank regarding the return of cheque as unpaid.
(vi) Drawer of the cheque fails to make the payment of the said amount to the payee or holder in due course of cheque within 15 days of said notice.
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12. Section 142, Negotiable Instruments Act further requires that the complaint under Section 138 must be made in writing by payee or holder in due course of cheque and such complaint must be made within one month from the date on which the cause of action arises i.e. within one month from the expiry of fifteen days time within which the accused is required to make the payment of cheque amount upon receipt of demand notice.
13. Now coming to the facts of the present case, the impugned cheque was dishonoured for the reason "Account dormant" and the accused admitted that the same bears his signature. "Account dormant" relates to the situation when the account is in inoperative condition, and the legal proposition as applicable upon the cases of "account closed" would apply upon that of "account dormant"
The position of law with respect to dishonour of cheque for the reason 'Account Closed' is manifestly clear in light of judgment of Hon'ble Supreme Court in the case NEPC Micon Ltd. v. Magma Leasing Ltd. (1999) wherein it was held that dishonour of the cheque by a bank on the ground that account is closed would be covered by the phrase the amount of money standing to the credit of that account is insufficient to honour the cheque because cheque is dishonoured as the amount of 11 of 19 money standing to the credit of that account was nil at the relevant time apart from it being closed. Closure of the account would be an eventuality after the entire amount in the account is withdrawn. The expression the amount of money standing to the credit of that account is insufficient to honour the cheque is a genus of which the expression that account being closed is specie.
However, the accused has stated to have given the cheque in question in a blank signed manner. And, at this stage, Section 20 of the Negotiable Instruments Act, 1881 becomes relevant which states that Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder.
12 of 19 Accordingly, if the signature on the cheque has been admitted, it is immaterial as to who has filled in the other particulars. The cheque which has been signed by the account holder but remaining particulars of which, are filled in by some other person is a valid cheque.
It is further not in dispute that the said cheque was returned unpaid for the reason "Account dormant"; that the cheque was presented within the period of its validity; that upon information of dishonour of cheque, the complainant made a demand in writing for payment of cheque amount within a period of thirty days from the receipt of information of dishonour.
Accordingly, ingredients (i), (iii), (iv) and (v) of the offence under section 138 are well established and are not in dispute.
14. However, the accused has averred that he does not owe the liability towards the amount in cheque in question. At this point, provisions of Section 118 read with Section 139 of the Negotiable Instruments Act become relevant which raise a presumption that the negotiable instrument was drawn for a consideration and that 13 of 19 payee or holder in due course of cheque received the said cheque for discharge, in whole or in part, of any debt or other liability.
15. However, this is a rebuttable presumption. The burden of rebuttal lies on the accused. The standard of proof required is not as strict as is required to establish a criminal liability, and would get discharged on the basis of preponderance of probabilities. The rebuttal does not have to be conclusively established, rather such evidence in support of the defence needs to be adduced before the court that the court either believes the defence to exist or considers its existence to be reasonably probable.
16. Coming to the present case, averments have been made by the accused that he had taken a loan of Rs.10 lakhs from the complainant and that he has already repaid the principal amount. He further averred that he had issued the cheque in question in a blank signed manner as security towards the loan taken by him. The burden of proving the said averments is on the accused.
16.1. The accused stated that he had paid the complainant 24 installments of Rs.20,000/ each and 11 installments of Rs.50,000/ each against the 14 of 19 loan taken by him from the complainant. In order to prove the same he summoned and examined a defence witness, DW2, who stated that he had paid installments as aforementioned on behalf of the accused. However, DW2 stated that he used to give installments to one Mr. Garg, while the accused stated in his cross examination (as DW1) that he had paid installments to the complainant and to his son, namely Ashok. It is pertinent to note here that the DW2 talked about only person to whom he used to give the installments, and it is not clear as to who that person was. It was not explained by DW2 as to whether that 'Mr. Garg' was the complainant himself or his son.
16.2. Further, the accused stated that the aforementioned installments were given from 2013 to 2016, and on the other hand, DW2 stated that they were paid from 2013 to 2015. Also, the accused stated in his cross examination that the installments were sometimes paid at the house of the complainant and sometimes, at his shop. On the contrary, DW2 gave the impression that he had paid all the installments to the complainant on behalf of the accused at the shop of the accused. DW2 never said if any installment was paid at the house of the complainant also. 15 of 19 16.3. The accused stated that he did not take any receipt for the payment of installments made by him in cash. It is incredible that the accused, as alleged by him, gave so many installments to the complainant yet he did not care to take a single receipt. Further, the accused admitted that a receiptcumdeclaration was executed and five blank signed cheques were given by him to the complainant when he had taken a loan of Rs 5 lakhs from the latter. Taking these circumstances into consideration, had not a thought came to the mind of the accused to have some proof of repayment with him when the complainant was playing so safe and had made him sign formal documents pertaining to the loan transaction?
Hence, in view of the above discussion and the difference in versions stated by the accused and DW2, it could not be said that the accused has been able to prove that he has repaid the principal amount of the loan by way of installments.
16.4. The accused even failed to show if he took any step for obtaining the possession of his blank signed cheques after he had repayed the entire principal amount, (as alleged by him) or that he had taken any precaution to prevent the misuse of them.
16 of 19 16.5. It was argued on behalf of the accused that the loan in the present matter was not a friendly loan and that the complainant is a professional moneylender who does not have a licence to lend money. No cogent evidence has been adduced by the accused to show that the complainant is into the profession of lending money. Mere averments to this effect would not suffice in absence of any evidence. The complainant admitted in his cross examination that he has filed a complaint against one Lalit Verma also under section 138 Negotiable Instruments Act. This admission does not go on to establish that the complainant is a money lender. To be in profession of money lending would mean to be actively engaged in the same and to have lent money to several persons. At the most, the accused has been able to show money lending by the complainant to only person apart from himself. This does not lead to an inference that the complainant is a money lender.
17. In view of the above discussion, the accused has failed to prove the defence taken by him. Accordingly, the presumption raised by virtue of Section118 read with Section 139, Negotiable Instruments Act remains unrebutted and ingredient
(ii) of offence under Section 138, Negotiable Instruments Act is also established.
18. As regards the fact of receipt of legal notice, the accused stated that he did not receive the same.
17 of 19 It is relevant to discuss provision of Section 27 of General Clauses Act, 1897, which provides that Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression serve" or either of the expressions "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying 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.
Therefore, where the payee sends the demand notice by registered post with correct address of the drawer written on it, it would raise a presumption of service unless the drawer proves that it was not received by him in fact and that he was not responsible for such nonservice.
Burden of rebuttal again lies on the accused. It has not been disputed by the accused that the address mentioned on the notice or postal receipt is not his correct address, rather it is the same address at which the summons were served on the accused.
18 of 19 In view of these circumstances and the above discussion, ingredient (vi) of offence under Section 138 is also established.
19. Upon consideration of the facts of the case and evidence adduced, this Court is of the view that the Complainant has been able to establish the guilt of the accused.
20. Accordingly, the accused is hereby convicted of offence under Section 138 of the Negotiable Instruments Act, 1881.
21. Copy of this judgment be given to the convict free of cost.
Announced in the open Court
on 29th day of August, 2019 (Tarunpreet Kaur)
MM03 (NI Act)/SouthWest
Dwarka/ New Delhi
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