Delhi District Court
18. The Hon'Ble Supreme Court In Kumar ... vs . Sharma Carpets (2009) 2 Scc on 29 June, 2022
IN THE COURT OF SH. P. BHARGAV RAO, M.M.01, N.I. ACT, WEST DISTRICT,
TIS HAZARI, DELHI
C.C. No.18118/16
PS Rajouri Garden DLWT020101192015
M/s Poonam Securities Pvt. Ltd.
Office at J21, Beriwala Bagh,
Hari Nagar, New Delhi
Through its director /AR
Sh. Sanjay Arora
....Complainant
Versus
Lalit Kumar
S/o Sh. Dumar Singh
r/o 1136, S Block,
Mangolpuri, Delhi ......Accused
Date of institution : 20.05.2015
Offence complained of: 138 NI Act
Matter was reserved for judgment: 28.05.2022
Date of Decision: 29.06.2022
Plea of guilt: Plead not guilty
Decision: Acquitted
JUDGMENT:
The present complaint has been filed by the complainant against the accused under section 138 Negotiable Instruments Act, 1881 (hereinafter referred as the "Act").
C.C. No. 18118/16 Dated 29.06.2022 Pages 1 Complainant's Version:
1. Complainant avers that accused made a representation before complainant for availing a finance facility in the nature of Hire & Purchase for vehicles no. DL2W4233 and DL2W5700. It is further avered that accused signed the loan agreement/vehicle loan cum Hypothecation Agreements in respect of vehicles no. DL2W4233 and DL2W5700 and other necessary documents for the financed amount in this regard. Accused undertook to confirm to the payment schedule alongwith agreed rate of interest. The accused had taken the vehicle no. DL2W4223 on finance from complainant at a monthly installment of Rs. 10,300/ for 36 months and vehicle no. DL2W5700 on finance at a monthly installment of Rs. 11,100/ for 36 months. The accused paid installments amount in broken amount to complainant and committed breach of terms of agreement. The possession of the above said vehicles are with accused till date. In the month of April, 2015, accused issued one cheque to the complainant bearing no.133566 amounting to Rs. 5,02,000/ dated 07.04.2015 drawn on Bank of Baroda, Sultanpur Mazra, New Delhi41. Consequently, the complainant presented the impugned cheque with its Banker, IDBI Bank Ltd, Rajouri Garden, New Delhi which got dishonoured vide return memo dated 15.04.2015 with remarks "funds insufficient".
2. Thereafter, the complainant sent a legal demand notice dated 22.04.2015 on address of the accused.
3. Upon failure of the accused to make payment of the cheque in question within the stipulated time of 15 days, the complainant has filed the present complaint u/s 138 of the Act.
4. The complainant examined himself in presummoning evidence and after considering the complaint and entire documents on record, summon was issued by this Court against the accused on 05.06.2015.
Notice against the accused:
5. Notice was framed against the accused on 20.05.2017 and the accused pleaded not guilty and claim trial.
C.C. No. 18118/16 Dated 29.06.2022 Pages 2 Plea of defence of the accused:
6. The accused had taken the following plea in his defence:
"I plead not guilty and claim trial.
I have no legal liability towards the complainant as I have subsequently made some payments to the complainant. The content of my application u/s 145(2) NI Act may kindly be read as my plea of defence. Complainant has misused the cheque in question.
7. Thereafter, accused was permitted to crossexamine the complainant on 20.05.2017.
Complainant's evidence:
8. The complainant examined himself as CW1 reiterating the statements made in the complaint by way of affidavit which is CW1/1. He also relied upon the documents Ex. CW1/A to CW1/J. • Certificate of registration issued by the Reserve Bank of India is Ex.CW1/A(OSR) • Board resolution/authority letter is Ex. CW1/B • Copy of the loan agreements and other documents are Ex.CW1/C(colly)(OSR) • Statement of account of the said vehicles showing balance outstanding amount is Ex. CW1/D(colly) • Original cheque in question is Ex. CW1/E • Original return memo is Ex. CW1/F • Copy of legal demand notice is Ex.CW1/G • Original postal receipt is Ex. CW1/H • Courier receipt is Ex.CW1/I • Tracking report is Ex. CW1/J C.C. No. 18118/16 Dated 29.06.2022 Pages 3
9. However, during the crossexamination of the complainant, accused brought receipts issued by the Arora Finance Company which are as follows: • Receipt of Arora Finance company dated 06.05.2012 of Rs.5000/ is Ex.CW1/D1 • Receipt of Arora Finance company dated 09.07.2012 of Rs.9500/ is Ex. CW1/D2 • Hand written receipt is Ex. CW1/D3 • Receipt of Arora Finance company dated 09.01.2013 of Rs.10,000/ is Ex. CW1/D4 • Receipt of Arora Finance company dated 08.03.2013 of Rs.5000/ is Ex.DW1/D5
10. Thereafter, the complainant as CW1 was duly crossexamined by the Ld. Counsel of the accused. No other witness was examined by complainant. CE was closed by this Court vide order dated 22.10.2019.
Statement of the accused
11. Statement of the accused was recorded under section 313 Code of Criminal Procedure (hereinafter referred as "Cr.P.C") on 11.12.2019 wherein all the incriminating evidences were put up before the accused.
12. Accused stated that the cheque in question bears his signature. He did not receive the legal demand notice in question from the complainant. The legal demand notice in question bears his correct address. He had given the cheque in question to the complainant since complainant had financed the purchase of vehicles. He had returned the major amount of the liability/loan to the complainant.
Defence Evidence:
13. No witness was examined by the accused in support of his defence. DE was closed on 07.02.2020.
C.C. No. 18118/16 Dated 29.06.2022 Pages 4 Final arguments were heard on behalf of both the parties. I have heard the both the Ld Counsels and have given my thoughtful consideration to the material appearing on record.
The Law relating to Sec. 138 NI Act:
14. Before proceeding on the merits of the case, it is considered important to lay down the basic provisions of law with respect to section 138 of the Act which are as follows:
15. Section 138 of Negotiable Instruments Act, 1881 makes dishonour of cheques an offence. The Hon'ble Supreme Court in the case of Krishna Janardhan Bhat v. Dattatraya G. Hegde AIR 2008 SC 1325 held that the procedural requirements of section 138 are:
• There is a legally enforceable debt.
• The drawer of the cheque issued the cheque to satisfy part or whole of the debt.
• The cheque so issued has been returned due to insufficiency of funds.
16. In order to establish an offence u/s 138 NI Act, following ingredients must be fulfilled by the complainant :
(i) The cheque was drawn by a person on account maintained by him for payment of money and the same is presented for payment within a period of 03 months from the date on which it is drawn or within the period of its validity;
(ii) The cheque was drawn by the drawer for discharge of any legally enforceable debt or other liability;
(iii) The cheque was returned unpaid by the bank due to either insufficiency of funds in the account to honour the cheque or that it exceeds the amount arranged to be paid from that account on an agreement made with that bank;
(iv) A demand of the said amount has been made by the payee or holder in due course of the cheque by a notice in writing given to the drawer within 30 days of the receipt of information of the dishonor of cheque from the bank;
C.C. No. 18118/16 Dated 29.06.2022 Pages 5
(v) The drawer fails to make the payment of the said amount of money within fifteen days from the date of receipt of notice.
Points for Determination:
i. Whether the accused in the present case was in receipt of legal demand notice?
ii. Whether presumption under section 118(a) read with section 139 of the NI Act can be raised in favour of complainant in the present case?
iii. If the reply to the above question is in affirmative, whether the accused successfully rebutted the presumption u/s 118(a) r/w Section 139 of the NI Act through preponderance of probabilities?
iv. If the reply to the above question is in affirmative, whether the complainant could prove his case beyond reasonable doubt?
I shall be deciding the abovementioned points of determination separately.
(I)Whether the accused in the present case was in receipt of legal demand notice?
17. The accused in his statement under Section 251 CrPC has admitted the receipt of the legal demand notice.
(II) Whether presumption under section 118(a) read with section 139 of the NI Act can be raised in favour of complainant in the present case?
18. The Hon'ble Supreme Court in Kumar Exports vs. Sharma Carpets (2009) 2 SCC 513, while discussing the contours of section 118(a) r/w 139 of the N I Act, has held interalia the following:
"14. Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
C.C. No. 18118/16 Dated 29.06.2022 Pages 6
15. Applying the definition of the word "proved" in section 3 of the Evidence Act to the provisions of sections 118 and 139 of the Act, it becomes evident that in a trial under section 138 of the Act a presumption will have to be made that every negotiable intstrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under section 118 and 139 of the Act help him shift the burden on the accused. The presumption will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists."
19. In the instant case, the accused at the time of framing of notice u/s 251 has admitted the issuance of cheque.
20. Ergo, this court is of the considered view that the statutory presumptions under section 118(a) and 139 of the NI Act would be raised in favour of the complainant. In the instant case, since, the accused has admitted the execution of impugned cheque, the aforementioned statutory presumptions would be raised in favour of the complainant regarding the fact that the impugned cheque has been drawn for consideration and issued by the accused in discharge of legally enforceable debt.
III) Whether the accused successfully rebutted the presumption u/s 118(a) r/w Section 139 of the NI Act through preponderance of probabilities?
21. In order to create doubt in the complainant's claim regarding the existence of a legal enforceable, the accused has primarily adopted that he has already paid several installments which are exhibited as Ex CW1/D1, Ex CW1/D2, Ex CW1/D3, Ex CW1/D4 and Ex CW1/D5 C.C. No. 18118/16 Dated 29.06.2022 Pages 7 to the complainant which the complainant did not mention in his complaint. Therefore, if all the installments are added to the outstanding liability, the remaining amount would be Rs. 467,130/ and the cheque in question is of Rs. 5,02000/.
22. Ld. Counsel for the accused argues that the cheque in question is more than the liability of the accused and he relies upon the judgments mentioned herein below:
a) S.E. Investments Ltd. Vs. Prem Singh 2019 ACD 459(DEL)
b) Sanjay Kumar Jain Vs. State of Jharkhand and others.2018 ACD 993(JHA)
c) Susamma Raju Vs. K.M. Wilson and another 2018 ACD 545(KER)
d) T.T. Selvaraj Vs. State of Kerala and another 2019 ACD 336(KER)
e) Messers Biharilal Ramnarayan Mantri Vs. Anil Narottamdas Shah and another 2019 ACD 167(BOM)
f) Shiju K. Vs. Nalini and Anr Crl. Rev. Pet. No. 1251 of 2005(KER)
23. Before delving into the facts of the case, it is pertinent to note that the standard of proof which is required from the accused to rebut the statutory presumption under section 118 read with section 139 of the Act is preponderance of probabilities. The accused is not required to prove his case beyond reasonable doubt. This onus on the accused can be discharged from the materials available on record and from the circumstantial evidences. The Hon'ble Supreme Court in M.S Narayan Menon @ Mani vs. State of Kerala, Appeal (Crl) 1012 of 1999 has interalia held the following:
"The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies"
24. Further, it should also be noted that the standard of proof in order to rebut the statutory presumption may be inferred from the materials on record and circumstantial evidences. It is not always mandatory for the accused to examine its own witnesses in order to rebut the said statutory presumption. At this point, reliance may be placed on the decision C.C. No. 18118/16 Dated 29.06.2022 Pages 8 of the Hon'ble Supreme Court in the case of Krishna Janardhan Bhat v. Dattatraya G. Hegde AIR 2008 SC 1325, wherein the Hon'ble Court has categorically held the following:
"32. accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. As accused has a constitutional right to remain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different.
34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove defence on the part of an accused is "preponderance of probabilities". Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies."
25. This principle has been reiterated by the Hon'ble Supreme Court in Rangappa vs. Sri Mohan (2010) 11 SCC 441 wherein while discussing the scope and ambit of statutory presumption under section 139 of the Act, the Hon'ble Court has held the following:
"27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendantaccused cannot be expected to discharge an unduly high standard of proof.
28. In the absence of compelling justifications, reverse onus clause usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally recoverable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely C.C. No. 18118/16 Dated 29.06.2022 Pages 9 on the material submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
26. Thus, section 139 of the Act puts the burden on the accused to prove his defence. However, the accused has to prove his defence on the balance of probabilities and not beyond reasonable doubt. Accused can prove his defence by drawing inferences from the materials already on record (including complainant's evidences), circumstances of the case and also leading his own evidences. Further, the presumption under section 139 of the and NI act cannot be debited upon a denial. The same can be rebutted by the accused only by leading cogent evidence. If the accused successfully creates doubts in the complainant's claim about the existence of legally enforceable debt then the burden of proof shifts back to the complainant who is the required to prove the guilt of the accused beyond reasonable doubt. Reference can be taken from the decision of the Hon'ble Supreme Court in the case of Bharat Barrel & Drum Manufacturing Company vs. Amin Chand Pyarelal 1999 (3) SCC 35, wherein it was held:
"Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the nonexistence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non existence of the consideration can be either direct or by bringing on record preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading evidence as the existence of C.C. No. 18118/16 Dated 29.06.2022 Pages 10 negative evidence is neither possible not contemplated and even if led, it is to be seen with a doubt..."
27. Keeping in mind, the pronouncements laid down by the Hon'ble SC in the aforementioned cases, let us now examine the defence of the accused.
28. Perusal of the crossexamination of the complainant shows that complainant has admitted the payments made by the accused to the complainant on several dates. Relevant portion of the crossexamination is reproduced below:
"It is correct that the payment of Rs. 5,000/ made in Ex CW1/D1 dated 06.05.2012 is not reflected in Ex CW1/D(colly). It is correct that the payment of Rs. 9,500/ made in Ex CW1/D2 dated 09.07.2012 is not reflected in Ex CW1/D(colly). Vol It is mentioned in Ex CW1/D(colly) and the date is wrongly mentioned as 04.07.2012. It is correct that the payments reflected in Ex CW1/D3 are being received by the complainant company. It is correct that the payment of Rs. 8,000/ received on 19.12.2013 for vehicle no. DL2W5700 shown at point A is not mentioned in Ex CW1/D(colly). It is correct that payment of Rs. 10,000/ dated 09.01.2013 in Ex CW1/D4, payment of Rs. 5000/ and Rs. 4000/ dated 08.03.2013 and 28.03.2013 respectively mentioned in Ex CW1/D5 and payment of Rs. 13,000/ dated 21.11.2012 at point B in Ex CW1/D3 pertaining to vehicle no. DL2W4223 are not mentioned in Ex Cw1/D(colly)".
29. Therefore, the complainant has admitted that the payments were made by the accused vide Ex CW1/D1, Ex.CW1/D3 at point A and B, Ex. CW1/D4, Ex. CW1/D5. Further perusal of Ex. CW1/D(Colly) shows that the total outstanding balance was shown as Rs.3,04,130/ & Rs.2,17,500 (Total Rs.5,21,630/). Therefore, as per the Ex. CW 1/D(Colly) the outstanding liability by the accused was of Rs.5,21,630/. Subtracting the aforesaid admitted installments by the complainant shows that a total of Rs.54,500/ was paid by the accused to the complainant which is not reflected in the statement of account i.e. EXCW1/D(Colly). Ergo, the outstanding amount due to the complainant was Rs.4,67,130/. However, it is pertinent to mention that the complainant in his crossexamination stated that the payment of Rs.9,500/ is reflected in Ex.CW1/D(Colly), however, the date is wrongly mentioned as 04.07.2012. In my considered view, even if it is presumed that the entry of Rs.9,500/ was wrongly reflected C.C. No. 18118/16 Dated 29.06.2022 Pages 11 as 04.07.2012 the outstanding liability would of Rs.4,76,630/ which is also less than the amount claimed by the complainant by way of cheque in question.
30. It is well settled law that if the cheque is more than the amount of the debt due, Section 138 cannot be attracted. In this regard, it is pertinent to note that in Angu Paraneswari textiles Pvt. Ltd. v. Sh. Ranjam and Company, 2001 SCC online MAD 922, the Hon'ble Madras High Court held that "Section 138 of Negotiable Instruments Act reads that where any cheque was drawn for payment of any amount of money for the discharge in whole or any part of any debt or other liability and the same is dishonored by the bank, the person who drew the cheque shall be punishable.
Therefore, the cheque drawn should be towards the discharge of either the whole debt or part of the debt. If the cheque is more than the amount of the debt due, I am afraid, Section 138 cannot be attracted. This is a case where the cheque amount was more than the amount due on the date when the cheque was presented. The presentation of the cheque and subsequent dishonor alone raises a cause of action. When the cheque cannot be said to be drawn towards the discharge of either the whole or part of any debt or liability, Section 138 cannot be attracted. On this sole ground, the complaint is liable to be quashed and is accordingly quashed.( emphasis laid)
31. Further, Hon'ble High Court of Delhi in Lyca Finance Limited v. State, 2016 SCC online del 4198, hence held that "A trial has meticulously scrutinised evidence adduced by the parties and on the basis thereof has held that as per the loan agreement Ex CW1/D, petitioner had advanced Rs. 42,600/. As agreed the interest of Rs. 57,000/. CW1 admitted in his crossexamination that respondent no.2 had already paid about Rs. 40,000/ to petitioner.
Statement of account Ex CW1/1 indicated that as on 16.02.2009 Rs.17,100/ was outstanding balance. Over and above this, overdue charges of Rs. 12,451.48/ were added . Even the aggregate of this amount comes to Rs.
29,551.48/ whereas cheque amount was much more than this. Thus, the cheque being of higher amount could not be taken towards discharge of the existing legal liability".
C.C. No. 18118/16 Dated 29.06.2022 Pages 12
32. Therefore, it is a settled position of law that where the cheque amount is more than the underlying debt, the complaint is not maintainable. The said position of law has also been reiterated in M/s Alliance Infrastructure v. Vinay Mittal, 2010 SCC online Del 182.
33. Ld. Counsel for the complainant relies on judgment of the Hon'ble Supreme Court in Uttam Ram v. Devender Singh Hudan & Anr. criminal appeal No. 1545 of 2019.
34. With utmost respect, the case cited by the Ld. Counsel for the complainant is not applicable on the present case as the facts of the case are distinguishable. In Uttam Ram case(supra), the defence taken by the accused was that the cheque book was lost and the cheque was not issued in discharge of any debt or liability. Further, the accused did not take any stand in his statement under Section 313 CrPC that the cheque book was stolen. However in the present case, the accused in the framing of notice as well as in his statement u/s 313 Cr.P.C took the same stand that majority of amount has already been paid to the complainant. Further, the accused has brought on record the receipt issued by the Arora Finance Company. It has been admitted by the complainant in his crossexamination dated 23.10.2018 that the said receipts were issued by the Arora Finance Company on behalf of the complainant company.
35. Ld. Counsel for the accused further argues that the cheque in question also includes the interest which was supposed to be given by the accused as per the loan agreement Ex CW1/C(colly). The said contention is not tenable as the fact that the cheque in question also includes the interest has neither been mentioned in the legal demand notice sent to the accused nor in complaint or in the evidence by way of affidavit. Perusal of the Ex CW1/D(colly) shows that no interest component has been mentioned in the said exhibit. Ergo, the said plea is not sustainable at the stage of final arguments.
Decision:
36. On evaluation of the entire defence pleas, this court is of the considered view that the accused has able to rebut the presumption through preponderance of probabilities. The complainant, has not been able to establish that there was a legal debt or liability standing on the part of the accused towards the complainant on the date of issuance of cheque. Thus, the most important ingredient of section 138 of the Act has not been fulfilled.
C.C. No. 18118/16 Dated 29.06.2022 Pages 13 Decision
37. In view of the above discussion, the accused is acquitted for the offence under section 138 of the Act. Digitally signed by P BHARGAV P RAO BHARGAV Date:
2022.06.30 RAO 16:53:42 +0530 Announced in the open court on (P. BHARGAV RAO) 29.06.2022 MM01/NI Act/WEST/THC/DELHI 29.06.2022 It is certified that this judgment contains 14 pages and each page bears my signature.Digitally signed
P by P BHARGAV RAO BHARGAV Date: RAO 2022.06.30 16:53:49 +0530 (P. BHARGAV RAO) MM01/NI Act/WEST/THC/DELHI 29.06.2022 C.C. No. 18118/16 Dated 29.06.2022 Pages 14