Delhi District Court
It Will Be Apt To Quote Hon'Ble Supreme ... vs Nimesh B Thakore, (2010) 3 Scc 83: on 7 March, 2011
IN THE COURT OF SH. RAKESH KUMAR SINGH:
METROPOLITAN MEGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.-42, TIS HAZARI COURT COMPLEX, DELHI
07.03.2011
JUDGMENT
a. Serial No. of the case
1654/10
b. Date of the commission of the offence
22.09.2000
c. Name of the complainant
Rakesh Kumar
d. Name of accused person and his parentage and residence
Mrs. Suman, W/o Sh. Jitender Kumar Jain, R/o WZ14 Plot No-5, Vishnu Garden, New Delhi.
e. Offence complained of or proved Dishonor of cheque for insufficient funds.
f. Plea of the accused and his examination (if any) Not guilty. No legal demand notice. No loan was availed of. Cheques not issued to the complainant. No liability.
g. Final Order
Held not guilty. Acquitted.
h. Date of such order
07.03.2011
i. Brief reasons:
Complainant's case:
Complainant's case is that Complainant lent a friendly loan of Rs.7,00,000/- to the accused on the assurance of repaying the same within six months alongwith interest @24% per annum. This amount was collected by the complainant from his neighbor shopkeepers and relatives. Towards discharge of the liability of friendly loan, accused issued two cheques to the Complainant i.e. Cheque bearing No.875195 dated 19.09.2000 for Rs.3,00,000/- drawn on State Bank of India, Hauz Qazi Branch, Delhi which is Exh.CW2/B and Cheque bearing No.875194 dated 21.09.2000 for Rs.4,00,000/- drawn on State Bank of India, Hauz Qazi Branch, Delhi which is Exh.CW2/A. 1 1.1. For encashment of the above mentioned both the cheques, complainant presented them with his Banker Syndicate Bank, Naya Bazar, Delhi on 21.09.2000 but returned unpaid to the Complainant on 22.09.2000 for the reasons 'INSUFFICIENT FUNDS' vide Cheque Returning Memo Exh.CW2/C which is of dated 22.09.2000 for which Complainant sent a Legal Demand Notice Exh.PW1/5 which is of dated 30.09.2000 through his Advocate by Regd. A.D. as well as by U.P.C. on 03.10.2000. Accused when failed to repay the amount, complainant filed the present complaint case.
1.2. It may be noted that Complainant i.e. Rakesh Kumar Paliwal has expired during the pendency of this case, and LR of the deceased complainant has been prosecuting the case since then.
Stand of accused:
2. Accused has not examined herself but examined only one person i.e. Kamla Devi in defence to prove that she was residing as tenant in Mewa Niwas / Mewa Bhawan since the year 2002-2004. However, she has not led any evidence or examined any person to controvert the existence of liability.
2.1. In her Written Arguments, accused has built her case in respect of non-existence of liability. Her case is that Complainant being an agent of Shri Balaji Co-Op. Urban T/C Society Ltd. procured a loan of Rs.25,000/- for the accused. The said loan was to be repaid in installments. For which Complainant got opened a bank account of accused with the Banker State Bank of India by giving the address of accused' shop i.e. Naya Bazar, Delhi-6. In order to complete the formalities of the loan, complainant got signed the cheques from the accused to be deposited with the above mentioned Society towards Security. Accused submits that 5 cheques were deposited as Security and were deceitfully kept by the Complainant and later on misused to show / allege that the same had been issued to repay loan of Rs.7,00,000/- allegedly taken by the accused from him, so he filed the complaint.
3. I am satisfied that defence taken by the accused as non receipt of legal demand notice can not succeed. Accused had not controverted the correctness of his address appearing on legal demand notice, postal receipts and returned envelope. Legal demand notice has to be treated as served. There is sufficient material on the record to draw the presumption under Section-27 Genreal Clauses Act and the same has to go in the favour of the complainant. In this respect it will be apt to quote Hon'ble Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed and Another (2007) 6 SCC 555:
"17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable 2 to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskarans case (supra), if the giving of notice in the context of Clause (b) of the proviso was the same as the receipt of notice a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act."
3.1. Accused has examined on Kamla Devi in defence as DW1. This witness in her affidavit stated:
"That I know Smt. Suman W/o Sh. Jitender Kumar Jain, who was residing as tenant in Mewa Niwas / Mewa Bhawan since 2000 to 2004. Her husband was running juice shop opposite to Anaj Mandi, near Railway Station, Sonepat."
This witness does not establish anything. The transaction in question had allegedly taken place in January-2000 and the cheques are dated 19.09.2000 and 21.09.2000. The cheques are allegedly post dated cheques. Witness has not defined the month in the year 2000 and even not clarified the exact position of Mewa Niwas / Mewa Bhawan. Complainant had sent a Notice to the second address of the accused i.e. C/o Plaza Juice Corner, near Gur Mandi, Sonepat, Haryana. The same has been returned back. Interestingly, when Summons was sent to the accused on her first address, the same received back with a report "Praptkarta Plaza Corner Gur Mandi ke samne chali gai hai." The Summons sent to this address i.e. Plaza Juice Corner, near Gur Mandi, Sonepat, Haryana was received back as unclaimed with a report "Bar bar jane par praptkarta dukan par milti nahi notice de diya gaya hai."
Further more, it is mentioned in the order dated 25.01.2002:
"It is submitted on behalf of the accused that the summons could not be served to her as she is not residing at the earlier address which has been mentioned in the complaint."
It is clear from her own admission that the address mentioned in the complaint was at least not wrong.
It is quite clear that accused was residing at the second address given in the Legal Demand Notice and, therefore, presumption of Section-27, General Clauses Act will be applicable.
4. I am also satisfied that the defence taken by the accused as to the fact that complainant failed to establish the presentation and dishonour of the cheques can not help the accused in view of mandatory presumption of law arising under Section-146 NI Act. (This provision being a procedural one may also apply with retrospective effect.) In this respect it will be apt to quote Hon'ble Supreme Court in M/s Mandvi Co-op Bank Ltd vs Nimesh B thakore, (2010) 3 SCC 83:
3"28. Mr. Ranjit Kumar also made a feeble attempt to contend that the provisions of sections 143 to 147 inserted in the Act with effect from February 6, 2003 would operate prospectively and would not apply to cases that were pending on that date. The High Court has considered the issue in great detail and has rightly taken the view that the provisions of sections 143 to 147 do not take away any substantive rights of the accused. Those provisions are not substantive but procedural in nature and would, therefore, undoubtedly, apply to the cases that were pending on the date the provisions came into force. We are fully in agreement and in order to buttress the view taken by the High Court we will only refer to a decision of this court."
4.1. Section-146 of Negotiable Instruments Act reads as under:
"146. Bank's slip prima facie evidence of certain facts.-
The court shall, in respect of every proceeding under this Chapter, on production of bank's slip or memo having thereon the official mark denoting that the cheque has been dishonoured, presume the fact of dishonour of such cheque, unless and until such fact is disproved."
Presumptions are:
i. The cheque has been dishonoured;
ii. The cheque has been so dishonoured for the reason mentioned in the memo.
4.2.. Cheque returning memo is on record. Now it is for the accused to rebut the mandatory presumption in respect of
the dishonour by leading evidence that she was having sufficient funds in her account. Pertinently, accused has not taken a defence that the cheque does not pertain to her account.
5. Now the only this remains to be discussed is the issue of liability in respect of the cheques.
Discussion on factual position:
6. In her examination under section 313 Cr. P. C, accused has taken a defence that she had neither taken any loan from the complainant nor given any cheque to him.
6.1. Complainant is primarily relying upon the mandatory presumptions of law. He has not led any other evidence or filed any other document in support of his claim. Mandatory presumptions of law arising under section-118 & 139 NI Act may be summarized as under:
4Section-118 of Negotiable Instruments Act reads as under:
"118. Presumptions as to negotiable instruments.-
Until the contrary is proved, the following presumptions shall be made:
(a) of consideration: that every negotiable instrument was made or drawn for consideration, and that every such instrument when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;"
Presumptions are:
i. Cheque was drawn for consideration;
ii. Cheque was transferred for consideration;
iii. Cheque was accepted for consideration.
Section-139 of Negotiable Instruments Act reads as under:
"139. Presumption in favour of holder.- It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt, or other liability." Presumptions are:
i. Holder of the cheque has lawfully received the cheque, meaning thereby that the holder was in lawful possession of the cheque;
ii. The cheque was given in discharge of any debt or liability;
iii. Legally enforceable debt or liability was in existence at the time of issuance of
the cheque; (contrary view has been overruled by the three judges bench of Hon'ble Supreme Court in Rangappa vs S. Mohan decided on 07.05.2010).
iv. The cheque was of the nature as described in section-138;
v. The cheque was drawn by the person who was maintaining the account
pertaining to the cheque;
vi. Amount of money mentioned in the cheque was intended to be given;
No doubt, the mandatory presumptions of law may arise in favour of the complainant as discussed above. However, the inference of presumptions are left to the discretion of the Court. In this respect Hon'ble Supreme Court in Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 has observed that:
"23. In other words, provided the facts required to form the basis of a presumption of law exists, the discretion is left with the Court to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, after 5 considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man."
6.2. Accused has tried to rebut the mandatory presumptions in respect of the consideration, liability and the existence of the liability.
6.3. Accused has not denied relationship with the Complainant. The defence in respect of existence of liability taken by the accused are:
a. Five cheques which were given as Security in respect of a loan taken by Balaji Cooperative Urban T/C Society Ltd. were available with the complainant since the Complainant was an agent of the Society and was indulged in the loan transaction.
b. Complainant has not established the fact of the availability of amount of Rs. 7,00,000/- with him.
6.4. Complainant was cross-examined. He has stated:
"I got sanctioned a loan of Rs.25,000/- from Shri Balaji Cooperative Urban Thrift and Credit So. Ltd. Hauz Qazi Delhi to accused Suman Jain, Jitender Jain, Ravinder Jain and Kaushalya Devi."
"The repayment of the loan can be made through cheque or through cash."
"I got open the account of the above four persons with the said society."
"It is correct that society keeps blank signed cheques as security."
"It is correct that blank signed cheques with regard to loan taken by Jitender Jain, Kaushalya Devi and Ravinder Jain and were given to the society."
(Interestingly, in this particular statement there is no mention of the name of Suman whereas in all other statement in respect of the loan and bank account, name of all the four persons are mentioned.) 6 In the light of all the above extracted statements, we cannot through the story of accused as being frivolous or concocted. The plea of the accused that the cheques were given as security in respect of the loan can not be said to be wholly improbable.
One more statement of the complainant may be noted.
"It is correct that I have received a notice from the counsel for accused for returning 5 cheques including 2 cheques in question. The copy of the said notice is Ex.PW1/D1. Volntd. I had sent the reply of the said notice which is Ex.PW1/12."
(The notice Ex. PW1/D1 appears to be an afterthought of the accused. Accused appears to have sent this notice on 03.01.2002. NBW was directed to be issued on 12.12.2001 observing therein "It is stated by ld. cl. for complt. that accused is waiting outside the court & intentionally did not appear when the matter was called." It appears that accused was having knowledge of the case pending against her and to escape from the trapping of law, she built a base by sending the said notice to the complainant. On 25.01.2002 NBW was recalled. It is mentioned in the order dated 25.01.2002 "It is submitted on behalf of the accused that the summons could not be served to her as she is not residing at the earlier address which has been mentioned in the complaint." It is clear from her own admission that the address mentioned in the complaint was at least not wrong. Clearly, accused was having knowledge of the case. Accused has not clarified the position in respect of the action taken against the society or the complainant when they failed to return her cheque. Complainant had replied to this notice. In such circumstances, this notice requesting return of the cheques can not be relied upon in absolute sense. However, this notice to some extent may be treated as corroborative peace if other circumstances do favour the accused.) 6.5. In his Cross-Examination, Complainant has stated:
"Previously I was doing business of Commission....."
"I used to maintain accounts while doing the business of commission agent".
(No such account has been produced by the complainant to show his income.) "I have a Saving Bank Account in Syndicate Bank Naya Bazar, there is balance in the said bank account which is less than Rs.1,000/-."
"I did not give any money by withdrawing from my bank account."
"Out of Rs.7 lakhs, I had Rs.2 lakhs of my own,.........."
"The amount of Rs. 2 lakhs with me, some of the amount was from committees account and the rest was from my 7 shop's sale. i.e. I received the payment of the parties which was to be returned to the shopkeepers after deducting commissions."
"I do not remember as to from whom I had collected the amount of committee."
(No details of committees have been filed by the complainant to establish the fact that he was having any such amount with him. Even no person of so called committee has been examined by the complainant. Though the complainant claimed to have collected some amount from the shopkeepers, he did not examine any of them.) ".......4 lakhs I took from some Viney Kumar....."
"Vieny Kumar Jain deals in pulses. I do not know what he is doing these days."
"There is no writing of taking Rs. 4 lakhs from Viney Kr. Jain."
(How can we believe the position? There is no writing in respect of the loan taken from this viney kumar. Complainant has not examined this person to establish the fact that he had taken the loan of Rs. 4 Lakhs from viney kumar. Complainant has not stated anything in respect of the return of the said loan amount to viney kumar. Instead he is saying that he has no knowledge of the whereabouts of viney kumar.) ".........and Rs.1 lakh from my father in law."
"I also did not give any writing to my father in law."
(Here again there is no writing to establish the fact that complainant had taken Rs. 1 Lakh from his father in law. He has not examined his father in law despite the fact that the father in law was residing with the complainant for last 6-7 years means from year 1995 onwards.) "I arranged the said money i.e. Rs. 7 lakhs in 3/4 days from 20.1.2000 to 23.1.2000."
(A person may or may not be able to arrange a sum of Rs. 7 Lakhs in 3-4 days. It all depends upon the circumstances. However, in the present fact situation, this statement can not be believed. Complainant was not arranging the money for the advancement of his business but for advancing a friendly loan to someone. And that too when his financial soundness was itself in doubt. As per his own admission he was not filing ITR for last 4-5 years due to loss suffered by him in the business.) 6.6. In his Cross-Examination, Complainant has also stated:
"I was an Income tax payee but I am not filing my return for the last 4/5 years because of the losses suffered by me in my business."8
(This statement was given on 13.03.2003. If the complainant was not filing the Income Tax Returns for the last 4/5 years due to loss suffered in the business, the period when he stopped filing the ITR should be taken as the year 1998. He has assigned the reasons for non-filing of the ITR as loss in the business. This be so i.e. he had suffered a loss in business in/around the year 1998, how could have he advanced a loan of Rs.7,00,000/- to anyone in the year 2000 ?).
6.7. Circumstances discussed at paragraphs-6.5 & 6.6 create a serious doubt as regards the accumulation of Rs. 7 lakhs.
7. Hon'ble High Court of Bombay in Peter Mascarenhas Vs. Monsabre Ashley Oswald Dias, CCC X-2010(4) 234 has dealt with the above aspect in great detail. This was also a case of frindly loan of Rs. 12 lakhs which the complainant had lent to the accused after collecting the same from several other persons. Complainant had examined the persons from who he collected the amount. There was also an agreement executed by the accused person. However, after a detailed factual and legal discussion, Hon'ble High Court has acquitted the accused primarily on the ground that complainant has failed to discharge his onus to establish accumulation of money. It has been observed therein that:
"In juxtaposition though the Complainant was faced with the aforesaid material which has come through the cross examination of Cw.2, Cw.3 and Cw.4, the Complainant did not choose to lead any further evidence to discharge the burden of proving the existence of the liability when the burden again shifted to him. Applying the principles that the Complainant has to prove the offence beyond reasonable doubt but the Accused has to only probabilise his defence, in my view, the test has been satisfied by the Accused then the Complainant. The Complainant as can be seen has not led any further cogent evidence to prove the factum of the lending of the money to the Accused and thereby has not discharged the burden which had shifted to him on account of the evidence which has come in cross examination of the Complainant and his witnesses."
7.1. In the present case, complainant has not examined any other person, has not shown any documentary proof in respect of loan. The instant case is even weaker than the case before the Hon'ble High Court of Bombay.
8. Complainant has relied upon a decision in case titled V S Yadav vs Reena 2010(4) JCC (NI) 323 to contend that a mere explanation given in the examination recorded under Section-313 is not sufficient. Hon'ble High Court of Delhi in the said judgment has observed that:
"3. The appellant had taken a stand that no reply to the notice of legal demand was sent by the respondent, instead, envelopes with blank sheets in it were sent by the respondent. In her examination under Section 281 Cr. P.C. she did not deny issuance of cheques, but, took a defence that cheque were issued as security for seeking loan but no loan was advanced and the cheques were therefore without consideration. The learned MM 9 observed that conviction under Section 138 of N.I. Act cannot be made acting on evidence of complainant and considering the presumption under Section 139 of N.I. Act. The complainant has to prove beyond reasonable doubt the debt or liability of the accused. Learned MM observed that complainant had not specified the date of giving loan and a reasonable man would remember the date of giving substantial sum of money as loan to other and this blissful forgetness of the date by the complainant raised doubt about the liability of the accused, more so, in view of the stand taken by the accused that the cheques were issued as security and the same were never returned. *******
7..............The Trial Court in this case turned a blind eye to the fact that every accused facing trial, whether under Section 138 of N.I. Act or under any penal law, when charged with the offence, pleads not guilty and takes a stand that he has not committed the offence. Even in the cases where loan is taken from a bank and the cheques issued to the bank stand dishonoured, the stand taken is same. Mere pleading not guilty and stating that the cheques were issued as security, would not give amount to rebutting the presumption raised under Section 139 of N.I. Act. If mere statement under Section 313 Cr. P.C. or under Section 281 Cr. P.C. of accused of pleading not guilty was sufficient to rebut the entire evidence produced by the complainant/ prosecution, then every accused has to be acquitted. But, it is not the law. In order to rebut the presumption under Section 139 of N.I. Act, the accused, by cogent evidence, has to prove the circumstance under which cheques were issued. It was for the accused to prove if no loan was taken why he did not write a letter to the complainant for return of the cheque. Unless the accused had proved that he acted like a normal businessman/prudent person entering into a contract he could not have rebutted the presumption u/s 139 N.I. Act. If no loan was given, but cheques were retained, he immediately would have protested and asked the cheques to be returned and if still cheques were not returned, he would have served a notice as complainant. Nothing was proved in this case."
8.1. Against this, the accused has relied upon a decision of Hon'ble Supreme Court in Kamala S vs Vidyadharan M.J. & Anr Appeal (crl.) 233 of 2007, decided on 20.02.2007 "15. The Act contains provisions raising presumption as regards the negotiable instruments under Section 118(a) of the Act as also under Section 139 thereof. The said presumptions are rebuttable ones. Whether presumption stood rebutted or not would depend upon the facts and circumstances of each case.
16. The nature and extent of such presumption came up for consideration before this Court in M.S. Narayana Menon Alias Mani V. State of Kerala and Anr. [(2006) 6 SCC 39] wherein it was held :
10"30. Applying the said definitions of "proved" or "disproved" to the principle behind Section 118(a) of the Act, the court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration dos not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon."
17. This Court clearly laid down the law that standard of proof in discharge of the burden in terms of Section 139 of the Act being of preponderance of a probability, the inference therefor can be drawn not only from the materials brought on record but also from the reference to the circumstances upon which the accused relies upon. Categorically stating that the burden of proof on accused is not as high as that of the prosecution, it was held;
"33. Presumption drawn under a statute has only an evidentiary value. Presumptions are raised in terms of the Evidence Act. Presumption drawn in respect of one fact may be an evidence even for the purpose of drawing presumption under another."
It was further observed that ;
" 38. If for the purpose of a civil litigation, the defendant may not adduce any evidence to discharge the initial burden placed on him, a "fortiori" even an accused need not enter into the witness box and examine other witnesses in support of his defence. He, it will bear repetition to state, need not disprove the prosecution case in its entirety as has been held by the High Court.
39. A presumption is a legal or factual assumption drawn from the existence of certain facts."
8.2. I have considered the rival contentions based upon the aforesaid judgments. I am of the opinion that an accused has a right to rebut the presumption by placing reliance upon the circumstances brought and material placed by the complainant. In this respect a three Judges bench of Hon'ble Supreme Court in Rangappa Vs. S. Mohan decided on 07.05.2010 has held that:
"However, it must be remembered that the offence made punishable by Section 138 11 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 accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses 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 enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials 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."
9. In the light of the above discussion, I am of the opinion that accused has created a reasonable doubt in respect of accumulation of money, existence of liability and issuance of cheques for consideration.. The complainant has not tried to establish the factum of loan by any other means and has chosen to rely only upon the mandatory presumptions of law. The prosecution has to fail in the circumstances discussed above.
10. I accordingly return a finding of not guilty against the accused person.
11. Accused is hereby acquitted from the charges in the present complaint case.
12. A copy of this order be placed on the official website of the District Court.
(Rakesh Kumar Singh) MM(NI Act)-01, Central/07.03.2011 12