Delhi District Court
Tajender vs . Rajeev Gulati on 29 August, 2020
IN THE COURT OF MS. DEEPALI SRIVASTAVA: MM (N.I.ACT):
SOUTH-EAST DISTRICT, SAKET COURTS COMPLEX: NEW DELHI
Tajender Vs. Rajeev Gulati
CC No.620625/2016
U/s 138 Negotiable Instruments Act, 1881
1. CIS number : 620625/16
2. Name of the complainant : Tajender
S/o Late Shri Rajbir
R/o D-14, Lajpat Nagar-I,
New Delhi-110024.
3. Name of the accused , : Rajeev Gulati
parentage & residential S/o Jagdish Gulati
address R/o 97-B, Jangpura-B,
Near Rajdoot Hotel,
Mathura Road,
New Delhi.
4. Offence complained of or : U/s 138 of Negotiable
proved Instruments Act, 1881
5. Plea of the accused : Pleaded not guilty and
claimed trial
6. Final Judgment/order : Acquitted
7. Date of judgment/order : 29.08.2020
Date of Institution : 10.08.2015
Date of Reserving Judgment/Order : 14.08.2020
Date of Pronouncement of Judgment/Order : 29.08.2020
JUDGMENT
1. By way of the present judgment, this court shall dispose off the present complaint filed by Sh. Tajender (hereinafter referred to as 'complainant') against Rajeev Gulati (hereinafter referred to as 'accused') u/s 138 of Negotiable CC No.620625/16 Tajender Vs. Rajeev Gulati page 1 of 16 Instruments Act, 1881 r/w Section 142 Negotiable Instruments Act, 1881 (hereinafter referred to as 'N.I. Act' in short). Factual Matrix:
2. It is the case of the complainant, that the complainant was earlier running his business in main Bazaar Bhogal, New Delhi where the accused was almost daily visitor to his shop. That due to the aforesaid reason and circumstances and because of his close association with the complainant, accused approached the complainant and requested for a loan of Rs.4,50,000/- to be returned within a period of two months. On his request, complainant granted a friendly loan of Rs.4,50,000/- in the month of May, 2015 to the accused, on his assurance that he will return the same within two months thereof. In order to return the amount of loan, accused issued three cheques i.e. cheque bearing no.000005 dated 01.07.2015 amounting to Rs.2,00,000/- drawn on PNB, Jangpura Extn., New Delhi, cheque bearing no.000006 dated 01.07.2015 amounting to Rs.2,00,000/- drawn on PNB, Jangpura Extn., New Delhi and the cheque bearing no.000014 dated 25.06.2015 amounting to Rs.50,000/- drawn on PNB, Jangpura, Extn., New Delhi in favour of complainant to discharge his legal liability towards the repayment of the loan with the assurance that the same will be duly encashed upon presentation before the bank. At the time of issuance of the aforesaid cheques, the accused had assured the complainant that the cheques were as good as cash and the same will be encashed on presentation to the bank. The cheque of Rs.50,000/- was however, a self drawn cheque given to the CC No.620625/16 Tajender Vs. Rajeev Gulati page 2 of 16 complainant for getting cash payment from the bank whereas the other two cheques of Rs.2,00,000/- each are drawn to the payee's account in favour of complainant, but, to the uttershock to the complainant, when the complainant presented the above mentioned cheques for encashment in the bank of the accused on their due dates, the same were dishonoured vide return memo dated 03.07.2015 with remarks 'insufficiency of funds'. That the third cheque which was of Rs.50,000/- was taken several times to the bank of the accused for getting payment in cash as it was self drawn cheque payable to the bearer and bearer is non else than the complainant but no payment has been made by the bank. That in the facts and circumstances as detailed above, the complainant made a demand of Rs.4,00,000/- being the amount of the two cheques of Rs.2,00,000/- each bearing no.000005 and 000006. Thereafter, aggrieved with the conduct of the accused, complainant sent a legal notice dated 15.07.2015 u/s 138 NI Act, calling upon the accused to make the payment towards the dishonoured cheques as prescribed u/s 138 of the N.I. Act. Even after the expiry of 15 days stipulated period, accused did not make the payment as required by the legal demand notice, hence, the present case was filed by the complainant.
Proceedings before the Court:
3. After perusing the complaint and hearing the arguments of the complainant on the point of summoning of the accused, prima facie it appeared that the offence U/s 138 NI Act, has been committed. Hence, cognizance of the offence u/s 138 NI CC No.620625/16 Tajender Vs. Rajeev Gulati page 3 of 16 Act was taken on 12.08.2015 by the Ld. Predecessor of this court and summons were issued to accused.
4. Notice u/s 251 Cr.P.C. was framed against accused on 12.07.2016, to which he pleaded not guilty and claimed trial. Thereafter, opportunity was given to the accused to file application u/s 145(2) NI Act, to cross-examine the complainant. On 12.07.2016 accused filed the application U/s 145(2),NI Act which was allowed and the case was listed for cross examination of the complainant. On 22.08.2016 and 08.03.2018, complainant was cross examined and the case was listed for statement of accused u/s 313 Cr.PC. On 30.05.2018, the statement of accused u/s 313 was recorded and case was listed for defence evidence. Thereafter, an application u/s 311 Cr.PC was moved by the accused for leading DE. Application in respect of examination of his father, Jagdish Gulati and neighbor, Manoj Kumar was allowed and the case was listed for defence witness. Jagdish Gulati DW1 was examined and duly cross examined, and the case was listed for final arguments. Written arguments were duly filed by both the Ld. Counsels whereupon, final arguments were heard on behalf of both the parties and the case was reserved for judgment.
Evidence:
5. To prove his case, complainant has examined himself as CW-
1 and has filed his evidence by way of affidavit Ex. CW1/1B and relied upon the following documents:-
(a) Original Cheque bearing no.000005 Ex. CW1/1.
(b) Original cheque bearing no.000006 Ex.CW1/2.
CC No.620625/16 Tajender Vs. Rajeev Gulati page 4 of 16
(c) Dishonouring memo dated 03.07.2015 Ex.CW1/3.
(d) Dishonouring memo dated 03.07.2015 Ex.CW1/4.
(e) Copy of Legal notice Ex.CW1/5.
(f) Speed post receipt Ex.CW1/6 and Ex.CW1/7.
(g) Original AD Card Ex.CW1/8.
(h) Copy of cheque bearing no.000014 dated 25.06.2015 Mark A.
6. The accused has examined only DW1-Sh. Jagdish Gulati as defence witness. No documentary evidence has been led by the accused.
Arguments of both parties:
7. Final arguments were heard on behalf of both the parties on 06.08.2020 and 10.08.2020.
8. Ld. counsel for the complainant while re-iterating the contents of the complaint has argued that all the requirements of Section 138, N.I. Act have been fulfilled by the complainant in the present case. He argued that the cheques in question Ex.CW1/1 and Ex.CW1/2 were issued by the accused towards the repayment of friendly loan, hence towards the legally enforceable liability of the accused. He further argued that when the cheques were presented before the bank for encashment, the same were dishonoured on presentation vide return memos Ex. CW1/3 and Ex.CW1/4 dated 03.07.2015 for reasons 'Funds Insufficient'. Thereafter, the legal notice u/s 138 NI Act Ex. CW1/5 dated 15.07.2015 was sent to the accused to make the payment within 15 days stipulated period, but no payment was made by the accused.
Thus, all the ingredients of section 138 NI Act, have been CC No.620625/16 Tajender Vs. Rajeev Gulati page 5 of 16 duly satisfied by the complainant and thus presumption u/s 139 NI Act, has been validly raised against the accused. Ld. Counsel submits that the accused has failed to raise any probable defence to disprove the case of complainant and to rebut the presumption u/s 139 NI Act. Therefore, accused be convicted for the offence u/s 138 NI Act.
9. Per contra, ld counsel for the accused while denying any liability towards the complainant has argued that the complainant is involved in business of match fixing/online gaming which are illegal activities. In regard to the same activities, complainant had forcibly taken the alleged cheques from the accused as security and as such, since the complainant himself is involved in illegal business, accused is under no legally enforceable liability to make any payment to him. Ld. counsel has further questioned the financial capacity of the complainant to lend the loan as alleged by him. It is stated by the counsel that as accused has no legally enforceable liability in favour of complainant, he be acquitted of the offence u/s 138 NI Act.
10. Before deciding the present complaint case, lets consider the legal provisions. For fastening liability u/s 138 Negotiable Instruments Act following are the requirements
(a) Drawing of the cheque by the person on the account maintained by him.
(b) Drawer of the cheque issued the cheque to discharge in whole or in part, any legal enforceable debt or other liability.
(c) The cheque issued has been returned unpaid due to CC No.620625/16 Tajender Vs. Rajeev Gulati page 6 of 16 insufficiency of funds or exceeds the arranged amount.
(d) The drawer fails to make payment within stipulated time after the receipt of demand notice.
Further Section 118 Clause (a) of Negotiable Instruments Act provides for presumptions regarding the consideration for the Negotiable Instruments. It reads as under: -
"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".
Section 146 of Negotiable Instruments Act reads as under:-
"The court shall, in respect of every proceedings under this chapter on production of bank's slip or memo having thereon official mark the denoting that the cheque has dishonoured, presume the fact of dishonour of such cheque, unless and until such fact is disproved."
Section 139 of the Negotiable Instruments Act provides for presumption in favour of a holder. It reads as under:-
"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, or any debt or other liability."
The combined reading of above said sections raises a presumption in favour of the holder of the cheque that he has received the same for discharge in whole or in part of any debt or other liability. However, it is settled principle of law that the presumption available u/s 139 CC No.620625/16 Tajender Vs. Rajeev Gulati page 7 of 16 Negotiable Instruments Act can be rebutted by the accused by raising a probable defence but the burden of proof is on the accused.
Appreciation of Evidence:
11. Coming to the present case in hand, complainant has relied upon the cheques Ex.CW1/1 and Ex.CW1/2, dishonor memos Ex.CW1/3 and Ex.CW1/4, legal notice Ex.CW1/5 to support his case. The complainant has duly proved all the ingredients of section 138 NI, Act. Also, accused has admitted that the cheques in question were given by him to the complainant and the same bears his signatures. As, such presumption u/s 139 NI Act and u/s 118 (a) has been raised against the accused which says that S.139. "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, or any debt or other liability." and S. 118(a) "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".'
12. Now, it is upon the accused to displace this presumption on a scale of preponderance of probabilities and the lack of consideration or a legally enforceable debt but it need not be proved to the hilt or beyond all reasonable doubts. The accused can either prove that the liability did not exist or make the non existence of liability so probable that a CC No.620625/16 Tajender Vs. Rajeev Gulati page 8 of 16 reasonable person ought under the circumstances of the case act on the supposition that it does not exist. This, the accused can do either by leading own evidence in his defence or even by punching holes within the case of the complainant in cross examination.
The accused has to come forth with a convincing defence that appeals to common sense & basic rationality. Only in a case where the accused comes up with a convincing defence to counter liability, that the presumption can be stated to have been rebutted.
13. Considering the plea of the accused u/s 251 Cr.PC, his statement and the evidence led by him, it comes to the fore that the accused has raised following defence in order to rebut the presumption u/s 139 NI Act raised against him. It is the main contention of the accused that the complainant is into illegal business of gambling and the cheques were taken forcibly from the accused as security for the said gambling. As the cheques were taken for a liability arising from illegal transaction, the same is not recoverable u/s 138 NI Act as legally enforceable debt. Secondly it is the defence of the accused that as alleged by the complainant, the loan was given in cash . As such, even if it is admitted than a loan was given, the same being given in violation of Section 269SS IT Act, is an illegal transaction hence again, not a legally recoverable debt. Lastly, accused has questioned the financial capacity of the complainant to lend such a huge amount to the accused. It has been contented that the complainant did not have the means to lend such sum CC No.620625/16 Tajender Vs. Rajeev Gulati page 9 of 16 as loan to the accused and as such no loan was given to accused at any point of time.
14. It is the first defence of the accused that the complainant runs business of online gaming of roulette which is a gambling business. To prove that the complainant is so involved in an illegal business, accused has examined his father Jagdish Gulati, wherein DW-1 deposed that he knew complainant since last many years and he was told by his son that complainant runs the gambling business of roulette game. The statement given by Jagdish Gulati regarding the business of complainant is based on the information passed to him by his son, as such DW-1 do not seem to have personal knowledge of this fact. As per section 60 of Indian evidence act, the oral evidence must be direct, but here DW-1 has neither seen nor heard the complainant carrying on gambling business directly, his knowledge is based on information so passed on by his son. No other evidence has been brought on record by the accused to prove that complainant was carrying on any gambling business. But during the examination of complainant, he has himself admitted that he runs business of roulette.
15. As per Delhi Public Gambling Act, any activity/game which do not involve any skill and is merely an outcome of chance has been made punishable. Also, as per Contract Act, any transaction including any act/event in nature of wagering has been prohibited. As such roulette which is purely a game of chance and do not require any skill, also falls under it. Accused has alleged that the cheques were forcibly taken CC No.620625/16 Tajender Vs. Rajeev Gulati page 10 of 16 from him as security for the gaming business, however complainant alleges that the cheques were given towards the repayment of loan extended by him. Upon question of the loan being alleged to be given to the accused, complainant has been unable to bring on record any agreement/document or receipt of any nature which discloses the loan given by him. Also, if it taken to be true that complainant carries out gambling activities, it no where stopped him from lending any loan to any reasonable means. Once complainant admits that he runs online roulette games, he has admitted the defence of accused to the extent that complainant runs the online gaming business in regard to which cheques are alleged to be taken. Thus, accused has been successful in creating doubt and on basis of preponderance of probabilities, the fact of loan being given to accused.
16. Now it is upon the complainant to prove beyond doubt the transaction of loan between him and accused. Though complainant had taken steps to summon his CA before court, he has been unsuccessful to bring anything on record. Apart from this, no document or any witness has been examined by the complainant which prove that the loan was given by complainant to accused. No ITRs, financial statements/ ledger accounts has been brought on record to substantiate it. Also, no cash receipt etc has been produced which prove that loan was given in cash. Thus, complainant has been unable to prove the fact of loan being extended to accused.
17. Secondly, Ld. counsel for accused while disputing any loan as alleged to be given by complainant, has argued that CC No.620625/16 Tajender Vs. Rajeev Gulati page 11 of 16 even if it is taken to be true that a loan was given by the complainant, but as the same is alleged to be made in cash, it violates Section 269 SS of Income Tax Act, which makes it illegal hence, renders the loan to be an irrecoverable debt u/s 138 NI Act.
As per the settled proposition of law, if a loan is given in cash beyond the permissible limit in violation of S.269SS of Income Tax, the violator is liable to penalty as per section 271 D IT Act. It nowhere negates the fact of loan being given to the other party or makes it void or illegal. Section 296 SS: Section 269SS specifies the rules pertaining to the acceptance of loans, deposits and specified sum. It states that an assessee is restricted from taking or accepting the specified transactions other than by means of an account payee cheque, account payee bank draft or electronic clearing system on the event of the following conditions:
The amount of loan, deposit or specified sum exceeds a sum of Rs.20,000.
Loans, deposits or specified sum availed or accepted earlier haven't been settled.
The amount or its aggregate specified in the first clause together with the amount or its aggregate specified in the second clause constitutes a sum of Rs. 20,000 or more. Section 271D. (1) If a person takes or accepts any loan or deposit or specified sum in contravention of the provisions of section 269SS, he shall be liable to pay by way of penalty, a sum equal to the amount of the loan or deposit or CC No.620625/16 Tajender Vs. Rajeev Gulati page 12 of 16 specified sum so taken or accepted.
Thus, section 271D of IT Act, itself do not declare the transaction illegal or void. It simply imposes a penalty on violator.
Thus, the contention of the accused that any loan beyond Rs. 20,000/- in cash is illegal is untenable in eyes of law.
18. Thirdly, complainant has stated to have given a loan of Rs.4,50,000/- to the accused in cash. This loan transaction has not been supported by any loan agreement as complainant has denied from executing any loan agreement in regard to this. Also, no receipt has been produced before court regarding the receipt of the cheques in questions. Upon being questioned, complainant has stated that no other person was present at time of giving loan, neither at the time when the cheques were given by accused. Also, no books of accounts have been produced by complainant to show the alleged loan transaction. Though complainant seems to have taken stern action against his Chartered account for his absence before the court, no financial document/ITR has been produced by complainant which could reflect that during which period such loan was given or did complainant had the financial capacity to lend such loan.
19. At this stage, it is imperative to point out that Hon'ble Supreme Court in the case K Prakashan v P K Surenderan case has held that if huge amount of money is advanced as loan then the person who has purportedly advanced the loan must also show the solvency to the extent of the loan either CC No.620625/16 Tajender Vs. Rajeev Gulati page 13 of 16 though bank account or through other means. By admitting that no loan document/no receipt, no entry in books of account mentioning the loan, non-mentioning in ITR and no other witness to prove the transaction, a grave doubt is raised on the financial capacity of the complainant to lend the loan.
20. As held in Basalingappa Vs Muudibasappa, SC has held that complainant in a cheque bounce case is bound to explain his financial capacity, when the same is questioned by the accused. In the present case, during cross examination of complainant, when the financial capacity of the complainant is questioned, it falls upon the complainant to explain it beyond reasonable doubt.
Complainant admits of lending Rs. 4,50,000/- in cash to the accused, however he has been unable to show wherefrom he had arranged this sum. Also, no ITR of business or his personal ITR has been produced which could reflect that he had the solvency to lend the sum. Also in absence of any bank statements, his income/ source remain doubtful. By highlighting these infirmities, accused on basis of preponderance of probabilities has been successful in shifting the burden of proof upon complainant to explain his financial capacity. Now it was upon the complainant to prove his financial capacity to lend loan of Rs.4,50,000/- to accused beyond reasonable doubt.
As held in Basalingappa Vs Muudibasappa:
CC No.620625/16 Tajender Vs. Rajeev Gulati page 14 of 16 'To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by parties but also by reference to the circumstances upon which they rely'.
The standard of proof required from the complainant is on scale of beyond reasonable doubt, whereas the accused is required to establish his defense on the scale of preponderance of probabilities. Section 139 NI, Act imposes evidentiary burden on accused, not persuasive burden as been held in Basalingappa v Mudibassapa (2019 SCC 491). It has also been held in Rangappa v Sri Mohan (2010)11 SCC 441 that accused can rebut the presumption u/s 139 NI, Act on preponderance of probabilities.
21. Also, In Bharat Barrel & Drum Manufacturing Company v Amin Chand Payrelal (1999) 3 SCC 35 it was laid down as under:
"The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing 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."
CC No.620625/16 Tajender Vs. Rajeev Gulati page 15 of 16 Once, the accused has been successful in rebutting the presumption u/s 139 NI Act, on basis of preponderance of probabilities, the onus of proving the case is upon the complainant. In the present case, complainant has been unable to give any reasonable explanation or bring on record any documentary/ oral evidence which go on to prove his financial capacity in order to lend loan to the accused beyond reasonable doubt.
22. Hence, it is clear that as per the scheme of the N.I. Act, on proof of foundational facts, a presumption which arosed as to the cheque having been issued in discharge of a legal liability and the burden of disproving which lies upon the accused, has been successfully rebutted by the accused.
Conclusion:
23. From the above said facts, in the thoughtful opinion of this court, accused has succeeded to rebut the presumption raised against him u/s 139 N.I. Act and as per settled law once accused has raised a probable defense creating reasonable doubt about the existence of legally enforceable liability the onus shifts to complainant to prove that cheques were issued by the accused towards a legally enforceable debt or liability, which the complainant has failed to discharge. Hence, accused Rajeev Gulati is acquitted of the offence u/s 138, N.I. Act.
Announced in the open court (DEEPALI SRIVASTAVA) on 29.08.2020 MM(N.I. Act):SED: Saket Courts, New Delhi CC No.620625/16 Tajender Vs. Rajeev Gulati page 16 of 16