$ * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 11th May, 2017 Pronounced on:31st May, 2017 + Crl.A. 98/2017 SANJAY ARORA Appellant Through: Mr. Ankur Jain, Adv. Versus MONIKA SINGH Respondent Through: Mr. Paritosh, Adv. with respondent in person. CORAM: HON'BLE MR. JUSTICE R.K.GAUBA JUDGMENT
1. The appellant had instituted criminal complaint, registered as CC No. 832/2015 (New number 3008/2016), on 7.1.2010 seeking prosecution of the respondent herein for offence under Section 138 of Negotiable Instruments Act, 1881. The Additional Chief Metropolitan Magistrate (ACMM) to whom the case was allocated, after preliminary inquiry, issued process and having secured the presence of the respondent put her on trial, adopting summons trial procedure, by serving upon her a notice of accusations in terms of Section 251 of the Code of Criminal Procedure, 1973 (Cr.P.C) on 25.11.2011. Since the respondent entered plea of not guilty explaining her defence, followed by an application under Section 145 (2) of the Negotiable Instruments Act, she was granted opportunity to cross-examine the complainant (CW-1) who appeared as the solitary witness in support of his case. Having recorded, thereafter, the statement of the respondent under Section 313 Cr.P.C. on 4.2.2016, she not adducing any evidence in defence, the ACMM heard the parties and, by judgment dated 30.3.2016, pronounced acquittal holding that the statutory presumption (under Section 139 of Negotiable Instruments Act) stood rebutted, the facts pleaded by the appellant (complainant) about the liability being highly improbable.
2. By the criminal appeal at hand, instituted with leave of this Court, as granted by order dated 23.1.2017, in terms of Section 378 (2) Cr.P.C., the complainant seeks to assail the afore-said result of the criminal case.
3. The respondent has resisted the appeal by oral submissions on the basis of trial court record which has been called for and perused. Arguments of both sides, through counsel, have been heard.
4. The background facts, simply put, are that the complainant alleges that he and respondent have been acquainted with each other for a long time, she having approached him for financial assistance and he having advanced an amount of Rs. 2 lakhs to her in February, 2009 for repayment of which she had issued a cheque it bearing No. 263601 dated 12th August, 2009, drawn on her account in Canara Bank, Patparganj, Delhi. It is alleged that the said cheque, when presented through the bank of the complainant, was returned unpaid for want of funds immediately whereafter a legal notice dated 25th August, 2009 was served at the instance of the complainant on the respondent to which she did not give any reply.
It was alleged in the complaint that respondent thereafter had approached the complainant again explaining her inability to make the payment of said amount of Rs. 2 lakhs on account of illness of her father who was then hospitalized, she requesting for an additional amount of Rs. 3 lakhs, against this backdrop, promising to return the entire amount within four months. The complainant alleged that out of sympathy towards the pitiable condition of the respondent he had extended further amount of Rs. 3 lakhs to her on 9.9.2009 which was duly acknowledged by her, she taking back the previous cheque dated 12.8.2009, issuing fresh cheque bearing No. 130329 dated 15.11.2009 for total sum of Rs. 5 lakhs, the said cheque, thus, being post-dated, in favour of the complainant, drawn against account of the respondent in Canara Bank, Patparganj, Delhi. It was alleged that the said cheque when presented again returned unpaid with reasons "insufficient funds" on 19.11.2009. The complaint alleged that on 2.12.2009, on the assurance of the respondent, the said cheque was again presented but it was again returned dishonoured on 5.12.2009. It is thereafter that the complainant addressed another legal notice dated 6.12.2009 sent, inter alia, by registered AD post on 8.12.2009 inspite of which the respondent did not make payment and thereby having committed offence under Section 138 of Negotiable Instruments Act.
5. The complainant led evidence on the strength of his affidavit (Ex.CW-1/A) and proved, amongst others, the cheque dated 15.11.2009 (Ex.CW-1/6) which was returned by the bank without payment under memo (Ex.CW-1/7) dated 15.11.2009 and again under memo dated 3.12.2009 (Ex.CW-1/9). He also proved a document, type-written in Hindi (Ex.CW-1/4), it being an acknowledgement of the debt liability executed by the respondent on 9.9.2009 and a promissory note also dated 9.9.2009 (Ex.CW- 1/5) for the said amount. The copy of the legal notice of demand dated 6.12.2009 (Ex.CW-1/10), its discharge by registered AD post against postal receipt (Ex.CW-1/11) on 8.12.2009 and under postal certificate (Ex.CW-1/12) also on 8.12.2009, have further been proved. The complainant also brought on record copy of the legal notice dated 25.8.2009 (Ex.CW-1/1) which had been earlier issued by him in the context of previous cheque dated 12.8.2009 which had also returned dishonoured by the bank.
6. In answer to the notice under Section 251 Cr.P.C., the respondent, while pleading not guilty, explained her defence as under:-
"I had given blank signed cheque in the name of the complainant without writing the cheque amount. I had taken Rs. 30,000/- from the complainant as loan and the complainant had extended me loan through a cheque drawn on Punjab Nations Bank. The said cheque has been misused by the complainant. I had never taken Rs. 5,00,000/- in cash or in kind from the complainant. The complainant had obtained the receiving from me with regard to Rs. 30,000/- extended by him along with interest of 10% per month. I had given the cheque without writing the cheque amount as it was agreed between us that if I failed to make payment of Rs. 30,000/- along with interest, the complainant could have used this cheque for an amount of Rs. 30,000/- plus the interest. I have paid back Rs. 30,000/- along with interest to the complainant in cash but I have no receiving".
7. During cross-examination of the complainant (CW-1), questions were raised as to his financial capacity to extend loan amounts of such value, the complainant conceding that his monthly income from business was Rs. 12,000/-and that he would save money in cash also making some deposits in his bank account. He did not produce his bank passbook nor is shown to have submitted any income-tax returns. He explained that the respondent used to take money from him as interest free loan in the past against which she would give him cheques which he would return upon the money being repaid, pronote for each such transactions also having been executed but destroyed after the liability had been discharged. He referred to one Chhotu as a witness to the transaction wherein the previous loan of Rs. 2 lakhs had been enlarged to the extent of Rs. 5 lakhs by further loan of Rs. 3 lakhs due to the circumstances mentioned above. The said Chhotu admittedly has not been produced in evidence. Questions were raised as to the correctness of the address (B-11, Vikalp Apartment, Plot No. 42, I.P. Extn., Delhi-110092), at which the legal notice of demand dated 6.12.2009 (Ex.CW-1/10) had been sent. It appears that earlier against the backdrop of bouncing of the cheque dated 12.8.2009, the legal demand notice (Ex.CW-1/1) dated 25.8.2009 had been sent to the respondent at similar address, the plot number mentioned therein being 92, rather than 42, as mentioned concerning the cheque which is the subject matter of the case at hand. It, however, must be observed here that the address at which the legal demand notice leading to the present prosecution was sent is clearly the correct address of the respondent inasmuch as this is the address declared by her in the bail bonds which were presented before the Additional Chief Metropolitan Magistrate on 22.12.2010, her mother having stood surety she having declared the same address.
8. After taking note of the evidence to above effect, the ACMM, by the concluding para of the impugned judgment observed and held thus:-
"4. Now, at this very juncture this Court would like to point out certain things. The case of the complainant in the present case does not seem believable. The cross- examination of the complainant has revealed certain improbable facts, for example, the complainant deposed that he earns an amount of Rs. 12,000 only per month and is dependent upon his parents for his livelihood and day to day survival. Now, it is highly improbable that a person who earns Rs. 12,000/- only per month shall grant a loan of Rs. 5 lakhs to the accused when the accused has already showed inability to repay the earlier loans of Rs. 2 lakhs as alleged by the complainant. From the cross-examination of the complainant, this Court is of the opinion that the complainant is a habitual moneylender and is not an income tax assessee and the complainant is not revealing the true and complete facts of the case before this court. It is a cardinal principle of law that one who seek justice must come to the court with clean hands. Accused has been able to rebut the statutory presumptions mandated by the negotiable instruments act and has been able to prove a defence on the scale of preponderance of probabilities and has proved that the facts and story told by the complainant in his complaint are highly improbable if not impossible. Therefore, in view of my above-mentioned observations and discussions, this court acquits the accused."
9. To say the least, the approach of the Additional Chief Metropolitan Magistrate in dealing with the case has been wholly misdirected.
10. The offence punishable under Section 138 of Negotiable Instruments Act, is provided as under:
"138. Dishonour of cheque for insufficiency, etc., of funds in the account. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of 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, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to two year, or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless
(a) the cheque has 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;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.
Explanation For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability."
11. The Supreme Court in Kusum Ignots & Alloys Ltd. v. Pennar Peterson Securities Ltd. (2000) 2 SCC 745 explained the ingredients of the offence under Section 138 of the Negotiable Instruments as under:-
(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;
(ii) that cheque has 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;
(iii) that cheque is returned by the bank unpaid, either because the amount of money standing to the credit of the 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 the bank;
(iv) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days (now 30 days) of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice."
12. As observed by this court, in Col. (Retd.) H.C. Goswami vs. State of Delhi & Anr. in WP(Crl) 949/2009 decided on 18th May, 2017:-
"8. A bare reading of the above provision shows that mere issuance of a cheque does not constitute an offence. The return of the cheque by the bank without payment for either of the two reasons set out in the above provision also does not complete the offence. It is the non-payment of the amount of money represented by the cheque within the statutory period, after service of a notice of demand on the drawer by the drawee of the cheque which constitutes the offence made punishable by the above provision of law".
13. In the context of prosecution for offence under Section 138 Negotiable Instruments Act, the provisions contained in Section 118 (to the extent relevant here) and Section 139 Negotiable Instruments Act are also relevant and may be taken note of 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, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
(b) as to date that every negotiable instrument bearing a date was made or drawn on such date;
(g) that holder is a holder in due course that the holder of a negotiable instrument is a holder in due course:
xxx "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".
14. It may be added here that in terms of Section 142 of Negotiable Instruments Act, the prosecution for offence under Section 138 Negotiable Instruments Act requires cognizance to be taken upon a complaint in writing made "by the payee" or "the holder in due course of the cheque", such complaint necessarily to be made within one month of the expiry of the period of fifteen days, the said one month beginning with the cause of action arising i.e. failure of the drawer to make the payment of the money to the payee within fifteen days upon receipt of the notice of demand, though such period of one month for filing of complaint may be enlarged upon the court being satisfied about the sufficiency of cause for the delay.
15. In Rangappa vs. Sri Mohan (2010) 11 SCC 441, a three judge bench of Hon'ble Supreme Court noted that if the accused in the proceedings arising out of criminal complaint under Section 138 Negotiable Instruments Act admits his signature on the cheque in question, presumption that the cheque pertained to a legally enforceable debt or liability arises under Section 139, such presumption being "of rebuttal nature" and the onus being "on the accused to raise a probable defence". The court noted the statutory presumptions in terms of Section 118 (a) and Section 139 of Negotiable Instruments Act and following the earlier decision in Goaplast (P) Ltd. Chico Ursula D Souza (2003) 3 SCC 232 also held that such presumption would arise giving rise to prosecution under Section 138 of Negotiable Instruments Act even where the cheque is dishonoured on account of "stop-payment" instructions sent by the accused to his bank in respect of a post-dated cheque "irrespective of sufficiency of funds in the account" inasmuch as "by countermanding payment of post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138", since a contrary view would render the penal clause a dead letter providing "a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of ones own wrong". It was added that "post- dated cheque will lose its credibility and acceptability if its payment can be stopped routinely" and that "the purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque."
16. To complete the narration, it may be added that in M.M.T.C. Ltd. vs. Medchl Chemicals & Pharma (P) Ltd. (2002) 1 SCC 234, in the context of "stop payment instructions", the Supreme Court explained the mode of rebuttal of the presumption thus:
"19. The authority shows that even when the cheque is dishonoured by reason of stop-payment instructions by virtue of Section 139 the court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the stop-payment instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there were sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop- payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused."
(emphasis supplied)
17. In relation to the nature of presumption contemplated by Section 139 of Negotiable Instruments Act, in Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal (1999) 3 SCC 35, the Supreme Court held:-
"12. 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 non-existence 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 the 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 direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist."
(emphasis supplied)
18. Similarly, in Hiten P. Dalal vs. Bratindranath Banerjee (2001) 6 SCC 16, it was held as under:-
"22. Because both Sections 138 and 139 require that the court shall presume the liability of the drawer of the cheques for the amounts for which the cheques are drawn, it is obligatory on the court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused. Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court may presume a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter, all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact.
23. In other words, provided the facts required to form the basis of a presumption of law exist, no discretion is left with the Court but 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 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."
(emphasis supplied)
19. Again, in Malllavarappu Kasivisweswara Rao v. Thadikonda Ramulu Firm (2008) 7 SCC 655, it was observed:-
"17. Under Section 118(a) of the Negotiable Instruments Act, the court is obliged to presume, until the contrary is proved, that the promissory note was made for consideration. It is also a settled position that the initial burden in this regard lies on the defendant to prove the non- existence of consideration by bringing on record such facts and circumstances which would lead the court to believe the non-existence of the consideration either by direct evidence or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal."
(emphasis supplied)
20. Taking note of the above judgments, in Rangappa (supra) , it was held thus:-
"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 defendant- accused cannot be expected to discharge an unduly high standard or proof.
28. 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".
(emphasis supplied)
21. It is clear from the above overview that once the execution of the cheque is admitted, the complainant having been proved to be the payee of the cheque, or its holder in due course, statutory presumptions under Sections 118 and 139 of Negotiable Instruments Act arise to the effect that such cheque was drawn or indorsed, for consideration, the holder being its holder in due course, the cheque having been received by such holder for discharge, in whole or in part, of any debt or other liability. The legal presumption, undoubtedly, is rebuttable, the initial burden to rebut being on the defendant who must show, by positive evidence or pre-ponderance of probabilities, non-existence of the consideration by proving the necessary facts and circumstances, either by direct evidence or by bringing on record requisite material, possibly even through the evidence of the complainant, leading the court to believe that the existence of the consideration was doubtful or illegal. A bare denial of liability obviously cannot suffice. It is the onus of the accused to show the improbability by some evidence on record.
22. In the present case, the respondent as the accused did not dispute that the cheque in question bears her signatures and that she had handed it over to the complainant. She claimed she had taken only Rs. 30,000/- as loan by cheque drawn on Punjab National Bank and that the cheque in question when given, was signed by her, but was otherwise blank, even the cheque amount having not been filled up. She did not lead any evidence nor confronted CW-1 with any such theory or facts by any documentary proof. There is nothing on record to show that the complainant had extended loan only of Rs.30,000/- to the respondent by cheque or that the cheque in question was issued against such transaction or that it was blank when handed over. She has not been able to discredit the evidence of CW-1 with regard to the loan of Rs. 5 lakhs initially taken in the sum of Rs. 2 lakhs followed by additional Rs. 3 lakhs. She could not refute the evidence of CW-1 about the acknowledgement of the liability to that extent by document Ex.CW-1/4 or the promissory note (Ex.CW-1/5) contemporaneously prepared and executed.
23. In these circumstances, the defence pleaded by the respondent in answer to the notice under Section 251 Cr.P.C. has remained unsubstantiated.
24. Mere admission of the complainant that he was earning only Rs. 12,000 per month from small business or his failure to file income tax returns, or his omission to produce the bank passbook or to examine Chhotu as a witness in corroboration, are inconsequential. In order to rebut the statutory presumption, it was the burden of the respondent to prove the facts she had pleaded in answer to the notice under Section 251 Cr.P.C. No material in support of such plea having come on record, the statutory presumption under Section 139 Negotiable Instruments Act in the case at hand has not been rebutted.
25. In above view, the impugned judgment cannot be upheld. The guilt of the respondent (accused) for offence under Section 138 Negotiable Instruments Act stands brought home by the evidence adduced by the complainant.
26. In the result, the appeal is allowed. The impugned judgment is set aside. The respondent is held guilty and convicted for offence under Section 138 Negotiable Instruments Act, 1881.
27. This matter shall be listed for hearing on the question of sentence on 04.07.2017.
(R.K. GAUBA) JUDGE MAY 31, 2017 nk