1 IN THE COURT OF MS. [ENTITY] SARVARIA : MM : NI ACT-03 (CENTRAL) : TIS HAZARI COURTS : DELHI. CC No.536072/16 DATE OF INSTITUTION : 05.08.2013 DATE RESERVED FOR JUDGMENT: 18.03.2019 DATE OF JUDGMENT : 05.04.2019 IN THE MATTER OF: M/S The [PRECEDENT] 33/10, Shakti Nagar, Delhi110 007. Through Its Authorised Representative Sh. [ENTITY] Complainant VERSUS Mr. [ENTITY], S/o Sh. [ENTITY], R/o 180, Choudhrane Wali Gali, Rithala, Delhi110085. Accused JUDGMENT :
a) Srl. No. of the case & Date of institution :02406RO15721/2013 & 05.08.2013
b) Date of commission of offence : after the 15th day of receiving of legal demand notice
c) Name of the complainant :M/S The Bharat Co operative T/C Society Ltd.
d) Name of the accused : [ENTITY] e) Nature of offence complained of : [SECTION] [ACT] f) Plea of the accused person :Accused pleaded not guilty h) Final Order : Convicted i) Date of order :05.04.2019
M/S The [PRECEDENT] vs. [ENTITY] COMPLAINT UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT, BRIEF STATEMENT OF REASONS FOR DECISION OF THE CASE: JUDGMENT:
Brief facts
1. The brief facts of the present complaint filed U/[SECTION] of the [ACT] (hereinafter referred to as "[ACT]") are that the complainant is a co-operative society registered under [ACT] and is advancing loan to its members. Sh. [ENTITY] is authorised on behalf of the complainant to sign, verify and file the present complaint. That the accused is a member of the complainant society having Membership No.3148. That the accused had applied for loan of Rs.1,50,000/- in the month of May, 2012 and a sum of Rs.1,50,000/- as loan was sanctioned to the accused on which interest @ 16% were chargeable. The accused entered into an agreement dated 02.06.2012 and agreed to repay the loan in 60 monthly installments of Rs.3,650/- each commencing from July, 2012. That repayment schedule of the loan amount was not regular hence, the accused became defaulter. On 20.03.2013 the accused approached the Society and in order to streamline his account, the accused issued the cheque bearing No.6222611 dated 20.03.2013 for a sum of Rs.1,49,199/-(Rupees One Lac Forty Nine Thousand One Hundred Ninety Nine only) drawn on Vijaya Bank, Rohini, New Delhi-110085 in favour of the complainant. That the complainant deposited the said cheque for clearance and the same was returned unpaid vide memo dated 21.03.2013 with remarks "Funds M/S The [PRECEDENT] vs. [ENTITY] insufficient". The intimation with regard to the dishonour of cheque was intimated to the complainant on 22.03.2013. That the complainant sent a legal notice dated 16.04.2013 through the counsel as required under the provisions of [ACT] calling upon the accused to pay a sum of Rs.1,49,199/-
(Rupees One Lac Forty Nine Thousand One Hundred Ninety None only). The said notice was sent through Registered Post, and Courier as well. That the legal notice was received by the accused as the A.D. card was received by the counsel of the complainant on 22.05.2013. The A.D. card bears stamp of post office Shahdara of dated 21.05.2013. The legal notice was sent through courier as well. It is evidently clear that the legal notice was received on or before 21.05.2013. The accused neither replied the said legal notice nor paid the outstanding amount to the complainant. That the accused failed to make payment of the aforesaid cheque amount within the stipulated period of 15 days. Hence this complaint.
2. Proceedings Before Court
3. In the present complaint summons were issued against the accused. The accused entered appearance and Notice of accusation was framed against the accused on 06.02.2014 to which accused pleaded not guilty and claimed trial. In the defence recorded on same date the accused stated that he admits his signature in the impugned cheques. He had not filled up the details in the impugned cheque. The impugned cheque was issued for purpose of security. He did not receive the legal demand notice.
4. In support of his case the complainant examined AR Sh. [ENTITY] as CW-1 and he proved his affidavit in evidence as Ex.CW1/A, copy of resolution in his favour as Ex.CW1/1; The agreement dated 02.06.2012 and the loan bond as Ex.CW1/2 and M/S The [PRECEDENT] vs. [ENTITY] Ex.CW1/3; cheque bearing no. 622611 dated 20.03.2013 for Rs. 1,49,199/- drawn on Vijaya Bank , Rohini as Ex CW1/4; return memo dated 21.03.2013 as Ex.CW1/5; legal demand notice dated 16.04.2013 as Ex.CW/6; postal receipt as Ex.CW1/7 and courier receipt as Ex.CW1/8; AD card as Ex CW1/9; complaint Ex CW1/10 and receipt of Rs. 20,000/- as Ex CW1/11. He was also cross- examined. The complainant closed his complainant evidence on 20.09.2014.
5. Statement of accused u/[SECTION] [ACT] was recorded on 18.10.2014 wherein he has stated that he had taken loan from the complainant and had issued blank signed cheque for guarantee purpose at the time of availing loan. He was not aware regarding dishonour of impugned cheque. He did not receive the legal demand notice. This case against him is filed due to non payment of instalment. He stated that he wants to make the payment.
6. The accused examined himself as DW1. He was also cross examined. When despite several opportunities the accused did not lead any other defence evidence so defence evidence was closed by the court vide order dated 12.12.2018.
7. I have heard counsel for the parties, perused the record and have gone through the relevant provisions of the law.
Findings
8. The following are the components of the offence punishable under [SECTION] of [ACT]
(1) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/part any debt or liability, (2) presentation of the cheque by the payee or the holder in due M/S The [PRECEDENT] vs. [ENTITY] course to the bank, (3) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque, (4) giving notice in writing to the drawer of the cheque within 15 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount, (5) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice.
9. The contention raised on behalf of accused that legal notice was not served is without any merit as in his cross-examination the accused has admitted receiving legal notice dated 16.04.2013 i.e Ex CW1/6. Also, the legal demand notice Ex CW1/6 was issued at the address 180, Choudhrane Wali Gali, Rithala Gaon, Delhi- 110085 and the same address is mentioned in personal bail bonds furnished by the accused on 18.09.2013. Also, the said contention is without any merits as in view of the decision in [ENTITY] v Palapetty Muhammad & Anr. (2007) 6 SCC 555, which states that in case, drawer of the cheque raises an objection that he never received Legal Notice U/[SECTION] of [ACT], he can within 15 days of the receipt of summons make payment of the cheque amount and in case, he does not do so, he cannot complain that there was no proper service of Legal Notice U/[SECTION] of [ACT]. Hence, in view of the Judgment in [ENTITY], the presumption of service of Legal Notice has arisen if not of the legal notice Ex CW1/6 sent vide registered post then through issuance of summons by the court.
10. As regards the defence of the accused that the cheque in question was a security cheque and thus complaint under [SECTION] [ACT] is M/S The [PRECEDENT] vs. [ENTITY] not maintainable is without any merits in view of the decision of the Hon'ble Apex Court in [PRECEDENT] and [PRECEDENT]. Of Hon'ble High Court of Delhi decided on 29/06/2015 in [CASE NUMBER] and [PRECEDENT] decided on 14/05/2015 and [PRECEDENT]. Of Hon'ble High Court of Delhi the security cheques fall within the purview of [SECTION] [ACT].
11. As per decision in [PRECEDENT]. Of Hon'ble High Court of Delhi decided on 29/06/2015 in [CASE NUMBER] it has been held that the scope of [SECTION] would cover cases where ascertained and crystallized debt or other liability exists on the date when the cheque is presented and not only to the cases where ascertained and crystallized debt or other liability exists on the date on which it was delivered to the seller as a post dated cheque or as a current cheque with a credit period.
12. The defence raised by the accused is that the cheque in question was issued as blank signed and did not fill the details on the cheque in question. At this juncture it would be worthwhile to discuss the provisions under [SECTION] and [SECTION] of the [ACT], which is as under:
20.Inchoate stamped instruments. Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in [India], and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as then case may be, upon it a negotiable instrument, instrument, for any amount specified therein and not exceeding the amount covered by the stamp.
The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount, provided that no person other than a holder in due course shall recover from the person delivering the instrument anything M/S The [PRECEDENT] vs. [ENTITY] in excess of the amount intended by him to be paid thereunder.
118. Presumptions as to negotiable instruments of consideration Until the contrary is proved, the following presumptions shall be made:
(a) of considerationthat 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;
(c) as to time of acceptance that every accepted bill of exchange was accepted within a reasonable time after its date its date and before its maturity;
(d) as to time of transfer. that every transfer of a negotiable instrument was made before its maturity;
(e) as to order of endorsements that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stampsthat a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument has been contained from its lawful owner, or form any person in lawful custody thereof, by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
13. Further, in [PRECEDENT], the Hon'ble Delhi High Court had observed as under :-
"7. Even otherwise, prima facie, it was the petitioners who had handed over the undated cheque for a certain amount to the respondent in terms of a contract between the parties. Since an undated cheque cannot be encashed, it can only mean that the petitioners had authorized the complainant to enter an appropriate date on it. In [PRECEDENT] it was held that when a blank cheque is signed and handed over, it means the person signing it has given an implied authority to any subsequent holder to fill it up. Similarly, in [PRECEDENT] it was held that whoever signs a cheque or accepts a bill in blank, and then puts it into circulation, must necessarily intend that either the person to whom he gives it, or some future holder, shall fill up the blank which he has left. This common law doctrine was also affirmed by Justice [ENTITY] in [PRECEDENT] where it was held that the drawer of an undated cheque gives a prima facie authority to fill in the date. This aspect has also been incorporated in [SECTION] of the [ACT], which deals with Inchoate Stamped Instruments. The Supreme Court in [PRECEDENT] while discussing the scope of [SECTION] held that by reason of this provision, a right has been created in the holder of the cheque. Prima facie, the holder thereof is authorized to complete the incomplete negotiable instrument. In that view of the matter, all further issues that may be raised by the petitioners regarding the nature and scope of the M/S The [PRECEDENT] vs. [ENTITY] authority of the respondent to put any particular date on the cheque in question, are all matters for trial.
8. It is not as if the cheque came to be issued without any consideration whatsoever in the first place or that there was such a glaring defect in the complaint that the decision of the Trial Court to issue summons has ex facie resulted in miscarriage of justice or an abuse of the process of Court, and therefore interference under [SECTION] [ACT] to quash the proceedings is warranted in the interest of justice. The question whether the consideration for which the cheque was issued was ultimately satisfied or whether the cheque was wrongly sought to be encashed, are all issues that must also be decided at the trial. The Supreme Court in the case of [PRECEDENT] held as follows:
"13 the wellsettled law that the power of quashing criminal proceedings should be exercised very stringently and with circumspection. It is settled law that at this stage the Court is not justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the complaint. The inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice. At this stage the Court could not have gone into merits and/or come to a conclusion that there was no existing debt or liability."
The Court further held that:
"17. There is therefore no requirement that the complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability was on the respondents. This they have to discharge in the trial. At this stage, merely on the basis of averments in the petitions filed by them the High Court could not have concluded that there was no existing debt or liability."
14. From the aforesaid discussion, it is manifest that by reason of the provision under [SECTION] [ACT], a right has been created in the holder of the cheque. Prima facie, the holder thereof is authorized to complete the incomplete negotiable instrument. Mere averment to the effect that the accused/drawer of the cheque did not fill in the details on the cheque except for signing on the cheque is not sufficient. Thus, merely that allegation of issuance of incomplete negotiable instrument does not create absolute defence in favour of the accused unless corroborative evidence exists to show that by threat or fraud, a cheque was taken. There is no law that a person drawing the cheque has to necessarily fill it up in his own handwriting. Respondent has not denied his signatures on the cheques. Once he has admitted his signatures on the cheques he cannot escape his liability on the ground that the same has not M/S The [PRECEDENT] vs. [ENTITY] been filled in by him. When a blank cheque is signed and handed over, it means that the person signing it has given implied authority to the holder of the cheque, to fill up the blank which he has left. A person issuing a blank cheque is supposed to understand the consequences of doing so. He cannot escape his liability only on the ground that blank cheque had been issued by him. Thus, this defence is of no assistance to the accused. (See also: [PRECEDENT] decided on 16.11.2016 by Hon'ble High Court of Delhi in [CASE NUMBER]; [PRECEDENT] & [PRECEDENT]
15. At the time of framing of notice the accused admitted the issuance of the cheques in question. Since issuance of cheque in question by the accused is not disputed, hence, presumption U/[SECTION] of the [ACT] is raised.
16. In [ENTITY] v. Sri Mohan AIR 2010 SC 1898 it was observed by the Hon'ble Supreme Court as under :
"14. In light of these extracts, we are in agreement with the respondentclaimant that the presumption mandated by [SECTION] of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in [ENTITY] (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. [SECTION] 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] of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under [SECTION] is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by [SECTION] 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 M/S The [PRECEDENT] vs. [ENTITY] 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], 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 and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. "
(emphasis added)
17. In view of the decision in [ENTITY] laid down by the Supreme Court, the presumption raised under [SECTION] of the [ACT] is of legally enforceable debt or liability and it is for the accused persons to raise a probable defence to rebut the presumption.
18. [SECTION] [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] of the [ACT] specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under [SECTION] Act is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by [SECTION] Act can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong those 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 of proof.
19. The reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled M/S The [PRECEDENT] vs. [ENTITY] position that when an accused has to rebut the presumption under [SECTION] [ACT], 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. 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.
20. As discussed herein above, under [SECTION] [ACT] strong rebuttable presumptions in favour of the complainant arise but same can be rebutted by the accused by way of credible defence.
21. The defence raised by the accused is that he was not aware regarding dishonour of impugned cheque. This case against him is filed due to non payment of instalment. He stated that he wants to make the payment. During his deposition as DW1 he stated that he had received loan amount of Rs. 1,30,000/- although had applied for loan of Rs. 1,50,000/-.
22. The Hon'ble Supreme Court in [PRECEDENT] held, that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist.
M/S The [PRECEDENT] vs. [ENTITY]
23. In the present case the accused has stated that he had received loan amount of Rs. 1,30,000/- although had applied for loan of Rs. 1,50,000/- and has repaid 7 installments of Rs.3,650/- and loan was extended in the year 2012. But in his cross-examination as DW1 admitted that loan was advanced to him @16% pa interest thus the contention of the counsel for the accused that the accused is not liable to pay the cheque amount is without any merits.
24. The contention of the accused that as per [SECTION]/[SECTION] [ACT] any loan granted in cash above Rs.20,000/- attracts penalty and thus the present complaint is not maintainable is without any merits as violation of [SECTION]/[SECTION] [ACT] entails penal consequences provided under the [ACT] and present complaint is not barred under [SECTION]/[SECTION] [ACT].
25. The defence of the accused that the complainant has the initial burden to prove its case is without any merits as only after the accused has rebutted the presumption under [SECTION] [ACT] the burden shifts on the complainant to prove its case/disprove the defence of the accused.
26. In this regard in [PRECEDENT] decided by hon'ble Apex Court in [CASE NUMBER] decided on 15.03.2019, it has been held as under:
In the case at hand, even after purportedly drawing the presumption under [SECTION] of the [ACT], the Trial Court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the Trial Court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been M/S The [PRECEDENT] vs. [ENTITY] raised for want of evidence regarding the source of funds for advancing loan to the accusedappellant. The aspect relevant for consideration had been as to whether the accusedappellant has brought on record such facts/material/circumstances which could be of a reasonably probable defence.
27. The burden of proof to prove his defence was on the accused and in view of the foregoing discussion the accused has failed to prove the same. As per [SECTION] of [ACT] burden of proof means that a party has to prove an allegation before he is entitled to a judgment in his favour. [SECTION] of [ACT] provides that burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any special law that the proof of that fact shall lie on any particular person. The provision of [SECTION] of [ACT] amplifies the general rule of [SECTION] of [ACT] that the burden of proof lies on the person who asserts the affirmative of the facts in issue.
28. The decisions in [PRECEDENT] and [ENTITY] vs Dattaray G Hegde relied upon by the accused is set out in different fact situations and thus this judgment cannot be applied to the facts of the present case and is of no assistance to the accused. It is well settled that a judgment of a Court is only an authority for what it actually decides and not what logically follows from it and judgment of the Court is not to be read mechanically as a Euclids Theorem nor as if it was a statute. The Honble Apex Court has held in [PRECEDENT] that it is well settled that a judgment of a Court is not to be read mechanically as a Euclids Theorem nor as if it was a statute.
29. In view of the aforesaid reasons, the court finds that the accused has not been unable to prove any probable defence and has failed M/S The [PRECEDENT] vs. [ENTITY] to rebut the presumption raised U/[SECTION] of the [ACT].
30. Since the accused has failed to rebut the presumption raised U/[SECTION] of the [ACT], there is no need to go into complainant's evidence for proving the complainant's case. There is nothing coming out in the cross examination of complainant's witness which would probabilise the defence raised by the accused or falsify the case of the complainant. Therefore, the complainant has been able to prove his case beyond reasonable doubt.
31. The complainant has been able to prove that the cheque in question i.e. cheque bearing no. 622611 dated 20.03.2013 for Rs. 1,49,199/- drawn on Vijaya Bank , Rohini as Ex CW1/4 was issued in discharge of legally recoverable liability owed to the complainant by the accused.
32. Therefore, the accused [ENTITY] is convicted for the offence punishable U/[SECTION] of the [ACT] in respect of cheque Ex CW1/4.
(Announced in open [ENTITY] SARVARIA Court on 05.04.2019 ) SARVARIA Date: 2019.04.05 15:48:46 +0530 ([ENTITY]) [ACT]Central. 05.04.2019 Judge Code: 0530
M/S The [PRECEDENT] vs. [ENTITY]