IN THE COURT OF SH.NAVJEET BUDHIRAJA, METROPOLITAN MAGISTRATE, SPECIAL COURT06, DWARKA COURTS, NEW DELHI. PUNJAB NATIONAL BANK VERSUS JAGBIR SINGH P.S.: CANNOUGHT PLACE U/S: 138 NEGOTIABLE INSTRUMENTS ACT 1.
Serial No./CC No. of the case : 30033/10 2. Name of the complainant : Punjab National Bank, 11th Floor, Atma Ram House, 1 - Tolstoy Marg, New Delhi 110 001 3. Date of institution : 22.02.2010 4. Name of the accused, his : [ENTITY], parentage and residence M - 44 C, Gali No. 3, New Mahabir Nagar, Near Tilak Nagar, New Delhi. 5. Date when judgment was : 13.07.2011 reserved 6. Date when judgment was : 12.08.2011 pronounced
7. Offence complained of and : [SECTION] [ACT] proved
8. Plea of accused : Pleaded not guilty and claimed trial [CASE NUMBER] 1 of 14
9. Final Judgment : Accused found guilty of offence under [SECTION] [ACT] and convicted for the same.
: J U D G M E N T : 1 Vide this judgment, I shall decide the present complaint filed by the complainant Punjab National Bank under [SECTION] of [ACT] (hereinafter referred to as "[ACT]") against the accused [ENTITY].
2 Factual matrix of the complaint is that the complainant is a nationalized bank and engaged in the business of banking and finance under the guidelines of Reserve Bank of India having its office in New Delhi. It is averred that accused approached the complainant for loan and complainant sanctioned a loan of Rs. 9.5 lacs in the name of [ENTITY] and [ENTITY] for purchase and renovation of house on 28.04.2005. It is further averred that accused has assured the complainant that he shall make the repayment as per the terms and conditions of the sanction facilities but despite the assurance, accused started defaulting in making the payment of the loan amount and complainant was constrained to take possession of the mortgaged house on 12.08.2009. Further, accused offered one time settlement to the complainant for an amount of Rs. 8,50,000/ vide letter dated 20.10.2009 and the above said one time settlement was approved and the same was conveyed to the accused on 30.10.2009. It is further averred that accused had issued 2 cheques bearing number 035068 and 035069 dated 26.10.2009 and 30.10.2009 drawn on HDFC Bank allotted for an amount of Rs. 25,000/ each towards the part payment. The said cheques when presented for encashment were returned back unpaid with the remarks "Funds Insufficient" vide memo dated 30.11.2009.
[CASE NUMBER] 2 of 14 Further complainant issued statutory notice through its counsel dt. 10.12.2009 through registered AD and [ACT] calling upon the accused to pay the amount covered by the cheques within 15 days from the receipt of the notice but despite service of the notice accused failed to make the payment thereby committing offence under [SECTION] of [ACT] for the prosecution of which the present complaint is filed.
3 After taking cognizance of the offence summons were issued to the accused post which accused entered appearance and was admitted to bail on 09.04.2010. Thereafter, notice under [SECTION] [ACT] encompassing all the accusations against the accused was served upon the accused to which he pleaded not guilty and claimed trial 4 In complainant's evidence, complainant got examined Sh. [ENTITY], the manager of PNB as CW1 who tendered his evidence by way of affidavit Ex.CW1/A1. Other documents relied upon by CW1 are general power of attorney Ex.CW1/A, cheques are Ex.CW1/B and Ex.CW1/B1, returning memo Ex.CW1/C and Ex.CW1/C1, legal notice Ex.CW1/D, postal receipts Ex.CW1/E and Ex.CW1/E1 and AD card is Ex.CW1/F and Ex.CW1/F1. In cross examination it is deposed by CW1 that particular loan transaction stated in the complaint was not sanctioned in his presence but stated that he has personal knowledge of the sanctioning of the loan amount. CW1 further deposed that he cannot say how many installments have been paid by the accused and since when he had defaulted in paying the installments. CW1 admitted that Smt. [ENTITY] had filed a [CASE NUMBER] before the Debt Recovery Tribunal and vide order dated 19.09.2008 DRT had directed [ENTITY] to make the payment in 12 installments. Thereafter, the offer of the settlement letter got Ex.CW1/H. CW1 further deposed that one time settlement was offered by [ENTITY] but [CASE NUMBER] 3 of 14 denied the suggestion that one time settlement offer was never accepted by the bank. CW1 further stated that the information of the acceptance of the offer was given to the accused but admitted that the said acceptance is not placed on record. CW1 further admitted that the cheques in question were issued alongwith offer letter but not for the repayment of the loan amount. CW1 denied the suggestion that accused has no liability against the cheques in question. CW1 further deposed that the legal notice was issued to the accused as well as in the name of his wife but admitted that acknowledgment card does not bear the signature of the accused. Complainant's evidence got closed vide order dt. 07.02.2011. 5 The complainant's evidence was followed by Statement of the accused under [SECTION] [ACT] read with [SECTION] [ACT] wherein accused admitted to have availed loan of Rs.9.5 lacs from the complainant. Regarding the issuance of the cheques in question, he stated that the said cheques were given at the time when he made the offer of settlement and was assured by the complainant that these cheques will not be presented for encashment if he pays the amount of Rs. 50,000/ as per payment towards the settlement which he had paid to the complainant. Accused admitted to have received a legal demand notice from the complainant. Lastly, accused stated that he wanted to lead defence evidence, but despite giving number of opportunities, accused failed to adduce DE, therefore, right of the accused to lead DE got closed vide order dated 18.04.2011.
6 Learned counsels for complainant and accused addressed their respective final arguments at length. Before appreciating the evidences and arguments of both the parties, it would be appropriate to advert to the relevant provisions of [ACT].
[CASE NUMBER] [SECTION] of [ACT] reads as under [SECTION] of [ACT] reads as under:
[SECTION] 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 make 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 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 bank within a period of six months from the date on which it was 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 15 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.
7 [SECTION] of the [ACT] has three ingredients, viz., (i) that there is a legally enforeceable debt; (ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which pre supposes a legally enforeceable debt; and (iii) that the cheque so issued had been returned due to insufficiency of funds. The proviso appended to the said section provides for compliance of legal requirements before a compliant petition can be acted upon by a court of law.
[CASE NUMBER] I would now embark upon the evidences adduced and the arguments advanced by both the parties. 9 It is contended by learned counsel for complainant that accused approached the
complainant for loan and a sum of Rs 9.5 lacs was sanctioned in the name of accused and his wife for purchase and renovation of house. Accused started defaulting in payment of his monthly installments and then later on offered a settlement for a sum of Rs 8,50,000/ vide letter dated 20.10.2009.The said settlement was approved by the complainant and the same was conveyed to the accused on 31.10.09.It is further contended that accused had issued two cheques of Rs 25,000/ each as part payment towards the settlement but on presentation with the banker, the said cheques got dishonoured with the remarks "funds insufficient".Thereafter legal notice was sent to the accused to which he did not reply hence committing offence under [SECTION] of [ACT]. On the other hand it is contended by learned counsel for the accused that although the accused offered a settlement to the complainant but the said offer has not been accepted by the complainant therefore in the absence of any acceptance , contract could not be said to be concluded. It is further contended that cheques were not given towards the loan but alongwith the offer of settlement and when the offer is not accepted then there is no point of presenting the cheques for encashment. He further contends that complainant witness has accepted in his cross examination that no such acceptance letter is on record and also admitted that cheques were not given towards the repayment of the loan therefore the same cannot fall within the purview of [SECTION] of [ACT].
10 From the aforesaid argument it is manifest that entire bone of contention is the letter Ex CW1/H written by the accused to the complainant bank. So before giving my finding on the [CASE NUMBER] 6 of 14 aforesaid issue, let me reproduce the wordings of the said letter. The said letter is addressed to loan manager, Atma Ram House Building , New Delhi. Although the said letter is in Hindi, for the sake of convenience I am translating the same in English. The body of the letter is as follows:
" my housing loan NC288 has been settled for a sum of Rs 8,50,000/. I will pay the said sum by 15 march 2010.Today , I have given the cheques of Rs 50,000/."
11 The said letter is signed by accused along with the date 21.09.2009 and his address. The said letter bears the signature and stamp of the complainant bank.The said letter was produced by the complainant witness CW1 during his cross examination and accused has not disputed the authenticity and genuineness of the said letter. So, it is an admitted position that the letter Ex CW1/H was written by the accused to the complainant bank along with the cheques in question Ex CW1/B and B1.
12 Now adverting to the contention of learned counsel for the accused that the said letter was an offer of settlement which has not been accepted by the complainant therefore the cheques given along with it could not have been presented for encashment. Regarding this contention, I hold that firstly the language of the said letter does not depict that it is an offer of settlement. In fact the plain reading of it gives an impression that accused has already effected a settlement with the complainant for a sum of Rs 8,50,000/ and cheques of Rs 50,000/ were given as part payment along with the letter. So there arises no question of the said settlement being accepted by the complainant. Secondly, even if we assume that the said letter was an offer of settlement and not the settlement in itself, then why did accused gave cheques along with the letter. The normal course would have been that accused first had given the offer to the [CASE NUMBER] 7 of 14 complainant and waited for their acceptance and then after agreeing upon the terms of settlement should have given the cheques. But the act of giving cheques in question along with settlement letter Ex CW1/H evinces the intention of the accused that he has already settled the matter with the complainant and to show his bonafides , he is giving the cheques of Rs 50,000/ as part payment. So in such circumstances, in my opinion, the acceptance on the part of complainant remained a mere formality and therefore even if the acceptance letter is not on record, still it will not be fatal to the case of the complainant or a ground to throw out the complaint.
13 Moreover, perusal of the complaint and the letter Ex CW1/H shows that cheques were given to the complainant on 21.09.2009 and the two cheques were dated 26.10 09 and 30.10.09 and the cheques were returned unpaid on 30.11.2009 vide memo Ex CW1/C and C1. So, it means that the said cheques were presented for encashment towards the end of November, 2009 meaning thereby that there was a time period of two months between the handing over of the cheques and presentation of the same by complainant for encashment. So, the question arises that why did accused keep mum for two months. If he had not received any intimation or correspondence from the complainant regarding his settlement letter Ex CW1/H during those two months, then as a diligent and prudent person he should have enquired about the status of his offer and also asked for the return of his cheques which goes on to prove that the said cheques were given by the accused after embarking upon the settlement with the complainant and therefore it was incumbent upon him to have made arrangement for the encashment of the said cheques.
[CASE NUMBER] 8 of 14 14 Also in order to fortify my observation, I would like to refer to [SECTION] of [ACT] which says that :
"Performance of the conditions of the proposal , for the acceptance of any consideration for a reciprocal promise which may be offered with a proposal is an acceptance of the proposal"
The aforesaid provision implies that performing the conditions or terms of the proposal is an acceptance of the same. So applying the aforesaid provision to the facts of the present complaint, it comes out that the act of complainant of presenting the cheques for encashment given by the accused along with his letter implies the acceptance of the same.
15 Hence, in view of the aforesaid discussion, I hold that the contention of learned counsel for the accused that cheques in question do not fall within the purview of [SECTION] of [ACT] is without any force.
16 Another contention raised by learned counsel for the accused is that accused had paid a sum of Rs.25,000/ on two occasions dated 28.06.2010 and 28.07.2010 which has been admitted by CW1 in his cross examination and therefore there is no liability of the accused towards the cheques in question. Regarding this contention, I hold that there is no material on record which shows that the said payment was made against the cheques in question and moreover as per the own admission of the accused in his offer letter, he was liable to pay around Rs.8,50,000/ to the complainant. So in such a case, complainant is within its right to adjust any part payment made in the outstanding of the accused. Had the accused made the payment within 15 days of the receipt of legal demand notice, then position could have been different but since this is not the case therefore the aforesaid contention of learned counsel for [CASE NUMBER] the accused cannot be sustained.
17 Another limb of argument advanced by learned counsel for the accused is that legal demand notice as envisaged by proviso to [SECTION] of the Act has not been received by the accused which is sine qua non for prosecution of the complaint under [SECTION] of the Act. In support of his contention, learned counsel for the accused has drawn the attention of the court to the cross examination of the complainant witness CW1 wherein he admitted that acknowledgment card Ex CW1/F and Ex CW1/F1 does not bear the signature of the accused. In retort, learned counsel for complainant has averred that statutory notice dated 09.12.2009 was issued at the correct address of the accused by registered post and [ACT] and notice is deemed to be served by virtue of presumption under [SECTION] of [ACT]. 18 It is no longer res integra that service of legal demand notice calling upon the accused to make the payment in 15 days is indispensable for prosecution under [SECTION] of the Act. Before giving my finding on the aforesaid issue, a reference to [SECTION] the [ACT] will be useful. The section reads as under:
"[SECTION] Meaning of service by post Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression "serve" or either of the expressions "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post."
[CASE NUMBER] 10 of 14 19 The Supreme Court in "[PRECEDENT]" (supra), wherein it has been held as under:
"(24) No. doubt [SECTION] of the Act does not require that the notice should be given only by "post". Nonetheless the principle incorporated in [SECTION] (quoted above) can profitably be imported in a case where the sender has despatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such nonservice.
Any other interpretation can lead to a very tenuous position as the drawer of the cheque who is liable to pay the amount would resort to the strategy of subterfuge by successfully avoiding the notice." 20 In "[PRECEDENT] , it was held:
In "[PRECEDENT]] the scope and ambit of [SECTION] clauses (b) and (c) of the Act were noted by the Kerala High Court and Justice [ENTITY] (as His Lordship was then) observed as follows:
"In Clause (c) of the proviso the drawer of the cheque is given fifteen days from the date 'of receipt of said notice' for making payment. This affords clear indication that 'giving notice' in the context is not the same as receipt of notice. Giving is the process of which receipt is the accomplishment. The payee has to perform the former process by sending the notice to the drawer in his correct address, if receipt or even tender of notice is indispensable for giving the notice in the context envisaged in Clause (b) an evader would successfully keep the postal article at bay at least till the period of fifteen days expires. Law shall not help the wrong doer to take advantage of his tactics. Hence the realistic interpretation for the expression 'giving notice' in the present context is that, if the payee has dispatched notice in the correct address of drawer reasonably ahead of the expiry of fifteen days, it can be regarded that he made the demand by giving notice within the statutory period. Any other interpretation is likely to frustrate the purpose for providing such a notice."
[CASE NUMBER] In "M/s Indo Automobiles v. M/s Jai Durga Enterprises and others" 2008 (4)
RCR (Civil) it was held that once the notice demanding payment has been sent by registered post with acknowledgment due to a correct address, it must be presumed that the service has been made effective.
22 In [PRECEDENT] , division bench of the Delhi High Court has specifically opined that the notice under [SECTION] of [ACT] can be served either through registered post or [ACT]. It is also held that if notice is even dispatched by [ACT] with correct address of the drawer written on it, presumption of the service of the said notice arises. Relevant discussion is contained in para 10 of the judgment which is reproduced below:
10 "As it is [SECTION] does not prescribe any mode for giving of demand notice by the payee or holder of the cheque. But where such notice is served by post through registered post or postal certificate etc. with the correct address of the drawer written on it , it would raise a presumption of service unless the drawer proves that it was not received by him in fact and that he was not responsible for such nonservice. This is in tune with the principle embodied in [SECTION] of the [ACT] or even [SECTION] of [ACT] deals with the presumption of service of notice sent by post and provides that service of such notice shall be deemed to have been affected unless the contrary is proved. This principle is equally applicable to the service of notice for purpose of [SECTION] of the [ACT] also "
23 So it is quite clear from [SECTION] [ACT] and catena of Judgments that when a letter is properly addressed, prepaid and posted by registered post , service shall be deemed to be effected at the time at which the letter would be delivered in the ordinary course of post.
[CASE NUMBER] 12 of 14 24 As can be seen from ExCW1/D, CW1/E and CW1/E1, the statutory notice was
addressed to the residence of the accused at M44C, Gali No. 3, New Mahabir Nagar, Near Tilak Nagar, New Delhi. It is also pertinent to note that the accused has admitted receiving the statutory notice in his statement under [SECTION] [ACT] Moreover summons were issued to the accused on the address mentioned in the complaint which is same as on legal notice post which accused entered appearance. Also the Apex Court in [PRECEDENT] (supra) has held that where the sender has despatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such nonservice. So, the burden lies upon the accused to prove that he has not been served but he has not placed on record any material to this effect. In the present complaint, complainant by sending the legal notice by registered post and [ACT] with the correct address written on it has complied with the requirements of [SECTION] of [ACT]. In the circumstances of the case and for the above reasons, I hold that statutory notice was sent to the correct address of the accused and therefore I hold that the notice is deemed to be served. The contention of learned counsel for the accused that notice was not served on the accused does not pass any muster. 25 The complainant has proved basic facts of borrowing of loan and issuing of Ex.CW1/B and B1 cheques by the accused. Once the basic facts stand proved by the complainant, he discharges the initial burden. Then, it is for the accused to rebut the presumptions that are drawn in favour of the complainant under [SECTION] and [SECTION] of the [ACT]. He can make out his case from material brought on record by the complainant. Though complainant witness was cross examined by the accused, nothing material was elicited to rebut the presumptions under [SECTION] and [SECTION] of [ACT]. Accused has admitted availing loan [CASE NUMBER] 13 of 14 from the complainant and the issuance of cheques in question in his statement under [SECTION] of [ACT]
26 Thus the complainant is able to establish that the accused borrowed loan and issued Ex CW1/B and B1 cheques amounting to Rs. 25,000/ each dated 26/10/2009 and 30/10/2009. On presentation of the cheques, it came to be dishonoured with the remarks "funds insufficient" vide return memo Ex CW1/C and C1 and thereupon the complainant issued ExCW1/D notice calling upon him to make good the amount covered under the cheque in question. The accused received the notice but failed to give any reply. The complainant presented the complaint. All the essential ingredients of [SECTION] [ACT] have been made out by the complainant. Therefore, the accused stands convicted for the offence under [SECTION] of [ACT].
ANNOUNCED IN THE OPEN (NAVJEET BUDHIRAJA) COURT ON 12.08.2011 METROPOLITAN MAGISTRATE SPECIAL COURT 06, DWARKA COURTS, DELHI. [CASE NUMBER] 14 of 14