IN THE COURT OF SHRI [ENTITY], M.M (CENTRAL): TIS HAZARI COURTS, DELHI CC No. : 530564/2016 U/s : 138 [ACT] P.S : [PRECEDENT] [ENTITY] JUDGEMENT
1. Sl. No. of the case : 530564/16 2. Date of institution of the case : 09.07.2015. 3. Name of complainant : Sh. Rajender Kumar S/o Sh. Rampal R/o 306, Krishi Kunj, Near Inder Puri, New Delhi-110012. 4. Name of accused, parentage & address : Sh. [ENTITY] Prop. Ashwi Enterprises, R/o 319, Krishi Kunj, Near Inder Puri, New Delhi-110012. 5. Offence complained of or proved : 138 [ACT]. Plea of accused : Accused pleaded not guilty 7. Final order : Conviction. 8. Date on which order was reserved : 05.12.2019. 9. Date of pronouncement : 23.12.2019. [PRECEDENT] 1/ 16 Rajender Kumar Vs. [ENTITY] BRIEF REASONS FOR THE DECISION OF THE CASE Factual Background of the case
1. Briefly stated facts of this case as per complaint are that the accused is well acquainted with the complainant and accused has approached to the complainant for a sum of Rs. 1, 75,000/- as financial assistance and on believing on his said representation as true and correct, the complainant on 20.04.2014 paid a sum of Rs. 1,75,000/- by cash and the accused have received the said amount. The accused has issued a cheque on behalf of complainant for discharging his liability cheque bearing no. 133207 dated 20.03.2015 amounting to Rs. 1,75,000/- drawn from Syndicate Bank, Pusa Campus, IARI Branch, New Delhi-110012. Accused assured that the said cheque is good for payment and shall be honoured upon presentation by the complainant. The abovementioned cheque was deposited by the complainant with his banker, namely, SBI Bank, Hindu Rao Hospital, Malka Ganj Branch, Delhi for the encashment of the same but the same was dishonored by bankers of the accused vide returning memo 24.03.2015 with the endorsement "Insufficient Funds". Thereafter, complainant served a legal demand notice dated 30.03.2015 to the accused through Speed Post, at his address. The legal notice was duly received but despite that no payment was made. So, present case was filed under [SECTION] [ACT].
Proceedings Before Court
2. On the basis of pre-summoning evidence, accused was summoned for the offence u/[SECTION] [ACT] vide order dated 22.07.2015. Accused put his appearance on 04.11.2015 and [PRECEDENT] Rajender Kumar Vs. [ENTITY] thereafter, a notice under [SECTION] [ACT] was framed against him on 07.04.2016 by Ld. Predecessor to which he pleaded not guilty and claimed trial. In the defence recorded on the same date, the accused stated that accused has given a cheque for security purpose to the complainant, who misused the same. Accused had never taken a loan of Rs. 1, 75,000/- as alleged by the complainant and he had issued the cheque in blank to the complainant and the rest of the contents therein are not in his hand. Accused has been served with the legal demand notice.
3. The complainant adopted his pre-summoning evidence. Complainant has relied upon the documents i.e. Original Cheque as Ex.CW1/1, Returning memo as Ex.CW1/2, Office copy of legal demand notice, original postal receipt, and tracking report are Ex.CW1/3, Ex.CW1/4 and Ex.CW1/5 and complainant has been duly cross-examined by Ld. Defence counsel. Thereafter, CE was closed, on 20.07.2018.
4. Statement of accused under [SECTION] [ACT] r/w [SECTION] [ACT] was recorded in which he replied that he was innocent. He stated that the cheque in question was issued to his brother namely Sh. [ENTITY] and he had issued the cheque as security to the complainant. He does not have any liability towards the cheque in question. The cheque in question bears his signature only and he did not fill the rest of the details. Accused does not lead defence evidence and DE was closed. Afterwards final arguments were heard and after hearing the arguments trial was concluded.
5. I have heard counsel for the parties, perused the record and have gone through relevant provisions of the law.
[PRECEDENT] 3/ 16 Rajender Kumar Vs. [ENTITY] Findings
6. Before appreciating the facts of the case in detail for the purpose of decision, let relevant position of law be discussed first. Now, [SECTION] [ACT] provides 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 made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, 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 [PRECEDENT] 4/ 16 Rajender Kumar Vs. [ENTITY] liability" means a legally enforceable debt or other liability.
It is well settled position of law that to constitute an offence under [SECTION] [ACT], the following ingredients are required to be fulfilled:
(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) 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;
(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 30 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.
Being cumulative, it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under [SECTION] of the [ACT].
7. The Act raises two presumptions in favour of the holder of the cheque i.e. Complainant in the present case; firstly, in regard to the passing of consideration as contained in [SECTION] therein and, [PRECEDENT] Rajender Kumar Vs. [ENTITY] secondly, a presumption under [SECTION], that the holder of cheque receiving the same of the nature referred to in [SECTION] for discharge, in whole or in part, of any debt or other liability.
Analysing all the concerned provisions of law and various pronouncements in this regard, the Hon'ble Apex Court in [PRECEDENT], noted at para 23 as follows [[PRECEDENT]; [PRECEDENT]; [PRECEDENT]; [PRECEDENT]; [PRECEDENT] referred]:
(i) Once the execution of cheque is admitted, [SECTION] of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
(ii) The presumption under [SECTION] is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
(iii) 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 the parties but also by reference to the circumstances upon which they rely.
[PRECEDENT] 6/ 16 Rajender Kumar Vs. [ENTITY]
(iv) That it is not necessary for the accused to come in the witness box in support of his defence, [SECTION] imposed an evidentiary burden and not a persuasive burden.
(v) It is not necessary for the accused to come in the witness box to support his defence.
8. To put in nutshell, the law regarding the presumption for the offence under [SECTION] [ACT], the presumptions under [SECTION] and [SECTION] have to be compulsorily raised as soon as execution of cheque by accused is admitted or proved by the complainant and thereafter burden is shifted upon the accused to prove otherwise. These presumptions shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability etc. The onus to prove the issuance of the cheque lies upon the complainant, and the same has to be proved beyond reasonable doubt, unless the accused admits the same. Once the issuance of cheque is established, either by admission or by positive evidence, the presumption under [SECTION] of the [ACT] arises. We can summarize the general principles in the following way:
Onus of proof: [SECTION] of the [ACT] states that 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], for the discharge, in whole or in part, of any debt or other liability. Therefore, here the onus shifts upon the accused to prove the nonexistence of debt or other liability. [SECTION] of the [ACT] uses the word "shall presume", which means that the presumption under [SECTION] is rebuttable.
[PRECEDENT] 7/ 16 Rajender Kumar Vs. [ENTITY] Standard of proof: The standard of proof required to rebut the presumption under [SECTION] 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 other liability, the onus shifts back to the complainant to prove by way of evidence, beyond reasonable doubt, that the cheque in question was issued by the accused in discharge, whole or in part, of any debt or other liability, and now the presumptions under [SECTION] and [SECTION] will not come to the aid of the complainant.
Mode of Proof: The accused may adduce direct evidence to prove that the note/cheque in question was not supported by consideration, and that there was no debt or liability to be discharged by him. However, the Court need not insist in every case that the accused should prove the nonexistence of the consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated.
At the same time, it is clear that a bare denial of passing of 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 the consideration of which, the Court may either believe that the consideration and debt did not exist, or their nonexistence was so probable that a prudent man would, under circumstances of the case, act upon the plea that they did not exist.
As discussed above, from the legal provisions and the law laid down in various judgments, it can be safely gathered that it is for the [PRECEDENT] 8/ 16 Rajender Kumar Vs. [ENTITY] accused to rebut the presumptions. He can do so by cross examining the complainant, leading defence evidence, thereby demolishing the case of the complainant. It is amply clear that the accused does not need to discharge his or her liability beyond the shadow of reasonable doubt. He just needs to create holes in the case set out by the complainant. Accused can say that the version brought forth by the complainant is inherently unbelievable and therefore the prosecution cannot stand. In this situation the accused has nothing to do except to point inherent inconsistency in the version of the complainant or the accused can give his version of the story and say that on the basis of his version the story of the complainant cannot be believed.
9. Coming to the facts of this case, since the execution of the cheque is admitted, the presumption under [SECTION] [ACT] shall be raised that accused has drawn the cheque for the discharge of any debt or liability. Now the onus is on the accused to raise a probable defence to rebut the presumption, by adducing evidence. If upon preponderance of probabilities, the accused is able to do the same, onus once again shifts back on the complainant to prove its case beyond reasonable doubt.
Accused in his defence under [SECTION] [ACT] has stated that he has issued the cheque in question to complainant as blank security cheque. Accused stated that he has not taken any loan from the complainant. But accused has changed his version in defence taken in written application under [SECTION] [ACT] and in statement of accused under [SECTION] [ACT], in which he has stated that he has issued the cheque in question to his brother [ENTITY] and his brother has issued the cheque to the complainant. Accused does not have any liability towards cheque in question.
[PRECEDENT] 9/ 16 Rajender Kumar Vs. [ENTITY]
10. Accused has not proved this fact by any independent evidence that he has handed over the cheque in question to his brother. Accused has not examined his brother as witness. Accused has failed to explain the circumstances under which he has issued the blank signed cheque to his brother and why his brother has given the cheque to the complainant. These are merely bald assertions unsubstantiated by any cogent evidence. The complainant, in his cross examination, is given only a suggestion regarding running a committee/ chit fund in respect of which cheque in question is given as security, which was denied by the complainant. Accused has not brought on record anything to explain why and how the cheque in question got into the possession of complainant.
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. In the present case, the entire defence of the accused revolves around that he did not take any loan from the complainant. But the accused has not brought on record any document like bank statement or books of account of his business or ITR furnished by the accused etc. to show that he was not in financial crisis at the relevant time when allegedly loan was given by the complainant.
11. The defence of the accused that cheque was issued as a blank security cheque also does not hold ground. It is worthwhile to [PRECEDENT] 10/ 16 Rajender Kumar Vs. [ENTITY] mention [SECTION] of [ACT] which is as under:
[SECTION]: 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 the case may be, upon it a negotiable 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 in excess of the amount intended by him to be paid there under.
It is manifest that by reason of the provision under [SECTION] [ACT], a right has been created in the holder of the cheque. When a blank cheque is signed and handed over, it means that person signing it has given an implied authority to any subsequent holder to fill it up. Prima facie, holder thereof is authorized to complete the incomplete inchoate instrument. Thus, merely the allegation of issuance of incomplete negotiable instrument does not create absolute defence in favour of the accused. There is no law that a person drawing the cheque has to necessarily fill it up in his own handwriting. Hence, once accused has admitted his signature on cheques, he cannot escape his liability on the ground that same has not filled in by him. A person issuing a blank cheque is supposed to understand the consequences of doing so. Thus, this defence is of no assistance to accused. ([PRECEDENT], by Hon'ble High Court of Delhi, & [PRECEDENT] 11/ 16 Rajender Kumar Vs. [ENTITY] 2008 (2) JCC (NI) 169, relied on.) As regards the defence of accused that cheque in question was security cheque is without any merits in view of the decision of Hon'ble Apex Court in [PRECEDENT] and of Hon'ble High Court of Delhi in Credential Leasing & Credits Ltd.
Vs. Shruti Investments & Anr 223 (2015) DLT 343, that security cheques fall within the purview of [SECTION] [ACT].
As per the decision of [PRECEDENT] (supra) it has been held that the scope of [SECTION] [ACT] 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 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. Hence, it would have to be examined in a case to case basis, whether an ascertained or crystallized debt or other liability exists or not.
12. Accused has not stepped into witness box to led evidence. Accused has only cross examined the complainant.
It is well settled that the statement of accused under [SECTION] [ACT] or under [SECTION] [ACT] is not the evidence of the accused and it cannot be read as part of evidence. The accused has an option to examine himself as a witness. Where the accused does not examine himself as a witness, his statement under [SECTION] [ACT] or 313 [ACT] cannot be read as evidence of the accused and it has to be looked into only as an explanation of the incriminating circumstance and not as evidence. Mere pleading not guilty and stating that the cheques were issued as security, would not amount to rebutting the presumption raised under [SECTION] of [ACT]. If mere statement under [SECTION] Cr.
[PRECEDENT] 12/ 16 Rajender Kumar Vs. [ENTITY] P.C. or under [SECTION] [ACT] of accused of pleading not guilty was sufficient to rebut the entire evidence produced by the complainant/ prosecution, then every accused has to be acquitted. In order to rebut the presumption under [SECTION] of [ACT], the accused, by cogent evidence, has to prove the circumstance under which cheques were issued. It has been held by Hon'ble High Court of Delhi in [PRECEDENT] that:
"5. It must be borne in mind that the statement of accused under [SECTION] [ACT] or under [SECTION] [ACT] is not the evidence of the accused and it cannot be read as part of evidence. The accused has an option to examine himself as a witness. Where the accused does not examine himself as a witness, his statement under [SECTION] [ACT] or 313 [ACT] cannot be read as evidence of the accused and it has to be looked into only as an explanation of the incriminating circumstance and not as evidence. There is no presumption of law that explanation given by the accused was truthful Offence under [SECTION] of [ACT] is a technical offence and the complainant is only supposed to prove that the cheques issued by the respondent were dishonoured, his statement that cheques were issued against liability or debt is sufficient proof of the debt or liability and the onus shifts to the respondent/ accused to show the circumstances under which the cheques came to be issued and this could be proved by the respondent only by way of evidence and not by leading no evidence."
[PRECEDENT] 13/ 16 Rajender Kumar Vs. [ENTITY]
13. There is nothing coming out in the cross examination of complainant's witness which would probablise the defence raised by the accused or falsify the case of the complainant. There is nothing in the cross-examination of the complainant regarding the defence taken by the accused, which could be of assistance to accused. Accused has tried to question the complainant on point of his financial capacity, source of funds to advance loan and permission to advance loan as complainant is a government servant.
Although, complainant has admitted that there is no written agreement between the parties qua the transaction of loan, but that is not always the requirement. Complainant has stated that he does not file the ITR. The complainant has been able to explain the source of funds and also it must be remembered that once the presumption u/[SECTION] [ACT] is drawn, the complainant need not prove his source of funds till accused discharges his burden as has been held by Apex Court in [ENTITY] Patel Vs. State of Gujarat 2019 SCC online SC 389. Apex court held in para 17 of the [ENTITY] (supra):
"17. 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 [PRECEDENT] 14/ 16 Rajender Kumar Vs. [ENTITY] the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the accused-appellant. The aspect relevant for consideration had been as to whether the accused-appellant has brought on record such facts/material/circumstances which could be of a reasonably probable defence."
Considering the same, the question about financial capacity is, in fact, not to be considered till the accused raised a probable defence, in his favour to rebut the presumption.
14. The decision in [PRECEDENT], [PRECEDENT], and [PRECEDENT] 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.
15. Regarding the requirement of giving notice in writing to the drawer/accused of the cheque within 30 days of the receipt of information by the payee from the bank, accused has admitted the receipt of legal notice in statement under [SECTION].
16. As such, on the summation of the entire range of reflections, the court concludes that the version of the accused is implausible and does not inspire confidence. From the foregoing discussions, it is clear the accused has not led any such cogent evidence to rebut presumptions under [SECTION] [ACT]. In view of the aforesaid discussions the Court [PRECEDENT] [ENTITY] finds that accused has not been able to prove any probable defence and has failed to rebut the presumption raised under [SECTION] of [ACT].
17. The complainant has been able to prove that the cheque in question i.e. cheque bearing no. 133207 dated 20.03.2015 amounting to Rs. 1,75,000/- drawn from Syndicate Bank, Pusa Campus, IARI Branch, New Delhi-110012 as were issued in discharge of a valid legally recoverable liability owed to the complainant by the accused with the aid of presumptions of law raised in his favour.
18. Therefore, the entirety of the evidence hold the accused guilty and the accused [ENTITY] convicted for the offence punishable U/[SECTION] of the [ACT] in respect of cheque in question. Copy of this judgment be given free of cost to accused.
Digitally signed by [ENTITY] Date:
Announced in the 2019.12.24 16:20:13 open Court on 23.12.2019 +0530 ([ENTITY]) Metropolitan Magistrate (Central-02), Tis Hazari, Delhi. [PRECEDENT] 16/ 16 Rajender Kumar Vs. [ENTITY]