IN THE COURT OF SH. VIKRANT VAID, MM(NI ACT02)/ SOUTH, SAKET COURTS, NEW DELHI Unique Id No. 02406R0243292001 [PRECEDENT] [ENTITY] S/o Sh. H.L. Nagpal R/o Flat No. 129, DDA SFS Flats, Hauz Khas Apartment, New Delhi. Complainant Versus [ENTITY] W/o Sh. Dalip Khanna R/o B1, Ashoka Staff Quarters, chankaya Puri, New Delhi. Accused OFFENCE COMPLAINED OF OR PROVED : [SECTION] of Negotiable Instrument Act. PLEA OF ACCUSED : Pleaded not guilty DATE OF INSTITUTION : 19.02.2011 DATE OF RESERVING ORDER : 07.05.2013 [PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 1 of 17 FINAL ORDER : Acquittal DATE OF PRONOUNCEMENT : 07.05.2013 JUDGMENT
1. The present complaint is filed by [ENTITY] (hereinafter referred to as "complainant") against [ENTITY] (henceforth referred to as "accused") under [SECTION] of [ACT] (hereinafter referred to as "The Act").
2. In a nutshell, it is complainant's case that he advanced a friendly loan of Rs. 1,00,000/ to the accused. Accused issued a post dated cheque of Rs. 1,00,000/ in discharge of her legal liability. The complainant presented the said cheque for payment but the the same was dishonoured with remarks 'Account Closed'. A legal demand notice was served upon the accused by complainant. Despite service of legal notice, the accused failed to make the payment of cheque amount within the stipulated period. Against the factual matrix, complainant instituted the present complaint against the accused.
[PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 2 of 17
3. Court took cognizance of the offence under [SECTION] of the Act. Presummoning evidence was led. The Court was satisfied that a prima facie case was made out and the accused was summoned.
4. Accused appeared pursuant to the process issued by the Court. Notice under [SECTION] [ACT] was read and explained to the accused to which he pleaded not guilty and claimed trial.
5. Complainant, in his evidence, appeared as sole witness CW1. In his examination in chief, he reiterated the averments made in the complaint and proved the following documents:
a. The cheque bearing no.049576 dated 20.07.2011 for Rs. 1,00,000/as Ex.PW1/A. b. Debit advice dated 22.07.2011 as Ex.PW1/B. c. Copy of legal notice dated 09.08.2011 as Ex. PW1/C. d. RLAD receipts and undelivered postal envelope as Ex. CW1/D (colly).
e. His affidavit of evidence as Ex.PW1/F. CW1 was cross examined at length and certain documents were put to him which he admitted and proved as:
i. Receipt showing payment of Rs. 15,000/ and Rs. 20,000/ by accused to complainant as Ex.CW1/X1.
ii. Legal notice dated 24.09.2010 issued by complainant as Ex.CW1/X2.
[PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 3 of 17 iii. Loan agreement dated 27.12.2009 as Ex.CW1/X3. iv. Inchoate affidavitcumundertaking executed by the accused as Ex.CW1/X4.
Vide separate statement, complainant's evidence was closed and matter was listed for examination of accused u/[SECTION] [ACT].
6. All the incriminating circumstances were put to the accused and her explanation was recorded during examination under [SECTION] [ACT].
7. Accused opted not to adduce evidence in her defence and has relied upon the contradictions in the testimony of CW1 and accompanying circumstances to prove her case.
8. I have heard the final arguments and perused the record carefully.
9. The essential ingredients which need be proved for constituting the offence under [SECTION] of The Act were discussed in the case [PRECEDENT]. The relevant portion of the said judgment reads as under:
[PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 4 of 17 "9. It is manifest that to constitute an offence under [SECTION] of The Act, the following ingredients are required to be fulfilled:
(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;
(ii) The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
(iii) 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;
(iv) that cheque is returned by the bank unpaid, either because of 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;
(v) 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 of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(vi) 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.
[PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 5 of 17
10. The signatures on cheque and its dishonour has been admitted by the accused. As the signatures on the cheque are admitted, the presumptions raised under [SECTION] of The Act become applicable and the issuance of cheque in discharge of the legal liability stands proved. The law on this point has been succinctly laid down by the Hon'ble Apex Court in [PRECEDENT]. The legal notice has been received back with the report "[PRECEDENT]". In these circumstances, service of legal notice stands proved. The fact of nonpayment of cheque amount has not been controverted by the accused.
All the necessary ingredients for the offence have been made out against the accused with the aid and assistance of the presumptions raised under The Act. So the complainant has discharged the initial burden of proving his case beyond reasonable doubt and now the onus shifted upon the accused to come up with a probable defence and rebut the presumptions raised against her.
11. The plea of defence is three fold. Firstly, she had repaid Rs. [PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 6 of 17 70,000/ out of the loan amount of Rs. 1,00,000/. The loan was not a friendly loan and she paid interest @ 4% per month to the complainant. Secondly, the cheque was issued in blank as a security which has been misused by the complainant. Some other blank signed papers alongwith another blank signed cheque were given to the complainant at the time of loan. However, he did not return the same. Accused denied the liability of the cheque value. Thirdly, the debt in question is not legally recoverable.
12. At the outset, I would like to mention that the accused has raised a consistent defence and no discrepancy whatsoever crept up in her instance at any stage.
13. Counsel for the accused has heavily relied upon the contradictions in the testimony of CW1 in support of his arguments. It is pertinent that the affidavit of evidence Ex.PW1/F contains reiteration of the facts mentioned in the complaint. Let us now examine the contradictions which have surfaced in the testimony of CW1/A which are as follows:
i. It is mentioned in the complaint that the loan was advanced [PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 7 of 17 for a period of one year. Per contra, CW1 deposed in cross examination that the loan was advanced for a period of two months and thereafter, it was extended.
ii. Para 3 of the complaint avers that the cheque was issued post dated. It reads as:
"3. and in discharge of legal liability the accused issued a post dated cheque dated 20.07.2011 bearing cheque No. 049576 in the sum of Rs.1,00,000/
In contradiction to the same, CW1 testified in cross examination that the cheque was issued in blank. Relevant portion of his testimony reads as:
"It is correct that the cheque in question was issued as a blank cheque and I have filled the particulars of the same. It is correct that I have filled the date of the cheque as 20.07.2011."
The quoted testimony depicts that the cheque in question was issued in blank. It did not bear any date when issued. This circumstance is highly material. It is consistent with the defence plea. At the same time, it falsifies the complaint regarding the [PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 8 of 17 issuance of the cheque as post dated.
iii. It is mentioned in Para 1 of the complaint that the accused was known to the complainant and having good friendly relations with him. Friendly relations is the foundation upon which the loan transaction is based. In contradiction, CW1 deposed in cross examination that he did not know the accused personally in the following words:
"I have advanced the loan to the accused through Mr. [ENTITY] and I do not know the accused personally."
The quoted disclosure strikes at the very foundation of the transaction. The foundation of the complainant's case is shaken and it is badly damaged due to the said deposition. At the same time, quoted testimony corroborates defence plea that the transaction in question is a commercial transaction entered into by the complainant for the sole purpose of earning interest. iv. The complaint is silent as to the interest chargeable upon the loan amount. As per complaint and CW1, the loan is friendly in nature. In initial crossexamination, CW1 denied the suggestion [PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 9 of 17 that he had advanced the loan to the accused on interest @ 4% per month. Later he admitted loan agreement Ex.CW1/X3 and demand notice Ex.CW1/X2 which categorically speak that the loan was advanced on interest @ 4% per month. It exposes the falsity of the complaint and CW1's testimony. This revelation annihilates the complaint and establishes the defence plea that the transaction in question is a commercial transaction.
v. There is no mention of part repayment of the loan amount by the accused in the complaint, legal notice or the affidavit of evidence Ex.PW1/F. The receipt Ex.CW1/X1 (put to him in cross examination) is admitted by CW1 which proves the payment of Rs. 35,000/ by the accused to the complainant. The concealment of payment made by the accused reassures that the complaint is false and does not speak the truth.
vi. Admittedly, a loan of Rs. 1,00,000/ was advanced by the complainant to the accused. The receipt Ex.CW1/X1 proves repayment of Rs. 35,000/ by the accused to the complainant. It brings down the liability of the accused to Rs.65,000/ only. It has transpired in cross examination of CW1 that the payment of Rs. [PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 10 of 17 35,000/ was received by him prior to the filling of blank cheque Ex.PW1/A. As admitted the particulars of the cheque including date and amount have been filled by CW1. Despite receipt of Rs. 35,000/ and an outstanding liability of Rs. 65,000/, the complainant filled the cheque Ex.PW1/A for Rs. 1,00,000/ and demanded Rs. 1,00,000/ in his legal notice. Even the complaint or affidavit of CW1 do not disclose that the liability outstanding was only Rs. 65,000/. All these circumstances demonstrate the malafide and misuse of blank cheque Ex.PW1/A by the complainant.
As the liability of the accused is less than the cheque amount, she deserves acquittal on this ground alone.
14. The explanation to [SECTION] of The Act clearly provides that a debt or other liability referred to in section means a legally enforceable debt or other liability. It reads as:
" Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability]."
[PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 11 of 17 Counsel for the accused contended that debt is not legally recoverable as it contravenes the provisions of [SECTION] of The [ACT]. In this regard, the following facts and circumstances requires consideration:
i. Complainant admitted that he had no personal relation with the accused.
ii. CW1 admitted that he had advanced loan to other persons also. He deposed that all the persons were introduced through one Mr [ENTITY]. It manifests that the CW1 had no personal relations with other borrowers also.
iii. Demand notice Ex.CW1/X1 and agreement Ex.CW1/X3 manifests that the loan was not friendly. Rather it was advanced on interest @ 4% per month.
iv. CW1 has entered into a formal agreement Ex.CW1/X3. Not only this, he also obtained blank cheque Ex.PW1/A and blank affidavit cum undertaking Ex.CW1/X4.
The manner in which the entire loan transaction has taken [PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 12 of 17 place manifests that it is the work of a professional money lender only. An inescapable conclusion stands drawn from the aforesaid facts and circumstances that complainant is engaged in the business of money lending.
[SECTION] of The [ACT] permits the recovery of any loan advanced by money lender only if he interalia holds a valid money lending licence.
Without a money lending licence, the money lender cannot legally recover the debts. It is worthwhile to mention that provisions of The [ACT] is also applicable to Delhi.
CW1 admitted that he had no money lending licence. Hence the alleged loan advanced cannot be legally recovered as it contravenes the provisions of [SECTION] of aforesaid Act. When the debt itself is not legally recoverable, the provisions of [SECTION] are not attracted which entails acquittal of the accused.
15. It is no more res integra now that the accused may rebut the presumptions from the circumstances of the case and even need not [PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 13 of 17 lead positive evidence for rebuttal. In [PRECEDENT] discussing at length the question of the rebuttal of the presumption, it was observed:
" Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in [SECTION] of the [ACT] to rebut the presumptions arising under [SECTION] and [SECTION] of The Act. The accused has also an option to prove the nonexistence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial "
In [PRECEDENT] and [PRECEDENT], it was held:
"5. There is no doubt that the burden rests on the accused to rebut the presumption as raised under [SECTION] and [SECTION] of the [ACT]. However, this presumption can be rebutted by the accused not merely by examining his own [PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 14 of 17 witnesses but even by crossexamination of the complainant and his witnesses and bringing out on record, through crossexamination, that the complainant was altar and there was no privity of contract between the complainant and the accused and cheques were misused."
Going a step further, Hon'ble Supreme Court in [PRECEDENT] has observed:
"31.The courts below, as noticed herein before, proceeded on the basis that [SECTION] raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct."
As quoted above, the standard of proof so as to prove a defence on the part of an accused is 'preponderance of probabilities'. 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 he relies. [PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 15 of 17
16. It is a cardinal principle of criminal jurisprudence that the complainant has to stand on its own leg. Prosecution cannot take advantage of the fact that no positive evidence has been led by the accused in support of its defence.
The averment of friendly relations has been disproved. It has transpired that the loan transaction was a commercial in nature and loan was advanced on interest @ 4% per month. The averment of issuance of post dated cheque has been falsified. Misuse of the blank signed cheque by the complainant has been established. CW1 concealed the payment made by the accused in the complaint. He admitted that the accused is not liable for the amount claimed in the cheque /complaint. Apart from it, testimony of sole witness CW1 is shaky and full of material contradictions. I find merit in the defence argument that it has been completely demolished.
17. After carefully scrutinizing and analyzing the evidence together with the circumstances discussed above, I am of the opinion that there is sufficient material on record to displace the presumptions raised under The Act. The circumstances of the case [PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 16 of 17 are more consistent with the innocence of the accused than her guilt. Moreover, the debt is not legally recoverable (already discussed) . There is no doubt in my mind that accused has proved her defence not only on the basis of preponderance of probabilities but also on the technical ground that the debt is not legally recoverable. On the other hand, complainant has failed to prove his case beyond reasonable doubt against the accused. Accordingly, the accused is acquitted.
Announced in the open Court ([ENTITY]) on 07.05.2013 MM(NI Act)02/South Saket/Delhi [PRECEDENT] [ENTITY] Vs. [ENTITY] Page No. 17 of 17