IN THE COURT OF Ms. [ENTITY], MM-01 (NEGOTIABLE INSTRUMENTS ACT) WEST DISTRICT, TIS HAZARI COURTS, DELHI Sh. [ENTITY] R/o WZ-78, Sant Nagar, Tilak Nagar, Delhi Complainant Vs. 1. M/s [ENTITY], 604-B, Jaina Tower - II, District Centre New Delhi through Dr. [ENTITY] Prop. 2. Dr. [ENTITY] Proprietor of M/s [ENTITY], R/o Flat no.1-D, Navyug Adarsh Apartments F-Block, Vikaspuri, New Delhi. Accused JUDGMENT
Complaint [CASE NUMBER] Date of institution : 19.11.2010 Offence alleged : Under [SECTION] [ACT] Plea of the accused : Not pleaded guilty Final order : Conviction. Date of Decision : 25.06.2018 BRIEF STATEMENT OF REASONS FOR THE DECISION
1. The instant complaint is in respect of an offence punishable under [SECTION] of the [ACT] (hereinafter "the [ACT]").
[CASE NUMBER] of page no.1/13
2. Brief facts alleged by the complainant is set out below:
a) The complainant and accused are well known to each other and the accused approached the complainant for financial assistance in connection with his business requirements. The accused requested for financial assistance of Rs. 7 lakhs with the undertaking that he will return the same within one year along with interest of 10% per annum.
b) The complainant arranged funds to the tune of Rs. 6,25,000 and the said amount was given in cash in different intervals to the accused.
c) The accused in part discharge of his liability, issued cheque bearing no. 534597 drawn on State Bank of India dated 28.05.2010 for a sum of Rs. 3 lakhs in favour of the complainant. The said cheque was returned as unpaid / dishonored for the reason "FUNDS INSUFFICIENT" vide cheque return memo dated 27.09.2010. The cheque was issued on a bank account maintained by the accused in the name of his proprietorship concern.
d) Despite various reminders, neither the accused nor her husband made payment. On 04.10.2010, the complainant sent legal demand notice through his counsel and called upon the accused to make the payment of the amount of the cheque in question within 15 days of receipt of legal notice. The accused failed to make the payment amount involved despite service of notice and therefore, according to the complainant, the accused is liable for the offence under [SECTION] of the [ACT]. Hence, the present complaint is filed.
3. To prove his case, the complainant has examined himself as CW1 by way of affidavit Ex. C1 and has relied upon the following documents:
a) Original cheque bearing no. 534597 dated 28.05.2010 for an amount of Rs. 3 lakhs Ex. CW1/1; [CASE NUMBER] of page no.2/13 b) Return memo dated 27.09.2010 which is Ex. CW1/2; c) Legal demand notice dated 04.10.2010 Ex.CW1/3; d) Postal, speed post and UPC receipts Ex. CW1/4 to CW1/7; e) Returned postal covers Ex. CW1/8 and Ex. CW1/9; and f) Reply to legal demand notice received from the accused
dated 19.10.2010 and courier cover Ex. CW1/10 and Ex.
CW1/11.
4. On finding a prima facie case against the accused, he was summoned vide order dated 26.11.2010. Consequent to the service of summons, the accused entered his appearance and was admitted to bail. On 20.04.2011, notice under [SECTION] of the [ACT] (hereinafter "the Code") was framed against the accused to which he pleaded not guilty and claimed trial. He stated that though the cheque in question bears his signature, it was issued to the complainant only for security purpose. He also stated that he filed a police complaint in P.S. Tilak Nagar for extortion and misuse of cheque by the complainant. He admitted receipt of legal notice.
5. Subsequently, the accused was granted a right to cross-examine the complainant and therefore, the complainant was asked to lead evidence to prove his case. In his evidence, the complainant deposed as CW-1 and adopted the evidence led by him at the pre-summoning stage as his post-summoning evidence. In his affidavit he has fully corroborated the averments made by him in his complaint. The complainant was cross-examined by the Learned Counsel for accused. Bank witness from Standard Chartered Bank was examined as CW-2. Complainant evidence was closed vide order dated 28.01.2015.
6. Statement of accused was recorded under [SECTION] read with [SECTION] of page no.3/13 281 of the Code on 25.05.2015 and all the incriminating circumstances were put to him to enable him to offer an explanation. [ENTITY] was examined as DW1 and Sh. [ENTITY] was examined as DW2. Both the defence witnesses were duly cross examined by the counsel for the complainant. Thereafter, the matter was fixed for final arguments.
7. It is pertinent to note that this matter alongwith two other matters were decided by way of a common judgment dated 29.01.2017 by the Learned Predecessor Judge. The accused filed an appeal which was allowed by Learned Sessions Judge by order dated 31.07.2017 with directions to this Court to decide the matters by way of three separate judgments.
8. Final arguments have been heard on behalf of the both the parties. The matter was then reserved for judgment. The submissions made on behalf of both the parties and the judgments relied on by both the parties have been considered and the record of the case has been thoroughly perused.
9. In order to ascertain whether the accused has committed the offence under [SECTION] of the [ACT], it is deemed fit to examine separately as to whether all the indispensable ingredients constituting the offence have been proved by the complainant. The offence under [SECTION] of the [ACT] has the following ingredients:-
a) Existence of legally enforceable debt or liability and issuance of cheque in discharge of said debt or liability;
b) Dishonor of cheque in question which must have been drawn on an account maintained by the accused;
[CASE NUMBER] of page no.4/13
c) Service of demand notice seeking payment of cheque amount within fifteen days from the date of service;
d) Non-payment of cheque amount within fifteen days from the date of service of notice; and
e) Filing of complaint within one month from the date on which cause of action arises.
10. Presentation of the cheque in question for encashment and dishonor of the cheque for the reason "funds insufficient" is not disputed as it is a matter of record proved by the return memo dated 27.09.2010 which is Ex. CW1/2. Therefore, it is a matter of record and has been proved that the cheque was presented within its validity period and dishonoured by the banker of the accused. It is also not disputed that the impugned cheques were issued by accused and were drawn on his bank account as he has not denied his signatures on the cheque. Further, service of legal demand notice dated 04.10.2010 Ex. CW1/3 has also been admitted by the accused and it is a matter of record that he sent a reply to the legal notice Ex. CW1/10. Finally, the complaint has been filed within limitation period. Therefore, essential ingredients mentioned from b) to e) in the above paragraph have been duly satisfied.
11. The only question remaining for determination is whether a legally valid and enforceable debt existed qua the complainant and the cheque in question was issued in discharge of said liability / debt. It is pertinent to note that [SECTION] of the [ACT] provides a statutory presumption that the cheque was handed over in respect of a debt or other liability. Under [SECTION] of the [ACT], every negotiable instrument is presumed to have been drawn and accepted for consideration. In the case of [PRECEDENT], it was observed as follows:
[CASE NUMBER] of page no.5/13 "Thus in complaints under [SECTION], the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused. This Court in the case of [PRECEDENT] has also taken an identical view."
12. The Hon'ble Supreme Court, in the case of [PRECEDENT], observed as follows:
"Because both [SECTION] and [SECTION] require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in [PRECEDENT], it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. It introduced an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused" (ibid).
13. Also, in the case of [PRECEDENT], it has been held by the Hon'ble Supreme Court as under:
"As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in [SECTION] of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. [SECTION] of the Act enjoins on the court to presume that the holder of the cheque received it for the discharge of any debt or liability."
14. Further, 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 [CASE NUMBER] of page no.6/13 "preponderance of probabilities". In [PRECEDENT], the Hon'ble Supreme Court has observed:
"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 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.
15. Thus, as laid down in catena of decisions, it is an established law that onus lies upon the accused to rebut the presumption and to establish that the cheque in question was not given in respect of any debt or liability, with the standard of proof being preponderance of probabilities. Therefore, it becomes critical to examine whether the explanation of the accused coupled with the evidence on record is sufficient to dislodge the presumptions envisaged by [SECTION] and [SECTION] of the [ACT].
Appreciation of evidence
16. As discussed above, in this case, presentation of cheque, its dishonorment and receipt of legal notice is not disputed as it has been proved on the basis of cogent evidence. In fact, the accused has not denied his signatures on the cheque. The defence of the accused as stated in his application under [SECTION] of the [ACT] and in his statement recorded under [SECTION] read with [SECTION] of the Code is that no loan was given by the complainant to the accused. The accused [CASE NUMBER] of page no.7/13 admits that he had friendly relations with the complainant. The defence of the accused is that he had approached the complainant, who is a financial adviser / assistant, for a bank loan of Rs. 20 lakhs and he gave 20 cheques as security to the complainant. It is further submitted that the complainant lingered on the matter and never obtained loan for the accused. He also submitted that subsequently complainant with certain other persons namely [ENTITY], [ENTITY], [ENTITY] and [ENTITY] threatened and mishandled him and his associate ([ENTITY]) and threatened them that they will present the security cheques. It finally averred that a police complaint was lodged in relation to the said incident and against extortion by misuse of cheques. Unrelated to these averments, the accused also submitted in his statement under [SECTION] read with [SECTION] of the Code, that he had financed a car from the complainant which was later on purchased by the complainant. I proceed to examine whether the abovementioned defence of the accused is supported by the evidence on record and a probable defence has been raised by the accused.
17. Firstly, the accused has denied that loan was ever given to him. However, it is pertinent to note that the factum of loan given to the accused has been affirmed by CW2, bank witness from Standard Chartered Bank. CW-2 deposed that the complainant paid Rs. 4 lakhs to the accused and his firm by way of cheque no. 79792, 79793 79795 and 70813. The bank statement of the complainant which is filed by CW2 is Ex. CW2/1 and it clearly shows that an amount of Rs. 4 lakhs by way of the abovementioned cheques was transferred into the account of the accused and his firm. The Learned counsel has questioned CW2 as to his knowledge in relation to the transaction between the complainant and the accused. However, said questions are not relevant as CW-2 is a formal witness deposing on documents of the bank and cannot be expected to know the underlying transaction. Nothing relevant has been elicited by Learned counsel for accused in the cross-examination of CW-2.
18. Secondly, in continuation to the above, it can be said that the complainant's averrment that he had given loan partly by bank payments (Ex. CW2/1] [CASE NUMBER] of page no.8/13 and remaining in cash is well corroborated in his bank statement and evidence of CW2. During his cross-examination, in relation to the source of the loan, the complainant deposed that he had received 4 lakhs from his company, Air India and remaining amount was given from his savings and arragements from other friends, one of them being [ENTITY]. The learned counsel for accused, during the cross- examination and at the time of final arguments, stated that the complainant has not disclosed in his complaint that he had been removed from the services of Air India and that he had withdrawn amount from PPF to fund the loan. However, to my mind, these facts would have been relevant where the complainant had made transactions entirely in cash. However, in this matter, the complainant has shown beyond reasonable doubt that he has given loan to the accused and the accused has been unable to shred any suspicion on the factum of loan.
19. Thirdly, the learned counsel for accused has given suggestions that the bank transactions actually pertain to repayments made by the complainant to the accused. However, there is no clarity as to whether loan was given by the complainant at any stage and no evidence has been led in that regard. Therefore, this defence appears to be completely bogus and does not inspire the confidence of this court.
20. Fourthly, the accused has relied on the police complaint filed by the accused and has examined DW-1 to prove his complaint. The complainant has not denied the police complaint filed by the accused. However, to my mind said complaint does not help his case. In fact, the complainant has also filed complaints against the accused which is Ex. CW1/13 and Ex. CW1/12. There are counter blast complaints on record wherein there are allegations and counter-allegations between the parties. More importantly, the complaint filed by the accused with the police station is dated 15.09.2010. This complaint filed by the accused appears to be a counter blast to the complaint filed by the complainant dated 11.09.2010 (Ex. CW1/12). Therefore, the [CASE NUMBER] of page no.9/13 averments made in the complaint cannot be said to be the truth in the absence of other evidence corroborating this version of the accused and therefore, the police complaint in itself would not be sufficient to establish a probable defence in favor of the accused.
21. Fifthly, Learned counsel for accused submitted that in his complaint (Ex. CW1/13), the complainant has stated that a memorandum of understanding was entered into by the complainant with the accused and one [ENTITY] and cheques were issued under the said memorandum. It is also averred that in his complaint (Ex. CW1/12), the complainant has referred to a pro-note which has not been filed. The accused alleges that complainant is concealing and withholding material documents from this court and leading to an inference that the case is faulty. In my opinion, said averment is incorrect as the complainant has filed all documents which are essential to the case and which establish beyond reasonable doubt the essential ingredients of [SECTION] of the [ACT].
22. Sixthly, it is correct that the complainant during his cross-examination stated that he did not maintain any record of his business and did not file any ITR for his business. In this context, accused has relied on [PRECEDENT] wherein the Hon'ble High Court stated that where amount is not disclosed ITR, case is not made out against the accused. However, this ratio is not applicable as the High Court had made said observation in relation to a cash loan which is not the fact in the instant case. Similarly, the decision of Hon'ble High Court of Delhi in [PRECEDENT] as to loan agreement would have been relevant where loan was given in cash. In the said case, 44 lacs loan was given in cash. Therefore, these cases can be distinguished on facts and ratio of these cases will be inapplicable to the case at hand. There is no requirement for ITR in this matter as majority of the loan amount has been given through bank transactions and nothing has been placed on record to doubt the other [CASE NUMBER] of page no.10/13 part of the loan which was given in cash. He also admitted that he is not having any money lending license. However, both the parties have admitted that they had friendly relations and no money lending license is required for extending friendly loans.
23. Seventhly, the accused has not given any plausible explanation as to how a signed cheque has come into the possession of the complainant. It was her duty to lead positive evidence as to how a duly signed cheque came into the custody of the complainant. The entire defence of the complainant along with certain persons threatening the accused and his associates remains just averments of the accused as there is no evidence in support of this. Neither has the associate of accused been examined nor have the other persons who allegedly threatened them have been called into the witness box.
24. Finally, the accused has also introduced a vehicle transaction between the parties as a part of the defence and has examined DW-2 in relation to the ownership of the vehicle. However, the connection of the said transaction to the instant case has not been explained and hence, is irrelevant. Further, the accused has attempted to establish his defence only through the cross-examination of CW-1 and his statement recorded under [SECTION] read with [SECTION] of the Code. This has undoubtedly prejudiced the accused as the statement recorded under [SECTION] read with [SECTION] of the Code cannot be read as evidence. The accused has not brought on record even a single document which could show that the cheques were not given to the complainant for the purpose as alleged by the complainant. It is to be noted that the accused apart from exhibiting his police complaint, has not examined himself in the present case to substantiate his claim. The accused has been unable to elicit anything material from the cross-examination of the complainant. At this juncture, it is pertinent to note that the Hon'ble High Court of Delhi in [PRECEDENT], commented on the obligation of the accused while setting up a [CASE NUMBER] of page no.11/13 defence to repulse the presumption created by virtue of [SECTION] and [SECTION] of the [ACT] as follows:
"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] or [SECTION] [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. In the present case, the accused in his statement stated that he had given cheques as security. If the accused wanted to prove this, he was supposed to appear in the witness box and testify and get himself subjected to cross examination. His explanation that he had the cheques as security for taking loan from the complainant but no loan was given should not have been considered by the Trial Court as his evidence and this was liable to be rejected since the accused did not appear in the witness box to dispel the presumption that the cheques were issued as security. Mere suggestion to the witness that cheques were issued as security or mere explanation given in the statement of accused under [SECTION] [ACT], that the cheques were issued as security, does not amount to proof. Moreover, the Trial Court seemed to be obsessed with idea of proof beyond reasonable doubt forgetting that offence under [SECTION] of [ACT] was 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 [CASE NUMBER] of page no.12/13 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."
25. Since in the instant case, the accused has failed to lead any convincing evidence to aid him in discharge of his onus, the presumption of law operates in favour of existence of debt or liability. I am of the opinion that the defence set up by the accused is neither definitive nor consistent with his innocence. It was the sole burden and duty of accused to prove absence of liability by raising a probable defence. However, he has failed to discharge his onus. Except for making bare averments, accused has not led any cogent evidence which could be termed as a probable defence. It is pertinent to note that though accused has taken multiple defences, but as discussed above, none of them have raised a probable defence in his favor.
26. Having considered the entire evidence, I am of the opinion that the complainant has successfully proved all the essential ingredients of [SECTION] of the Act. Accordingly, accused is held guilty for committing the offence punishable u/[SECTION] of the Act. He is hereby, convicted for the offence under [SECTION] of the Act. Let he be heard on the point of sentence separately.
A copy of the order be sent to District Courts website.
PRIYADARSHINI THYAGARAJAN THYAGARAJAN Date: 2018.06.27 11:10:08 +0530 Announced in open court on [ENTITY] 25.06.2018 [ACT] [CASE NUMBER] of page no.13/13 [CASE NUMBER] of page no.14/13