1 IN THE COURT OF MS. SNIGDHA SARVARIA : MM : NI ACT-03 (CENTRAL) : TIS HAZARI COURTS : DELHI. CC No.523772/16 DATE OF INSTITUTION : 21.10.2013 DATE RESERVED FOR JUDGMENT: 18.12.2018 DATE OF JUDGMENT : 22.12.2018 IN THE MATTER OF: [ENTITY] W/o Sh. [ENTITY], R/O H. No. 48/100 Basant Nagar, [ENTITY], Sarai Rohilla. Delhi110007. Complainant VERSUS [ENTITY] S/O Sh. [ENTITY] R/O H. No. 308A, Gali No.5, [ENTITY], [ENTITY], Delhi110007. Accused JUDGMENT:
a) Srl. No. of the case & Date of institution : 2038/13/2013 & 25.10.2013
b) Date of commission of offence : after the 15th day of recieving of legal demand notice
c) Name of the complainant :[ENTITY]
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 :22.12.2018 [ENTITY] 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 and accused are good relationship from a long time, due to this relationship accused requested to the complainant for the friendly loan for a sum of R.1,50,000/- as the accused was in urgent need of money for the purpose of expansion of the work of the factory in the month of February 2012. The complainant as per the urgent need of money of the accused and as per the relationship between the complainant and accused came under the grip for emotions and paid Rs.1,50,000/- in cash to the accused after arranging the same from her near and dear. The accused promised that he will return the same before February, 2013. The complainant demanded repayment of the loan from the accused at the end of February 2013 but the accused assured the complainant that he will repay the loan at the end of June, 2013.
That the complainant again asked for the repayment of the loan from the accused. But no fruitful result came out. On asking some more time about the repayment of the loan, the accused issued a cheque bearing no. 238903 dated 10.07.2013 drawn in Punjab National Bank, [ENTITY], Delhi for the some of Rs.1,50,000/- against the liabilities of the loan taken in the month of February, 2012. The accused assured the complainant that the above [ENTITY] vs [ENTITY] mentioned cheque is good as cash and will be encashed on the presentation of the same into Bank. The complainant presented the cheque into her Banker, on 19.08.2013 Allahabad Bank, [ENTITY], Delhi. The complainant got shocked when she came into knowledge that the same cheque has been dishonoured with the remark of '88-Other reasons' with the 'Return memo Report' dated 20.08.2013. The complainant contacted in this regard to the accused and told the incident to him, accused then again assured the complainant and told to present the cheque again after 15.09.2013. The complainant again presented the cheque to her Banker, on 19.09.2013, but she again got shocked when she again came to knowledge that the cheque again got dishonoured with the remark '88-Other Reasons' with the 'Return Memo Report' dated 20.09.2013. The complainant again contacted to the accused but no fruitful result came out. The complainant on failure to make repayment by the accused, issued a legal notice dated 27.09.2013 through her Advocate to the accused through Registered Post and Speed Post. The statutory period of 15 days of the legal notice has been already expired, hence this complaint. Therefore, the accused has committed an offence, which is an offence under the provision of [SECTION] of [ACT].
Proceedings Before Court
2. In the present complaint summons were issued against the accused. The accused entered appearance and Notice of accusation was framed against the accused on 21.01.2015 to which accused pleaded not guilty and claimed trial. In the defence recorded on same date the accused stated that the cheque in question was issued by him to the complainant and the cheque bears his signatures but none of the other particulars are filled by him. He stated that he received the legal demand notice but did not reply to it. He stated that the cheque was given on the assurance [ENTITY] vs [ENTITY] of the complainant that she will advance him a loan of Rs.20,000/-, after that complainant has not given him any amount. When he demanded the cheque back, complainant said that she has thrown away the cheque. The cheque was given by him at his residence only.
3. In support of his case the complainant examined herself as CW-1 and proved her affidavit in evidence as Ex.CW1/A, cheque bearing no. 238903 dated 10.07.2013 for Rs.1,50,000/- drawn on PNB, [ENTITY], Delhi as Ex.CW1/1, cheque return memo dated 20.09.2013 as Ex.CW1/2 and legal notice dated 20.08.2013 as Ex CW1/3, legal demand notice dated 27.09.2013 as Ex.CW1/4 and postal receipts as Ex.CW5 and Ex.CW1/6. Complainant was also cross-examined at length. The complainant closed her complainant evidence on 15.03.2016.
4. Statement of accused u/[SECTION] [ACT] was recorded on 19.08.2016 wherein he stated that he had not taken any loan from the complainant and had not assured about any payment. The cheque was taken by the complainant from the wife of the accused. It was a matter of committee and therefore, the complainant had taken a cheque from his wife in regard to the committee. He stated that he had already told the complainant that he does not have any operational account and had also informed that the cheque cannot be honoured. The cheque was given as security. He stated that he did not receive any legal demand notice. However, the address mentioned on the notice is partly correct as it is not langde khan but khade khan. He stated that the cheque in question was a security for the committee.
5. The accused examined himself as DW1 and Ms. [ENTITY] as DW2 and DW1 and DW2 were also cross-examined. The accused [ENTITY] vs [ENTITY] closed defence evidence on 04.12.2018.
6. I have heard counsel for the parties, perused the record and have gone through the relevant provisions of the law.
Findings
7. 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 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.
8. At the time of framing of notice the accused admitted receiving of legal demand notice issued by the complainant. But at the time of recording of statement under [SECTION] [ACT] the accused denied receiving of statutory legal demand notice. The defence of the accused that he did not receive legal demand notice 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 [ENTITY] vs [ENTITY] 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 CW1/4 sent vide registered post then through issuance of summons by the court.
9. As regards the defence of the accused that the cheque in question was a security cheque and thus does not fall within the purview of [SECTION] [ACT] 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] .
10. 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.
11. In the defence recorded at the time of framing of notice under [SECTION] [ACT], the accused stated that the cheque in question was [ENTITY] vs [ENTITY] issued by him to the complainant and the cheque bears his signatures but none of the other particulars are filled by him. 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 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.
12. Further, in Mojj Engineering Systems Limited & Ors. Vs. A.B. [ENTITY] vs [ENTITY] Sugars Ltd.; 154 (2008) Delhi Law Times 579, 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 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 [ENTITY] vs [ENTITY] 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."
13. 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 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] & Ravi Chopra vs State and Anr. - 2008 (2) [ENTITY] vs [ENTITY] JCC (NI) 169).
14. The accused at the time of framing of notice and recording of statement under [SECTION] [ACT] has admitted issuing of cheque in question and his signatures on the said cheques. Since issuance of cheque in question by the accused is not disputed, hence, presumption U/[SECTION] of the [ACT] is raised.
15. 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 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 [ENTITY] vs [ENTITY] 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)
16. 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.
17. [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.
18. The 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] [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 [ENTITY] vs [ENTITY] 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.
19. 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.
20. The defence raised by the accused is that he had not taken any loan from the complainant and had not assured about any payment. The cheque was taken by the complainant from the wife of the accused. It was a matter of committee and therefore, the complainant had taken a cheque from his wife in regard to the committee. He stated that he had already told the complainant that he does not have any operational account and had also informed that the cheque cannot be honoured. The cheque was given as security.
21. 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.
22. The document Mark CW1/D1 is only a copy of certain calculations and merely since complainant/CW1 has admitted her signatures on [ENTITY] vs [ENTITY] it does not mean that the said document has been proved.
23. In defence of the accused recorded on 21.01.2015 the accused stated that the cheque in question was issued to the complainant for taking loan of Rs. 20,000/- but in defence recorded in statement under [SECTION] [ACT] the accused has stated that the cheque in question was issued for committee. Clearly, the accused has taken different defences at different point of time and the said defences of the accused are wavering and thus not believable.
24. Dw2, wife of the accused, deposed that she has already paid Rs. 45,000/- to the complainant for the committee and only Rs. 4,000/- remains to be paid. However, as per the accused no money was received by him from the complainant. Also, no receipt of payment of Rs.45,000/- has been filed by DW2. Furthermore, the accused has not examined other persons who had taken/participated in the committee. In view of the aforesaid, the defences raised by the accused are not believable.
25. From the foregoing discussions, the accused has not led any such cogent evidence to rebut presumptions under [SECTION] [ACT]. In view of the aforesaid discussions, the court finds that the accused has not been unable to prove any probable defence and has failed to rebut the presumption raised U/[SECTION] of the [ACT].
26. 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.
[ENTITY] vs [ENTITY]
27. The complainant has been able to prove that the cheque in question i.e. cheque bearing no. 238903 dated 10.07.2013 for Rs.1,50,000/- drawn on PNB, [ENTITY], Delhi as Ex.CW1/1 was issued in discharge of legally recoverable liability owed to the complainant by the accused.
28. Therefore, the accused [ENTITY] is convicted for the offence punishable U/[SECTION] of the [ACT] in respect of cheque Ex CW1/1. Digitally signed by [ENTITY] Date:
2018.12.22 (Announced in open 17:26:18 +0530 Court on 22.12.2018 ) ([ENTITY]) [ACT]Central.
22.12.2018 Judge Code: 0530 [ENTITY] vs [ENTITY]