IN THE COURT OF SHRI [ENTITY] METROPOLITAN MAGISTRATE (SOUTH-EAST) - 05, SAKET COURTS : NEW DELHI JUDGMENT
[ENTITY] Vs. [ENTITY] A. ID No. of the Case : 02406R0269872011 B. Date of Institution of case : 19.10.2011 C. Name of the complainant : [ENTITY] S/o Late Sh. [ENTITY] R/o H. No. 217, Haddu Mohalla Madanpur Khadar, New Delhi.
D. Name of the Accused, his Parentage and address : [ENTITY] S/o Sh. [ENTITY] R/o H. No. B-40, Nazir House, Gali No. 7, B-Block, Abdul Fazal Enclave-II, Okhla, Jamia, New Delhi. E. Offence complained of : u/[SECTION] [ACT] Plea of the Accused : Pleaded not guilty G. Order reserved on : Not reserved. H. Final order : Acquitted. I. Date of such order : 20.12.2014
Brief statement of reasons for decision of the case:
Facts of the Case:
1. The present case is a complaint filed under [SECTION] [ACT] ( hereinafter referred to as 'the Act') filed by the complainant against the accused for dishonour of one cheque bearing no. 010251 on account of insufficient funds. The brief facts averred by the complainant in his complaint are that in the month of June 2010 accused approached complainant for a friendly loan of Rs. 2,00,000/-
(Rupees two lacs only). On 20.07.2010, complainant gave a friendly loan [CASE NUMBER] of Rs. 2,00,000/- to accused for four months. When complainant demanded abovesaid loan amount from the accused, he showed some difficulty to return the loan amount and requested him to make the payment in the month of February 2011 with interest. In the month of February 2011, accused issued a cheque bearing no. 010251 dated 24.03.2011 for a sum of Rs. 2,00,000/- drawn on Union Bank of India, Jamia Nagar, New Delhi. It is the averment of complainant that on presentation, the cheque was returned unpaid for reasons " funds insufficient" vide a separate return memo. It is averred that a legal notice dated 08.09.2011 was sent to the accused through registered AD. Despite service of legal notice, accused failed to make payment of the cheque amount and hence, this complaint for commission of an offence under [SECTION] of the Act. It is averred that the complaint has been filed within limitation.
Proceedings before the Court:
2. On the aforesaid facts, Court took cognizance of the offence and issued summons to the accused vide order dated 30.11.2011. The accused appeared pursuant to issuance of summons and was admitted to bail. Vide order dated 02.08.2014, notice was served upon the accused to which he pleaded not guilty and claimed trial. In his plea of defence, he stated that he had not taken a friendly loan of Rs. 2,00,000/- and had not issue impugned cheque to complainant and the cheque also did not bear his signature.
3. Accused preferred not to move an application u/[SECTION] [ACT] and stated that he intended to lead defence evidence directly. This submission was made in terms of observations of Hon'ble Delhi High Court in case titled [PRECEDENT]. Since the said judgment permits the accused to adopt such a course in a matter [CASE NUMBER] under [SECTION] of the Act, the permission was granted.
4. During defence evidence, accused examined Mr. [ENTITY], Assistant Manager, Union bank of India, Jamia Nagar, New Delhi. The copy of statement of account of M/s Electric Bike Service station (Drawer of cheque) is Ex. DW1/A, application form along-with project report of the firm is Ex. DW1/B, copy of ration card of account holder [ENTITY] is Ex.
DW1/C, a certificate of applicant [ENTITY] is Ex. DW1/D, copy of application furnished by application to Delhi Khadi & [ENTITY] is Ex. DW1/E, and copy of affidavit submitted by applicant is Ex. DW1/F. The witness was not cross-examined despite opportunity.
5. Final arguments advanced by Sh. [ENTITY], learned counsel for complainant and Sh. [ENTITY], learned counsel for accused heard at length. Judicial record carefully perused.
Ingredients \of Offence:
6. The court considers it necessary to determine all the following ingredients for making out a case u/[SECTION] of the Act against the accused:
(1) Accused must have drawn a cheque on an account maintained by him in a bank for payment of certain amount of money to complainant from out of that account for discharge of any debt or liability; (2) The cheque must have been dishonored for insufficiency of funds or that it exceeds the amount arranged to be paid from that account; (3) Issuance of legal demand notice of dishonor of cheque to the accused within 30 days of the receipt of the information by the complainant from the bank regarding the return of cheque as unpaid; and (4) Failure of accused to make payment within 15 days of the receipt of said notice.
[CASE NUMBER] Law of Presumptions Under the Act:
7. Before appreciating the evidence and rival contentions of both the parties, it is necessary here to reproduce [SECTION] and [SECTION] of the Act which deal with the law of presumptions under the Act. The [SECTION] reads as:
"that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration". And [SECTION] reads as under:
"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".
8. The said two sections have been elaborately discussed, and interpreted by the Hon'ble Supreme Court in a series of judgments. The Hon'ble Supreme Court in case titled [PRECEDENT] made the following observations:
"32. Applying the definitions of 'proved' and 'disproved' to the principle behind [SECTION] of the Act, the Court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the nonexistence of the consideration so probable that a prudent matter ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon."
9. The following observations of the Hon'ble Supreme Court in [PRECEDENT], at this stage are also important;
" because both [SECTION] and [SECTION] require the Court 'shall presume' the liability of the drawer of the cheques for the amounts for which the cheques are drawn it is obligatory on the Court to raise this presumption in every case where the factual basis for raising the presumption has been established. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the [CASE NUMBER] onus on to the accused".
Reading of [SECTION] and [SECTION] of the Act and observations of the Hon'ble Supreme Court provides two settled principles of the law, which are:
1. It shall be mandatory upon the court to presume, (a) the issuance of cheque for legally enforceable liability by the drawer, and (b) the existence of legally enforceable debt/liability as such of the drawer.
2. The burden of proof to rebut these presumptions lies upon the accused.
The court through the appreciation of evidence on record shall examine whether the accused has successfully rebutted the dual presumptions of law raised against him by the court.
Appreciation of Evidence:
10. It is the case of the complainant that the accused issued the impugned cheque to the complainant to discharge his part liability towards re-paymentof friendly loan. The cheque got dishonored on presentation. The complainant got a legal demand notice served upon the accused but the accused failed to make payment of cheque amount despite service of legal demand notice and hence, this complaint.
11. The complainant through his complaint, affidavit, the dishonored cheque, returned memo and legal demand notice has created a factual basis to raise dual presumptions under [SECTION] of the Act i.e. issuance of cheque for legally enforceable liability in whole or in part or any other liability and of the existence of legally enforceable debt/liability as such.
12. To the case of the complainant, it is the defence of the accused, that he did not issue any cheque to the complainant and the [CASE NUMBER] account on which the impugned cheque is drawn, is not in his name. It is also the defence of the accused that he is not the proprietor of the firm M/s Electric Bike Service Station and has nothing to do with any transaction with the complainant. It is also the defence of accused that he did not receive legal demand notice.
13. To establish his innocence and rebut the presumptions against him and also to establish his defence that he was neither the proprietor of accused firm M/s Electric Bike Service Station nor did the account on which the impugned cheque was drawn, belongs to him, the accused summoned Mr. [ENTITY], Assistant Manager, Union Bank of India, New Delhi. He was examined as DW1. He filed various documents concerning the said account on which the impunged cheque is drawn. Perusal of the documents reveal that the account has been opened in the name of M/s Electric Bike Service Station through its proprietor [ENTITY]. The account opening form also bears his signatures as proprietor.
14. Further, the perusal of impugned cheque Ex. CW1/A reveals that it has been drawn on account of M/s Electric Bike Service Station and has been apparently signed by its proprietor. The comparison of signatures of the proprietor of M/s Electric Bike Service Station on the impugned cheque Ex. CW1/A and the signatures of proprietor of M/s Electric Bike Service Station on banking documents produced by DW1 make it abundantly manifest that both the documents bear the signatures of the same person. Thus, the impugned cheque undoubtedly bears the signatures of Mr. [ENTITY] as proprietor of M/s Electric Bike Service Station and not that of the accused Mr. [ENTITY].
15. At this stage, it is significant to quote the observations of Hon'ble Supreme Court in case titled [PRECEDENT]:
"8 from reading of the Section it is very clear that in order to attract the provisions thereof a cheque which is dishonored will have to be drawn by a person on account maintained by him with the bank for payment of any amount of money to another person out of that account for the discharge, in whole or in part of any debt or other liability. It is only such cheque which is dishonored which would attract the provisions of [SECTION] against the drawer of the cheque."
16. Further, it has been categorically ruled by the Hon'ble Supreme Court in case titled [PRECEDENT], decided on 10.07.2009) that:
"there is a clear averment that the cheque in question was issued from an account which was nonexistent on the date it was issued or that the account from where the cheque was issued "pertained to someone else". As per the complainant's own pleadings, the bank account from where the cheque had been issued, was not held in the name of the appellant and therefore, one of the requisite ingredients of [SECTION] of the Act was not satisfied. Under the circumstances, continuance of further proceedings in the complaint under [SECTION] of the Act against the appellant, would be an abuse the process of the court."
17. In the opinion of the court, the cause of action in an offence under [SECTION] of the Act, thus, arises on the 'drawing" of cheque by 'the accused'. [SECTION] begins with words 'where any cheque drawn by a person on an account maintained by him with a banker ", clearly entitles a complainant to institute a complaint against the drawer of the cheque alone, who has an account with the banker. In the present complaint, the impugned cheque has neither been signed by the accused nor the same has been drawn on account maintained by the accused with his banker. The argument that the accused that the impugned cheque was handed over to him by the accused [ENTITY] cannot be considered in view of the responsibility of the complainant to verify the status of signatory of the cheque and the name of the proprietor of the firm against whom the criminal proceedings under [SECTION] of the Act are being [CASE NUMBER] instituted.
18. After the establishment of the aforesaid fact of cheque being neither signed by the accused nor being drawn on his account, the impugned cheque by no stretch of imagination can be presumed to have been issued to discharge the legally enforceable liability/debt. Similarly, the presumption of existence of legally enforceable liability as such is also ruled out completely. Thus, the case of the complainant suffers from the basic infirmities which form the very basis of an offence under [SECTION] of the Act. Consequently, the dual presumptions of law raised by court against the accused stand rebutted.
20. Since it stands established that the impugned cheque has neither been signed by the accused nor been drawn on an account maintained by him, the mere dishonor of the cheque does not make out an 'offence' against the accused under [SECTION] of the Act.
21. The legal demand notice in the present matter has been served by the complainant upon the present accused who has been established to have no relation with the impugned cheque. It is a settled legal proposition under [SECTION] of the Act that the legal demand notice must be served upon the 'drawer of the cheque' and none else to make out a case for dishonor of a cheque. It is significant here to quote [SECTION] of the Act: "138. Dishonor of cheque for insufficiency, etc., of funds inthe account:
Provided that nothing contained in this section shall apply unless (b) The payee or holder in due course of the cheque, as the case may be, makes a demand for the payment of said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank "
22. On this issue the Hon'ble Supreme Court of India in case [CASE NUMBER] titled [PRECEDENT], held that service of notice of demand in Clause (b) of the proviso to [SECTION] is a condition precedent for filing a complaint under [SECTION] of the Act.
Further, Hon'ble High Court of Madhya Pradesh in case titled [PRECEDENT], held that the provision of [SECTION], [SECTION] of the Act is indispensable and breach of the same would result in the dismissal of the complaint filed by the complainant. Also, Hon'ble High Court of Karnataka in case titled [PRECEDENT]), held that when notice as contemplated under [SECTION] is not issued to the drawer of the cheque within 15 days of the receipt of information by him from the bank regarding the return of cheque as unpaid there is no compliance of [SECTION] of the Act. As such, the complaint made upon the grounds stated in the complaint strictly do not constitute an offence under [SECTION] of the Act.
23. In the case in hand, the legal demand notice Ex. CW1/C has been served by the complainant upon the accused [ENTITY] and not upon 'the drawer of cheque'. The contention that the notice has been served upon the accused on the same address as that of the real proprietor of M/s Electric Bike Service Station is devoid of any substance since the mere sending of legal demand notice on a correct address but addressed to a separate legal entity does not strictly comply the provision of [SECTION] of the Act. Thus, 'the drawer of cheque' remains unserved and therefore, the offence under [SECTION] of the Act for dishonor of impugned cheque cannot be said to have made out against the accused [ENTITY].
Standard of Proof:
24. It is the basic principle of criminal law that in order to hold an [CASE NUMBER] accused guilty of an offence, all the ingredients of that offence should be established against him beyond reasonable doubt and the burden upon accused is not so onerous and the standard expected of him is that of preponderance of probabilities by moving cogent and viable evidence. The observations of the Hon'ble Supreme Case in the case [PRECEDENT] are important:
"the standard of proof for accused is preponderance of probabilities. The standard of proof on the part of an accused and that of the prosecution in a criminal case is different. Whereas prosecution must prove the guilt of an accused beyond all unreasonable doubt, the standard of proof as to prove a defence on part of the accused is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from thematerials brought on records by the parties but also by reference to circumstances upon which he relies".
Therefore, the position on standard of proof is well settled.
Final Order:
25. In the thoughtful opinion of this Court, the overall circumstances of the case and the above discussion into law and facts goes on to conclusion that the case of complainant falls short of the required standard of proof of beyond reasonable doubt as he has failed to prove all the necessary ingredients of the offence under [SECTION] of the Act. At the same time, the accused has raised a doubt in the case of the complainant on the standard of preponderance of probabilities. Hence, the accused [ENTITY] is acquitted of the offence under [SECTION] of the Act.
Dictated &Announced in Open Court on December 20, 2014 ([ENTITY]) METROPOLITAN MAGISTRATE -05 SOUTH-EAST DISTRICT, SAKET COURTS NEW DELHI [CASE NUMBER]