1 IN THE COURT OF SH. [ENTITY], ADDL. CHIEF METROPOLITAN MAGISTRATE; NORTHEAST, KARKARDOOMA COURTS : DELHI Prit Pal Singh vs [ENTITY] P S Shahdara U/[SECTION] [ACT] JUDGEMENT
(a) The Complaint case number : 122/13 (b) The date of commission of : 20.9.2011 onwards offence (c) The name of complainant : Prit Pal Singh Chawla s/o Sh.Jawand Singh (d) The name, parentage etc. of : [ENTITY] w/o Sh. [ENTITY] accused r/o Flat no.1678, Janta Flats, Nand Nagri,Delhi (e) The offence complained of/ : U/[SECTION] [ACT] proved (f) The plea of accused : Pleaded not guilty (g) The date of institution : 09/01/12 (h) The final order : convicted (i) The date on which order was : 19.05.2014 reserved (j) The date of such order : 29.05.2014 Prit Pal Singh Chawla vs [ENTITY] k) Brief statement of the reasons for the decision : JUDGMENT : 1 The complainant herein has come before this court on the succinct
allegations that the accused had sought financial help of Rs.60,000/ from the complainant for her personal use and in view of the relationship between the accused and the complainant , the husband of the accused had taken a friendly loan of Rs.1 lac from the complainant for a period of 6 months and on the basis of assurances given by the accused as well as her husband to repay the said amount, the complainant agreed to advance the said loan amount. That on 19.1.11, the accused approached the complainant and the complainant gave a friendly loan of Rs.60,000/ in cash. That on expiry of period of 6 months, the complainant asked the accused to return the loan amount of Rs.60,000/ and Rs.1 lac as given to her husband. Thereafter, on 20.9.11, the wife of the accused issued a cheque bearing no.408157 dt.20.9.11 for a sum of Rs.60,000/ to the complainant. That the said cheque when presented for encashment, was returned back unpaid and dishonoured with remarks"no such account " vide memo dated 28.9.11. That the cheque was again presented but was again returned back dishonoured with the same remarks vide memo dt.10.10.11. That the cheque was again presented but was again returned back dishonoured with the same remarks vide memo Prit Pal Singh Chawla vs [ENTITY] dt.29.11.11. That legal notice dated 5.12.11 was sent to the accused vide Registered A.D but the accused failed to make payment of the amount of the dishonoured cheque to the complainant despite the legal notice. Hence, the present complaint has been filed.
2 After supply of documents to the accused, notice of accusation U/[SECTION] [ACT] was served upon the accused vide order dated 18.4.12 to which the accused pleaded not guilty and claimed trial.
3 Matter was posted for CE. The complainant examined himself as C.W1. One [ENTITY], PO SBI was examined as C.W2 and thereafter CE was closed. The accused was examined U/[SECTION] [ACT] and all incriminating material coming on record was put to him. The accused submitted that he did not receive the legal notice. That the cheques in question were given as security . That her husband had given the blank cheques in 2001 against a loan of Rs.10,000/ and the said amount has been repaid in the year 2002. Accused chose not to lead any DE and the matter was accordingly, fixed for final arguments.
4 I have heard the final arguments on behalf of the complainant and perused the record.
5 Before proceeding any further it would be germane to refer to the propositions of law on the point. The [ACT] Prit Pal Singh Chawla vs [ENTITY] raises two presumptions; According to [SECTION] it shall be presumed that every negotiable instrument was made or drawn for consideration. By virtue of this clause, the Court is obliged to presume that the instrument was made for consideration or until the contrary is proved. According to [SECTION] of [ACT] "it shall be presumed, unless the contrary is proved that the holder of a cheque received the cheque for discharge in whole or in part, of any debt or other liability." Under [SECTION] [ACT] there is a legal presumption that the cheque was issued for discharging an antecedent liability and that presumption can be rebutted only by the person who draw the cheque. Presumptions, both under [SECTION] and [SECTION] of the Act, are rebuttable in nature. The burden is squarely upon the accused to rebut the presumptions and discharge the onus placed upon him to show that the cheque was not against any liability. It is a settled law that for this purpose, the accused is not required to enter the witness box in order to discharge the burden of proof that the law places upon him. In the case reported as [PRECEDENT], it has been held by a Three Judge Bench of the Apex Court that consideration attached to a cheque is a matter of presumption and the complainant is not required to prove it beyond reasonable doubt. The question that naturally arises is as to what is the standard of proof that the law requires and which the accused is Prit Pal Singh Chawla vs [ENTITY] expected to discharge in order to rebut the presumptions. In criminal matters, the standard of proof upon the prosecution is proof beyond reasonable doubt. However, the accused in order to rebut the presumption(s) against him is not required to conclusively establish his case. The burden of proof on accused in rebutting the presumption(s) is not as high as that of the prosecution. Reference in this regard can be made to the judgment reported as [PRECEDENT]. It is also a settled principle that where the accused has discharged the initial burden of rebutting the presumptions; the burden of proof shifts to the complainant and whether or not the accused has discharged the onus of proof placed upon him would depend entirely on the facts and circumstances of the case. In this regard the judgment of the Apex Court in [PRECEDENT] can be fruitfully referred to. 6 Having dwelt upon the law as regards presumptions and the burden of proof in matters arising under [SECTION] [ACT], I shall now deal with the merits of the present case. The case of the complainant is that cheque in question Ex. CW1/A was issued by the accused towards discharge of her legal liability in respect of her liability qua friendly loan taken by her husband. The defence of the accused is that her husband had taken a loan of Rs.10,000/ in the year 2001 and had issued the Prit Pal Singh Chawla vs [ENTITY] cheque in question as a blank security cheque for the same and that the said loan was repaid in the year 2002. In this context, it appears that even through her defence as disclosed in his statement u/[SECTION] [ACT], the accused has admitted the existence of a financial transactions between her husband and the complainant and has admitted that atleast some loan was taken by her husband from the complainant. The contention of the accused is that her husband had repaid the said loan amount in the year 2002. However, no evidence in support of the said assertion has been brought on record by the accused. A reasonably prudent man similarly situated would atleast be expected to get something executed in black and white to witness the factum of repayment of loan especially when a cheque given by her as security was still in the hands of the opposite party. However, no such receipt or anything in black and white has either been asserted to exist by the accused nor any such document has been brought on record. The conduct of the accused is thus, improbable even when viewed from stand point of a reasonably prudent man similarly situated and furthermore, the non production of anything in black and white to witness the repayment of the alleged loan also goes against veracity of the defence of the accused. 7 It has been urged on behalf of the accused that the cheque in question was given by the accused as a security cheque and it has been urged that the Prit Pal Singh Chawla vs [ENTITY] cheque in question is labelled as such in the complaint. However, it appears that merely because the cheque in question is stated to be security cheque, the same is not sufficient to term it as a security cheque. In this context, reliance can be placed upon pronouncement of our own Hon'ble High Court in [PRECEDENT] wherein it was held that the post dated cheque may be issued under two circumstances. Under one circumstance, it may be issued for a debt in presenti payable in future and under second circumstance, it may be issued for debt which may become payable in future upon the course of contingency event. The cheque issued under first circumstance, would be for a debt due, only payment being postponed whereas later cheque would be by way of security. It was held that a debt would become due if it was in existence as a crystallized demand akin to liquidated damages and not as a demand which may or may not come into existence, it existence being contingent on happening of an event in future. It was held in Collage culture supra that offence under [SECTION] [ACT] would not be made out in case the cheque in question had been issued as security. Coming to the factual matrix of the present case, even if the contention of the accused is taken at its face value, even then the cheque in question would purport to be a cheque for debt due Prit Pal Singh Chawla vs [ENTITY] but payment whereof was postponed as enumerated in Collage Culture (supra) and the said cheque would not be a security cheque. It would be apt here to recall the ratio in the case of [PRECEDENT] where it was observed as under:
"8. If at the time of entering into a contract it is one of the conditions of the contract that the purchaser has to pay the amount in advance then advance payment is a liability of the purchaser. The seller of the items would not have entered into contract unless the advance payment was made to him. A condition of advance payment is normally put by the seller for the reason that the purchaser may not later on retract and refuse to take the goods either manufactured for him or procured for him. Payment of cost of the goods in advance being one of the conditions of the contract becomes liability of the purchaser. The purchaser who had issued the cheque could have been asked to make payment either by draft or in cash. Since giving cheque is a mode of payment like any other mode of payment, it is normally accepted as a payment. The issuance of a cheque at the time of signing such contract has to be considered against a liability as the amount written in the cheque is payable by the person on the date mentioned in the cheque. Where the seller or manufacturer, on the basis of cheques issued, manufactures the goods or procures the goods from outside, and has acted upon the contract, the liability of the purchaser gets fastened, the moment the seller or manufacturer acts upon the contract and procures the goods. If for any reason, the seller fails to manufacture the Prit Pal Singh Chawla vs [ENTITY] goods or procure the goods it is only under those circumstances that no liability is created. However, where the goods or raw material has been procured for the purchaser by seller or goods have been manufactured by the seller, it cannot be said that the cheques were not issued against the liability. I consider that if the liability is not construed in this manner, the sole purpose of making dishonour of the cheque as an offence stands defeated. The purpose of making or enacting [SECTION] of the [ACT] was to enhance the acceptability of cheque in settlement of commercial transactions, to infuse trust into commercial transactions and to make a cheque as a reliable negotiable instrument and to see that the cheques of business transactions are not dishonoured. The purpose of [ACT] is to make an orderly statement of rules of law relating to negotiable instruments and to ensure that mercantile instruments should be equated with goods passing from one hand to other. The sole purpose of the Act would stand defeated if after placing orders and giving advance payments, the stop payments are issued and orders are cancelled on the ground of pricing of the goods as was done in this case."
8 Coming to the factual matrix of the present case, even if the argument of the accused that the cheque in question that the cheque is stated to be a security cheque is taken at its face value, even then, the cheque in question was for repayment of the loan amount itself. At the time of taking of the loan, the accused also had promised to repay it and the liability of the Prit Pal Singh Chawla vs [ENTITY] accused to repay the amount of loan existed even on the day when the cheque was issued and only the repayment of the loan had been postponed between the parties. At the risk of sounding trite, the cheque in question was for a crystallized demand and only the payment of the debt had been postponed. Drawing a corollary with the ratio of Magnum Aviation supra, the purpose of the cheque would remain as one of repayment of the loan amount and the cheque in question cannot be interpreted to be a security cheque. To do so would defeat the very purpose of [SECTION] [ACT]. In taking this view, I am fortified by pronouncement of our own Hon'ble High Court in K.S. Bakshi & Anr. Vs. State and Anr. 146 (2008) DLT [SECTION] and [PRECEDENT] decided on 11 January, 2012 where dishonour of cheques issued at inception of the agreement even for payment of security amounts was held to constitute an offence under [SECTION] [ACT] as the issuance of the cheques was held to be fundamental to the agreement. It was held that it was irrelevant whether such money was retained or returned in future. Thus, the cheque was for a crystallized demand and the cheque can not be deemed to be a security cheque. 9 It has been urged on behalf of the accused that the cheque in question was given by the husband of the accused as a security cheque in the year 2001. It has been observed that no material has come on record to show that Prit Pal Singh Chawla vs [ENTITY] the cheque in question was issued as a security cheque. The bald assertion of the accused that the cheque in question was issued as a security cheque to my mind is not sufficient to establish the defence of the accused. The accused was still required to show from the material on record that the cheque in question was given by her husband in the year 2001 as has been alleged by her. It, however, appears that in the present case nothing has been brought on record by the accused to show when the cheque book containing the cheque in question was issued to her or at what point of time the preceding and succeeding cheques to the cheque in question from the same cheque book were utilized. There is nothing on record to even show how many of the cheques of the said series had been infact been utilized by the accused or on what dates. The unused cheque book if any has not been produced by the accused in court and furthermore, the counter foil of the cheque book has also not been produced by the accused to substantiate her claim that the cheque in question was issued in the year 2001. It has been observed that the cheque book of the accused including the counterfoils of the used cheques were the best possible evidence to show the point of time and the purpose for which the cheque in question had been utilized by the accused. The cheque book containing the counterfoils would also have been best corroborative evidence to show that the cheques coming after the Prit Pal Singh Chawla vs [ENTITY] cheque in question in the said cheque book had been utilized by the accused prior to the date of dishonour of the cheque in question and as such no inference can be drawn from the material on record that the cheque in question was in fact issued in the year 2001 and not at later date on which it is alleged to have been issued. To my mind, the bald assertion of the accused that the cheque in question was issued as a security cheque does not ipso facto warrant the conclusion that the cheque in question might have been issued to the complainant in the year 2001 as alleged. 10 It has been urged on behalf of the accused that no income tax record has been shown on record by the complainant. In this context, it has been urged on behalf of the accused that the complainant has not disclose the loan amount in his income tax return and as such the present complaint is not maintainable. It appears that in the present case the complainant was not cross examined regarding the source of his funds. The complainant in his cross examination stated that he was assessed to income tax and that the loan of Rs one lacs was shown in his ITR but he could not say if the amount of Rs 60,000/ was shown in the income tax return or not. The said income tax return was not called by the accused in court. It has been observed that the complainant has unequivocally stated that he was assessed to income tax and the loan amount presumably comprised the savings of the complainant Prit Pal Singh Chawla vs [ENTITY] presumably from his income after paying income tax and was accounted money. No material to suggest the contrary has been led before this court. No presumption can be raised that the loan amount comprised of unaccounted or black money. In these circumstances, merely because the complainant has not filed the ITR on record and has stated that he did not remember if the amount of Rs 60,000/ was shown in his ITR or not would not ipso facto make the source of funds illegal when the complainant has stated that he was assessed to income tax and especially when he complainant was not cross examined on point of his capacity to pay the loan in question.
11 It has been urged on behalf of the accused that there are contradictions in the pleadings of the complainant in the present case and in the pleadings of the second complaint case filed by the complainant herein. It has been urged that while in the connected case, the contention of the complainant is that the loan of Rs.1 lac was given by the complainant to the accused on 19.1.11, in the present case the contention of the complainant is that the first loan of Rs.1 lac was given on 17.1.11. It is further alleged that while in the connected case, the contention of the complainant is that the other loan of Rs.60,000/ was given to the accused on 19.2.12, the contention of the complainant in the present complaint case is that the other Prit Pal Singh Chawla vs [ENTITY] loan of Rs.60,000/ was given on 19.1.11. In this context, it appears that complainant tendered his evidence by way of affidavit and in the affidavits tendered in both the cases , the date of loan given to [ENTITY] is given as 19.1.11 while the date of other loan of Rs.60,000/ given to the accused is given as 19.2.11. Furthermore, even in cross examination in both the cases, the complainant has unequivocally stated that the first loan was given by him on 19.1.11. In the above circumstances, for one thing the mentioning of the dates of loan as 17.1.11 and 19.1.11 in the present complaint of the complainant could equally be an oversight or a typographical error. Furthermore, the accused has not been able to show how the said error or ambiguity affects the veracity of the version of the complainant when the complainant has himself asserted in his evidence by way of affidavit and in his cross examination that the first loan was given on 19.1.11 and the other loan was given on 19.2.11. There is thus no merit in this argument of the accused.
12 It has been urged on behalf of the accused that the cheque in question was not filled up by the accused. In this context, it would be fruitful here to refer to [SECTION] [ACT] which talks of "inchoate stamped instruments"
and states that if a person signs and delivers a paper stamped in accordance with the law and "either wholly blank or have written thereon an incomplete Prit Pal Singh Chawla vs [ENTITY] negotiable instrument" such person 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." These provisions indicate that under the scheme of the [ACT] an incomplete cheque which is subsequently filled up even as to the name, date and amount is not rendered void only because it was so done after the cheque was signed and delivered to the holder in due course. In this regard, it would be fruitful here to advert to the pronouncement of our own Hon'ble High Court in [ENTITY] vs State And Anr. decided on 13 March, 2008 in which, the same proposition of law was reiterated.
13 It thus appears that the ratio of [ENTITY] is fully applicable to the facts of the case. To reiterate, the cheque in question was not dishonoured on ground of any material alteration and the accused has admitted her signatures on the said cheque. It thus appears that in view of [SECTION] and [SECTION] of the [ACT], merely because the name of the payee, amount or the date even if were filled up subsequently does not amount to a material alteration and does not render the cheque void. The burden was therefore entirely on the drawer of the cheque, i.e, the accused, to establish that the date, amount and the payee's name are written by somebody else without the knowledge Prit Pal Singh Chawla vs [ENTITY] and consent of the drawer. In the instant case, the accused has not discharged said burden. Apart from the interested testimony of the drawer, no independent evidence was adduced to discharge the burden and as already observed the defence of the accused does not appear to be plausible. 14 In passing reference can also be had to pronouncement of our own Hon'ble High Court in [ENTITY] v. M/s. Eicher Motors Pvt. Ltd. 2012 ACD 621 to the effect that once accused had admitted his signatures on the cheque he could not deny his liability on the ground that it was a blank cheque and has not been filled in by him. It was held in [ENTITY] supra that a person handing over a blank cheque is supposed to understand the consequences of doing so. In the present case also the accused has admitted his signatures on the cheque in question. It has been observed that the issue of a cheque is a serious matter and a person issuing a blank cheque is supposed to understand the consequences of doing so and now the accused cannot escape his liability by contending that he had only issued a signed blank cheque.
15 There is another aspect of the matter. The cheque in question was dishonored with the remarks ' no such account'. The complainant has however, examined C.W2 [ENTITY], PO, SBI, Dilshad Garden who brought on record the attested copy of statement of account of the accused Prit Pal Singh Chawla vs [ENTITY] alongwith other relevant record. C.W2 deposed in his cross examination that the account number mentioned on the cheque in question was in the name of [ENTITY] and [ENTITY] and that the cheque in question was issued from the said account. He further deposed that the account in question was closed as unfunctional since 3.9.11. The cheque in question was received back dishonoured lastly on 29.11.2001 and it appears that on the said date the account of the accused had already been closed. It appears to be the settled proposition of law that court cannot be allowed to be mislead by the reasons in the cheque returning memo and in case of vagueness, difficulty or unclear reasons, the court can take steps to find out the actual reason for dishonour of cheque. In this regard the pronouncements in Prithvi Raj Vs Bhupender 1993 (II) CCR [SECTION]7 and [PRECEDENT] can be fruitfully adverted to. In the present case, the cheque in question was dishonoured lastly on a date on which the account of the accused had already been closed. It appears to be the settled proposition of law that the dishonour of a cheque on ground of account being closed would attract the punishment u/[SECTION] [ACT]. The pronouncement of Hon'ble Apex Cour tin NEPC Micon VS Magma Leasing 1999 CriLJ 2883 can fruitfully be adverted to on the point. Thus commission of offence u/[SECTION] [ACT] is disclosed in the present Prit Pal Singh Chawla vs [ENTITY] case.
16 There is yet another aspect of the present matter that is required to be dealt with and it is regarding the service of the legal notice. The accused has denied having received the legal notice. However legal notice was sent on the address of the accused at H.No 1678, Janta Flats, Nand Nagri Delhi. The same address is mentioned in the personal bond of the accused filed on record and in the statement of accused recorded u/[SECTION] [ACT]. In view of the above, I find no hesitation in holding that the legal demand notice was issued on the correct address of the accused and that the address mentioned on the legal notice was the correct address of the accused. In this connection the judgment reported as [PRECEDENT] can fruitfully be adverted to. It was observed therein:"[SECTION] gives rise to a presumption that service of notice has been effected when it is sent o the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time Prit Pal Singh Chawla vs [ENTITY] at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement "refused" or "not available in the house" or "house locked" or "shop closed" or "addressee not in station" due service has to be presumed. [[PRECEDENT]; [PRECEDENT] and [PRECEDENT] [PRECEDENT]. It is, therefore, manifest that in view of the presumption available under [SECTION] of the Act, it is not necessary to aver in the complaint under [SECTION] of the Act that service of notice was evaded by the accused or that the accused had a role to play in the return of the notice unserved." 17 In the facts of the case, nothing has been brought on record to establish that the notice was infact not received by the accused. Therefore, in terms of [SECTION] [ACT], there is presumption of valid service. It is for the accused to have rebutted the presumption. The accused has not made any endeavour to rebut the presumption of service of the legal notice as contained in [SECTION] of the [ACT]. 18 To conclude, in the case at hand, the accused has miserably failed to rebut and dislodge the statutory presumptions attached to the cheque in Prit Pal Singh Chawla vs [ENTITY] question. Therefore,this court holds accused guilty for the offence under [SECTION] [ACT]. Accordingly, in view of the above discussion the accused stands convicted for the offence under [SECTION] [ACT] Accused be heard on point of sentence separately.
ANNOUNCED IN THE OPEN COURT ([ENTITY]) ON 29th MAY, 2014 ACMM/ NE/KKD/DELHI Prit Pal Singh Chawla vs [ENTITY]