1 IN THE COURT OF SH. SHARAD GUPTA METROPOLITAN MAGISTRATE; DWARKA COURTS : NEW DELHI IN RE: CC No 1613/0311 U/s 138 [ACT] P.S. Bindapur [ENTITY] S/o Sh. Prem Datta, R/o P97/98, 2nd floor, Vijay Vihar, Uttam Nagar, New Delhi 59. Complainant Versus [ENTITY] S/o Sh. Arun Jindal, R/o R 154, Vani Vihar, Uttam Nagar, New Delhi. Accused Date of decision : 30.07.2013. Date of which order reserved:27.07.2013 Final order : Convicted JUDGEMENT :
1. The complainant herein has come before this court on the succinct allegation that he had friendly relations with the accused. That on 13.03.2011, the accused had approached him for a friendly loan of Rs. 2.5 lacs. That the complainant gave a loan of Rs. 2.5 lacs to the accused which was to be paid back in one month. That in order to secure the repayment and to satisfy his commitment, accused issued cheque bearing No. 444190 dated 19.04.2011 for sum of Rs. 2.5 lacs drawn upon corporation Bank, Janakpuri, Delhi in order to discharge his legal liability / debt taken by him from the complainant. That the said cheque when presented by the complainant for encashment, was returned unpaid with the remarks "insufficient funds" vide return memo dated 19.04.2011. That legal notice dated 12.05.2011 was sent to the accused through registered post, speed post and courier 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 03.11.2011 of my ld predecessor to which the accused pleaded not guilty and claimed trial. The accused in reply to notice U/[SECTION] [ACT] submitted that the he did not issue any cheque to the complainant. That he had taken a loan of Rs. 20,000/ from one [ENTITY] around one year back on interest which was returned to the said [ENTITY] after one month. That [ENTITY] had taken a blank signed cheque from the accused as security at the time of taking of the loan. That he did not know the complainant. That [ENTITY] has filled in the cheque wrongfully and lodged a false complaint against the accused through [ENTITY]. That [ENTITY] did not return the cheque to him even after receiving the entire payment. That he had given the reply to the legal notice.
3. Application under [SECTION] [ACT] was moved by the accused and cross examination of the complainant was allowed. CW1 [ENTITY] was cross examined at length by the counsel for the accused. In his cross examination CW1 stated that he was working as Deputy General Manager in Northern India, Nozen Herbal Pvt. Ltd. That he knew the accused for the last 23 years as he used to visit the shop of the accused as a customer. He reiterated that the accused had taken Rs. 2.5 lacs on 13.03.2011. He stated that his salary was Rs. 5 lac per annum and that he had made a cash payment to the accused. He disclosed that his PAN number was APTPK0289D. He stated that his wife was also working in IT, Minsitry. That he had paid money to the accused after getting the amount from his committee conducted by his brother in law in Hodal, District Faridabad. He admitted that he had not shown the transaction of payment made to the accused of Rs. 2.5 lacs in his ITR. He submitted that this was so because he had instantly handed over the amount to the accused. He admitted that signatures of the cheque in question were in one ink and rest of the particulars on the cheque in question were in a different ink. He stated that he had got the cheque filled in from another person. The defence of the accused was put to the complainant and the same was denied by him. Complainant admitted that one more case of a cheque of Rs. 2 lacs was pending against one [ENTITY]. He denied that he was involved in money lending activity.
4. Thereafter, the accused was examined U/[SECTION] [ACT] and all incriminating material coming on record was put to the accused. The accused reiterated his defence and chose to lead DE. Accused has examined himself as DW1. Accused has stated that he did not know the complainant and met him for the first time in court. That he had given cheque in question Ex. CW1/1 to one [ENTITY] as security. That the cheque was blank signed cheque bearing only the signatures of the accused. That he had taken a loan of Rs. 20,000/ from said [ENTITY] and had handed over the cheque in question. That he had returned the said amount about one month later. That he had asked for the said cheque but [ENTITY] did not return the cheque stating that it had been misplaced and would be return as soon as it was found. That thereafter, the accused received a legal notice and came to know that legal notice had been issued by the complainant herein. He got issued reply Ex. DW1/1. That he went to PS concerned for giving complaint against the complainant but the officials asked him to give a complaint in writing. That he did not give any complaint in writing. That he returned a sum of Rs. 20,000/ to [ENTITY] in daily installments of Rs. 1,000/ each without any interest. In his cross examination, accused stated that he did not remember the date, month or year when he had taken the loan from [ENTITY] or the date, month or year when he had returned the loan to [ENTITY]. That he did not remember the date, month or year when he asked [ENTITY] to return his cheque. That he did not issue any Stop Payment instructions. That no person was present when he took the loan from [ENTITY] or when he returned the loan. The case of the complainant was put to him and the accused denied the same. Accused stated that he had a cloth shop earlier which was closed by him and now he assisted his father in property dealing business. That he went to special branch to make complaint against the complainant in May, 2013. That he did not make any complaint against [ENTITY] for not returning his cheque. He admitted that he had issued reply dated 24.05.2011 Ex. DW1/1 to the complainant and the same was issued and drafted under his instructions. Thereafter, DE was closed and the matter was posted for final arguments.
5. I have heard the final arguments on behalf of the parties and perused the record with their assistance.
6. Before proceeding any further it would be germane to refer to the propositions of law on the point. The [ACT] 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 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.
7. 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. CW1/1 for a sum of Rs.2,50,000/ was issued by the accused towards discharge of his legal liability in respect of loan taken by him. The defence of the accused is that he had no dealing with the complainant. That he had taken a loan of Rs 20,000/ from one [ENTITY] and had returned the loan amount to said [ENTITY].
8. To rebut the statutory presumptions against him, the accused has examined himself as DW1. The accused has deposed along the lines of his defence and has stated that he did not know the complainant and met him for the first time in court. That he had given cheque in question Ex. CW1/1 to one [ENTITY] as security. That the cheque was blank signed cheque bearing only the signatures of the accused. That he had taken a loan of Rs. 20,000/ from said [ENTITY] and had handed over the cheque in question. That he had returned the said amount about one month later. That he had asked for the said cheque but [ENTITY] did not return the cheque stating that it had been misplaced and would be return as soon as it was found. That thereafter, the accused received a legal notice and came to know that legal notice had been issued by the complainant herein. That he got issued reply Ex. DW1/1. That he went to PS concerned for giving complaint against the complainant but the officials asked him to give a complaint in writing. That he did not give any complaint in writing. That he returned a sum of Rs. 20,000/ to [ENTITY] in daily installments of Rs. 1,000/ each without any interest.
9. The contention of the accused was that he had taken a loan of Rs 20,000/ from [ENTITY] and he had returned the same. However, in his cross examination, accused stated that he did not remember the date, month or year when he had taken the loan from [ENTITY] or the date, month or year when he had returned the loan to [ENTITY]. Furthermore, the accused also stated in his cross examination that no person was present when he took the loan from [ENTITY] or when he returned the loan. Thus no evidence is forthcoming on record to either establish that the accused had taken a loan from [ENTITY] or that he had returned the same to [ENTITY] and the accused has not even been able to tell the dates on which he had taken the loan from [ENTITY] or the dates when he had returned the same. The accused could not produce any material on record to substantiate his assertion that he made payment of Rs 20,000/ to [ENTITY]. In this context, the assertion of the accused is that he had handed over a cheque to [ENTITY] but even after repayment of the entire amount of Rs 20,000/ the said [ENTITY] did not return the cheque of the accused. It stands to reason that a reasonably prudent man similarly situated would atleast have sought some receipt or execution of something in black and white in token of having made the payment especially in the circumstance when a cheque which could be misutilized was still in possession of the opposite party. However, even as per the accused he did not get any receipt from [ENTITY] in token of having made repayment of the entire amount even when he was aware that his cheque had not been returned by the said [ENTITY]. For one thing the absence of any proof witnessing the repayment of the said amount of Rs 20,000/ is fatal to the defence of the accused and furthermore, the conduct of the accused at the time of repayment of the said amount in not taking a receipt also makes his conduct and by necessary implication his entire story unbelievable when viewed from the view point of a reasonably prudent man similarly situated.
10. Furthermore, the contention of the accused was that his cheque had been misused by the present complainant in connivance with [ENTITY]. However, the accused was unable to tell even the dates on which he had demanded his cheque from [ENTITY]. The accused stated in his cross examination that he did not remember the date, month or year when he asked [ENTITY] to return his cheque. Furthermore, it appears that even when the cheque of the accused was not returned to him, he did not take any steps for redressal of his grievances. In his cross examination, the accused admitted that he did not issue any Stop Payment instructions to his bank in respect of the cheque in question. Furthermore, the accused stated that he went to special branch to make complaint against the complainant in May, 2013 and that he did not make any complaint against [ENTITY] for not returning his cheque. It thus appears that the accused neither issued any stop payment instructions nor made any complaint against [ENTITY]. The accused as per his own version, went to the special branch to make a complaint against the present complainant in May 2013. The cheque in question pertains to the year 2011 and even as per the accused the only instance when he went to the any police station to make complaint against the accused was two years after the date of the cheque in question. A reasonably prudent man similarly situated would be expected to be vigilant of his rights and a reasonably prudent man similarly situated would be expected to at least make complaints to the authorities in respect of the misuse of his cheque. However, no such step was taken by the accused herein. The conduct of the accused does not appear to be probable even when viewed from view point of a reasonably prudent man similarly situated and the defence of the accused does not appear to be probable.
11. It has been urged by the accused that the cheque in question was handed over to [ENTITY]. However, no material in support of his contention has been brought on record by the accused. In this contest only the bald assertion of the accused is available on record however, in the absence of any material to substantiate his defence the contention of the accused does not appear to be believable. Reliance can be placed here to pronouncement in [PRECEDENT] where in the absence of any attending circumstances having been established to show that any action was taken by the accused to show that the cheque in question had been stolen or was forged/fabricated, his defence that the cheque in question had been stolen or was forged/fabricated was not found to believable.
12. It has been urged on behalf of the accused that the complainant did not have any means to pay the loan amount and that the source of the loan was unlawful. In this context the complainant was cross examined by the accused regarding his capacity to advance the loan. The complainant submitted that he was working as Deputy General Manager in Northern India, Nozen Herbal Pvt. Ltd. The complainant stated that his salary was Rs. 5 lac per annum and that he had made a cash payment to the accused. He stated that his wife was also working in IT, Minsitry and that he had paid money to the accused after getting the amount from his committee conducted by his brother in law in Hodal, District Faridabad. It thus appears that the complainant and his wife are both working and the complainant has stated his salary to be Rs 5 lacs per annum. Thus the complainant appears to be a man of sufficient means to advance the loan amount. The complainant further submitted that he had paid money to the accused after getting the amount from his committee conducted by his brother in law in Hodal, District Faridabad. The committee comprised the savings of the complainant presumably from his savings and no material to suggest the contrary has been led before this court. In these circumstances, merely because the complainant has stated that he had taken the amount from his committee would not ipso facto make the source of funds illegal when the complainant has shown himself to be a man of means and capable of advancing Rs 2.5 lacs as loan and especially when there is no material on record to show that the said committee was being run in contravention of any law.
13. It has been urged on behalf of the accused that the complainant has not shown the transaction of payment made to the accused of Rs. 2.5 lacs in his ITR. The import of this argument is that the said transaction was not disclosed as the money used to advance the loan was unaccounted money. In this context, the complainant has submitted that he did not show the amount in his ITR as he had instantly handed over the amount to the accused after taking the same from his brother in law. In this context it appears that the loan was advanced as per the complainant for a period of one month on 13.03.2011 and this fact has even been mentioned in the complaint and the testimony of the complainant. The reason of the complainant that the transaction was not shown by him in his ITR as he instantly had handed over the amount appears to be believable. Furthermore, the complainant is a salaried employee and is an income tax assessee. Furthermore, the complainant had taken the amount from his savings which had been accumulated presumably from his salary after deduction of income tax. There is certainly no material before this court to presume otherwise. This being so, the failure of the complainant to show the transaction in his ITR is not fatal to his case and the same would not make the loan money unaccounted or black money.
14. It has been urged on behalf of the accused that the complainant has admitted that he had got the cheque filled in from another person. It has been urged that the said filling of the cheque by another person by the complainant amounts to material alteration in the cheque. Reliance has been placed by counsel for the aaccused upon the judgment of the Hon'ble Delhi High Court in [PRECEDENT] to contend that if there are material alterations in the cheque then such an instrument is rendered void. Reliance is also placed on pronouncement of Hon'ble Madras High Court in [PRECEDENT] to contend that [SECTION] of the [ACT] is not applicable to cheques.
15. 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 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." Similarly [SECTION] [ACT] permits the holder of an uncrossed cheque to cross it and that would not render the cheque invalid for the purposes of presentation for payment. These provisions indicate that under the scheme of the [ACT] an incomplete cheque which is subsequently filled up 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. Before proceeding any further it would be relevant to refer to the settled proposition of law on the point. The position in law has been explained in the judgment of the Division Bench of the Kerala High Court in [PRECEDENT] in the following words:
"In the instant case, signature is admitted. According to the drawer of the cheque, amount and the name has been written not by the drawer but by somebody else or by the payee and tried to get it encashed. We are of the view, by putting the amount and the name there is no material alteration on the cheque under [SECTION] of the [ACT]. In fact there is no alteration but only adding the amount and the date. There is no rule in banking business that payee's name as well as the amount should be written by drawer himself. In the instant case Bank has never found that the cheque was tampered with or forged or there is material alteration or that the handwriting by which the payee's name and the amount was written was differed. The Bank was willing to honour the cheques if sufficient funds were there in the account of the drawer even if the payee's name and the amount was written by somebody else other than the holder of the account or the drawer of the cheque. The mere fact that the payee's name and the amount shown are not in the handwriting of the drawer does not invalidate the cheque. No law provides in the case of cheques the entire body has to be written by the drawer only. What is material is the signature of the drawer and not the body of the instrument. Therefore when the drawer has issued the cheque whether the entire body was written by the drawer written beyond the instructions of the drawer, whether the amount is due or not, those and such matters are defenses which drawer has to raise and prove it. Therefore the mere fact that the payee's name and the amount shown in the cheque are in different handwriting is not a reason for not honouring the cheque by the Bank. Banks would normally see whether the instrument is that of the drawer and the cheque has been signed by the drawer himself. The burden is therefore entirely on the drawer of the cheque to establish that the date, amount and the payee's name are written by somebody else without the knowledge and consent of the drawer. In the instant case, the drawer of the cheque has not discharged and burden. Apart from the interested testimony of the drawer, no independent evidence was adduced to discharge the burden.
16. It would also 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 the said pronouncement, the scope inter alia of [SECTION] [ACT] was discussed. The relevant portion of the pronouncement reads as under:
"The counsel for the petitioner contended that a cheque which is signed but left blank at the time of such signing, will be materially altered if it is subsequently filled up without the consent of the drawer, which according to him is what has happened in the present case. Such cheque would be void in terms of [SECTION] of the [ACT] and therefore cannot be presented for payment or honoured even if it is. [SECTION] [ACT] reads as under:
[SECTION] Effect of material alteration Any material alteration of a negotiable instrument renders the same void as against anyone who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties; Alteration by indorsee.And any such alteration, if made by an indorsee, discharges his indorser from all liability to him in respect of the consideration thereof. The provisions of this section are subject to those of [SECTION], [SECTION], [SECTION] and [SECTION].
17. While it is correct that in terms of the above provision, any material alteration to a cheque without the consent of the drawer unless it is made to carry out the common intention of the original parties thereto renders the cheque void, the expression "material alteration" has not been defined. Significantly, [SECTION] has been made subject to [SECTION], [SECTION], [SECTION] and [SECTION] [ACT]. These provisions help us to understand what are not considered 'material alterations' for the purpose of [SECTION].
18. [SECTION] [ACT] 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 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." [SECTION] permits the holder of a negotiable instrument endorsed in blank to fill up the said instrument "by writing upon the endorsement, a direction to pay any other person as endorsee and to complete the endorsement into a blank cheque, it makes it clear that by doing that the holder does not thereby incurred the responsibility of an endorser." Likewise [SECTION] states that where the holder acquiesces in a qualified acceptance, or one limited to part of the sum mentioned in the bill, or which substitutes a different place or time for payment, or which, where the drawees are not partners, is not signed by all the drawees, all previous parties whose consent has not been obtained to such acceptance would stand discharged as against the holder and those claiming under him, unless on notice given by the holder they assent to such acceptance. [SECTION] [ACT] permits the holder of an uncrossed cheque to cross it and that would not render the cheque invalid for the purposes of presentation for payment. These provisions indicate that under the scheme of the [ACT] an incomplete cheque which is subsequently filled up 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.
19. The above provisions have to be read together with [SECTION] [ACT] which sets out various presumptions as to negotiable instruments. The presumption is of consideration, as to date, as to time of acceptance, as to transfer, as to endorsement, as to stamp. The only exception to this is provided in proviso to [SECTION] which reads as under:
Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor 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.
20. A collective reading of the above provisions shows that even under the scheme of the [ACT] it is possible for the drawer of a cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up at a subsequent point in time and presented for payment by the drawee. There is no provision in the [ACT] which either defines the difference in the handwriting or the ink pertaining to the material particulars filled up in comparison with the signature thereon as constituting a 'material alteration' for the purposes of [SECTION] [ACT]. What however is essential is that the cheque must have been signed by the drawer. If the signature is altered or does not tally with the normal signature of the maker, that would be a material alteration. Therefore as long as the cheque has been signed by the drawer, the fact that the ink in which the name and figures are written or the date is filled up is different from the ink of the signature is not a material alteration for the purposes of [SECTION] [ACT]."
17. Interestingly, the ratio in BPDL investments supra relied upon by the accused also was distinguished in [ENTITY] supra on ground that BPDL supra applied to grant of leave to defend under [SECTION] [ACT] and was not in context of the [ACT]. It thus appears that the ratio of [ENTITY] is fully applicable to the facts of the case and the ratio of BPDL Investments and [ENTITY] supra relied on by the accused is not 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 his 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 and the date and the crossing of the cheque were done 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 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.
18. Reliance has also been placed by the accused on pronouncement of our own Hon'ble High Court in [ENTITY] v. Manju Rohida 155 (2008) DLT 447 to the effect that where there was inconsistency in the evidence of the complainant about issue of the cheque in question towards legally enforceable debt, the acquittal of the accused was found to be proper. In that case in the pre summoning evidence the case of the complainant was that the cheque in question was issued towards discharge of a loan while in the post notice stage the contention of the complainant was that the cheque was issued towards the liability of accused in chit fund. However, there is no inconsistency in the stand of the complainant in the present case and as such the ratio of [ENTITY] supra is not applicable to the facts of the present case. Reliance has also been placed on pronouncement of our own Hon'ble High Court in [PRECEDENT] where the complainant could not establish the delivery of goods to the accused in his evidence. However the facts of N.Chirag Travels supra are also entirely different from the facts of the present case where the complainant has been able to establish the advancing of a loan to the accused. The ratio of N.Chirag Travels supra is also of no help to the accused.
19. 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.
20. 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 in reply to notice under [SECTION] [ACT] as also in his testimony as DW 1 has admitted the receipt of the legal demand notice. The accused has admitted in his cross examination that he had issued reply dated 24.05.2011 Ex. DW1/1 to the complainant and the same was issued and drafted under his instructions. Thus in view of the clear and consistent admission of the accused, I find no hesitation in holding that the legal demand notice had been served on the accused.
21. To conclude, in the case at hand, the accused has miserably failed to rebut and dislodge the statutory presumptions attached to the cheque in 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 on 30th July, 2013. ([ENTITY] ) MM/ Dwarka Courts