Indiabulls vs. [ENTITY] [CASE NUMBER] IN THE COURT OF MS. [ENTITY], LD. MM-05 NEGOTIABLE INSTRUMENTS ACT, DWARKA COURTS, DELHI CC No. 774/12 ID No. 02405R0580782010 [ENTITY] Registered Office at: F-60, Second Floor, Malhotra Building, Connaught Place, New Delhi-110001. Complainant Vs. [ENTITY] 188, G-Floor, Gali No. 5, Gopal Pur Village, Delhi. Accused Date of Institution : 01.04.2010 Offence Complained of : [SECTION], [ACT] Plea of Accused : Not Guilty Date of Reserving order : 12.09.2012 Date of Decision : 24.09.2012 Decision : Acquitted JUDGMENT:
1. The present complaint has been filed by M/s. [ENTITY] (hereinafter referred to as "complainant") submitting that M/s. Indiabulls Credit Services Ltd. (hereinafter referred to as "former company") had amalgamated into complainant under the scheme of arrangement sanctioned by Hon'ble High Court of Delhi and thus all the rights, title and interests in respect of the loans extended by former company are now vested in the complainant.
Indiabulls vs. [ENTITY] [CASE NUMBER]
2. The complaint has been filed through Sh. [ENTITY], Authorized Representative (AR) of the complainant. However, during pendency of the complaint, Sh. [ENTITY] was substituted as Authorized Representative of the complainant vide order dated 03.04.2012.
3. Briefly stated the case of the complainant is that accused had approached the former company for grant of personal loan and a loan of Rs. 35,000/- was sanctioned to him under the scheme of personal loan vide loan account no. S000136092. It is submitted that the loan amount was disbursed to the accused through a cheque drawn on HDFC Bank, Connaught Place, New Delhi-110001.
4. Complainant further submits that accused had promised to make timely and regular payment of the scheduled EMIs without any default but he failed to abide with the terms and conditions of the loan agreement. It is stated that under such circumstances, the former company was constrained to recall the entire loan and accused was asked to repay the recalled amount.
5. Complainant states that on receipt of the loan recall notice, accused approached the former company to settle the loan account by making full and final payment of the total outstanding loan amount. Complainant submits that in discharge of his legal liability and to settle the account, accused issued a cheque bearing no. 24979 dated 07.01.2010 Indiabulls vs. [ENTITY] [CASE NUMBER] for an amount of Rs. 21611/- drawn on Centurion Bank of Punjab Ltd. in favour of the complainant (hereinafter referred to as "cheque in question").
6. It is stated that the cheque when presented for encashment was returned unpaid vide cheque return memo dated 09.01.2010 with the remarks "account closed". It is submitted that the former company sent a legal notice dated 08.02.2010 to the accused intimating the return of the cheque as unpaid and asking the accused to pay the sum of Rs. 21611/- within a period of 15 days from receipt of notice.
7. Complainant submits that accused failed to repay the amount of dishonored cheque despite service of notice and thus accused has become liable to be prosecuted under the provision of [ACT].
8. Feeling aggrieved, complainant has filed the present complaint praying that the accused be summoned, prosecuted and punished in accordance with law for the offence committed under [SECTION] of [ACT] and cost of litigation be allowed to the complainant.
9. Pre-summoning evidence was led by the complainant on 03.04.2010. After perusal of material on record, prima facie case was made out against the accused and summons were issued against him. Accused entered appearance on Indiabulls vs. [ENTITY] [CASE NUMBER] 21.05.2010 and notice was framed upon him on 16.02.2012 to which the accused pleaded not guilty and claimed trial.
10. In reply to the notice, accused admitted that the cheque in question bears his signatures but submitted that he had taken a loan of Rs. 25,000/- which was repayable in 24 EMIs of Rs. 1,935/- each. Accused stated that at the time of availing loan, he had handed over blank signed cheque to the complainant since the same was demanded by the complainant as a pre-condition for sanction of the loan. Accused stated that even after due payment of 24 EMIs, two extra EMIs were deducted from his account, pursuant to which he closed his account.
11. Accused stated that when he tried to contact the branch office of the complainant from whom he had availed loan, it was found out that the office at the said branch had been closed. Accused stated that the blank signed cheque has been filled up and presented without any intimation to him or obtaining his instructions and the same has been misused to file the present complaint. Accused denied the receipt of legal demand notice and stated that he does not owe any liability towards the complainant rather the complainant is liable to refund two extra EMIs deducted from his account through ECS.
12. Subsequent to framing of notice, accused sought permission of the court to cross-examine the complainant Indiabulls vs. [ENTITY] [CASE NUMBER] under [SECTION] [ACT] which was allowed vide order dated 16.02.2012.
13. In complainant's evidence, Sh. [ENTITY], AR of the complainant was examined as CW1. CW1 tendered his evidence by way of affidavit Ex. CW1/H1 and relied upon documents Ex. CW1/A to Ex. CW1/F. Ex. CW1/A is the copy of incorporation certificate, Ex. CW1/B is the copy of power of attorney, Ex. CW1/C is the cheque bearing no. 24979 dated 07.01.2010, Ex. CW1/D is the cheque return memo dated 09.01.2010, Ex. CW1/E is the legal notice dated 08.02.2010, Ex. CW1/F is the courier receipt. Complaint is exhibited as Ex. CW1/G.
14. In cross examination, CW1 deposed that he had been working with the complainant since December, 2010 and the loan was disbursed to the accused in March, 2007. CW1 deposed that the loan amount was Rs. 35,000/- and the same was repayable in 36 EMIs of Rs. 1,935/- each. CW1 deposed that accused had paid only 26 EMIs as on date. CW1 stated that the amount mentioned on the cheque in question is calculated as Principal outstanding, interest, penal and bounce charges. CW1 admitted that he has not filed any document which would show aforesaid calculation. CW1 added that cheque in question was given to the accused towards settlement.
Indiabulls vs. [ENTITY] [CASE NUMBER]
15. CW1 further deposed that he was not aware as to whom the accused had given the cheque in question. CW1 added that generally such cheque is given to the Collection Executives of Indiabulls. CW1 denied the suggestion that the cheque in question was given as a security cheque at the time of sanctioning the loan and same was given blank at the time of handing over the same to the complainant. CW1 denied that the complainant had filled the amount in cheque in question without asking or intimating the accused.
16. CW1 admitted that the signatures of accused are in Hindi and other contents are in English and on the cheque, there is a stamp of Indiabulls Credit Services Ltd. in the column of Pay. CW1 denied the suggestion that all the contents were filled by the complainant except stamps and signatures. CW1 denied the suggestion that no legal notice has been sent to the accused and added that courier receipt and delivery receipt are already on record. CW1 admitted that the delivery report is computer generated report. CW1 denied the suggestion that the delivery report is a manipulated report. CW1 also denied the suggestion that there is no liability against the accused as stated by the complainant or that the present case has been filed by the complainant to extort money from the accused. CW1 denied that no loan agreement was filed by the complainant because it is a false case. CW1 denied the suggestion that he was deposing falsely being the employee of the complainant company.
Indiabulls vs. [ENTITY] [CASE NUMBER]
17. Statement of accused was recorded under [SECTION] [ACT] 19.04.2012 wherein all the incriminating evidence was put to the accused. In his statement, accused stated that the cheque does not bear his signatures and he is not aware about dishonor of the same. Accused stated that he had not received any legal notice and he has no knowledge as to why the complaint was filed against him. Accused stated that he is illiterate and complainant has taken advantage of him. Accused stated that he had issued blank cheques but the same were misused by the complainant. Accused further stated that CW1 had deposed falsely against him and the present complaint is a false case filed against him to extort extra money apart from the loan amount.
18. In defence evidence, accused examined himself as DW1 u/[SECTION], [ACT]. Accused deposed in his examination that he had taken a loan of Rs. 24,000/- from the complainant which was to be repaid in 24 monthly installments of Rs. 1,935/- each. DW1 deposed that at the time of taking loan from the complainant, complainant was having its office at Connaught Place. DW1 deposed that complainant had taken a blank cheque from him along with the cheques of EMI. Accused denied his signatures on the cheque in question i.e. at point X1 on Ex. CW1/C. Accused stated that he had not signed on Ex. CW1/C and the same was taken entirely in blank by the complainant and misused to file the present complaint.
Indiabulls vs. [ENTITY] [CASE NUMBER]
19. Accused deposed that he has repaid the entire loan amount to the complainant. Accused relied upon his pass-book of the account maintained with Centurion Bank of Punjab, copy of which was tendered as Ex. DW1/1 (Original Seen and Returned) to show the payment made to the complainant.
20. Accused deposed that as per Ex. DW1/1, he had made the entire payment of 24 installments to the complainant. Accused stated that he does not owe any liability towards the complainant rather it is the complainant who is liable for wrongly withdrawing extra amount from his account. Accused deposed that false complaint has been filed against him and he does not owe any liability towards the complainant.
21. In cross-examination, DW1 admitted that he had taken loan from the complainant. DW1 expressed inability to produce any document in respect of loan amount of Rs. 25,000/- or to show that the same was repayable in 24 installments. Accused denied the suggestion that he had taken a loan of Rs. 35,000/- from the complainant or that the same was repayable in 36 installments. Accused admitted that the cheque Ex. CW1/C belongs to him but stated that the same does not bear his signature. DW1 was confronted with his reply to the notice as well as admission/ denial of documents wherein he had admitted his signatures on the cheque in question. DW1 denied the suggestion that he was deposing falsely with regard to his signatures on Ex. CW1/C, since Indiabulls vs. [ENTITY] [CASE NUMBER] otherwise, the cheque return memo would have borne the remarks of "signature differ" rather than "account closed".
22. DW1 denied the suggestion that due to financial difficulty, he could not repay the entire loan amount. Accused added that he has made a payment of Rs. 50,000/- approx. to the complainant in 26 installments. Accused denied the suggestion that the cheque Ex. CW1/C was issued to the complainant towards discharge of liability or that he was deposing falsely.
23. Final arguments were advanced at length by Sh.
[ENTITY], Ld. Counsel for complainant and Sh. [ENTITY], Ld. Counsel for accused from DLSA.
24. I have considered the submissions and perused the record carefully.
25. [SECTION] of [ACT] has been enacted to give credibility to the commercial transactions. The main ingredients of [SECTION], [ACT] as laid down by Hon'ble Supreme Court in [PRECEDENT] are as follows:-
(i) that there is a legally enforceable debt
(ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt; and Indiabulls vs. [ENTITY] [CASE NUMBER]
(iii) that the cheque so issued had been returned unpaid due to insufficiency of funds.
26. The offence under [SECTION] [ACT] is made out only when each and every ingredient of the provision has been fulfilled. Apart from this, [SECTION] of [ACT] lays down a presumption in favour of the holder of cheque in following terms : "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".
27. Thus, in cheque dishonor cases, what the courts have to consider is whether the ingredients of the offence enumerated in [SECTION] of the Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by [SECTION] of the Act. It is pertinent to note that though the presumption contained in [SECTION] of the Act lies in favour of the complainant but the same is rebuttable and it is not mandatory for the accused to lead separate evidence qua the same. The presumption can be rebutted from the material already placed on record by the complainant.
28. In the case of [PRECEDENT], Hon'ble Supreme Court observed, Indiabulls vs. [ENTITY] [CASE NUMBER] "30. [SECTION] of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under [SECTION] of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability.
31. The courts below, as noticed hereinbefore, proceeded on the basis that [SECTION] raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct.
32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of the accused and that of the prosecution in a criminal case is different.
34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of the accused is `preponderance of probabilities'. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies.
45. We are not oblivious of the fact that the said provision ([SECTION] has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This however, shall not mean that the courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have been rebutted. Other important principles of legal jurisprudence, namely, presumption of innocence as Indiabulls vs. [ENTITY] [CASE NUMBER] a human right and the doctrine of reverse burden introduced by [SECTION] should be delicately balanced. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same (underlining added)"
In [PRECEDENT], Hon'ble Supreme Court held, " 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 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."
29. In light of the abovesaid legal propositions, we now come to the first and second ingredients of [SECTION] stated above viz. that there was a legally enforceable debt against the accused and that the cheque was drawn by the accused from his bank account for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt.
30. So far as the question of loan transaction is concerned, the same is an admitted fact between the parties. The amount of each installment being Rs. 1,935/- is also not in dispute. It is also admitted that accused has paid 26 installments of Rs. 1935/- each to the complainant till date. The only fact which is in dispute in the present case is the total loan amount and the number of installments.
Indiabulls vs. [ENTITY] [CASE NUMBER]
31. As per the complainant, the loan amount was of Rs.
35,000/- and the same was repayable in 36 installments of Rs. 1,935/- whereas, as per the accused, the loan amount was Rs. 25,000/- and the same was repayable in 24 installments. Now, the complainant has not mentioned either in the complaint or in the pre-summoning evidence and post-summoning evidence i.e. Ex. CW1/H and Ex. CW1/H1 about the entire loan amount as well as the number of loan installments.
32. To establish that the loan amount was of Rs. 35,000/-
repayable in 36 installments, complainant moved an application under [SECTION], [ACT] seeking permission to file loan agreement and statement of account on record. The application was allowed vide order dated 19.07.2012, however, complainant failed to file loan agreement and statement of account on record despite grant of sufficient opportunities on 13.08.2012, 29.08.2012 & 12.09.2012. Ultimately the opportunity was closed vide order dated 12.09.2012.
33. Thus, on record there is not a single document which can establish that the loan amount was of Rs. 35,000/- or that the same was repayable in 36 EMIs. On the other hand, accused has placed on record copy of his pass-book of the account maintained with HDFC bank i.e. Ex. DW1/1 (Original Seen and Returned) which shows that 26 installments of Rs. 1935/- were paid by the accused to the complainant which fortifies the defence raised by the accused to the effect that the Indiabulls vs. [ENTITY] [CASE NUMBER] loan amount was repayable in 24 installments and two extra installments were paid to the complainant.
34. Even otherwise, from Ex. DW1/1 it can be seen that a sum of Rs. 50,414/- (1,935x26) has already been paid by the accused to the complainant. Thus, if the averments of the complainant are taken to be true, it is seen that the accused was liable to pay a sum of Rs. 69,660/- (1935x36) only and since the accused has established payment of a sum of Rs. 50,414/- to the complainant, therefore, only a sum of Rs. 19,246/- would have remained outstanding against the accused. Surprisingly, the complaint states the amount outstanding against the accused as Rs. 21,611/- (which is also the amount of the cheque in question). However, there is no evidence on record which can establish or provide yardstick on the basis of which the amount of Rs. 21,611/- was calculated by the complainant as outstanding against the accused as on 07.01.2010. CW1 has also admitted in his cross examination that there is no document on record which can show the manner in which the amount of Rs. 21,611/- was calculated as outstanding against the accused. Thus, the complainant has not been able to establish the liability of the accused to the tune of Rs. 21,611/- as on 07.01.2010.
35. It is also inexplicable as to why the accused would not have made the payment of remaining installments to the complainant when he had already paid a sum of Rs. 50,414/-
Indiabulls vs. [ENTITY] [CASE NUMBER] in monthly installments to the complainant. No explanation has been furnished by the complainant qua the same .
36. Furthermore, throughout the proceedings, accused has stated that the cheque in question was issued to the complainant as security cheque at the time of grant of loan. Now, it was for the complainant to show that the cheque in question was issued towards discharge of any liability by the accused. Complainant in para no. 5 of its complaint i.e. Ex. CW1/G states that the cheque in question was issued by the accused pursuant to the receipt of loan recall notice. However, no such loan recall notice has been placed or proved on record by the complainant. Thus, there is no evidence to show that loan recall notice was indeed sent by the complainant to the accused pursuant to which the accused approached the complainant and issued the cheque in question for a sum of Rs. 21,611/-. The averments of the complainant are not fortified from the evidence brought on record.
37. Such state of affairs only gives rise to inference in favour of the accused to the effect that the cheque in question was issued as a security cheque in favour of the complainant. It is a settled law that a security cheque does not attract the penal provisions of [SECTION] of [ACT] (vide [PRECEDENT]; [PRECEDENT] decided by Hon'ble High Court of Delhi on 01.03.2011).
Indiabulls vs. [ENTITY] [CASE NUMBER]
38. In view of the entire discussion made above, the presumption under [SECTION] of [ACT] stands rebutted. The complainant has failed to establish that the cheque in question was issued by the accused towards discharge of any debt or liability. When the core ingredient of [SECTION] [ACT] has not been made out then it would be futile exercise to analyze other ingredients of [SECTION] of the Act. Accordingly, the offence under [SECTION] [ACT] is not made out against the accused. The complaint stands dismissed and accused stands acquitted. File be consigned to Record Room.
Announced in Open Court 24.09.2012 ([ENTITY]) METROPOLITAN MAGISTRATE-05 NEGOTIABLE INSTRUMENT ACT DWARKA COURTS, NEW DELHI/ 24.09.2012