IN THE COURT OF Ms [ENTITY] AGGARWAL: METROPOLITAN MAGISTRATE-04: NORTH-WEST DISTRICT: ROHINI DISTRICT COURTS: NEW DELHI [ENTITY] Vs. [ENTITY] PS Keshav Puram U/s 138 [ACT] Date of Institution : 10.06.2011 Date of Judgment : 25.01.2019 JUDGMENT
(1) Serial number of the case : 16823/16 (2) Name of the complainant : Sh. [ENTITY] S/o.: Late Sh D. C. Goel R/o.: B-2/12B, Lawrence Road, Delhi.
(3) Name of the accused : Smt. [ENTITY] W/o.: Late Sh. [ENTITY], R/o.: H No. 94, Triveni Apartments, Block H-3, Vikaspuri, New Delhi (4) Offence complained of : Under [SECTION] [ACT] (5) Plea of the accused : Pleaded not guilty (6) Final Order : Conviction
BRIEF STATEMENT OF THE REASONS FOR THE DECISION
1. In brief, it is the case of the complainant that he had given a friendly loan of Rs 5,00,000/- to the accused in cash for six months which was to be repaid with interest @ 1% per month and on 11.11.2010 he approached the accused for repayment which the accused intended to pay through cheque bearing no. 943923 dated 12.11.2010 of Rs. 5,30,000/- drawn on Indian Bank, Kirti Nagar, Delhi (hereinafter referred to as the 'cheque in question') with the [ENTITY] Vs. [ENTITY] assurance that the cheque will be honored if presented on 04.05.2011 on which assurance the cheque was presented by the complainant but the same was returned dishonored with the remarks "Insufficient Funds". The factum of dishonor of the cheque was duly informed to the accused by the complainant who refused to pay the cheque amount to the complainant. Thereafter a legal demand notice was sent by the complainant on 14.05.2011 to the accused through his counsel through speed post but the accused neither replied to it nor made the payment of the cheque amount. Hence, the present complaint was filed by complainant under [SECTION] of [ACT] (hereinafter referred to as "the [ACT]").
2. To prove his case, the complainant led pre-summoning evidence by way of affidavit (Ex CW1/A) and relied upon the documents i.e. original cheque bearing no. 943923 of Rs 5,30,000/- dated 12.11.2010 drawn on Indian Bank, Kirti Nagar, Delhi ie Ex.CW1/1; the cheque return memo ie Ex CW1/2; legal notice dated 14.05.2011 ie Ex CW1/3; postal receipt ie Ex. CW1/4.
3. After consideration of the pre-summoning evidence by the Ld Predecessor, the accused was duly summoned for the commission of offence under [SECTION] of the [ACT].
4. After the accused entered appearance, she was admitted to bail and notice was served upon her by the Ld Predecessor for the [ENTITY] Vs. [ENTITY] commission of offence under [SECTION] of the [ACT] wherein the accused chose to contest the present case and also admitted her signatures but denied having filled the remaining particulars. She further stated that she had given the cheque to Mr [ENTITY] for arranging a loan of atleast Rs 5 Lakhs as she was undergoing personal difficulty which he had said that he will arrange from a professional money lender. She further stated that she did not know the complainant beforehand and that she was introduced to the complainant by Mr [ENTITY] and Mr [ENTITY] had got a loan of Rs 1 Lakh arranged for her by way of a cheque which had been given to her by Mr [ENTITY]. She further stated that the complainant had asked for an interest @5% per month to which she had expressed her inability and asked for return of her cheques. She further stated that by that time she had also sold her Kirti Nagar property so she did not need the loan. She further stated that the complainant and Mr [ENTITY] had got certain documents like MOU and Promissory note signed by her. She denied any liability qua the cheque in question and also denied having received any legal notice.
5. The accused then sought to file an application under [SECTION] [ACT] to cross-examine complainant but upon no objection given on behalf of the complainant, she was permitted to cross-examine the complainant whereupon the complainant was duly cross- examined at length on behalf of the accused and thereafter complainant evidence was closed.
[ENTITY] Vs. [ENTITY]
6. The statement of accused was thereafter recorded under [SECTION] of the [ACT] wherein the entire incriminating evidence was put to the accused wherein she reiterated the defence as raised at the time of framing of notice. She further stated that she had returned the loan of Rs 1 Lakh to Mr [ENTITY] within three months but the complainant and Mr [ENTITY] did not return her documents. She further stated that she had sold her property in Kirti Nagar in April 2010 and at that time itself, she had returned the money to Mr [ENTITY] as she had received the advance against the said property after which she went to the house of the complainant asking him to return the documents as she had to leave for Australia in March 2011 but the complainant and Mr [ENTITY] did not do so on various pretexts. The accused also chose to lead evidence in her defence but closed the same without examining any witnesses in her defence.
7. Final arguments were then advanced by the Ld counsels on behalf of the parties wherein the Ld Counsel for the accused also relied upon the following judgments:
(a) [PRECEDENT], decided by the Hon'ble Supreme Court in [CASE NUMBER].
(b) [ENTITY] v State NCT of Delhi, decided by the Hon'ble Delhi High Court in [CASE NUMBER].
(c) [PRECEDENT], decided by the Hon'ble Delhi High Court in [CASE NUMBER].
(d) [PRECEDENT] [ENTITY] Vs. [ENTITY]
8. The final arguments advanced by the parties have been carefully considered along with the evidence on record, written arguments and judicial precedents.
9. It is pertinent to note here that to prove an offence under [SECTION] [ACT], it is required to be proved that:
(i) The accused had issued a cheque on a bank account maintained by her;
(ii) That cheque has been issued for the discharge (either in whole or in part) of any debt or other liability;
(iii)That cheque has been presented to the bank within the period of its validity;
(iv) That cheque has been returned by the bank unpaid;
(v) The payee or the holder in due course of the cheque makes a demand for the payment of the 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 regarding the return of the cheque as unpaid; and
(vi) The drawer of such cheque failed to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
10. In the case at hand, the accused has not disputed her signatures on the cheque in question ie Ex CW1/1 and has even admitted the same at the time of the framing of notice as well as at the time of [ENTITY] Vs. [ENTITY] recording of her statement under [SECTION] read with [SECTION] of the [ACT]. The factum of dishonour of the cheque in question vide return memo Ex CW1/2 has also not been disputed by the accused who has rather admitted the same in her statement recorded under [SECTION] read with [SECTION] of the [ACT]. The accused has also not raised any defence as to the cheque in question not having been presented during the period of its validity. Hence the ingredients (i), (iii) and
(iv) are deemed to be admitted as not disputed and hence proved.
Legal Notice
11. In respect of the legal notice, as CW1, the complainant has testified that upon dishonor of cheque in question Ex CW1/1 on 05.05.2011 vide return memo Ex CW1/2, he sent the notice Ex CW1/3 to the accused at H No. 94, Triveni Apartment, Block H-3, Vikaspuri, New Delhi for return of the cheque amount by speed post on 14.05.2011 ie within 30 days of dishonor of the cheque. The complainant also relied upon receipt Ex CW1/4. The accused has however denied receipt of the notice of demand.
12. It is pertinent to note that [SECTION] of [ACT] is applicable to communications sent by post and it enables the court to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. [SECTION] of the [ACT] envisages that when a registered notice is posted, it is presumed to have been [ENTITY] Vs. [ENTITY] served unless rebuttal is given.
13. In the present case, it is not the case of the accused that the address on which the notice was sent is not her address, rather she has given the same address in the Court at the time of framing of notice as also when her statement under [SECTION] of the [ACT] was being recorded i.e. H No. 94, Triveni Apartment, Block H-3, Vikaspuri, New Delhi. The accused has not led any evidence to prove any address other than the one mentioned in the legal notice as being her correct address. That being so, there is no material on record to even remotely suggest that the legal notice was not sent to the accused at her correct address. A plea was taken by the accused as to her having gone to Australia in March 2011 but she did not lead any evidence to prove the same either by stepping into the witness box or by leading any other documentary evidence in respect of the same.
14. Be that as it may, in [PRECEDENT], the Hon'ble Apex Court has held that "Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint u/[SECTION] of the Act, make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is [ENTITY] Vs. [ENTITY] liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the court along-with the copy of the complaint u/[SECTION] of the Act, cannot obviously contend that there was no proper service of notice as required u/[SECTION], by ignoring statutory presumption to the contrary u/[SECTION] of the [ACT] and [SECTION] of the [ACT]".
15. Thus, keeping in view that except mere denial of receipt of notice of demand, no evidence in rebuttal has been led by the accused as also keeping in view the dictum of the Hon'ble Apex Court, the present complaint cannot be rejected and the notice is held to have been duly served upon the accused.
16. In respect of ingredient (vi), it is pertinent to note that there is no evidence on record to prove that the accused has made any payment to the complainant in respect of the cheque in question till date. Hence even the ingredient (vi) as to no payment having been made by the accused in respect of the cheque in question stands proved.
Debt/Liability
17. In the case at hand, the accused has not denied her signatures on the cheque in question. It is a well settled proposition of law that once execution of the negotiable instrument is admitted, the presumption under [SECTION] of the [ACT] would arise that it is supported by a consideration. However, such presumption is rebuttable and the accused can prove the non-existence of consideration by raising a probable defence. To disprove the presumption, the accused has to [ENTITY] Vs. [ENTITY] bring on record such facts and circumstances upon consideration of which the Court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist." (Ref: [PRECEDENT] reiterated in [ENTITY] (Supra .
18. The [ACT] also provides under [SECTION] that 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. It is a settled position that when an accused has to rebut the presumption under [SECTION], the standard of proof for doing so is that of `preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. (Reliance placed on [PRECEDENT]).
19. In the present case, the defence of the accused is that she was given a loan of only Rs 1 Lakh by cheque by the complainant which cheque was given to her by Mr. [ENTITY] who had even got various documents signed from her including MOU/Agreement, Pronote, Receipt and three cheques. She has further taken the defence that she had returned the money within three months as she had sold her property in Kirti Nagar in April 2010 and that Mr [ENTITY] as well as [ENTITY] Vs. [ENTITY] the complainant had not returned her documents despite repeated requests.
20. In the entire cross-examination of the complainant, the accused has been unable to elicit any admission from him admitting her defence and has been unable to bring to fore sufficient material or circumstances upon which the Court may disbelieve the case of the complainant as the complainant withstood the rigours of cross- examination and no material contradiction, variation, improvement or omission could be elicited by the accused who also failed to punch holes in the case of the complainant. Rather, in the cross- examination of the complainant, the accused put a suggestion that the accused had taken the money without counting which was promptly denied by the complainant. Now the effect of this innocuous appearing suggestion is deep in as much as it completely negated the defence of the accused as to her having been given only Rs 1 Lakh as loan and that too by way of cheque and thereby rendered her defence improbable.
21. Further, despite taking a defence that the complainant had given her loan of only Rs 1 Lakh, which she had already repaid after selling her property at Kirti Nagar, the accused did not bring any evidence on record to prove the identity or even existence of any of her property in Kirti Nagar much less any proof as it having been sold or as to her having received any consideration qua the same. Since she also did not step into the witness box, no evidence has come on [ENTITY] Vs. [ENTITY] record as to when and how the said loan was repaid. While she stated in her statement under [SECTION] read with [SECTION] of the [ACT] that she had returned the amount of Rs 1 Lakh to Mr [ENTITY], she did not examine the said Mr [ENTITY] to prove her defence nor sought any assistance of the Court to summon him as a defence witness.
22. It cannot be lost sight of that the statement of accused under [SECTION] read with [SECTION] of the [ACT] is not the evidence of the accused and the explanation furnished at the time of recording such statement is to be proved by witness appearing in the witness box where they can be subjected to cross examination as mere explanation given in the statement of accused under [SECTION] of the [ACT] does not amount to proof. (Reference made to [PRECEDENT]].
23. It is also pertinent to note here that despite taking the defence that she had repaid the loan amount despite which the complainant and Mr [ENTITY] were not returning her cheques and documents despite her asking them repeatedly for the same, the accused never stepped into the witness box to prove such stand nor is it her case that she ever made any complaint to the police regarding the failure of the complainant and Mr [ENTITY] to return the cheques/documents despite her repeated requests. Such conduct of the accused in not approaching the police appears to be contrary to the course of [ENTITY] Vs. [ENTITY] conduct of a reasonably prudent man who can be expected to make a complaint to the police or at the very least issue stop payment instructions to his banker to prevent any misuse of the cheques.
24. However, in the case at hand, there is no complaint of the accused to the police nor any stop payment instructions appear to have been issued as the cheque in question was dishonoured for the reason of insufficient funds and not payment stopped by drawer. There is no complaint to the police even after the accused purportedly returned from Australia or even after the institution of this case nor any explanation has come on record for omission by the accused to make any such complaint. In these circumstances, the defence as raised by the accused appears to be afterthought and weak and has remained unproved.
25. Hence, in the absence of any defence evidence having been led and since from the evidence of the complainant on record, the accused has miserably failed to create doubts about the existence of a legally enforceable debt or liability, she has not been able to rebut the statutory presumptions drawn in favour of the complainant qua the cheque in question.
Arguments of the accused
26. An argument has been raised by the accused that the complainant had not mentioned the date of the advancement of the loan in his complaint, in the legal notice as well evidence by way of affidavit [ENTITY] Vs. [ENTITY] which itself proved that no such loan was advanced by him. There is however no merit in the argument since during his cross- examination, the complainant has testified that he had given the loan in May 2010 though he could not tell the exact date due to passage of time. In his cross-examination, the complainant also produced the promissory note/receipt as well as loan agreement/ affidavits Ex CW1/X1 and Ex CW1/X2 dated 12.05.2010 which sufficiently corroborated the testimony of the complainant as to the loan having been given on the said date. No reason has been brought on record to disbelieve the testimony of the complainant corroborated by the documents Ex CW1/X1 and Ex.CW1/X2. Hence the omission of mentioning the date of advancement of loan in the complaint or legal notice is not of much significance.
27. Another argument has been raised by the accused that the complainant was doing business of money lending and hence the present complaint was hit by the provisions of [ACT] as applicable to Delhi in view of [SECTION] thereof. It is pertinent to note that in the entire cross- examination of the complainant, the accused was unable to elicit any admission from the complainant as to him working as a money lender since the complainant has categorically denied as to him doing any business of advancement of loan. Though the accused was able to elicit from the complainant that Mr [ENTITY] was instrumental for advancing of loan to other persons, no further details of transaction with such other persons or even their [ENTITY] Vs. [ENTITY] existence have been proved on record nor it is clear as to whether the complainant was involved in those transactions. That being so, there is not enough evidence on record to hold that the complainant was working as a money lender.
28. Be that as it may, even if the complainant was engaged in lending money, that would not debar him from filing a complaint under [SECTION] of the [ACT], if a cheque issued to him towards repayment of the loan advanced by him is dishonoured by the bank for want of funds and the drawer of the cheques fails to make payment within the prescribed time, after receipt of legal notice from the lender as [SECTION] of the [ACT], which applies to Delhi, does not debar a money lender from instituting a complaint under [SECTION] of the [ACT], which is a remedy enforceable before a criminal court, and totally independent of a civil suit. (Ref: [PRECEDENT], in [CASE NUMBER] decided by the Hon'ble Delhi High Court). Hence the reliance placed by the Ld Counsel for the accused on the judgment of Hon'ble Andhra Pradesh High Court in [PRECEDENT] to contend that the even the case under [SECTION] [ACT] is liable to be dismissed is misplaced and the accused cannot be acquitted on this count.
29. Another argument has been raised on behalf of the accused that as the signatures and particulars of the cheque in question have been filled in different inks, it proved that the cheque was given as [ENTITY] Vs. [ENTITY] security towards the loan of Rs 1 Lakhs and hence cannot be considered to have been given in discharge of liability of the accused. However, the argument as raised does not have any merits as it is a settled proposition that 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. The accused has failed to elicit any admission in the cross-examination of the complainant as to the cheque in question having been handed over by the accused to the complainant as security cheque nor the accused led any defence evidence to prove as a matter of fact that the cheque in question were ever handed over as a security cheque. Hence the mere difference in the ink and handwriting on the cheque does not lead to any inference as to the same having been given as security cheque which was for the accused to prove as a matter of fact, which she has failed to do.
30. Another argument has been raised by the accused that since the complainant has claimed an interest @1% per month of the loan amount, the same was destructive of his plea of having given the loan as friendly loan which was thus fatal to the case of the complainant. However, the argument as raised is devoid of merits in as much as merely because the loan may have been termed as a friendly loan, it does not negate the possibility of the term friendly loan having been used as a connotation to denote a loan taken [ENTITY] Vs. [ENTITY] otherwise than from a commercial institution. Further, the fact that the complainant was not specifically cross-examined on this aspect also renders this argument of the accused as devoid of merits.
31. Yet another argument has been raised by the accused that since the complainant did not prove that he had mentioned the loan amount in his ITR, it falsified his case. It is pertinent to note her that even if the factum of loan being advanced is not mentioned in the ITR of the complainant, drawing of any adverse inference in respect thereof is not warranted for the reason that the Hon'ble Delhi High has already held in [PRECEDENT] (decided on 30.06.2015) that:
"21. The finding that, as the amount of loan disbursed to the respondent was not shown in the balance sheet and ITR, the appellant could not be said to have proved its case beyond reasonable doubt, is also erroneous. In this regard, reference may be placed on the decisions of the Bombay High Court in:
i) [ENTITY] vs. Nilesh P. Salgaonkar & Anr., 2006 (6) BomCR 653, wherein the Court observed:
"The learned J.M.F.C. has also held against the complainant the fact that the complainant had not shown the amount advanced by him in his income tax returns. I do not think that every person who gives friendly loans does in all cases show such loans in their income tax returns more so if they are payable on demand after short time. The learned acquitting J.M.F.C. entirely lost sight of the several presumptions which the law has enacted in favour of the complainant." (Emphasis Supplied)
ii) [PRECEDENT] (Decided on 19.07.2013), wherein the Court observed:
"The underlined observations do not disclose as to where can one find a prohibition on recovering amounts not disclosed in income [ENTITY] Vs. [ENTITY] tax returns. With utmost humility, I have to state that I have not come across any provision of [ACT], which makes an amount not shown in the income tax returns unrecoverable. The entire scheme of the [ACT] for ensuring that all amounts are accounted for. If some amounts are not accounted for, the person would be visited with the penalty or at times even prosecution under the [ACT], but it does not mean that the borrower can refuse to pay the amount which he has borrowed simply, because there is some infraction of the provisions of the [ACT]. Infraction of provisions of [ACT] would be a matter between the revenue and the defaulter and advantage thereof cannot be taken by the borrower. In my humble view, to say that an amount not disclosed in the income tax returns becomes irrecoverable would itself defeat the provisions of [SECTION] of the [ACT]. Apart from the purpose of this Act, which has been outlined by the learned Single Judge in Shri [ENTITY] (supra) as well as in [ENTITY] (supra), it ought to be seen that the moment a person seeks to recover through a cheque an amount advanced in cash it gets amounted for in the system and the revenue authorities can keep a track of that and if necessary tax the person. To brand an amount which is not shown in [ACT] unaccounted money would be too farfetched and, therefore, I am in respectful disagreement with the observations in [ENTITY] (supra), which in fact amounts to reading an additional requirement in [SECTION] the [ACT], and legislating that such amounts becomes irrecoverable. At the cost of repetition, for saying that an amount not disclosed in income tax returns cannot be legally recoverable liability, some provisions of law to that effect would have to be shown. Such provision was not noticed by me and even the learned Counsel for the respondent could not show any such provision to me." (Emphasis Supplied)"
32. Thus, it is clear that even if the complainant had not disclosed this loan in his income tax returns, even then the loan does not become irrecoverable as there is no law that mandates the lender to declare the amount of loan in his Income Tax Returns as [SECTION] of the [ACT] does not cast any burden upon a person making [ENTITY] Vs. [ENTITY] advance in cash to record it in her returns and does not prevent any such cash advance from being made rather as per the said section no person can accept any loan or deposit of a sum of Rs. 20,000/- or more otherwise than by an account payee cheque or account payee bank draft. It does not say that a person cannot advance more than Rs. 20,000/- in cash to another person. It is thus clear that the restriction on cash advances is in fact on the taker and not the person who makes the advance. Even the penalty for taking such advance or deposit in contravention of provisions of [SECTION] is be suffered by one who takes the advance. Therefore, it was obviously impermissible to invoke these provisions for preventing a person from recovering the advance which he has made. (Reference made to Mr. [PRECEDENT] (Supra).
33. It is also pertinent to note here that the reliance placed by the accused on the judgment of [PRECEDENT], (Supra) and [PRECEDENT], (Supra) is misplaced as the same are distinguishable on the facts of the case and hence are of no assistance to the accused in disproving the case of the complainant or in proving her own defence.
34. It is a trite law that onus lies upon the accused to rebut the presumption and to establish that the cheque in question was not given in respect of any debt or liability. The mere oral explanation furnished by the accused in the present case is not sufficient to dislodge the presumptions envisaged by [SECTION] and [SECTION] of [ENTITY] Vs. [ENTITY] [ACT]. Since in the instant case, the accused has failed to lead any convincing evidence to aid her in discharge of her onus, the presumption of law operates in favour of existence of debt or liability.
Decision
35. Hence from the totality of the evidence on record, on the scale of preponderance of probabilities, the accused has not been able to raise any probable defence sufficient to rebut the statutory presumptions raised in favour of the complainant and has miserably failed to prove her defence to be so probable as to create doubts about the existence of a legally enforceable debt or liability. Accordingly, the accused [ENTITY], W/o. Late Sh [ENTITY] is held guilty for the offence punishable under [SECTION] [ACT] and is convicted for the same in the present case.
36. Copy of this judgment be given dasti to the convict as per rules.
Announced in the open court Digitally signed by [ENTITY] on 25.01.2019 [ENTITY] Date: 2019.01.26 14:32:53 +0530 ([ENTITY] AGGARWAL)
Metropolitan Magistrate-04/ North West District Rohini District Court/New Delhi Certified that this judgment contains 19 pages and each page bears my signature.
[ENTITY] Date: 2019.01.26 14:32:59 +0530 ([ENTITY] AGGARWAL)
Metropolitan Magistrate-04/ North West District Rohini District Court/New Delhi [ENTITY] Vs. [ENTITY]