1 PGK IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE Criminal Revision Application NO.278 of 2009 Harshad Shambhulal Sheth .. .. Applicant v/s. Sangeeta Rajesh Varma & anr. .. .. Respondents WITH Criminal Revision Application NO.279 of 2009 Harshad Shambhulal Sheth .. .. Applicant v/s. Tanvi Rajesh Varma & anr. .. .. Respondents Mr.Subhash Jha i/by Law Global for Applicant. Mrs.R.V. Newton, APP for State. ---- CORAM : SMT.ROSHAN DALVI, J. Dated : 17th November 2009 ORAL ORDER : 1.The Applicant, who is sole proprietor of M/s.Koltey Gum Industries, has challenged the order of the learned Additional Sessions Judge Greater Mumbai, dated 6.4.2009, dismissing his Appeal from an order of the learned Metropolitan Magistrate, 14th Court, Girgaum, Mumbai, convicting the Applicant in CC No.2140/SS/2005 2 essentially under 3 dishonoured cheques of Rs. 1,50,000/-, Rs.2,50,000/- and Rs.1 Lakh, aggregating to Rs.5 Lakhs. Hence there are two concurrent findings of fact against which these Revision Applications are filed. The ambit of the Court s jurisdiction in Revision is extremely narrow. 2.The Applicant has deposited Rs.3,75,000/- so far. The cheques were issued in 1999. The cheques were accompanied by corresponding Bills of Exchange duly drawn and accepted by and on behalf of the accused. 3.Documentary evidence of the corresponding Bills of Exchange by the complainants duly drawn and accepted by and on behalf of the accused has also been produced by the complainants and considered by the Court. There is the statutory presumption of the payment of consideration under the cheques. 4.The defence of the accused becomes material to consider to see whether statutory presumption is rebutted so that the onus could have been shifted upon the complainants to prove the consideration paid and legally enforceable debt. 5.It has been the case of the accused, the Applicant before this Court, that he had an initial transaction 3 in 1997 with one Dinesh Sanghvi. He had advanced a loan of Rs.5 Lakhs to Dinesh Sanghvi. Dinesh Sanghvi is stated to be the friend of the father of the complainant in one of the complaints and husband of the complainant in another complaint, one Rajesh Varma, who is stated to have stood as guarantor. It is the story of the accused that Dinesh Sanghvi could not repay the loan. The accused needed money immediately. He called upon Rajesh Varma, the guarantor, to repay. Rajesh Varma repaid the loan to the accused in 1999 by 3 cheques issued by his wife and daughters, aggregating to Rs.5 Lakhs. The Advocate for the Applicant/accused argued that whilst it was as and by way of repayment of the advance of Rs.5 Lakhs, the transaction was shown as if the accused was given Rs.5 Lakhs and consequently, the blank cheques were issued by the accused. 6.My attention has been drawn to the Affidavit of evidence of the Applicant/accused, which shows only oral statements. It shows that the accused advanced a loan of Rs.5 Lakhs to Dinesh Sanghvi, for which Rajesh Varma stood as guarantor and those documents have been destroyed in a fire. Thereafter it shows that he was in need of money and to get back the amount from Dinesh Sanghvi and Rajesh Varma issued the cheques signed by the complainants giving the transaction the colour of a loan advanced to the accused. The complainants were to 4 deposit the cheques only if the accused got the amount from Dinesh Sanghvi which was advanced by the accused to him. Dinesh Sanghvi expired and the amount was not repaid. 7.Ground (IX) to which my attention has been drawn by Mr.Jha on behalf of the accused (Applicant) specifically shows that the 3 blank cheques and 3 blank Bills of Exchange were given by way of security. This ground further shows that in the event of Dinesh Sanghvi returning the sum of Rs.5 Lakhs taken from the Applicant in the year 1997, the payment of Rs.5 Lakhs made by Rajesh Varma to the Applicant in the year 1999 was to be repaid. 8.The intrinsic defence, therefore, is that the cheques were given by the accused by way of security. Consequently, the accused must show that the amount was actually paid by him initially, in this case to Dinesh Sanghvi, if not the complainants. That has not been shown. 9.Though the complainants have relied upon not only the dishonoured cheques but also the Bills of Exchange, the accused has not shown initially how he had parted with the monies in the first place either to Dinesh Sanghvi or to Rajesh Varma. Only if that is shown, the 5 presumption would get rebutted and the onus would shift upon the complainants. Since that is not shown, the presumption stands. Hence, upon the evidence led by the accused himself in his examination-in-chief, no case of rebuttal of the presumption is made out. 10.The story of the accused can be tested in another perspective also. If the accused had given a loan to Dinesh Sanghvi which Rajesh Varma repaid, the transaction would have been completed. There would have been no need or reason for the accused to issue blank cheques and even Bills of Exchange. The accused would never need to repay his own guarantor any time in future. No security would be required to be given by the accused to his guarantor. The guarantor could have been paid back by the principal debtor directly. No security is needed at the time of repayment of the loan to the accused by his own guarantor. Such cheques could not be issued if the earlier transaction (if any) between the accused and his borrower, Dinesh Sanghvi was settled by Rajesh Varma. 11.The defence of cheques issued as security is oft taken, but seldom substantiated. 12.The concept of security is, therefore, required to be understood. 6 13.Security is defined in Black s Law Dictionary, 8 th Edition at page 1384 and Advanced Law Lexicon by P. Ramanatha Aiyar 2007 3rd Edition page 4273, as the collateral given or pledged to guarantee the fulfillment of an obligation; especially, the assurance that a creditor will be repaid (usually with interest); any money or credit extended to a debtor. The Law Lexicon further refers to security as anything (usually property) pledged as collateral against the loan or the document that sets out the terms of such collateral. It represents a loan that will be repaid at some time in the future. It is further set out to be : property deposited or made over, or bonds, recognizances, or the like entered into, by or on behalf of a person in order to secure his fulfillment of an obligation and forfeitable in the event of non-fulfillment; a document held by a creditor as guarantee for his right to payment; The term security signifies that which makes secure or certain. In its proper use, it relates to pecuniary matters, and often consists of a promise or right with or without possession of the 7 thing upon which it rests. It implies in its common acceptation that which prevents loss or makes safe. Dr.Johnson defines it as anything given as a pledge or caution. Dean Swift uses it as synonymous with safety or certainty . Webster defines it as anything given or deposited to secure the payment of a debt or the performance of a contract. Quoting from Stroud s Judicial Dictionary, the meaning is thus :- Speaking generally security is anything that makes the money more assured in its payment or more readily recoverable as distinguished from e.g., a mere `I.O.U. , which is only evidence of a debt, and the word is not confined to a document which gives a charge on specific property, but includes personal securities for money. The word `security should be taken to be comprehensible enough to include a `security or at least not to exclude it. The word `security is a word of general import meaning nothing more than an assurance. Anything that makes the money more assured in its payment 8 or more readily recoverable and may range from a mere personal bond or promissory note or guarantee, or even a mere pledge of something of no intrinsic value, to a mortgage or property from out of which the money can be realised. (Considered in Legu Venkataramanayya Setty & anr. vs. Gunda Subbayya Chetty & ors., AIR 1962 AP 175 @ 176) Collateral security is security given for the payment of a debt or the performance of some other act. 12.In the case of Palai Central Bank Ltd. vs. Jacob P. Cherian, AIR 1963 Kerala 128, the concept of security came to be considered. That was the case of a person who took a loan of Rs.10,000/- from the Bank. He deposited his Fixed Deposit Receipt of Rs.12000/- with the Bank duly discharged to be appropriated by the Bank for the principal amount as also the interest that would accrue due thereon. The Bank endorsed the account as care  lien. Before the amount could be repaid by the loanee the Bank was wound up. Official Liquidator was appointed. The set off claimed by the loanee was disallowed. Various other legal aspects of transfer of the property, the liability of the Company in liquidation, etc., with which we are not here. 9 Concerned, were considered. What was a security was also considered. The portions of the judgment which deal with what a security is and what it implies would be useful to import in this case. Those portions from the following paragraphs run thus:- (5) The deposits were given as security for the loans only in the wide sense of the word, security as including any form of assurance. (7) When a loan is taken on the security of a fixed deposit, the procedure adopted is the same whether the loan be on a promissory note or by way of overdraft on current account. (13).... nothing would be due to the respondents in respect of the deposits until the loan is repaid and the security, namely, the deposits, redeemed. (18)The word, security is a word of general import meaning nothing more than an assurance Anything that makes the money more assured in its payment or more 10 readily recoverable , is how Stroud defines it  and may range from a mere personal bond or promissory note or guarantee, or even a mere pledge of something of no intrinsic value, to a mortgage of property from out of which the money can be realised. (19)The deposit receipt is to be held as security and that the money, when it becomes due is to be applied in a particular way, to say that a particular sum in deposit is earmarked by way of security and that if a loan is not repaid in time it may be repaid from out of the deposit when the deposit becomes payable. (23)I would say that the transactions created an agency in respect of the deposits by way of security for the loans, an agency which being coupled with an interest is irrevocable until repayment of the loan in full has been effected. As security for the loan he was taking the customer authorised the bank to receive the amount due on the fixed deposit or to hold back the amount due on the savings bank deposit 11 and if the loan remained unpaid on the expiry of the stipulated period to apply the proceeds in discharge of the loan. The authority enures till the repayment of the loan and is irrecoverable and, therefore, since the loan remains unpaid, there is nothing due to the customer on the deposit to be set off against loan. (24)Another way of looking at the matter might be to regard the bank as a receiver appointed in respect of the deposit by way of security for the loan, holding the deposit in that capacity for until the loan is repaid and bound to apply the proceeds of the deposit in discharge of the loan in case the loan is not repaid in time. and the climax in paragraph 32 ...... (32).... the very purpose of taking security from a debtor is to place him at a disadvantage in the matter of evading repayment of the debt. 12 13. Hence the bottom line is that a cheque given by way of security implicitly shows a debt due; a legally enforceable debt. Unless that debt is discharged by the drawer of the cheque the security secures the payee. Hence the drawer of the cheque must show how he discharged his initial liability or the initial amount due to him. In this case the accused must show how he gave the loan initially to Dinesh Sanghvi which brought the later transaction into existence. That is not shown. 14. The defence of cheques given by way of security necessarily requires the borrower or the drawer of the cheques to show how the main debt is repaid by him so that the security could not be enforced by deposit of the cheques. The defence of security devoid of the evidence of repayment otherwise than by the dishonoured cheque can never be accepted. Security itself shows a debt due. The admission and the case that blank cheques were issued itself shows that at the time of issue there was a debt to be repaid. 15. The accused has contended that the documents were destroyed in a fire and sought to rely upon a certificate in that behalf. This evidence cannot prove the loan granted by the accused to Dinesh Sanghvi. It would allow the accused to show the copies of the 13 documents of loan, stated to have been destroyed, which were the copies removed by manual or mechanical process at the time of their execution by secondary evidence. No such secondary evidence is also produced. The statutory presumption is not rebutted. 16. Strangely the accused has contended that the complainants deposited the cheques without reference to him. Hence the accused issued instructions to stop payment , though there were sufficient funds in his Bank Account. Both the statements are contradictory. If the cheques were issued leaving the accused unawares, he could not have stopped payment. If he stopped payment himself, he brings himself within the four corners of the mischief of Section 138 of the Negotiable Instruments Act. 17. The issue of the cheques shows that the story of the accused about the previous loan transaction between him and Dinesh Sanghvi is moonshine. Hence it is seen that the defence that the blank cheques were issued by way of security is dishonest. 18. Hence even a probable defence is not shown. The existence of the consideration, which is 14 statutorily presumed, is not disproved as required in law. (See M.S. Narayan Memon vs. State of Kerala, 2006 6 SCC 39). The accused has not tendered any evidence to show repayment. [See Ashokkumar Kachrulal Zanwa vs. Bajrang Venket Kadam & anr., 2007 Bom. C.R. (Cri.) 209 and Nankilal Daulatrao Kasliwal Sandeep Panharinath & anr., 2007 (1) BCR (Cri.) 203 all relied upon on behalf of the accused]. 19. These aspects are all well considered in the two concurrent judgments showing the findings of fact. Besides, in the impugned judgment, the learned Judge has considered the aspects of the issue of the Bill of Exchange, given along with the blank cheques as well as the reply to the statutory notice sent to the accused. He has seen how contradictory cases were set out by the accused in reply to the notice of demand and in his Affidavit of examination-in-chief, setting out the aforesaid story. 20. The impugned orders do not suffer from any infirmity. The concurrent findings of facts of both the Courts are seen to be correct. No interference with these orders is called upon in the ambit of a Revision Application. In the facts of this case, no genuine defence whatsoever is seen. The host of judgments sought to be relied upon by the Advocate of the 15 accused/Applicant to show the law relating to case of money-lenders, source of earning of the complainants, the requirement of maintenance of accounts and production of taxation documents etc., need not be adverted to. 21. Both the Criminal Revision Applications are dismissed. The accused/Applicant shall have to comply with the order dated 6.4.2009. Hence, he shall surrender before the trial Court forthwith, failing which the Court of the learned Magistrate shall secure his presence in serving out the sentence and for recovery of the remaining compensation required to be paid. (SMT.ROSHAN DALVI, J.) 16