CC No.6223/10 SBL (P) Ltd Vs. Chaudhary Homeo Pharmacy Page no. 12 of Pages 14


Cc No.6223/10 Sbl (P) Ltd vs . Chaudhary Homeo Pharmacy Page ... on 18 December, 2013

iii) In the decision reported as 2006 (6) SCC 39 M.S. Narayana Menon @ Mani vs. State of Kerala & Anr., it was observed as under: "52. ................ If the defence is acceptable as probable the cheque therefore cannot be held to have been issued in discharge of the debt as, for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of the Act.

 It has also been held by Hon'ble High Court of Delhi in Ravi Kumar D v. State of Delhi and anr. (Manu / DE /1538/2011) that:
 9. Plain reading of the above provision of law shows that criminal liability under Section 138 NI Act is attracted only if the dishonored cheque was issued for the discharge in whole or in part of any existing debt or liability. The Section does not apply to a cheque issued to meet future liability which may arise on happening of some contingency. Thus, it is clear that a postdated cheque, if issued for discharge of a debt due, in the event of dishonor, would attract section 138 if the NI Act but a cheque issued not for an existing debt / liability but issued by way of security for meeting some future contingency would not attract Section 138 of the NI Act.


16. From the above stated discussion the defence of the CC No.6223/10 SBL (P) Ltd Vs. Chaudhary Homeo Pharmacy Page no. 13 of Pages 14 accused that the cheque in question was given as security appears to be probable. Though in the present matter accused has admitted that he had received goods vide invoices Ex. CW1/4 to Ex. CW1/10, but that does not permit the complainant to utilize the security cheques of the accused to discharge his liability against those invoices, further even if such cheques were utilized but on their dishonor Section 138 NI Act will not attract (Reliance placed on Ravi Kumar D v. State of Delhi and anr. (Manu / DE /1538/2011). It is established principle of law that the accused has only to create a doubt in the version of the complainant, while the complainant has to prove the guilt of the accused persons beyond reasonable doubt. In Kulvinder Singh v. Kafil Ahmed 2013(1) DCR 417 it was held by Hon'ble High Court:
 "The basic principle in criminal law is that the guilt of the accused must be proved beyond reasonable doubt and if there is a slightest doubt about the commission of an offence then the benefit has to occurred to him".

17. Thus from the above stated discussion it is clear that the accused has been able to prove his defence. Considering the entire circumstances and evidence on record, it stands duly proved that the cheque in question was not issued and drawn in discharge of liability or a legally recoverable debt of the accused.


18. In view of the aforesaid discussion, I am of the considered opinion that the complainant has failed to prove its case against CC No.6223/10 SBL (P) Ltd Vs. Chaudhary Homeo Pharmacy Page no. 14 of Pages 14 the accused while accused has proved his defence. Accordingly, accused Choudhary Homeo Pharmacy and its proprietor Sunil Kumar, C394 Mohan Gali, Nanak Chand Basti, Kotla Mubarakpur are stands acquitted of the offence U/s 138 Negotiable Instruments Act.
Announced in the open court today i.e. 18.12.2013 (GAJENDER SINGH NAGAR) MM:KKD:DELHI:18.12.2013 Containing 14 pages all signed by the presiding officer.

 (GAJENDER SINGH NAGAR) MM:KKD:DELHI:18.12.2013


Case No. 223/12 Madhav ... vs Alamgeer 1 Of 20 on 22 February, 2014

IN THE COURT OF Ms. MANU GOEL KHARB
     METROPOLITAN MAGISTRATE, DWARKA COURTS,
                     NEW DELHI

                 In Re:                  Case No. : 223/12
                                         (Old CC no. 2663/1 dated 03.10.07)
                                   U/s. 138 Negotiable Instrument Act
1.      CC No.                                        : 223/12

2.      Date of Institution                                 : 03.10.2007

3.      Name of the complainant,                            :  The Madhav Cooperative
        parentage and residence                                Urban Thrift & Credit
                                                               Society Ltd.,  E17, East
                                                               Uttam Nagar, Near Pali
                                                               Factory, Uttam Nagar,
                                                               New Delhi59 (Through
                                                               Sh. Satish Kumar Garg
                                                               S/o Sh. Ghanshyam Dass
                                                               Gupta, President/AR)

4.        Name of accused                                   :  Sh. Alamgeer
          his parentage                                        S/o Sh. Rafiq Ahmad
          and residence                                        R/o B254, JJ Colony,
                                                               Hastsal, Uttam Nagar,
                                                               New Delhi59

Case No. 223/12                    Madhav Cooperative Vs Alamgeer                1 of 20

5.      Date when Judgment
         was reserved                              :  12.02.2014

6.      Date when Judgment
         was pronounced                             : 22.02.2014

7.     Offence complained of                   : U/s. 138 NI Act

8.     Plea of accused                               : Not guilty

9.     Final Judgment                              : Convicted

                                     :: JUDGMENT ::

                       BRIEF FACTS AND REASONS FOR
                           DECISION OF THE CASE


BRIEF FACTS AND REASONS FOR
                           DECISION OF THE CASE

1. By way of the present judgment, I shall decide the complaint case U/s 138 Negotiable Instrument Act 1881 (as amended up to date) filed by the complainant The Madhav Cooperative Urban Thrift and Credit Society Ltd through its President/AR Sh. Satish Kumar Garg against the accused Sh. Alamgeer S/o Sh. Rafiq Ahmad.


2. The facts in brief necessary for the disposal of the present case Case No. 223/12 Madhav Cooperative Vs Alamgeer 2 of 20 are that as per the allegations in the complaint, on 11.08.04, the accused took a loan of Rs.25,000/ from the complainant society vide loan account no. 2564 at interest of 18% per annum with the promise that the same shall be returned with interest and the accused executed loan agreement in this regard. The accused was irregular in making the payment of installments and therefore, settled his account upto 18.07.2007 for a sum of Rs.29,200/. The accused for discharge of the said liability issued cheque bearing no. 284229 drawn on ICICI Bank, B1, Milap Nagar, Najafgarh Road, Uttam Nagar, New Delhi in favour of the complainant. On presentation of the above said cheque the same was returned unpaid with the reasons "INSUFFICIENT FUNDS" vide cheque return memo dated 21.07.2007. Thereafter, the complainant served the legal notice of demand dated 13.08.2007 to the accused which was sent by Speed post with AD thereby calling upon the accused to make the payment in lieu of dishonored cheque. It is alleged that accused has failed to pay any sum in response to the legal notice of demand. In consequence thereof the complainant has filed the instant complaint for prosecution of the accused U/s 138 Negotiable Instruments Act.
 Case No. 223/12 Madhav Cooperative Vs Alamgeer 3 of 20


3. After the complaint was filed, the President/Authorized Representative of the complainant society led his presummoning evidence by way of an affidavit and after hearing the AR for the complainant and considering the entire material and documents on record, summons were issued against the accused vide order dated 03.10.2007 for the offence U/s 138 Negotiable Instrument Act 1881. On appearance of the accused, a separate notice U/s 251 Cr.P.C. dated 09.02.2012 was given to the accused to which he pleaded not guilty and claimed trial and the matter was fixed for complainant evidence.


4. In order to prove the case, Sh. Satish Kumar Garg, President/AR of the complainant got himself examined as CW1 and reiterated the contents of the complaint on oath before this court and tendered his affidavit in evidence which is Ex. CW1/X. He got exhibited the original cheque bearing no. 284248 dated 19.07.2007 of Rs.29,200/ drawon on ICICI Bank, B1, Milap Nagar, Najafgarh Road, Uttam Nagar, New Delhi as Ex. CW1/A, Original cheque return memo dated 21.07.2007 as Ex. CW1/B, Copy of notice dated Case No. 223/12 Madhav Cooperative Vs Alamgeer 4 of 20 13.08.2007 as Ex. CW1/C, Postal receipt and acknowledgment Card is Ex. CW1/D and Ex. CW1/E. Sh. Satish Kumar Garg was cross examined by the ld. Counsel for the accused. Thereafter, the complainant evidence was closed by the Ld. Counsel for the complainant.
 Thereafter, counsel for the complainant moved an application under section 311 CrPC for calling a bank witness to prove the dishonor of cheque. This application was allowed and Sh. Bikesh Sharma, Customer Service Officer, ICICI Bank Ltd was examined as CW2. He brought statement of account of the accused and exhibited the same as Ex. CW2/X and also identified the original cheque Ex. CW1/A and return memo already Ex. CW1/B. CW2 Bikesh Sharma was crossexamined by the ld. Counsel for the accused. Thereafter, the complainant evidence was closed by the Ld. Counsel for the complainant and the case was fixed for statement of the accused.


5. In his statement recorded U/s 313 Cr.P.C r/w Sec. 281 CrPC, all the incriminating evidence along with exhibited documents Case No. 223/12 Madhav Cooperative Vs Alamgeer 5 of 20 were put to the accused Alamgeer in which he stated that he had issued the cheque in question as a blank signed cheque for security purpose and admitted the receipt of legal notice of demand. He further stated that he complainant has misused the blank signed cheque given by him to the complainant prior to the disbursement of loan. Thereafter, the case was fixed for defence evidence.


6. Ld. counsel for the accused moved an application U/s 315 Cr.PC for allowing the accused to appear in his defence. The aforesaid application was allowed and accused himself deposed as DW1. Accused deposed that he was sanctioned a loan of Rs. 25000/ by the complainant and the latter also took one blank signed cheque from him at the time of disbursement of loan. He admitted the receipt of legal demand notice. Accused did not tender any document in support of his defence. Accused was crossexamined by the ld. Counsel for the complainant wherein he admitted that he did not give any reply to the legal notice of demand.
 In his defence, accused also examined his wife Shama Begum as DW2 who exhibited the payment receipts as Ex. DW2/A(15 pages Case No. 223/12 Madhav Cooperative Vs Alamgeer 6 of 20 colly). DW2 deposed that she was present at the time of loan and on complainant's demand, her husband Alamgeer gave them one blank signed cheque for loan. She also deposed that on some occasions no receipt was issued by the complainant. DW2 was crossexamined by the ld. Counsel for the complainant. No other defence witness was produced on behalf of the accused. Thereafter, defence evidence was closed at request of Ld. counsel for the accused and the case was fixed for final arguments.

7. Final arguments were addressed on behalf of both the parties.

 I have heard Ld. counsels for both the parties and perused the entire record of the case file and the evidence on record. In order to bring home the conviction of the accused, the complainant has to show not only unbroken chain of events leading to commission of actual offence on record but also the ingredients of the offence complained of.


8. Before proceeding further let us go through the relevant provisions of law. The main ingredient of Section 138 of the Negotiable Instruments Act are as follows: Case No. 223/12 Madhav Cooperative Vs Alamgeer 7 of 20
 (a) The accused issued a cheque on an account maintained by him with a bank.

 (b) The said cheque has been issued in discharge of any legal debt or other liability.

 (c) The cheque has been presented to the bank within the period of six months from the date of the cheque or within the period of its validity.

 (d) When the aforesaid cheque was presented for encashment, the same was returned unpaid/ dishonoured.

 (e) The Payee of the cheque issued a legal notice of demand within 30 days from the receipt of information by him from the Bank regarding the return of the cheque.

 (f) The Drawer of the cheque failed to make the payment within 15 days of the receipt of the aforesaid legal notice of demand.

 If the aforesaid ingredients are satisfied then the drawer of the cheque shall be deemed to have committed an offence punishable u/s 138 Negotiable Instruments Act.

9. Now let us deal with the each ingredient of the section 138 of Negotiable Instruments Act to see whether the case against the Case No. 223/12 Madhav Cooperative Vs Alamgeer 8 of 20 accused has been proved or not.


10. WHETHER THE CHEQUE WAS ISSUED OR NOT The accused has himself admitted to have signed the cheque in question while answering to the question at the time of framing of notice U/s 251 Cr. PC. Further while answering to the question U/s 313 Cr.PC the accused has admitted to have given the cheque in question to the complainant but he stated that the same was given in blank only after putting his signatures there for purpose of security at the time of taking the loan from complainant. Therefore, so far as signing and delivery of the cheque in question by the accused is concerned the same is not disputed.

 Moreover, in Jaipal Singh Rana Vs. Swaraj Pal 149 (2008) DLT 682 it was held by Delhi High Court that "by putting the amount and the name there is no material alteration on the cheque U/s 87 of the Negotiable Instruments Act. In fact there is no alteration but only adding the amount and the date.

 It was further observed in the aforesaid judgment that there is no rule of banking business that the name of the payee as well as the Case No. 223/12 Madhav Cooperative Vs Alamgeer 9 of 20 amount should be written by the drawer himself. No law provides that in case of cheques the entire body has to be written by the drawer only."

 In view of the evidence on record it stands proved that the cheque in question was issued by the accused.


11. WHETHER THE CHEQUE WAS PRESENTED WITHIN THE PERIOD OF VALIDITY Perusal of the record reveals that the cheque in question which is Ex. CW1/A is dated 19.07.2007 which got dishonored vide cheque returning memo which is Ex. CW1/B dated 21.07.2007 which is not disputed by the accused clearly shows that the cheque has been presented within period of its validity i.e. within six months from the date of issuance of the cheque.

12. DISHONOUR OF CHEQUE IN QUESTION In the instant case, Satish Kumar Garg who has appeared as complainant's witness has got exhibited the cheque returning memo which is Ex. CW1/B to prove the fact of dishonour of the cheque in Case No. 223/12 Madhav Cooperative Vs Alamgeer 10 of 20 question. Complainant also examined bank witness Sh. Bikesh Sharma, to prove the dishonor of the cheque who correctly identified the cheque Ex. CW1/A and return memo Ex. CW1/B and stated that the same was issued by their bank mentioning 'insufficiency of funds' as the reason of dishonor. He produced the statement of account of the accused as Ex. CW2/X and stated that as the balance of the accused was not sufficient, so the entry of dishonor is not reflected in the statement of account.

 The dishonor of the cheque in question has not been disputed by the accused nor the cheque returning memo has been challenged by the accused.

 Therefore considering the entire evidence on record it stands duly proved that the cheque in question was dishonored vide cheque returning memo dated 21.07.2007 which is Ex. CW1/B with the reason "Insufficient Funds".


13. SERVICE OF LEGAL NOTICE OF DEMAND UPON THE ACCUSED In the instant case, Satish Kumar Garg who has appeared as complainant's witness has specifically stated in his examination in Case No. 223/12 Madhav Cooperative Vs Alamgeer 11 of 20 chief that the complainant got issued the legal notice of demand dated 13.08.2007 which is Ex. CW1/C and it was sent to the accused vide Spped Post with Regd. AD which are Ex. CW1/D and Ex. CW1/E respectively. The accused has also admitted the receipt of legal notice of demand during framing of notice under section 251 CrPC and while answering to the question during his statement U/s 313 r/.w 281 Cr.PC as well as his examination in chief.

 In light of the evidence on record and the admission made by the accused, it stands proved that legal notice of demand was properly served upon the accused.

14. WHETHER THE CHEQUE IN QUESTION WAS ISSUED IN DISCHARGE OF ANY LEGAL DEBT OR OTHER LIABILITY In the case in hand, Satish Kumar Garg who has appeared as complainant's witness has specifically stated in his examination in chief by way of affidavit that the accused was irregular in making payments and settled his account with the complainant for a sum of Rs. 29,200/ and issued the cheque in question in discharge of that Case No. 223/12 Madhav Cooperative Vs Alamgeer 12 of 20 liability.
 The accused has however deposed in his examination in chief that he had issued cheque in question to the complainant before the disbursement of loan as blank signed cheque, by way of security only and the same has been misused by the complainant.


Before deciding this issue let us go through the relevant provisions of law.
 Section 46 of the Negotiable Instruments Act speaks of the delivery, it reads as follows: "The making, acceptance or endorsement of a promisory notice, bill of exchange or cheque is completed by delivery, actual or constructive."
 Section 118 (b) of the Negotiable Instruments Act provides that until the contrary is proved, the following presumption shall be made.

 (b) As to date  that every Negotiable Instrument bearing a a date was made or drawn on such date.

 Moreover, there is a presumption in favour of the complainant Case No. 223/12 Madhav Cooperative Vs Alamgeer 13 of 20 u/s 118 (a) Negotiable Instruments Act that until the contrary is proved, it will be presumed that every negotiable instrument was drawn for consideration and every such instrument when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration.

 Further Section 139 of the Negotiable Instruments Act, 1881 provides that it shall be presumed until the contrary is proved that the holder of the cheque received the cheque of the nature referred in the Section 138 for the discharge in whole or in part of his debt or liability.

 Now the Court shall examine whether the accused is successful in rebutting the presumption as contemplated by Section 118 (b) and Section 139 of Negotiable Instruments Act.


To rebut the presumption of section 139 of NI Act and section 118 (b) of NI Act, the sole ground of defence taken by the Ld counsel for accused is that the cheque in question was given to the complainant as blank signed cheque by way of security prior to the sanctioning of loan and that the cheque in question was issued by the Case No. 223/12 Madhav Cooperative Vs Alamgeer 14 of 20 accused in blank with only his signatures.


To support this contention, the accused has failed to bring anything on record. DW2 Shama Begum, who is the wife of the accused has also stated in her examination of chief that the accused gave the cheque of ICICI Bank to the complainant for loan. A Security cheque if issued for any debt payable in presenti but such payment has been deferred to a future debt can be subject matter of proceedings under section 138 NI Act. In the present case, even it is presumed that the cheque has been issued for security purpose, it was meant for discharge of debt but the payment of which has been deferred to a future date. In this regard, the Hon'ble High Court of Delhi has observed in its judgment titled as Krish International P. Ltd & Ors Vs. State & Ors. MANU/DE/0302/2013 as : "9. There is no dispute that the proposition of law as laid down in M/s Collage Culture that a cheque issued not for an existing due but issued by way of security would not attract the provisions of Section 138 of the Act. In M/s Collage Culture the learned Single Judge of this Court (Pradeep Case No. 223/12 Madhav Cooperative Vs Alamgeer 15 of 20 Nandrajog, J.) drew distinction between a cheque issued for a debt in present but payable in future and second for a debt which may become payable in future upon the occurance of a contingent event. Paras 20 to 24 of the report in M/s Collage Culture are extracted hereunder :

 20. A post dated cheque may be issued under 2 circumstances. Under circumstance one, it may be issued for a debt in presenti but payable in future. Under Second circumstance it may be issued for a debt which may become payable in future upon the occurrence of a contingent event.


21. The difference in the two kinds of postdated cheques would be that the cheque issued under first circumstance would be for a debt due, only payable being postponed. The latter cheque would be by way of a security.

 22. The word 'due' means 'outstanding at the relevant date'. The debt has to be in existence Case No. 223/12 Madhav Cooperative Vs Alamgeer 16 of 20 as a crystallized demand akin to a liquidated damages and not a demand which may or may not come into existence; coming into existence being contingent upon the happening of an event." Hence, it is sufficiently proved on record that the cheque in question was not issued by way of security but for payment of the amount received by the accused from the complainant.

 Further, even if we assume that the cheque in question was issued by the accused in blank with only his signatures, even then the law has been clearly laid down in this regard by Hon'ble Delhi High Court in M/s Jammu & Kashmir Bank vs. Abhishek Mittal, 2012 CD DCR 189, that : "When a blank cheque is signed and handed over, it means that the person signing it has given the implied authority to the holder of the cheque, to fill up the blanks which he has left. A person issuing a blank cheque is supposed to understand the consequences of Case No. 223/12 Madhav Cooperative Vs Alamgeer 17 of 20 doing so. He cannot escape his liability only on the ground that blank cheque has been issued by him."


"Once issuance of the cheque been admitted or stands proved, a presumption arises in favour of the holder of the cheque that he had received the cheque of the nature referred to under Section 138 of the Act for the discharge, in whole or in part of any debt or any other liability. This presumption arises in favour of the holder under Section 139 of the Act which envisages that it shall be presumed unless the contrary is proved that the holder of a cheque received the cheque of the nature referred to under Section 138 of the Act for discharge, in whole or in part of any debt or any other liability. Of course, this presumption is a rebuttable presumption and same can be rebutted only by the person who had drawn the cheque."

 Thus, the accused has failed to rebut the presumption under section 118 (b) of Negotiable Instruments Act. Therefore, presumption under section 118 (b) holds good and according to which cheque was issued by the accused in discharge of his legal Case No. 223/12 Madhav Cooperative Vs Alamgeer 18 of 20 liability.

 Therefore, Court is of the considered opinion that the complainant has sufficiently been able to prove its case that the cheque in question was issued by the accused in discharge of his legal debt or liability.

15. THE DRAWER OF THE CHEQUE HAS FAILED TO MAKE THE PAYMENT WITHIN 15 DAYS OF THE RECEIPT OF SAID NOTICE In the instant case Sh. Satish Kumar Garg who has appeared as complainant's witness has deposed in his examination in chief by way of affidavit that despite service of legal notice of demand accused has failed to pay the cheque amount.
 Considering the evidence on record it stands proved that the accused has failed to make the payment of the cheque amount within 15 days of the receipt of legal notice of demand.


16.In view of the aforesaid discussion, I am of the considered Case No. 223/12 Madhav Cooperative Vs Alamgeer 19 of 20 opinion that the complainant has sufficiently proved its case against the accused. All the ingredients of Section 138 of Negotiable Instruments Act have been duly proved on record. Accordingly, accused Alamgeer S/o Sh. Rafiq Ahmed is hereby convicted of the offence u/s 138 Negotiable Instruments Act. Let copy of this judgment be given free of cost to the convict.

Announced in the open court
today i.e. 22.02.2014                                     (MANU GOEL KHARB)
                                                METROPOLITAN MAGISTRATE
                                                 DWARKA COURTS, NEW DELHI

Case No. 223/12                    Madhav Cooperative Vs Alamgeer           20 of 20