45. We are not oblivious of the fact that the said provision 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 a human right and the doctrine of reverse burden introduced by Section139should 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."

d) It may be pertinent to mention here that a three judges bench of the Hon'ble Supreme Court in Rangappa Vs. S. Mohan (2010) 11 SCC 441 has considered the dictum of Krishna Janardhan Bhat (supra) and overruled the view so far as existence of liability is concerned, however, has not dissented with other parameters observed and laid down in the said case. It has been observed therein that:
 "14. In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. "


Supreme Court In Rangappa vs . S.Mohan Arising Out Of Slp (Crl) ... on 24 December, 2011

e) This court is of the opinion that an accused has a right to rebut the presumption by placing reliance upon the circumstances brought and material placed by the complainant. Hon'ble Supreme Court in Rangappa Vs. S. Mohan (2010) 11 SCC 441 has further held that:
 "However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, 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. As clarified in the citations, 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."


9. Version of Accused The Accused was in need of money for marriage of his sister, so he approached the complainant for loan. Complainant advanced a sum of Rs. 1 lac only as loan to the accused. Accused issued blank, undated, and signed cheques including cheques in question as advance cheques, at the time of execution of agreement, which have been misused by complainant. Accused deposed that amount mentioned in the cheques has already been paid by the accused in year 2001. After clearing the loan amount the accused demanded the cheques back but the complainant did not return the same despite assurance. The accused denied to have ever entered into hire purchase agreement with the complainant and stated that blank loan agreement signed by him as well as his gaurantour was handed over to L.R Sh.Narang, partner of the complainant. Accused denied to have issued the cheques in question towards discharge of arbital award.

10. Now let us deal with the each ingredient of the section 138 of the Negotiable Instruments Act, 1881 to see whether the case against the accused has been proved or not.


By virtue of the affidavit filed at the time of pre-summoning evidence, wherein legal demand notice and postal receipts have been duly exhibited , requirement of proviso (b) & (c) appended to Section 138 of the Negotiable Instrument Act, 1881 stands satisfied (presumption of law arising under section 27 General Clauses Act is bound to arise). By virtue of Cheque Returning Memos, dishonour stands proved vide section 146 Negotiable Instrument Act, 1881. (Moreover, the accused has not controverted any of the above presumptions by even giving any suggestion in the cross examination of the complainant to negate the aforesaid presumptions). Nine cheques Ex.CW1/5 to Ex.CW1/13 dated 12.12.3003, 13.12.2003 and 15.12.2003 had been presented on 12, 13 and 15 Dec., 2003, which is within six months of date of issuance and was returned unpaid on 13.12.2003 ,15.12.2003 and 17.12.2003 vide return memos Ex.CW1/17 to Ex.CW1/25 due to the reason "FUNDS INSUFFICIENT". Notice dated 02.01.2004 Ex.CW1/26 was dispatched on 03.01.2004 which is within 30 days of dishonor of cheques in question. The complaint has been filed on 17.01.2004 which is prior to the arising of the cause of action, which in the present complaint arose on 20.01.2004 but the cognizance was taken on 27.01.2005 and thus, the defect in the pre-mature filing of the present complaint was cured as the accused got ample time till 19.01.2004 (the day when the 15 days time expired), to


till 19.01.2004 (the day when the 15 days time expired), to make the payment of the cheques amount as per the mandate of section 138 of the Negotiable Instruments Act, 1881.


11. By virtue of mandatory presumptions of law arising under section 118 and 139 of the Negotiable Instruments Act, 1881 legal liability can be treated as proved. It is pertinent to mention that the mandatory presumptions extend to the existence of legally enforceable debt or liability. (See a three judges bench decision of Hon'ble Supreme Court in Rangappa Vs. S. Mohan arising out of SLP (Crl) No.407/2006; (2010) NSC 373 decided on 07.05.2010.

12. Complainant has primarily relied upon the mandatory presumption of law in respect of legal liability. The issuance of cheque being admitted, signatures admitted & dishonor being proved presumption u/s 118 and 139 of the Negotiable Instruments Act, 1881 has to arise. So, it must be presumed that the liability as alleged was existing at the time when cheques were given.

13. Now it has to be seen whether the accused has been able to rebut the aforesaid presumption or not:
 It is a settled law that accused is entitled to discharge the onus placed on him even on the basis of materials brought on record by the complainant. It is not obligatory on the accused to separately adduce evidence or to enter into witness box if he can successfully gather the material from the evidence of complainant which would sufficiently disprove the presumptive facts by a rising a mere preponderance of probability without resorting to proof beyond reasonable doubt, particularly in relation to the pre-existence of legal liability of the debt for the discharge of which cheque was given. In the present case, the accused has relied on the material brought by the complainant and has preferred to lead defence evidence by deposing as defence witness u/s 315 Cr.P.C.


13.1. In tune with the suggestions put to the complainant during his cross examination, the Accused deposed in his examination in chief that he was in need of money for marriage of his sister, so he approached the complainant for loan. Complainant advanced a sum of Rs. 1 lac only as loan to the accused. It is further deposed by the accused that blank, undated, and signed cheques including cheques in question were issued by the accused, as advance cheques, at the time of execution of agreement, which have been misused by complainant. Accused deposed that amount mentioned in the cheques has already been paid by the accused in year 2001. This version of the accused was not rebutted as even a suggestion in this regard was not given on behalf of complainant. Accused affirmed during his cross examination that he requested the complainant for loan and denied to have approached the complainant for financing the vehicle. By asking this question and from the answer given by the accused, complainant got accused's version affirmed that the accused took the loan and did not enter into hire purchase agreement as per complainant's version. Accused deposed in his chief that he handed over a blank agreement bearing his own and his guarantors' signatures to Sh.L.R.Narang, partner of the complainant, who gave the accused a cheque of Rs.1.0 lac. This version of the accused is affirmed by the complainant in his cross examination by admitting that he can not tell the series of cheques but the same were not handed over at the time of advancement of loan of Rs.1.0 lac. The denial regarding handing over the cheques at the time of advancement of loan of Rs.1.0 lacs infers that the complainant subscribed to the factum of advancement of a loan of Rs.1.0 lac as the complainant did not say anything by explaining or volunteering


loan of Rs.1.0 lac as the complainant did not say anything by explaining or volunteering that loan of Rs.1.0 lac was never advanced. This factum is further substantiated from the voluntary clarification of the complainant in his cross examination that one cheque was given to the accused and the cheque was for an amount of Rs.1.0 lac or 75000/- but the complainant do not remember the exact amount of the cheque. Accused stated in his examination in chief that 14 cheques of Rs.7194/- each without name and date bearing his signatures were given by the accused to the complainant. This testimony of the accused has gone un-rebutted as no suggestion to impeach the same was put to the accused during his cross examination. Accused deposed that Rs.75000/- was paid in cash to accused after advancement of loan and the complainant did not issue any receipt for the same. It is further deposed that five cheques out of fourteen cheques issued for Rs.7194/-each were honored on its presentation. This defence of the accused has not only gone un-rebutted but the complainant admitted in his cross examination that he received Rs.75,000/- from the accused after advancement of loan and that no receipt was issued in respect of payment. It means that the complainant admitted and subscribed to this testimony of the accused.


The aforediscussed omissions of complainant to rebut and active admissions of the accused's version amount to affirmation of accused's version by the complainant.

13.2 Accused deposed that after clearing the loan amount accused demanded the cheques back but the complainant did not return the same despite assurance. Accused further deposed that amount in cheques is not due against him. This testimony of the accused was also not rebutted by the complainant either by leading any evidence or by even putting a suggestion which amounts to admission of accused's version that no amount is due in respect of the cheques in question and cheques have been misused by the complainant which falsify the complainant's version that the cheques in question were issued by the accused towards discharge of arbitral award.


13.3. Accused specifically denied that he approached the complainant for financing of CAR No. DL-6CE-8842. Accused's version of issuing cheques in question as advance cheques while taking loan and not entering into hire purchase agreement is further substantiated from the following facts:-
 Complainant admitted that the agreement exhibited CW1/3 was not signed by any witness but complainant placed carbon copy of hire purchase agreement on record during his cross examination, which is having the signature of firm's employee namely Anil as witness. The complainant upon being asked about signatures of Anil admitted that the signatures of Anil were obtained later on by the firm. Perusal of photocopy, EX.CW1/3 reveals that signatures of Anil were not present on it. When asked whether Anil signed on the original agreement or photocopy, the witness gave evasive reply by stating that he is not aware and by again saying that he does not remember. It shows that the complainant has forged the alleged hire purchase agreement and has not approached the court with clean hands which probablises the defence of handing over of blank signed loan agreement which has been fabricated into hire purchase agreement. When the complainant can dare to file forged and fabricated documents before the court the possibility of fabricating & manufacturing of hire purchase agreement becomes highly probable. Further, the complainant admitted that the vehicle was not hypothecated. Non hypothecation means that there was no hire purchase agreement in existence which shows that version of accused is probable and that he approached for a loan of Rs.1.0 lac for the marriage of his sister and not for hire purchase agreement against which cheques in question were issued as advance cheques which are being misused by complainant.


13.4 The falsity of complainant's version and fabrication of hire purchase agreement is further evident from the fact that the complainant admitted that the seal of partner was affixed only on original agreement but perusal of Ex.CW1/3 (photocopy) reveals that said stamp is also affixed on photocopy. It further shows that if the aforesaid deposition of complainant is believed then Ex.CW-1/3 (photocopy) is also fabricated document. It follows from the aforesaid discussion that the accused handed over a blank document/agreement bearing his and his guarantors signatures, which has been fabricated by complainant by filling it up later, according to his convenience. So, the complainant's documents do not support the version of hire purchase agreement & probablise the accused version of taking a loan of Rs.1.0 lac against which cheque in question were issued as advance cheque.

13.5 Complainant admitted at one place that he did not remember when the cheque in question were received by him, whereas in later part the complainant improved his version that the cheques were issued in lieu of arbitral award passed by the court. This Flip flop creates serious doubt on the version of the complainant as to the issuance of the cheques after passing of arbitral award, whose benefit must go to the accused.


13.6. Further, it is the case of the complainant that the accused issued the cheques in question towards discharge of awarded amount after the complainant warned him of instituting the execution proceedings. In his cross examination, the complainant said that the cheques were issued in lieu of awarded amount. Complainant did not say that cheques were issued for part payment of arbitral award. The awarded amount is Rs.1,10,677/- while the cheques are for an amount of Rs.64,746/-. It is very strange and unbelievable that the complainant accepted the cheques for sum of Rs.64746/- while the awarded amount was Rs.1,10,677/- despite the fact that the accused issued the cheques under the influence of warning as per complainant's version. The complainant could have compelled the accused to issue the cheque for entire amount as the accused was under the influence of complainant's warning as per complainant's version. Complainant got it admitted by the accused during his cross examination that the cheques were handed over without any force or pressure. This suggestion and its answer shatter the complainant's version of giving warning to the accused under influence of which accused allegedly issued the cheques as warning implies some sort of pressure which the accused denied to be present while answering the aforesaid suggestion. So, when the existence of warning stands disproved then the story of issuance of cheques under the influence of the warning after passing of arbitral award also stands disproved and the version of the accused that the cheques in question were issued as advance cheques voluntarily while entering into the loan agreement and not towards discharge of arbital award stands substantiated.


13.7. It is also very strange and unbelievable that the accused issued cheques to the complainant for the same amount all drawn on the same bank bearing dates falling after a gap of one or two days each as no reasonable person would do so. It is further beyond imagination that three cheques for equal amount drawn on same bank account bearing the same date are issued by accused to the same person. No person would issue three cheques as above, while the same purpose can be fulfilled by a single cheque of that date for entire amount covering the three cheques and no reasonable person would accept such cheques as single cheque would suffice the purpose. It shows that undated cheques issued by accused bearing his signatures were lying blank with the complainant and complainant abruptly filled these cheques without permission of the accused and thus misused the same. Though issuance of blank singed cheques can not come to the rescue of the accused in normal circumstances but in highly suspicious circumstances as herein before discussed the misuse of blank signed cheques by financier becomes a relevant fact benefit of which must go to the accused.


13.8. Complainant admitted that signatures of the accused are written by one pen and other parts of the cheques including dates have been written by a different pen. Complainant admitted that cheques were presented on the same day when they were issued. Three cheques were issued on 12.12.2003, another three on 13.12.2003 and the remaining three on 15.12.2003. Usually while issuing completely filled up cheques, the same pen is used and it is rarity that two different pens are used for this purpose, as people are very particular in filling the cheque, sensing the fear of rejection of the same. Still if it is assumed that the accused used two different pens to sign & fill up different parts of single cheque then it is impossible to believe that he used two different pens on all the nine cheques and on all the three dates when the cheques were issued. It may have been so in one or two case but such a thing happening in all cases implies that some other person on behalf of complainant has filled up the undated cheques which were issued in blank by the accused bearing his signature only & thus misused the cheques under the garb of arbitral award.

13.9. It is also beyond the understanding of a reasonable or prudent man that despite having an arbitral award that too ex-parte award, the complainant approached the accused to warn him of filing execution proceedings. In such circumstances a prudent man would have never approached the accused & had directly gone for execution. Moreso when the accused had already defaulted in making payments, the question of taking cheques from a defaulter against whom an exparte arbital award is in force seems to be highly unreasonable & renders the complainant's version unbelievable and improbable.


Complainant's version is that nine cheques of Rs.7194/- each were issued by the accused but perusal of the record reveals that the cheque No 2645 dated 15.12.2003 Exb.CW1/13 is drawn for Rs.7195/- and some alteration is visible on the amount written in words as the word five has been over written and changed to four. The pay in slip Exb. CW1/16 has also been falsely filled for Rs.7194/- while the banker issued the memo for Rs.7195 in respect of this cheque. This is major contradiction in the complaint and cheques filed by the complainant which falsifies the version that cheques in question for Rs.7194/- each were issued towards discharge of arbitral award.

 Complainant is himself not sure as to whether the cheques are for an amount of Rs 64,746/- or Rs 64,747/- which is reflected from para 6 of complaint, wherein the complainant mentioned that the accused issued nine cheques for a sum of Rs 7,194/- each (totaling Rs 64746/-), while in para 11, the complainant mentioned that the accused failed to pay the cheque amount of Rs 64,747/-. This is a material contradiction in the complainant's case, which indicates that the complainant has misused the cheques issued by the accused as advance cheques.


The documents Ex.CW1/3 relied upon by the complainant proves to be the last nail in the coffin as the schedule of payment reflects installment of Rs.7194 & 7195 both. It indicates that the cheques in question were issued in blank by the accused, at the time of loan agreement in the year 2000 and the same have been filled up according to installment schedule by the complainant which falsify the complainant's version of issuance of cheques in question by the accused after passing of arbitral award.


13.10. Alleged hire purchase agreement Exb.CW1/3 brought by the complainant on record shows that the monthly installment of Rs.7195/-, 7194/- and 7192/- were to be paid by the accused over a period of 36 months commencing from 10.12.2000. As per clause III of the aforesaid agreement installment were to be paid in cash or by demand draft. But the agreement does not prescribe for the payment to be made by way of cheques. However the complainant admitted during his cross examination that the accused used to pay the monthly payment through cheques and four-five cheques were encashed. This admission fortifies the version of the accused as to issuance of cheque at the time of execution of blank agreement. Complainant's version is that nine cheques of Rs.7194/- each were issued on 11, 12, 15 December 2003 towards discharge of arbitral award of Rs.1,10,677/-. Perusal of agreement exb.CW1/3 reveals that installment to be paid during the year 2003 till 10.12.2003 were all of 7194/- each and last one was of Rs.7192/-. It is not the case of the complainant that the cheques in question were issued for payment of installments but the same were issued towards discharge of arbitral award passed after the accused defaulted in making the payment in installment as per hire purchase agreement. It is not only strange but unbelievable also that the complainant accepted the cheques for amounts equal to the installment payable during the time as per installment schedule and did not ask for a single cheque for the entire arbitral award, despite the accused already having defaulted in making payments. It is not a mere co-incidence that the cheques allegedly issued by the accused are bearing the same amount as mentioned in the installment schedule but considering the afore discussed


issued by the accused are bearing the same amount as mentioned in the installment schedule but considering the afore discussed points, which probablize that the accused had not issued the cheques after passing of arbitral award, so the complainant was left with no other option but to misuse the blank undated cheques already delivered by the accused which, the financier as a matter of practice, usually fill in the amounts as per the installment schedule immediately after delivery of cheques.


14. Perusal of cheque no.2645 dated 15.12.2003 reveals that an amount of Rs. 7195/- is mentioned in figures and the word five in the amount written in words column has been changed to four so that cheque amount becomes 7194/- instead of Rs.7195/- as written in the figures column. It means that the accused deliberately changed the amount of this cheque to 7194/-. This fact is further evident from the pay in slip Exb.CW1/16 duly proved by the complainant through his affidavit wherein an amount of Rs.7194/- is mentioned against this cheque. It can not be said that the amount of Rs.7194/- is written due to a typographical, accidental or inadvertent error as the total amount in the pay in slip Exb.CW1/16 is mentioned as 21582/- which has been correctly calculated after adding the amount in three cheques of Rs.7194/- each. Had the complainant considered the said cheque of Rs.7195/- then at least this amount must have been mentioned in the pay in slip against the said cheque. That the said cheque had been altered to appear to be a cheque of Rs.7194/- is further substantiated from the notice, complaint and the affidavit wherein the complainant clearly mentioned that the accused issued nine cheques of Rs.7194/- each. So, the complainant considered this cheque to be of Rs 7,194/-


It is pertinent to mention section 18 of the Negotiable Instrument Act, which provides that when the amount is stated differently in figures and words, the amount stated in words shall be the amount undertaken or ordered on demand. So, the cheque Exb.CW1/13 is to be considered to have been issued for 7194/- (the amount mentioned in words). The total amount demanded by way of legal notice of demand should be Rs.64,746/- while the notice has been given demanding a sum of Rs. 64,747/- which is an amount more then that covered by the nine cheques in question. It is settled law that the payee or the holder in due course must demand payment of the amount covered by the cheque. If the demand is for a lesser amount or an higher amount not covered by the cheque then the prosecution must fail as the statutory requirement of the provision is not fulfilled [1997(1) Civil Court Cases 603(Calcutta): 1997(2) All India Criminal LR(Calcutta) 0664: 1995(3) Civil LJ 0897: 1995(3) RCR(CRL.) 0646: 1996(2) Banking Cases 0515: 1997(1) Crimes 0127: 1995 CRL.L.J.3412: 1996(4) CCR0174: 1997(1) CCR 0249: 1996(2) KLT 0886: 1995(2) CHN 0037: 1996 CCLR 0040]. The notice in this case which has been issued for an amount more than the amount of cheque is defective notice which goes to roots of the case and amounts to no notice of at all. So, notice which is an essential ingredient of Section 138 of Negotiable Instrument Act for completion of offence is inherently defective which amounts


essential ingredient of Section 138 of Negotiable Instrument Act for completion of offence is inherently defective which amounts to no notice at all and the complaint is liable to be dismissed on this ground also.


15. Considering the above discussion, it is thus clear that version of the accused that blank, undated, and signed cheques including cheques in question were issued by the accused as advance cheques at the time of execution of agreement which have been misused by complainant, that the cheques were not issued towards discharge of arbitral award and that the amount mentioned in the cheques has already been paid by the accused in year 2001, is tenable and probable.

16. No doubt complainant was well within his right to rely upon mandatory presumptions of law. However, the same are rebuttable even by showing a preponderance of probability and if certain defects are established by the accused, the complainant should try other ways to support his case. In the present case, however, the complainant did not make such efforts on his own peril. The complainant has to bear the consequences. No blemishes in the story of the accused can give a right to the complainant to claim that his story should be preferred. It is well settled law hat if from the facts and circumstances two views are possible, the one which makes no interference in life and liberty i.e. the one which goes in favour of the accused should be preferred.

17. From the above discussion, this court is of the considered opinion that accused has successfully rebutted the mandatory presumptions of law arising in favour of the complainant. Viewed from any angle, as complainant failed to discharge the burden which was shifted on him, no criminal liability could be fastened upon the accused. Accordingly, the complaint is hereby dismissed.

18. This court accordingly returns a finding of not guilty.


18. This court accordingly returns a finding of not guilty.

19. The accused is hereby acquitted. Surety is discharged. Bail Bond/Surety Bond is cancelled. Endorsement be cancelled and FDR be returned, if any. Original documents, if any be returned after retaining its photocopy on record. File be consigned to Record Room.

Announced in the open court                                     VIPLAV DABAS
today i.e. 24.12.2011                                        Metropolitan Magistrate
                                                                  North/Delhi
                                                                   24.12.2011

 CC No.151/A/10
24.12.2011
Present:-     Complainant with Ld. Counsel.
              Accused with Ld. Counsel.
 Vide separate judgment of even date announced in open court the accused is acquitted. Complaint is hereby dismissed. Surety is discharged. Bail Bond/Surety Bond is cancelled. Endorsement be cancelled and FDR be returned, if any. Original documents, if any be returned after retaining its photocopy on record.

 File be consigned to Record Room.

 VIPLAV DABAS MM/North/Delhi 24.12.2011


Judgment Reported As State Of M. P. vs Hira Lal & Ors (96), on 5 March, 2007

1

            IN THE COURT OF MS. ANU GROVER BALIGA
                        MM, NEW DELHI
CC No. 4516/1
Annamalai Finance Ltd.
26/25, Old Rajinder Nagar,
New Delhi -110060.

       VS

Ashok Kriplani
R/o. 17/13, Old Rajender Nagar
New Delhi - 110060.
05.03.2007
                         JUDGMENT
1. ) Briefly stated the averments on the basis of which the present complaint has been filed are as follows :
i) It is averred that the complainant is a public limited company doing the business of finance and having its office at Coimbatore.

ii) According to the complainant the accused had approached them for a loan of Rs. 6 Lacs and in lieu thereof had executed three promissory notes dated 04.04.95, 12.04.95 and 26.04.95 in favour of the complainant. It is the averment of the complainant that the promissory notes executed by the accused clearly stipulated that the rate of interest agreed between the parties was 26.78%. It is further stated that on 28.03.97, the accused had issued a cheque for a sum of Rs. 9,99,301/- in favour of the complainant company in order to discharge his liability to pay the loan amount alongwith the interest.

iii) The case of the complainant is that this cheque on presentation was dishonoured for reasons of '' insufficient funds'' on 29.05.97 and that the same information was received by the complainant on 04.06.97.


iv)A legal notice and a telegram was sent to the accused calling upon him to make the payment of the dishonoured cheque. However, since he failed to do so, the present complaint has been filed.

2) It is relevant to mention herein that, that the complaint was originally filed before the the court of Ld. Judicial Magistrate, Coimbatore, but was thereafter, on a petition moved by the accused, transferred to the Delhi Court vide orders of the Hon'ble Supreme Court.

3) Notice U/s. 251 Cr.PC was framed against the accused on 21.04.2003 to which he pleaded not guilty and claimed trial.

4) The complainant in support of its case examined three witnesses. PW 1 Shri R. Parmashivam, authorized representative of the complainant has filed his affidavit for the purposes of evidence. In the same the contents of the complaint have more or less been reiterated. The cheque in dispute has been exhibited as Ex. PW1/B. The original cheque return memos have been exhibited as Ex. PW1/C and PW1/D. The copy of the legal notice sent to the accused has been exhibited as Ex. PW1/E. The returned envelope sent at the address of the accused has been exhibited as Ex. PW1/F. The certified copy of the legal notice sent by telegram at the office of the accused has been exhibited as Ex. PW1/G. The certified copy of the telegram issued at the residence of the accused has been exhibited as Ex. PW1/H. The letter issued by the department of telecommunication confirming the delivery of the telegram has been exhibited as Ex. PW1/I. The said witness PW 1 was duly cross examined by the accused himself.


5) CW 2 Shri R.K. Anand, Officer of the Oriental Bank of Commerce, has brought on record the statement of account of the accused, which has been exhibited as Ex. CW2/1. He also confirmed that the return memo Ex. CW1/D has been issued by Oriental Bank of Commerce.

6) CW 3 Senthil Kumaran, Officer of Karur Vaishey Bank, has deposed that Ex. PW1/C is the return memo issued by his bank. This witness was also duly cross examined by the accused and in his cross examination this witness stated that the collection charges of Rs. 1500/- was levied upon the complainant for the dishonouring of the cheque.

7) The entire incriminating evidence was put to the accused and his statement was recorded u/s 313 Cr. P.C. In the said statement the accused admitted that he had taken a loan of Rs. 6 Lacs from the complainant, however, he denied that the rate of interest agreed between the parties was 26.78%. He further stated that he did not issue the cheque in dispute towards the repayment of principle loan amount and the interest and according to him he had given the cheque in blank in February 1996 on the request of the complainant. He further stated that the cheque was either given by him as a security or towards the outstanding interest that was pending as on February'1996. He has asserted that he never received any legal notice from the complainant, as his office was lying closed since the year 1996 and he was himself residing at Rajasthan. The accused has produced eight witnesses in his defence.


8) The accused himself appeared as a defence witness, DW1 and filed his affidavit for the purposes of evidence. In the said affidavit he has deposed that the promissory notes have been materially altered by the complainant with regard to the dates and the interest rate. He has deposed that the rate of interest that was agreed between him and the complainant was 22% per annum and not 26.78%. He also deposed that at the time of taking a loan he had pledged shares worth more than Rs. 8 Lacs and immovable property worth Rs. 12 Lacs with the complainant. The promissory notes have been exhibited as Ex. DE-1/A, Ex. DE-1/B and Ex. DE-1/C.

9) The accused has also deposed that during the year 1996 - 97, he had shifted to Alwar (Rajasthan). He has placed on record the rent agreement Ex. DE-1/O. Various documents have also been filed by the accused to show that his place of residence in the year 1997 was Alwar and that he did not receive the legal notice sent by the complainant.

10)DW 2, is the Executive Officer from National Stock Exchange, Janpath. This witness was summoned by the accused to prove the rates of the shares pledged by him with the complainant Company.

11)DW 3 is a Supervisor of Telegraph Office, Prasad Nagar. This witness was summoned by the accused to produce the text message and record of telegram dated 07.06.97 allegedly sent by the complainant to him. This witness merely stated that he could not bring the summoned record because the same has been destroyed. The requisite certificate in this regard has been exhibited as Ex. DW3/A.


12)DW 4 Shri S. Narainan, is the Manager of the complainant company, who had worked with the complainant company w.e.f 1989 till March 1996. This witness has stated that he does recall by whom were the promissory notes Ex. DE-1/A to C attested.

13)DW 5 Pradeep Godwani has deposed that the accused was his employee in the year 1995-98 and that the accused was posted as Commercial Manager at Alwar in the entire year 1997. In his cross examination this witness admitted that he had not brought on record any proof of his identity or the fact that the accused was his employee.

14)DW 6 R.K. Anand, Officer of Oriental Bank of Commerce has brought on record the certified copy of the statement of account of the accused for the period 01.04.95 to 31.05.95 and the same has been exhibited as Ex. DW6/A to DW6/3. He has also filed on record the relevant pages of the ''cheque issue'' register, which has been exhibited as Ex. DW6/4 and DW6/5. This witness has further deposed that as per their statement of account, on 04.05.96 an amount of Rs. 20,020/- was paid from the account of the accused to the complainant vide cheque bearing no.501444 and another amount of Rs. 5000/- was paid to the complainant from the account of the accused vide chqeue bearing no. 508727. The statement of account of the accused in this regard has been exhibited as Ex. DW6/6.

15)DW 7, the Manager Sterilite Industries has been summoned by the accused to prove the enhancement of the shares prices of this Company.


16)DW 8, Shri B.S. Meena has deposed that the accused was his tenant at Alwar for the period February' 1997 to December' 1997 at monthly rent of Rs. 4000/-.

17)DW 9 Deepak Dhull, Cashier, Indian Overseas Bank has brought on record the certified statement of account of the complainant for the year 1995 and the same has been exhibited as Ex. DW9/A.

18)The Ld. Counsel for the complainant and the accused appearing in person have relied upon the various authorities in support of their respective stands. According to the Ld. Counsel for the complainant, the complainant has brought on record sufficient evidence to prove that all the ingredients of the offence U/s. 138 of N.I. Act are clearly made out against the accused. On the other hand the accused has contended that he had issued a blank cheque in favour of the complainant and that the cheuqe was not issued for any liability or debt. It is also been contended by the accused that the legal notice sent by the complainant was never served upon the accused and therefore the complaint on this ground alone is liable to be dismissed. It has also been contended by the accused that the cheque in dispute was presented by the complainant twice with their bankers i.e. Kurur Visya Bank at Coimbatore and according to the accused, on both the occasions the bankers discounted bounced cheque and thus became the purchaser of the dishonoured cheque U/s. 59 of N.I, Act. He has therefore submitted that only the bankers have a remedy to file the present complaint and the complainant cannot now maintain the present complaint.


19)I will first deal with the objections of the accused as regards the non service of the legal notice upon him. In this regard it will be relevant to consider firstly the evidence that has been brought by the complainant on record. Ex PW 1/F is the registered envelop through which the legal notice was sent to the accused at 17/13, Ground Floor, Old Rajender Nagar, New Delhi. This registered envelop was received back by the complainant with the report that the house of the accused was found locked on seven occasions when the postal offcial went to deliver the same. Ex PW 1/G & H are the certified copies of the telegram that was sent to the accused by the complainant at his residence and office address respectively. The letter issued by the department of the Tele-communications confirmed that the telegram Ex DW1/I was delivered at both the addresses of the accused.


20)All the aforementioned documents clearly show that the complainant took all the steps that were necessary to serve upon the accused, its demand of payment. The accused has admitted during the trial that his residence was 17/13, Ground Floor, Old Rajender Nagar, New Delhi, but his only defence is that during the year 1997 he was not residing at his Delhi address and was residing at Alwar. Admittedly the accused has failed to prove on record that he had informed the complainant on or before year 1997 that he was not residing in Delhi in the year 1997 and that his place of residence has shifted to Alwar. In other words the complainant had no information or knowledge that the accused had temporarily shifted from his last known address at Delhi. In such circumstances, according to me the complainant fulfilled its duty by sending the legal notice to the last known address of the accused. Even if the registered envelop was returned back to the complainant with remarks "house locked", the complainant was under no legal duty or obligation to trace out any fresh address of the accused. In this respect in the judgment reported as State of M. P. vs Hira Lal & Ors (96), 7SCC523, Hon'ble Supreme Court has held that where the notice sent is returned with postal remarks ''not available in the house'', ''house locked'' and ''shop closed, such notices are deemed to have been served upon the addressee. Similarly in other case reported as K Bhaskaran vs SankaranVaidhyan Balan (1997) 7SCC, Hon'ble Supreme Court has held that :


''The context envisaged in Section 138 of the Act invites a liberal interpretation for the person who has the statutory obligation to give notice because he is presumed to be the loser in the transaction and it is for his interest the very provision is made by the legislature. The words in clause (b) of the proviso to Section 138 NI Act show that the payee has the statutory obligation to ''make a demand'' by giving notice. The thrust in the clause is on the need to ''make a demand''. It is only the mode for making such demand which the legislature has prescribed. A payee can send the notice for doing his part for giving the notice. Once it is dispatched his part is over and the next depends on what the sendee does.'' Maxwell's Interpretation of Statutes, relied on ''If a strict interpretation is given that the drawer should have actually received the notice for the period of 15 days to start running no matter that the payee sent the notice at the correct address, a trickster cheque drawer would get the premium to avoid receiving the notice by different strategies and he could escape from the legal consequences of Section 13 8NI Act. It must be borne in mind that the court should not adopt an interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legislative measure''


21.The contention of the accused is that he was not residing at his Delhi address in the year 1997 and therefore he was not actually served with the notice. He contends that as per the judgment of Hon'ble Supreme Court reported as '' D. Vinod Shivappa Vs. Nanda Belliappa, 2006, Cr. L.J, 2897 '' the service of the legal notice upon him cannot be deemed. In the said judgment, the Hon'ble Supreme Court has held that it is for the drawer to prove that he was not really served with a legal notice and that he was not responsible for such non service and if the drawer, accused is able to prove these facts, the presumption of service of legal notice cannot be made upon him, only on the basis of the postal receipts / documents filed by the complainant. In my considered opinion, though the accused has been able to show that he was not residing in Delhi in the year 1997, however, he has failed to show that he informed this fact to the complainant and thus according to me it is the accused himself who is responsible for the non service of the legal notice sent to him by registered post.


22.Even otherwise the Ld. counsel for complainant has rightly contended that the notice that was issued to the accused through telegram also satisfies the requirements of the legal notice as envisaged by section 138 NI Act. It is rightly contended by the Ld. Counsel for complainant that section 138 N.I. Act does not specify a particular mode by which the legal notice u/ 138 NI Act is to be sent nor does it specify the language to be used in such notices. In SIL Impex vs Exim Aides, 1999 (4 SCC 567), it has been held by the Hon'ble Supreme Court that a notice u/s 138 NI Act can be sent through any mode and that it is not necessary that it should be sent vide registered post or through a messenger. Hon'ble Supreme Court in this case accepted that fax transmission of a notice is valid. On the basis of the observations made by the hon'ble Supreme Court, it is rightly contended by the Ld. Counsel for complainant that legal notice sent by the complainant to the accused by telegram is also valid. A perusal of telegram Ex PW 1/H clearly shows that the complainant has made specific demand of the cheque amount from the accused. Further the certified copies of the telegram and the certificate issued by the Postal Authorities in respect of the delivery of this telegram clearly raises a presumption with regard to the delivery of this telegram and this presumption has no where been rebutted by the accused at all.

23.In view of my discussions hereinabove I am of the considered opinion that the complainant has discharged its duty by proving that it has served the legal notice to the accused demanding the cheque amount from him and the complaint can not be dismissed on the ground that the accused did not receive the same as he was not residing at his permanent address at that time.


24.As regards, the further contention of the accused that the bankers of the complainant in the present case became the holder in due course of the cheque in dispute and therefore they alone were entitled to maintain a complaint U/s. 138 of N.I. Act against the accused, it is suffice to state that the accused has not brought any evidence on record to show that the said cheque was purchased by the bankers of the complainant nor was any suggestions made in this respect, either to the complainant's AR nor to the bank witnesses.

25.Now coming to the next issue between the parties namely whether the cheque was issued by the accused in consideration of an existing debt or liability, it is rightly contended by the Ld. Counsel for complainant that as per the provisions of the Section 118 and 139 of Negotiable Instrument Act and the law laid down by the Hon'ble Supreme Court in a catena of judgments, once when the execution of a negotiable instrument is admitted, there is a presumption that it is supported by consideration and thereafter it is upon the accused to rebut this legal presumption against him.


26.In a case reported as Bharat Barrel and Drum Manufacturing Company Vs. Amin Chand Payrelal, AIR 1999 SC 1008, the Hon'ble Supreme Court was dealing with section 118 of N.I. Act and while so discussing laid down the principles which are applicable in suits / cases involving the execution of Negotiable Instruments Act. In Para 12 of its judgment the Hon'ble Supreme Court has held that :


''once execution of the promissory note is admitted, the presumption under section 118 (a) would arise that it is supported by consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would dis-entitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event the defendant is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled o the benefit of presumption arising under section 118 (a) in his favour. The Court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as existence of negative evidence is neither possible nor contemplated and even if led is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption the defendant has to 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, shall act upon the plea that it did not exist''


27.In another judgment reported as M.S. Narayana Menon Vs. State of Keral (2006) 6SCC 39, the Hon'ble Supreme Court has reiterated the observations made by it in the judgment of Bharat Barrel's case.

28. Therefore what is to be examined in the present case is whether the accused has been able to discharge this onus or not. According to the Ld. counsel for complainant the accused has miserably failed to discharge this onus. Ld. counsel for complainant has pointed out that the accused in his statement recorded u/s 313 Cr. P. C., admits that he took a loan of Rs. 6 lacs from the complainant and that he executed promissory notes in possession of the complainant. It is also contended that the accused himself deposes in his affidavit that he had also pledged some of his shares and had mortgaged him immoveable property with the complainant as security against the loan taken. It is also an admitted position between the parties that the accused did not repay the loan on 28.03.07. Ld. counsel for complainant therefore submits that the fact of an existing debt or liability as on 28.03.07 is not at all disputed by the accused and further the issuance of the cheque in favour of the complainant is also not disputed by the accused. Thus according to the Ld. counsel for complainant the only conclusion is that the accused is taking a false defence that the cheque was not given by him in consideration of an existing debt or liability.


29.On the other hand the accused submits that as he had issued a blank cheque in favour of the complainant in the month of February 1996, wherein the amount of the cheque and the date were left blank and according to him this cheque was issued by him towards the re-payment of interest that had accrued as on February 1996 or as a security. It is also pointed by the accused that the complainants have admitted in their reply to a discharge application filed by the accused, that the cheque was infact blank as regards the date and the amount. It is further pointed out by the accused that PW 1 in his cross examination also admits this fact. It is further contended by the accused that the allegation of the complainant that the cheque in dispute was given to them on 28.03.97 is falsified by the own testimony of PW 1 in as much as this witness states in his cross examination that the cheque was given on 28.3.97 at the Delhi office of the complainant, though in the affidavit of PW 1 it is clearly stated that the cheque in dispute was presented for encashment for the first time on 28.03.97 in Coimbatore, an act which could not have been possible if that cheque was received at Delhi on 28.03.97. This anamoly, according to the accused is sufficient to prove that the complainant is taking a false stand that the cheque was given to them in March 1997.


30.It is further submitted by the accused that the ledger being maintained by him and filed on record (EX DE-1/N) clearly shows that the cheque in dispute was issued by him in favour of the complainant in February 1996. He therefore points out that the blank cheque given by him in February 1996 could not have been filled up by the complainant in March 1997 as on that date they had no implied authority of the accused to fill up an amount of Rs. 9,99,301/- in the cheque. For this contention accused has relied upon the following authorities 1.1995 Cr. LJ 560

2. III (2002) BC 419
3. 2004(I) RCR (Crl.) 284
4. Griffiths vs Dalton (1940) 2.K.B. 264

31.It is also contended by the accused that not only has the cheque in dispute been materially altered by the complainant but the complainant has also materially altered the promissory notes executed by the accused in favour of the complainant. According to the accused the rate of interest and the dates in the promissory notes have been altered by the complainant in as much as neither the promissory notes were executed on the dates mentioned therein nor was the rate of interest ever agreed between the parties @ 26% per annum. It is the submission of the accused that the promissory notes have thus become void u/s 87 of Negotiable Instruments Act and this by itself rebuts the presumption raised against him u/s 118 and 139 of Negotiable Instrument Act. For this contention accused has relied upon the following authorities.


1. AIR 1935 RANGOON131
2. 1965 RLW 47 (Raj)
3. AIR 1966 A. P. 267
4. AIR 1974 MADRAS 4
5. AIR 1982 KANT. 227
6. AIR 1983 ALL. 81
7. AIR 1986 A.P. 120
8. 1995 Cr.L.J. 560
9. AIR 1998 MADRAS 67

32.The accused has further contended that even if it is presumed that the complainant had the authority to fill up the cheque with the amount that was due from the accused as on 28.03.97, even then the cheque in question is invalid in as much as if the amount due from the accused is calculated at the rate of interest 26.7% per annum and the accused is given credit of the two payments of Rs. 25,000/-, only an amount of Rs. 8,90,177/- was due from the accused as on 28.03.97. He therefore contends that the complainant could not have filled up the cheque for an amount higher then this amount and that this itself takes the present case outside the purview of the Section 138 NI Act.


33.In rebuttal to the aforementioned contentions of the accused Ld. Counsel for complainant states that the accused has miserably failed to show that the promissory notes were materially altered or that the rate of interest of 26.78% was not agreed between the parties. According to him, none of the judgments relied upon by the accused are applicable to the facts of the present case, since the complainant has not sued on the basis of the promissory notes but has sued on the basis of the cheque issued by the accused. He further submits that even if the accused has not been given a credit of the payment already paid by him in March 1996, while coming to the figure 9,99,301/-, even then it does not exculpate him of the offence u/s 138 NI Act. In this respect, Ld. counsel for complainant has relied upon an authority of the Hon'ble High Court of Kerala reported as R. Gopikuttan Pillai vs Sankara Narayanan Nair, Equivalent citation:I(204)BC.


34.I have gone through all the judgments filed by both the parties and have also given careful consideration to the submissions made by them. According to me, the one distinguishing feature in the present case, is that the cheque in dispute issued by the accused is admittedly, an incomplete negotiable instrument. No doubt under Section 20 NI Act, the complainant was within its right to complete the same before its presentation, however the date and amount that could have been filled up in the cheque was to have been agreed to, between the parties expressly or impliedly. The contention of the accused is that he did not give any authority, express or implied, to the complainant to fill up the date of 28.03.97 and the amount of Rs. 9,99,301/- in the cheque. To rebut the presumption raised against him by virtue of Section 118(b) NI Act with respect to the date filled up in the cheque, the accused has brought on record a ledger maintained by him, the pages of which have been exhibited as Ex DE-1/N. I have myself tallied the entries made therein along with the entries in Ex DW 6/1, EX DW 6/2 and Ex DW6/3, the statement of account of accused proved by his Banker DW6. According to me, the fact that some of the entries in the aforementioned documents do tally, show that the ledger was maintained by the accused in his ordinary course of business and by virtue of Section 34, Evidence Act, it can be read in evidence. This ledger shows that the cheque in dispute was issued by the accused in favour of the complainant in February 96 and not on 28.03.97 as is being alleged by the complainant. The deposition of PW 1 to the extent that the cheque was handed over in Delhi on 28.03.97 and the fact of its presentation on 28.03.07 at Coimbatore,


and the fact of its presentation on 28.03.07 at Coimbatore, being totally inconsistent with each other, also falsify the stand of the complainant with respect to the date of receipt of the cheque. According to me, accused is rightly contending that as on 28.03.07 the complainant had no authority to fill up a cheque given in February 96, as a reasonable period had elapsed thereafter. The judgment reported as ''Griffiths vs Dalton (1940) Kings Bench Division clearly supports this contention of the accused. It lays down that an undated cheque can be filled up by the creditor within a reasonable period of time and the question what is a reasonable period of time within which an undated cheque can be filled up, is a question that depends upon the facts and circumstances of each case. In the admitted facts and circumstances of the present case namely that the loan was disbursed in April/May 95 & was repayable within on year, the complainant had in its possession shares of accused which it had a right to sell if the accused failed to make payment with in a year, the huge amount of interest that accumulated between the date and issuance of cheque in February 96 and before its presentation in 28.03.97, I am inclined to hold that a reasonable period of time had elapsed after the cheque was issued in February and that the complainant had no authority to fill it up on 28.03.97


35.Now coming to the amount that has been filled up in the cheque, according to Ld. counsel for complainant the accused had executed three promissory notes Ex DE1/A to 1/C, in favour of the complainant, expressly agreeing therein to pay interest @ 26.78% on the principle amount and therefore the amount of Rs. 9,99,301/- was filled up in the cheque after calculating the interest @ 26.78% p.a. on the principle amount. As discussed herein above accused has taken a contention that the promissory notes have been materially altered by the complainant as the date and the rate of interest were inserted in the promissory notes after their execution. To support his contention the accused has pointed out that PW 1 in his cross examination and in the admission/denial of the promissory notes carried out by him with respect to the promissory notes, has admitted that the promissory notes were written and attested by him. He has further admitted that in none of the promissory notes, rate of interest was written by him and in two of the promissory notes namely Ex DE 1/B and 1/C, the dates were not written by him, though all the promissory notes, as per his admission were executed by accused in his presence in Delhi. In other words the only inference that can be drawn from the cross examination and the admission and denial carried out by this witness is that, the date of promissory notes and the rate of interest were inserted in the promissory notes by the complainant on its own after their execution.


36.Further there can not be any presumption raised against the accused in this regard and the authorities/judgments relied upon by the accused would be applicable, since the complainant by filling up the cheque amount as per the term of the promissory notes is clearly suing on the basis of the promissory notes. Thus as per the law laid down in the judgments AIR 1974 MADRAS 4 and AIR 1982 KANT.227, it was clearly for the complainant to have proved that the rate of interest @ 26.78 % p.a. was filled in the promissory notes with the consent of the accused. The Hon'ble High Court, Karnataka in one of its judgment reported as N. Narayanaswamy vs Madanlal, AIR (1982) Karnataka 227, has held that :
 ''Where in a printed pro note form all the particulars were filled up but the interest column was left blank it was not an incomplete document under S. 20 of the Negotiable Instruments Act entitling the promisee to fill it up since S. 80 made a specific provision that in such a case interest at 6% p.a. was payable. The filling up of the note by the promisee without the consent of the promisor would render it void under S. 87.''


37)I am unable to accept the contention of the Ld. Counsel for complainant that as per the agreement Ex DE - 1/D or as per the prevalent practices the complainant had the absolute right to decide the rate of interest unilaterally and fill up the same in the promissory notes without even informing the accused about the same. The fact that the accused has not also been able to prove that the rate of interest agreed was 22 % p.a. and not 26.78%, does not ipso facto imply that the complainant's assertion that it was 26.78% p.a. without any proof in support thereof is to be accepted.

38)Therefore in my considered opinion the complainant has failed to prove that the amount of Rs. 9,99,301/- was filled up in the cheque with the consent of the accused.


39)Further apart from the above discussed lacunae, in my considered opinion even if the contention of the complainant with respect to the rate of interest being 26.78% p.a. is accepted, even then the complaint has to fail because of another very material lacunae. Admittedly the accused had paid an amount of Rs. 25,000/- to the complainant in the month of March and May 1996. DW6, R. K. Anand, Official, Oriental Bank of Commerce, Rajender Nagar, in his deposition has stated that as per the statement of account, Ex. DW 6/6, on 22.3.96 an amount of Rs. 20,020/- was paid to the complainant vide cheque bearing No. 501444 and on 04.05.96 another amount of Rs. 5,000- was paid to the complainant by the accused vide cheque bearing No. 508727. His deposition has not been questioned at all. Now if the accused is given the credit of these payments made by him in March and May 1996 and even if the interest is calculated @ 26.78%, (as is contended by the complainant), the amount due from the accused as on 28.3.97 does not total up to Rs. 9,99,301/-. According to the accused Ex DE 1/I is the statement of account filed by the complainant in one of civil suit pending between the parties - though it is rightly contended by the counsel for complainant that this document has not been proved by the accused as per the rules of Evidence Act, however according to me this document merely contains mathematical calculation of the amount due from the accused and the same can be considered in evidence since no discrepancy in the calculations made therein have been pointed out to me by the Ld. Counsel for complainant. The calculation made therein clearly shows that the


to me by the Ld. Counsel for complainant. The calculation made therein clearly shows that the complainant arrived at the figure of Rs. 9,99,301/-, as the amount due from the accused, without giving him any credit of the payments made by him in March and May 1996. Admittedly there was no other transaction between the parties where the payment made by the accused could not have been credited. In other words, the amount due from the accused as on 28.03.97 was less then Rs. 9,99,301/-and therefore in my considered opinion the complainant could not have been said to have any authority to fill up the cheque for an amount, in excess of the liability of the accused.


40)Ld. Counsel for complainant has tried to contend that even if the credit of the payments made by the accused in the year 1996 has not been given to him, that itself does not make the present complaint not maintainable. For this contention he has relied upon a judgment of the Hon'ble High Court of Karnataka reported as R. Gopikuttan Pillai vs Sankara Narayanan Nair, Equivalent citation:I(204)BC34. In the said judgment the Hon'ble High Court has held that a part payment made by the accused towards the cheque in dispute, whether before or after the legal notice, can not absolve the accused of the culpability of the offence u/s 138 NI Act. I have gone through the said judgment. According to me the judgment is not at all applicable to the facts and circumstances of the present case. The facts before the Hon'ble High Court of Karnataka were that a post dated cheque for Rs. 72,750/- dt./ 19.09.93 had been issued by the accused to the complainant and the accused had made some part payments before the actual date of the cheque in dispute. It was in those circumstances that the Hon'ble High Court has held that a part payment will not absolve the accused of the culpability u/s.138 NI Act. The cheque in the case before the Hon'ble High Court was duly filled in at the time of its issuance and on the date of its issuance the accused admitted that he would have to pay Rs. 72,750/- on 19.9.93, (the date of the cheque in dispute). The facts of the present case, which have been discussed at length here in above, clearly are distinguishable - the complainant has on its own filled up Rs. 9,99,301/- on 28.03.07, even after realising that this was not the amount due from the accused


even after realising that this was not the amount due from the accused as on 28.3.97. Thus it can by no stretch on imagination be stated that the complainant has rightly filled up the cheque on 28.03.97 without the cheque amount being due from the accused as on that date. I am supported in my view by the judgment of the Hon'ble High Court of Karnataka in the matter reported as M/.s Shreyas Agro Services Pvt. Ltd vs Chandrakumar S. B., 2006 CRL L.J. 3140. The Hon'ble High Court has held that :


''If the drawee were to dishonestly fill up any excess liability and the extent of liability if it becomes bona fide matter of civil dispute in such case, the drawer has no obligation to facilitate the encashment of cheque and the dishonour of cheque under such circumstances does not attract prosecution u/S 138 NI Act''


41. In view of my discussions hereinabove the dishonour of the cheque in the circumstances of the present case does not at all attract the provisions of the section 138 NI Act. In view thereof accused is hereby acquitted for the offence u/s 138 NI Act. His bail bond stands cancelled, surety stands discharged, endorsement on the documents if any be cancelled as per rules. File be consigned to Record Room.

Announced in the open court on 05.03.2007.

 (Anu Grover Baliga) Metropolitan Magistrate New Delhi


M/S Fashion Link vs M/S Knit & Fit Fashions (India) ... on 28 June, 2014

THE COURT OF MS. NEHA PALIWAL
 METROPOLITAN MAGISTRATE03, KKD, EAST, NEW DELHI

Complaint No. 242/01/2011
Unique ID No. 02402R0257242011

M/s Fashion Link,
Through its Proprietor,
Smt. Anju Arora,
A20, Gali No.3, Jagatpuri, Delhi - 110051.                          .....Complainant

                                               Versus

1. M/s Knit & Fit Fashions (India) Ltd., A67, Sector 7, Noida, U.P.

 Also at :
 M/s Knit & Fit Fashions (India) Pvt. Ltd., Glamour Line Inc., 1205, Broadway Suite No. 208, New York - 10001, USA.

2. Mr. Naresh Kumar Bansal, Director, M/s Knit & Fit Fashions (India) Pvt. Ltd., A67, Sector 7, Noida, U.P. .....Accused Persons COMPLAINT U/s 138 OF THE NEGOTIABLE INSTRUMENTS ACT Offence complained of : U/s 138 N.I. Act Plea of accused person : Not guilty CC No. 242/01/2011 Page no. 1 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors Complaint filed on : 26.8.2011 Final Arguments heard & Concluded on : 21.06.2014 Date of decision of the case : 28.6.2014 Final order : Convicted U/s 138 NI Act.

 BRIEF FACTS AND REASONS FOR DECISION OF THE CASE


BRIEF FACTS AND REASONS FOR DECISION OF THE CASE

 1. The present case has been instituted on the complaint of Smt. Anju Arora, Proprietor of M/s. Fashion Link, U/s 138 Negotiable Instrument Act 1881 (as amended up to date) against the accused company M/s. Knit & Fit Fashions (India) Pvt. Ltd and its Directors. However, in the present matter only the company and one of its Director Naresh Kumar Bansal were summoned by the Court as by the statement made by the complainant before the court on 27.8.2011, she was allowed to withdraw her case against the other Directors.

 2. As per the complaint, it is the case of the complainant that in the month of Jan/Feb 2011, accused no.1 company through its Directors approached the husband of the complainant namely Sh.


CC No. 242/01/2011 Page no. 2 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors Satish Arora, who was looking after the day to day conduct and business of the complainant to enter into a business transaction of manufacturing and selling export quality garments to the accused as per their requirements. It is the case of the complainant that thereafter the accused placed orders of Rs. 3 lacs in the month of April 2011 and Rs. 2 lacs in April 2011 and Rs. 5 lacs in April 2011 and the said orders were fulfilled and only after the prior payment made by the accused to the complainant through RTGS, goods were supplied to the accused persons.


3. It is further the case of the complainant that the accused placed a further order of Rs. 13,92,008/ with the complainant in the month of April 2011 and paid an advance of Rs. 5,00,000/ to the complainant vide cheques bearing no. 184243 dated 5.3.2011 and vide cheque No. 402003 dated 24.3.2011. However, the accused persons directed the complainant to hand over a cheque of Rs. 5,00,000/ as security with the assurance that the same will be returned to the complainant after delivery of goods. It is the case of the complainant that accordingly her husband Satish Arora issued a cheque bearing no. 539333 dated 10.5.2011 for an amount of Rs. 5,00,000/ in favour of accused no.1 with the specific understanding CC No. 242/01/2011 Page no. 3 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors that the aforesaid cheque will be returned to the complainant at the time of delivery of goods.


4. It is the case of the complainant that after manufacturing the goods as per the requirements of the accused persons, the complainant informed the accused persons about the same with the request to make payment of balance amount of Rs. 8,92,008/ as was agreed before actual delivery of goods. However, the Directors of accused company expressed their inability to make the payment at that time and requested the complainant to deliver the goods with assurance that soon after the delivery of the goods that they shall be making the payment to the complainant.
 5. It is the case of the complainant that on relying upon the assurances given by the accused persons, the complainant delivered the goods to accused persons vide Bill/Cash Memo No. 001 dated 17.5.2011 for an amount of Rs. 13,92,008/ and requested the accused persons to return the aforesaid cheque bearing no 539333 dated 10.5.2011 for an amount of Rs. 5,00,000/. However, the Directors of the accused company informed the complainant that the aforesaid cheque has been misplaced and the same will be returned to the complainant whenever the same is found by them. In CC No. 242/01/2011 Page no. 4 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors the meantime the complainant further supplied the goods for Rs. 1,50,000/ to the accused persons vide Bill No. 002 dated 10.6.2011 against advance payment of Rs. 1,50,000/ received by the complainant on 8.6.2011 through RTGS.


6. It is the case of the complainant that since then the complainant has been requesting the accused persons to make the payment of outstanding amount of Rs. 8,92,008/. However the accused persons deliberately avoided in making the payment of said amount to the complainant.

 7. It is the case of the complainant that upon her persistence, the accused persons, in partial discharge of their admitted debts and liability towards the complainant, issued a cheque bearing no. 402041 dated 17.6.2011 for an amount of Rs. 1,00,000/ drawn on Andhra Bank, Preet Vihar, New Delhi - 110002 in favour of Complainant"Fashion Link" signed by accused Sh. Naresh Kumar Bansal.

 8. It is further the case of the complainant that however, when she presented the said cheque for encashment, it was dishonoured with the remarks "Payment stopped by drawer", vide cheque returning memo dated 18.6.2011. Thereafter she got issued legal CC No. 242/01/2011 Page no. 5 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors demand notice dated 12.7.2011, dispatched on 14.7.2011 to the accused persons, whereby the accused persons were asked to pay the amount of said cheque within 15 days and the said notice was duly served upon the accused persons in ordinary course of postal delivery.


9. It is the case of the complainant that as accused persons have not replied to the said notice within the period of 15 days nor have paid the said amount to the complainant, the present complaint was filed by the complainant against the accused persons. Thus it is prayed by the complainant that the accused persons be tried and punished for the offence U/s 138 NI Act.

 10. In the present matter the complaint was filed before the court on 26.8.2011. The cognizance of the offence was taken and after presummoning evidence and hearing arguments on the point of summoning accused company and accused Naresh Kumar Bansal were summoned for the offence by the Ld. Predecessor of the court, vide order of the court dated 27.8.2011, as the complainant withdrew her case against the other accused persons.


11. Thereafter, on 29.10.2011, accused Naresh Kumar Bansal was admitted to bail and notice was served upon him on behalf of CC No. 242/01/2011 Page no. 6 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors himself as well as on behalf of accused company by the Ld. Predecessor of this Court to which he pleaded not guilty and claimed trial.
 12. It was submitted by the accused at the stage of framing notice that the company had entered into an agreement with the complainant as per which the complainant was to prepare garments for them and the impugned cheque was issued as security for the consideration amount of the agreement. It was further submitted that on the same day he had transferred Rs. 1,50,000/ to the account of the complainant through RTEGS. It was further submitted that as the complainant had not delivered goods as per terms of said agreement, therefore, he got the payments of the cheque stopped and intimated to the complainant to this effect. The accused Naresh Kumar Bansal further admitted that he is the director of accused company and had received the legal notice of the complainant, however, he submitted that he had not pecuniary liability towards the complainant and pleaded not guilty and claimed trial.


13. As it was submitted by Ld. Counsel for complainant that he has no objection if the opportunity is granted to the accused to cross CC No. 242/01/2011 Page no. 7 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors examine the complainant, Ld. predecessor of this court put the matter straightaway for the purpose of cross examination of complainant and dispensed with the requirement of moving the application U/s 145(2) NI Act.


14. In order to prove her case, the complainant examined herself as CW1 and adopted her affidavit Ex. CW1/1, which was led in presummoning evidence in post summoning evidence. She had relied upon the documents Ex. CW1/A to Ex. CW1/F which are as under:

 (a) Ex. CW1/A , is cheque bearing no. 402041 dated 17.6.2011, drawn on Andhra Bank.

 (b) Ex. CW1/B is cheque returning memo dated 18.6.2011 containing remarks 'Payment stopped by drawer'

 (d) Ex. CW1/C is Legal Notice dated 12.7.2011.

 (e) Ex. CW1/D1 (Colly.) and Ex. CW1/D2 (Colly.) are postal receipts and courier receipts dated 14.7.2011.

                (f)      Ex. CW1/E (Colly.) are AD cards.

                (g)      Ex. CW1/F is the complaint.

 15. Post summoning complainant's evidence was closed in the present matter vide order of the Court dated 20.4.2012 and the CC No. 242/01/2011 Page no. 8 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors matter was fixed for statement of accused.


16. Statement of accused U/s 313 read with Section 281 Cr.P.C. was recorded before the court on 2.5.2012 wherein it was submitted by the accused that he had business dealing with the complainant firm regarding garments and he had ordered certain ladies skirts from the complainant and issued the present cheque as security. But as the complainant failed to supply the goods on time despite repeated extensions and as a result of which he could not fulfill his commitment with his purchasers, therefore, he had stopped the payment of cheque in question. It was further submitted by the accused that he wishes to lead evidence in his defence.

 17. Thereafter, the matter was fixed for defence evidence. An application U/s 315 Cr.P.C. was moved by the accused for getting himself examined as a witness and the same was allowed vide order dated 7.7.2012 passed by Ld. Predecessor of this court. Accused was examined as DW1. The accused has in his evidence relied upon the following documents:

 (a) Ex. DW1/1original agreement dated 7.4.2011.

 (b) Ex. DW1/2 original bill/cash memo dated 17.5.2011.

 (c) Ex. DW1/3 original bank certificate.

CC No. 242/01/2011 Page no. 9 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors
 (d) Mark C copy of email dated 6.4.2011.

 (e) Mark D Copy of email dated 28.4.2011.


18. As it was submitted by the accused that he does not wish to examine any other witness in his defence, defence evidence was closed vide order of the Court dated 31.1.2014 and the matter was fixed for final arguments.

 19. I have heard the arguments as advanced by the Ld. counsels for the complainant and the accused and have gone through the material placed on record.

 20. Before adverting to the case in hand it is necessary to discuss the law of the land as applicable to the present case in hand. The main ingredients of Section 138 of the Negotiable Instruments Act are as follows:

 (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 issuance of the cheque or within the CC No. 242/01/2011 Page no. 10 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors 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.
 21. 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.


22. As per Section 141 NI Act if the person committing the offence U/s 138 NI Act is a company every person who at the time of the offence was committed was incharge of and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty for the offence and shall be liable to be proceeded against and punished CC No. 242/01/2011 Page no. 11 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors accordingly.

 23. In the present case in hand accused persons are the company and one its Directors who has signed the cheque in question. Accused Naresh Kumar Bansal (hereinafter referred to as accused no.2) on behalf of himself and on behalf of accused company (hereinafter referred to as accused no.1) has admitted in his cross examination that the impugned cheque Ex. CW1/A bears his signatures and was issued by him in favour of the complainant and was filled by him in his own handwriting. It was further admitted by him that he has instructed his bankers to stop the payment of the cheque. The receipt of the legal notice was also admitted by the accused no.2 and it was further admitted that he had not given any written reply to the same.

 24. Thus the existence of the cheque, the drawing of the cheque on the account maintained by the accused persons, its dishonour and the sending of the legal notice has been established before the court. The only question which remains to be determined is whether the cheque was issued for the discharge of any debt or liability.


25. Section 118 NI Act raises a number of presumptions of consideration, date, time of acceptance, time of transfer and status CC No. 242/01/2011 Page no. 12 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors of holder in due course unless the contrary is proved. The section lays down special rule of evidence applicable to negotiable instruments and presumptions are one of law and the court shall presume that the negotiable instrument which is the cheque in the present case, was made for consideration, was made on the date which it bears and that it was handed over to the complainant by the accused in due course.


26. Section 139 of Negotiable Instruments Act raises presumption that the holder of the cheque which is the complainant in the present case received the cheque for the discharge in whole or in part of any debt or other liability.
 27. However, these presumption U/s 118 and Section 139 NI Act are rebuttable in nature. These presumptions have to be compulsorily raised as soon as the execution of cheque by the accused is admitted or proved by the complainant and thereafter the burden is shifted to accused to prove otherwise. A presumption is not itself evidence, but only makes a prima facie case for a party for whose benefit it exists.
 28. In the case of Kumar Exports VS Sharma Carpets 2009 II AD (SC) 117 it was held by the Hon'ble Apex Court that to rebut CC No. 242/01/2011 Page no. 13 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors the statutory presumptions the accused may either adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist on every case that the accused should disprove the nonexistence of consideration and debt by leading direct evidence, because the existence of negative evidence at all times is neither possible nor contemplated. At the same time mere denial of passing of consideration and existence of debt also would not serve the purpose of accused, something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. It was further held that once the rebutal evidence is adduced and accepted by the court the evidential burden shifts back upon the complainant and thereafter, the presumptions U/s 118 and 139 of the Act will not again come to the complainant's rescue.


29. Thus the accused has to bring before the court something probable in his support in order to shift the burden back to the complainant.
 30. The accused persons have taken a defence at the stage of notice that they had issued the cheque as security for the CC No. 242/01/2011 Page no. 14 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors consideration amount of the agreement and as the complainant had not delivered the goods as per agreement, they got the payment of the cheque stopped and intimated the complainant to this effect. In the statement of accused recorded u/s. 281 Cr.P.C read with Section 313 Cr.P.C. the defence taken was that as the complainant had failed to supply the goods on time, despite repeated extensions as a result to which the commitment made by the accused to its purchasers could not be fulfilled, therefore, they stopped the payment of cheque in question.

 31. The accused in his examination inchief has relied upon Ex.DW1/1 which is the agreement dt. 07.04.11. The said agreement is not mentioning anything about the handing over of security cheque by the accused to the complainant or viceversa. The accused has further placed on record the bill/cash memo Ex.DW1/2 dt. 17.05.11 as per which goods worth Rs.12,83,040/ were received by the accused.


32. It is deposed by the accused that he had no transactions with the complainant except transaction dt. 17.05.11, however, the bank statement Ex.DW1/3 shows transactions prior to that date between the parties i.e of 08.03.11 and 25th March, 2011. The bill as per the CC No. 242/01/2011 Page no. 15 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors case of the accused itself was subsequent to the agreement dt. 07.04.11 and therefore, the commercial transaction prior to 7th April 2011 goes contrary to the deposition of the accused.

 33. Furthermore, it is admitted by the accused no.2 in his cross examination that he had obtained the consent of the buyer (i.e his purchasers) and the goods supplied by the complainant were accepted even though there was delay. Once there is an admission on the part of the accused that the goods supplied were accepted by him the defence taken by the accused that he could not fulfill his commitments with 3rd party as a result of the failure of the complainant to supply goods on time hold no force.

 34. More so, in the present matter the cheque in question is dated 17.06.11 and the accused no.2 has admitted the entire filling of the cheque in his own handwriting. Once as per Ex.DW1/2 the goods were delivered on 17.05.11 the issuance of a subsequent cheque goes contrary to the defence raised by the accused that the cheque was given as a security for the consideration amount of the agreement or that as he could not fulfill his commitment with purchasers due to failure of supply of goods on time, he got the payment of the impugned cheque stopped.


CC No. 242/01/2011 Page no. 16 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors
 35. In Negotiable Instruments Act presumptions are there in favour of complainant and burden is upon the accused to rebut the same. In the present matter in view of the above said discussions accused persons have failed to rebut the presumption of NI Act. Mere denial of liability or averment without any substantial evidence to corroborate the same is of no aid to the accused. Nothing has come in the cross examination of the complainant which can assail her credibility before the court or rebut the presumption u/s 118 & 139 NI Act.
 36. The complainant in support of her case has proved before the court the existence of cheque. The signatures and execution of the cheque are even admitted by the accused at all stages. This cheque was presented on an account maintained by the accused and was dishonored on the ground 'Payment stopped'. Receipt of legal notice has been admitted by the accused. The accused persons thus have not been able to rebut the presumptions of Section 118 and 119 NI Act.


37. Thus, in the present case in hand, the existence of cheque duly signed by the accused no.2 on behalf of accused no.1 is proved before the court and in view of the presumption of Section 118 and CC No. 242/01/2011 Page no. 17 of 18 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors 139 of NI Act which are not rebutted by the accused persons, it is presumed that the cheque was drawn for consideration and on the date which it bear and that the complainant is the holder of the cheque in due course and that she received the cheque for the discharge in whole or part of debt or liability.

 38. The complainant has further proved before the court that the cheque was dishonoured with the reasons 'Payment stopped' and that the accused persons have not paid the amount of cheque in question to the complainant, despite receipt of legal notice. The ingredients of Section 138 NI Act are fulfilled. In view of the same accused no.1&2 are convicted for the offence U/s 138 NI Act.

 39. Let they be heard separately on the point of sentence.

 40. Let convicts be provided with a copy of judgment free of cost.
Announced in the open Court
today i.e. 28.6.2014                                           (NEHA PALIWAL)
                                                                 MM3:East: KKD:DELHI

 It is certified that the judgment contains 18 pages and all pages bear my signatures.
                                                               (NEHA PALIWAL)
                                                                 MM3:East: KKD:DELHI

CC No. 242/01/2011                                                                  Page no. 18 of 18
 M/s Fashion Link Vs M/s Knit & Fit Fashions (India) Pvt. Ltd. & Ors


In The Court Of Ms.Riya Guha vs Brief Facts Of The Present Case Are ... on 25 June, 2014

IN THE COURT OF Ms.RIYA GUHA, MM02
( NEGOTIABLE INSTRUMENTS ACT) CENTRAL DISTRICT,
                          TIS HAZARI COURTS, DELHI
M/S Aneja Agencies
B14, (FF), Sangam Market,
Katra Neel , Chandni Chowk, Delhi
Through its partner Mr. Gurpreet Singh                          ......Complainant
                                   Versus
1.    M/S R.K. Apparels
     17A/2B, W.E.A, Ajmal Khan Road,
     Karol Bagh, New Delhi
     Through its partner/proprietor
     Mr. Arun  Singhal
1.    Mr. Arun Singhal, Proprietor
     Authorized signatory
     M/S R.K. Apparels
     17A/2B, W.E.A, Ajmal Khan Road,
     Karol Bagh, New Delhi                                        ........Accused

                                                    JUDGMENT
Complainant Case No                 :      2526/1/11

Date of institution                :       29/09/2009

Offence alleged                     :      Under Section 138 N.I. Act

Plea of the accused                 :      Not pleaded guilty

Final order                         :      Conviction

Date of Decision                    :      25/06/2014

                                               BRIEF FACTS


1. Brief facts of the present case are that complainant is a registered partnership firm and the present complaint is filed by Sh.Gurpreet Singh, one CC No. 2526/1/11 M/s Aneja Agencies vs M/S R.K. Apparels 1 of 15 of the partners. It is further stated that the complainant is a wholesale distributer of suitings and shirtings and that the accused no.2 Arun Singhal is the proprietor of the accused no.1 firm, and that he used to purchase goods/fabrics from the complainant firm from time to time on credit basis. It is further allaged that as per the books of accounts maintained by the complainant in the name of the accused no.1, a sum of Rs.1,68,553/ was due and payable by the accused to the complainant, which was inclusive of part interest. In order to discharge the above said liability, the accused no.2 issued three post dated cheques bearing cheque no. 341517 dated 2801 2009 of amount Rs.50,000/, cheque no. 341518 dated 28022009 of amount Rs.50,000/ and, cheque no.341519 dated 28032009 of amount Rs.68,553/, all drawn on Syndicate Bank, Ajmal Khan Road, Karol Bagh, New Delhi and the same are Ex.CW1/4 to Ex.CW1/6. The complainant presented the cheques in question for encashment through his banker but the same was got dishonored by the banker of accused with the remarks "Funds Insufficient" vide returning memos dated 29.07.2009 which are Ex.CW1/7 to Ex.CW1/9. Hence, the complainant issued the mandatory notice U/s 138


Ex.CW1/9. Hence, the complainant issued the mandatory notice U/s 138 NI Act dated 13082009 i.e. Ex.CW1/10 and the same was served upon the accused vide postal receipts/registered AD and U.P.C. The same are Ex.CW1/11 to Ex.CW1/13.


2. When the accused failed to fulfill the conditions of the said legal notice CC No. 2526/1/11 M/s Aneja Agencies vs M/S R.K. Apparels 2 of 15 Ex.CW1/10 within 15 days of its presumed service, then the complainant has filed the present complaint case U/s 138 of Negotiable Instrument Act 1881 (hereinafter the Act) against the accused.

3. After the institution of the present complaint, the complainant adduced his pre summoning evidence U/s 200 Cr. P.C. on which basis the accused was summoned via order dated 09102009 to face trial for the offence U/s 138 NI Act. After the service of the summons, the accused entered his appearance whereupon the provisions of Sec. 207 Cr. P.C. were also complied. The accused was admitted to bail and the notice U/s 251 Cr. P.C. for the offence U/s 138 NI Act was served upon accused Arun Singhal on 15 122010 after hearing the contesting parties. The accused pleaded "Not Guilty" and claimed trial. He further stated in his plea of defence that the cheques in question were given as security and that no amount is due and payable by the firm RK Apparels. He further stated that the statement of account filed by the complainant is incorrect and that the complainant has not placed the complete record. He further stated that as per the records of the accused firm, the complainant is liable to pay to the accused and that the cheques in question were issued without consideration.


4. In order to substantiate the case of the complainant, Sh.Gurpreet Singh, the partner in the complainant firm examined himself as the witness CC No. 2526/1/11 M/s Aneja Agencies vs M/S R.K. Apparels 3 of 15 CW1 and adopted the presummoning evidence as his examination in chief, the contents of which are a mere repetition of what had already been mentioned above and hence are not repeated for the sake of brevity. The CW1 was duly crossexamined by the counsel for the accused.

5. The matter was thereafter fixed for statement of the accused and the same was recorded on 22082012. All the incriminating circumstances, appearing in the evidence against the accused were put in order to unable him to offer his explanation. In his explanation u/sec 313 Cr.P.C r/w sec 281 Cr.P.C, the accused Arun Singhal stated that the cheques Ex.CW1/4 to Ex.CW1/6 were given as a security to the complainant and that there is no outstanding payable to the complainant. It was further stated by accused Arun Singhal that an amount of Rs.6 lakhs was made to the complainat by way of cheque which the complainant had illegally adjusted in the account of Ahuja Apparels Pvt. Ltd.

6. Despite sufficient opportunity the accused has not lead any defence and finally the defence was closed by the order of the Court on 17122013. Thereafter, final arguments were advanced. I have also perused the record.


7. For the offence under Section 138 NI Act to be made out against the accused, the complainant must prove the following points that: CC No. 2526/1/11 M/s Aneja Agencies vs M/S R.K. Apparels 4 of 15
 (a) The accused issued a cheque on an account maintained by him with a bank.

(b) The said cheque had been issued in discharge, in whole or in part, of any legal debt or other liability.

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

(d) The aforesaid cheque, when presented for encashment, was returned unpaid /dishonoured.

(e) The payee of the cheque issued a legal notice of demand to the drawer 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 aforesaid legal notice of demand.


8. Hence, the complainant must firstly show that the cheque in question was issued by the accused in its favour. Hence, firstly, the complainant must prove that the accused had issued the impugned cheques Ex.CW1/4 to Ex.CW1/6 in its favour. There is no denial by the accused that the signatures on the cheques in question are not his or that the account was not of the accused firm. However, the accused has alleged that he did not have the liability in respect of the said cheques as they were issued in lieu of security. CC No. 2526/1/11 M/s Aneja Agencies vs M/S R.K. Apparels 5 of 15


9. During the cross examination, the CW1 stuck to his stand that the cheques in question were issued by the accused in discharge of liability due and payable towards the complainant. To prove the stand of the accused, Ld. Counsel for the accused put questions to the CW1 that the complainant had received six cheques totalling upto Rs. 6 lakhs dated from 10/06/2007 to 26/06/2007. The CW1 affirmed to such suggestion but he also clarified that such cheques totalling upto Rs. 6 lakhs were issued in order to discharge the liability of M/S Ahuja Apparels Ltd. However, he also admitted that these cheques totalling upto Rs. 6 lakhs were issued by M/S R.K. Apparels from its bank account. The CW1 further went on to state that he had been given oral communication that the said cheques of Rs. 6 lakhs be adjusted against the dues of M/s Ahuja Apparels. With such questioning, the accused had tried to establish that firstly, with the payment of Rs. 6 lakhs given by way of these six cheques, which by the way were mentioned for the first time only during the cross examination of the CW1, there was no outstanding liability towards M/S R.K. Apparels. Secondly, the accused also tried to prove that the complainant had unjustifiedly and wrongly adjusted the payments made by these six cheques into the account of M/s Ahuja Apparels when they were meant to be issued towards discharge of liability of the accused firm.


10. However it is pertinent to note that these 6 cheques were all dated of CC No. 2526/1/11 M/s Aneja Agencies vs M/S R.K. Apparels 6 of 15 the month of June, 2007 whereas the cheques in question Ex.CW1/4 to Ex.CW1/6 were dated 28/01/2009, 28/02/2009 and 28/03/2009. Apart from such questioning, the accused has not been able to show that the cheques in question were issued as security. No statement of account of the accused firm has been produced . It is an admitted position that the complainant firm and the accused firm were having ongoing business transactions. Merely by questioning the CW1 that he has received certain sundry cheques would not tantamount to rebutting the presumption in favour of the complainant that the three cheques in question Ex. CW1/4 to Ex. CW1/6 were issued in lieu of discharge of legally enforceable liability and the same were issued against consideration.

11. The presumptions provided U/s 118 NI Act and 139 NI Act would come to the rescue of the complainant once the execution of the cheque in question is proved on record. As per section 118 NI Act, it is to be presumed in favour of the complainant during the trial that the cheque in question was given against consideration by the accused and that the complainant was the holder of the said cheque in due course. Further as per Sec. 139 NI Act, it is to be presumed in favour of the complainant during the trial that the cheque in question was received by the complainant against a legally enforceable debt or liability ("Rangappa Vs. Sri Mohan" SLP (Crl.) 407/06, Dated: 07.05.2010).