Complaint Case number : CC No. 285/2018 2 Name of the complainant : Devinder Kumar Kaim, S/o Sh. Attar Singh, R/o A­42 B, Jawahar Park, Khanpur, Devli Road, New Delhi.

3. Name and address of the : Sumit Gupta @ Shalu, accused S/o Sh. V.K. Gupta, R/o Shop No. 7, NBCC Towar complex, Kidwai Nagar East, New Delhi­ 110023.

4. Offence complained of or : Under Section 138 of the proved Negotiable Instruments Act, 1881 .

5. Plea of the accused : Pleaded not guilty and claimed trial.

6. Final Order : Conviction CC No. 285/2018 Devinder Kumar Kaim Vs.Sumit Gupta @ Shalu Page 1 of 24

7. Date of Institution : 09.01.2018

8. Date of Reserving the : 15.03.2021 Judgment

9. Date of pronouncement : 31.08.2021 Judgment:

2.4 Pursuant thereto, complainant brought this fact of dishonor of cheques to the notice of the accused and requested for the replacement of the cheques in question. However, no response was received from the accused regarding the said request. Feeling aggrieved, the complainant had then issued notice dated 04.12.2017 to the accused in this regard. On receiving the same, the accused failed to honour the cheque within the statutorily prescribed period and also did not reply to the notice sent in the manner CC No. 285/2018 Devinder Kumar Kaim Vs.Sumit Gupta @ Shalu Page 3 of 24 contemplated under Section 138 of the Act.

2.5 Following these developments, the complainant was constrained to file the present complaint (under Section 200 of the Code of Criminal Procedure) against the accused for the offence punishable under Section 138 of the Act.

3. Pursuant to filing of the said complaint, the complainant, filed his pre summoning evidence by way affidavit Ex CW­ 1/A and has relied upon various documents viz. Original cheques dated 16.11.2017, Ex. CW­1/1 and CW1/2, cheque return memos dated 01.12.2017 Ex.CW­1/3 and Ex. CW­ 1/4, Legal notice dated 04.12.2017 Ex.CW­1/5, postal receipt and tracking report Ex. CW­1/6 (colly).

4. Ld. Predecessor of this Court took cognizance of the offence under section 138 NI Act vide order dated 11.01.2018 and ordered for issuance of summons for attendance of the accused.

5. Thereafter, the Accused entered appearance on 19.03.2018 when he was admitted to bail.

5.1 On 31.05.2018, notice under Section 251 Code of Criminal Procedure, 1973 (hereinafter referred to as ' Cr.P.C .') was given to the accused and he was asked whether he pleaded guilty or claimed trial. In CC No. 285/2018 Devinder Kumar Kaim Vs.Sumit Gupta @ Shalu Page 4 of 24 reply to this, he pleaded not guilty and claimed trial. In his statement of defence recorded at that very time, he, inter­alia, stated to have taken loan of Rs. 30,000 from the complainant in 2017. The said loan was taken without interest. Furthermore, it was stated by him that the cheques in question were given to the complainant as blank cheques. However, the accused admitted receipt of legal demand notice dated 04.12.2017. The accused also stated that he was yet to repay the abovementioned loan.

5.2 As the statement of defense of accused revealed a specific defense, hence he was allowed to cross examine the complainant witness under section 145(2) NI Act.

5.3 Given the nature of the allegations, Ld. Predecessor Court had directed that the case shall be tried as a Summons case under Chapter XX of Cr.P.C.

6. During the course of the trial, the complainant CW1 relied on the the affidavit Ex.CW1/1 filed by him at the pre­ summoning stage and adopted the same in his examination in chief. He also relied upon the documents already exhibited as Ex.CW1/1 to Ex.CW1/6. The said witness was cross­examined by the Ld. counsel for the accused.

6.1 After closure of complainant's evidence on 09.05.2019, statement of the accused under Section 313 Cr.P.C. was recorded on 30.09.2019 whereby circumstances appearing against him in evidence were put to him. While reiterating his said defence, additionally it was stated, inter­alia that a loan amount of Rs. 30,000 was taken by the accused from the complainant at the time of demonetization. It was further stated that the cheques in question were given to the complainant as security cheques at the time of taking loan and not towards discharge of any liability and out of Rs. 30,000/­, approximately Rs. 6000/­ has been repaid.

6.2 Pursuant thereto, the case was fixed for defence evidence. However, on 09.12.2019, accused had made a submission that he didn't wish to lead any DE and in view thereof, DE stood closed on the same date.

6.3 Thereafter arguments were heard at length on behalf of both the parties. Counsel for the complainant had also filed written submissions.

7. Before delving into the facts of the present case, it is necessary to look at the legal framework regarding Section 138 NI Act. The Hon'ble Supreme Court of India in Kusum CC No. 285/2018 Devinder Kumar Kaim Vs.Sumit Gupta @ Shalu Page 6 of 24 Inglots & Alloys Ltd and Ors v. K Pennar Peterson Securities Ltd and Ors. , (2000) 2 SCC 745 has clearly laid down the ingredients which are to be satisfied for making out a case under Section 138 NI Act, which are being reproduced hereunder:

If the aforementioned ingredients are satisfied then the person who has drawn the cheque shall be deemed to have committed an offence. In the explanation to the section clarification is made that the phrase "debt or other liability"

8.3 Coming now to the facts of the present case, a careful reading of legal demand notice, in this context is essential. The said notice contained serious accusations against the accused i.e. for the repayment of loan amount, the accused issued the two cheques in question totaling to Rs. 3,00,000/­, which on presentment were dishonored with reason 'Drawer's Signature Differs'. Even after having received such information, the accused was unperturbed and did not approach the complainant nor did he write any letter to the complainant. No prudent mind can be left with any semblance of doubt that the accused did not choose to dispute the facts stated in the legal demand notice.

8.4 Now, during the trial, when the accused was given notice under Section 251 Cr.P.C., he took the defence that the cheques in question were given to the complainant as blank cheques and the said cheques do not bear his signature. In his defence he also stated that he had taken a loan of Rs.30,000/­ only from the CC No. 285/2018 Devinder Kumar Kaim Vs.Sumit Gupta @ Shalu Page 11 of 24 complainant. This was also reiterated by him when his statement when his statement under Section 313 Cr.P.C. was recorded. However no proof of the said loan amount was adduced by the accused. Looking from the lens of a prudent person, the said plea taken by the accused during trial seems improbable and an afterthought. It appears that the said defence has been taken by the accused only to evade the legal liability. Hence, in light of the above discussion it is clear that cheques in question, drawn in favour of the complainant on a bank account maintained by the accused, were signed, executed and handed over by the accused to the complainant.

9. The said cheques in question bearing no. 332709 and 332710 were presented to the Bank concerned within the period of their validity and were returned unpaid vide return memos dated 01.12.2017 and 16.11.2017 for the reason of "Drawer's Signature Differs". In this context, it is pertinent to mention here the judgment rendered by Hon'ble Supreme Court in Laxmi Dyechem vs. State of Gujarat & Ors [(2012) 13 SCC 375] wherein it was held that :

appearing in Section 138 of the Act is a genus and dishonour for reasons such "as account closed", "payment stopped", "referred to the drawer" are only species of that genus. Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in Section 138 , so also dishonour on the ground that the "signatures do not match" or that the "image is not found", which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act. This Court has in the decisions referred to above taken note of situations and contingencies arising out of deliberate acts of omission or commission on the part of the drawers of the cheques which would inevitably result in the dishonour of the cheque issued by them. For instance this Court has held that if after issue of the cheque the drawer closes the account it must be presumed that the amount in the account was nil hence insufficient to meet the demand of the cheque. A similar result can be brought about by CC No. 285/2018 Devinder Kumar Kaim Vs.Sumit Gupta @ Shalu Page 13 of 24 the drawer changing his specimen signature given to the bank or in the case of a company by the company changing the mandate of those authorised to sign the cheques on its behalf. Such changes or alteration in the mandate may be dishonest or fraudulent and that would inevitably result in dishonor of all cheques signed by the previously authorised signatories. There is in our view no qualitative difference between a situation where the dishonour takes place on account of the substitution by a new set of authorised signatories resulting in the dishonour of the cheques already issued and another situation in which the drawer of the cheque changes his own signatures or closes the account or issues instructions to the bank not to make the payment. So long as the change is brought about with a view to preventing the cheque being honoured the dishonour would become an offence under Section 138 subject to other conditions prescribed being satisfied. There may indeed be situations where a mismatch between the signatories on the cheque drawn by the drawer and the specimen available with the bank may result in dishonour of the cheque even when the drawer never intended to invite such a dishonour. We are also conscious of the fact that an authorised signatory may in the ordinary CC No. 285/2018 Devinder Kumar Kaim Vs.Sumit Gupta @ Shalu Page 14 of 24 course of business be replaced by a new signatory ending the earlier mandate to the bank. Dishonour on account of such changes that may occur in the course of ordinary business of a company, partnership or an individual may not constitute an offence by itself because such a dishonour in order to qualify for prosecution under Section 138 shall have to be preceded by a statutory notice where the drawer is called upon and has the opportunity to arrange the payment of the amount covered by the cheque. It is only when the drawer despite receipt of such a notice and despite the opportunity to make the payment within the time stipulated under the statute does not pay the amount that the dishonour would be considered a dishonour constituting an offence, hence punishable. Even in such cases, the question whether or not there was a lawfully recoverable debt or liability for discharge whereof the cheque was issued would be a matter that the trial Court will examine having regard to the evidence adduced before it and keeping in view the statutory presumption that unless rebutted the cheque is presumed to have been issued for a valid consideration."

In the case at hand, elucidating from the principles laid out by Hon'ble Apex Court, it has been already mentioned CC No. 285/2018 Devinder Kumar Kaim Vs.Sumit Gupta @ Shalu Page 15 of 24 above that accused admittedly received the legal demand notice dated 04.12.2017 sent on behalf of the complainant but even after receiving the said notice, the accused neither responded to the notice nor made any payment within the statutory period of fifteen days and only thereafter, complaint was filed by the complainant under Section 138 of the Act against the accused. Hence, the said dishonour would be considered a dishonour constituting an offence under Section 138 NI Act.

10. Now, once it has been established that the cheque was duly executed and signed by the accused, we must shift our focus towards the presumption under Section 118 and 139 NI Act.

10.1 As per the said Section 139 NI Act, it shall be presumed that the issuance of cheque was issued by the accused/drawer for the discharge, in whole or in part, of debt or other liability. The said proposition has been dealt in a catena of judgments of Hon'ble Supreme Court in APS Forex Services Pvt. Ltd. v. Shakti International Fashion Linkers and Ors. , [AIR 2020 SC 945]; Rohitbhai Jivanlal Patel v. State of Gujarat and Ors., [AIR 2019 SC 1876]; Basalingappa v. Mudibasappa , [(2019) 5 SCC 418("Basalinga case")]; Kumar Exports v. Sharma CC No. 285/2018 Devinder Kumar Kaim Vs.Sumit Gupta @ Shalu Page 16 of 24 Carpets , [(2009) 2 SCC 513]. In Basalinga case, the Hon'ble Apex Court has held that:

10.2 It has been categorically held in Bir Singh v Mukesh Kumar [(Criminal Appeal Nos 230­231 OF 2019)] that :

10.3 In K.N. Beena vs. Muniyappan and Another {SLP (Crl) 969 of 2001], the Hon'ble Supreme Court held that :

10.4 The Hon'ble Delhi High Court in V.S.Yadav v. Reena [172 (2010) DLT 561], where the accused had similarly pleaded that no loan was ever taken and yet the security cheques were not returned by complainant; noted that:

10.5 In light of the legal proposition discussed above, it is now imperative to examine as to whether the accused has brought any cogent evidence to rebut the presumption raised against him. It is pertinent to note here that when the accused was given notice under Section 251 Cr.P.C., he admitted that he had taken a loan of Rs 30,000/­ from the complainant in the year 2017. At that time cheque in question was given by the accused to the complainant as blank cheque. Thereafter, when accused was examined under Section 313 CrPC, he inter alia stated that the cheque CC No. 285/2018 Devinder Kumar Kaim Vs.Sumit Gupta @ Shalu Page 20 of 24 in question was given by the him to the complainant as blank cheque, without signing the same, as security at the time of taking loan from the complainant and towards discharge of any liability towards the complainant. The accused has got his statement recorded under Section 313 of the Code, but failed to record evidence to disprove or rebut the presumption in support of his defence available under Section 139 of the Act. The accused chose not to lead DE and hence his plea that the cheque in question by way of security is a mere ipse dixit and cannot be believed in absence of any proof on behalf of the accused. In this context the Hon'ble High Court of Delhi in Suresh Chandra Goyal v. Amit Singhal, Crl . L.P, 706/2014 has succinctly observed that:

Additionally, the Hon'ble High Court of Delhi in the aforesaid decision also referred to the judgments of the Hon'ble SC in ICDS Ltd. v. Beena Shabeer & Anr. [(2002) 6 SCC 426]; and Hon'ble High Court of Bombay in Sai Auto Agencies through its partner Dnyandeo Ramdas Rane v. Sheikh Yusuf Sheikh Umar, [2011 (1) Crimes 180 ("Sai Auto Agencies Case")] to buttress the aforesaid observation. In fact, the Hon'ble High Court of Bombay in Sai Auto Agencies Case (supra) noted that:

Merely by saying that cheque was issued as a security cheque will not solve the purpose. Therefore, the defence of the cheque being a security cheque does not by itself rebut the presumption.

10.6 It is also pertinent to mention here that when accused was examined under Section 313 CrPC, he stated that he had taken a loan of Rs. 30,000 from the complainant and out of CC No. 285/2018 Devinder Kumar Kaim Vs.Sumit Gupta @ Shalu Page 22 of 24 that amount Rs. 6,000 had been repaid to the complainant. However no proof of any such statement was adduced on behalf of the accused. It has been categorically held by Hon'ble Supreme Court in Sumeti Vij vs M/S Paramount Tech Fab Industries [(CRIMINAL APPEAL NO(S ). 292 OF 2021)] that :

10.7 In the present case, the accused has done nothing more than making bare statements. The argument advanced on behalf of the accused, that the complainant should have examined the family members in front of whom the loan CC No. 285/2018 Devinder Kumar Kaim Vs.Sumit Gupta @ Shalu Page 23 of 24 amount was given to the accused, pales into insignificance as the initial burden was on the accused to rebut the presumption raised against him. In order to do that, the accused should have brought some cogent material on record but he failed to do so.

From the foregoing discussions, the court finds that the accused has not been unable to prove any probable defence and has failed to rebut the presumption raised under Sections 118 and 139 of the NI Act.

11. Therefore, accused is held guilty and convicted for commission of offence punishable under Section 138 of the Negotiable Instrument Act, 1881.

12. Let the convict be heard separately on quantum of sentence.

Copy of this judgment be given free of cost to both the sides.

Announced on 31.08.2021 through video­conferencing in presence of counsel for complainant, the accused and his counsel.

(Aayushi Saxena) Metropolitan Magistrate­01 (South), NI Act /Saket/New Delhi/31.08.2021 CC No. 285/2018 Devinder Kumar Kaim Vs.Sumit Gupta @ Shalu Page 24 of 24