1. The Complainant has filed the present complaint under Section 138 / 142 of Negotiable Instruments Act, 1881 (" NI Act ") against the Accused on the averments that Complainant had given a personal loan to the Accused under the personal loan Page 1 of 18 Uphar Finvest Limited v. Insaf Khan CC No.2635/2018 agreement No. TA-0045 dated 04.02.2015 for a sum of Rs. 2,00,000/-; which was repayable in 36 installments of Rs. 9,556/- each. However, the Accused was irregular in payment of the EMIs and thereafter stopped paying the EMIs. The Complainant then made a demand for repayment of the outstanding balance, but despite the same, the Accused did not pay the said amount.

2. As per the Complainant, the Accused in discharge of part of his liability, issued a cheque bearing no. 070440 dated 01.02.2018 amounting to Rs. 2,75,200/- drawn on Central Bank of India, Jasola Branch, G-47, Kalindi Kunj Road, New Delhi-110044 in favour of the Complainant (hereinafter referred as "cheque in question"). Upon presentation, the same was returned unpaid vide return memo dated 03.02.2018, for the reason "Funds Insufficient". The Complainant sent the legal demand notice dated 07.02.2018 through registered post at address of the Accused. Hence, despite the service of the legal demand notice, the Accused failed to make the payment within the stipulated period and the Complainant filed the present complaint.

3. After taking pre-summoning evidence, the Accused was ordered to be summoned in this case for commission of offence under Section 138 NI Act, vide order dated 27.03.2018.

4. Accused appeared and was released on bail on 07.05.2019. On finding a prima facie case, notice U/s 251 of the Criminal Procedure Code , 1973 (" CrPC ") was served upon the Accused on 03.09.2019 to which he pleaded not guilty and opted to contest Page 2 of 18 Uphar Finvest Limited v. Insaf Khan CC No.2635/2018 after disclosing the following defence:

5. Vide order dated 10.12.2019, opportunity was granted to the Accused to cross examine the Complainant. The Complainant/CW1 adopted his pre-summoning evidence affidavit and also proved following documents:

Thereafter, Accused was examined under Section 313 of CrPC dt. 17.05.2022 for explaining the circumstances appearing against him in the Complainant's evidence. He denied the Complainant's case and pleaded false implication in the present case and opted not to lead evidence in his defence.

7. I have heard Ld. Counsel for the parties and have perused the case file along with the written submissions filed by the parties carefully and meticulously. Submissions of the Complainant and Accused

8. The Ld. Counsel for the Complainant has submitted that all ingredients of Section 138 NI Act are fulfilled in the present case and hence, the presumption under Section 139 NI Act arises in the favour of the Complainant, which has not been successfully rebutted by the Accused.

9. Per contra, Ld. Counsel for the Accused has submitted that the Accused deserves to be acquitted as the cheque in question was given as a blank signed security cheque for the loan amount of Rs. 2,00,000 and he has repaid a significant part of the loan. Hence, the presumption under Section 139 NI Act stands rebutted. Legal Framework Ingredients of Section 138 NI Act:

10.The Hon'ble Supreme Court of India in Kusum Ingots & Alloys Ltd and Ors v. K Page 4 of 18 Uphar Finvest Limited v. Insaf Khan CC No.2635/2018 Pennar Peterson Securities Ltd and Ors., (2000) 2 SCC 745 ("Kusum Ingots Case"), has clearly stipulated that "the ingredients which are to be satisfied for making out a case under the provision are:

The same is now enhanced to 30 days.

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Uphar Finvest Limited v. Insaf Khan CC No.2635/2018

(v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice;

If the aforementioned ingredients are satisfied then the person who has drawn the cheque shall be deemed to have committed an offence."

11.Therefore, if the aforesaid ingredients are made out, the Accused is deemed to have committed an offence under Section 138 NI Act.

Presumption under Section 139 NI Act/ Section 118 NI Act:

12. Section 139 NI Act states that:

13. Section 139 NI Act is a type of reverse onus clause, which stipulates a presumption in the favour of the Complainant as to fact of a cheque being received in discharge of a legal debt or liability.

14.Further, Section 118(a) of the NI Act, states as follows:

15.The Hon'ble Supreme Court of India has in a number of judgments dealt with the combined effect of the presumptions raised under Section 139 and Section 118(a) NI Act.

16.The following proposition can be summarized on a perusal of the judgments of the Hon'ble Supreme Court of India in Sunil Todi & Ors v. State of Gujarat, LL 2021 SC 706 ("Sunil Todi Case"), Kalamani Tex v. P. Balasubramanian , 2021 SCC OnLine SC 75; 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; Kumar Exports v. Sharma Carpets , (2009) 2 SCC 513; K.N. Beena v. Muniyappan and Anr. , (2001) 8 SCC 458; and Dhanvantrai Balwantrai Desai v. State of Maharashtra , 1964 Cri. LJ 437:

17.In the case at hand, it is not in dispute that the cheque in question was drawn by the Accused from his bank account. Further, it is also not in dispute that the Accused is the signatory of the cheque in question as this has been admitted by the Accused in his statement u/s 294 CrPC. Presentation of the cheque in question by the Complainant is also not in dispute.

18.The dishonour of the cheque in question by way of the return memo, Ex. CW1/F, as it has been admitted by the Accused in his statement u/s 294 CrPC. The Complainant sent the legal demand notice, dated 07.02.2018 (Ex. CW1/I (Colly)) by way of speed post (Ex. CW1/I (Colly)). Though, it is the stand of the Accused that he has not received the legal demand notice; but it is noted that in his statement u/s 294 CrPC , he has stated that "the address mentioned in the legal demand notice is my correct address". Hence, the legal demand notice was sent on the correct address of the Accused. Therefore, a presumption of due service is drawn u/s 27 of General Clauses Act, 1897; which provides that where the notice is sent by Page 9 of 18 Uphar Finvest Limited v. Insaf Khan CC No.2635/2018 registered post to the correct address, the same shall be presumed to have been duly served. In M/s Darbar Exports and other v. Bank of India, 2003 (2) SCC (NI) 132 (Delhi), the Hon'ble High Court of Delhi held that a presumption of service of notice is to be drawn where the notice is sent through registered post as well as UPC on correct address. Further, the Hon'ble Supreme Court in C.C. Alavi Hazi v. Palapetty Muhammad & Anr , (2007) 6SCC 555 has held that: "Any drawer who claims that he did not receive the notice by post, can, within 15 days of receipt of summons from the court in respect of the complaint U/s 138 of the Act, make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the court along with the copy of complaint U/s 138 of the Act, cannot obviously contend that there was no proper service of notice as required U/s 138, by ignoring statutory presumption to the contrary U/s 27 of the General Clauses Act and Section 114 of the Evidence Act.".

19.Thus, the legal demand notice Ex. CW1/I is held to have been duly served upon the Accused. Finally, the complaint has been filed within the limitation period. Therefore, essential ingredients (i) to (v) as stipulated by the Hon'ble SC in Kusum Ingots Case (supra), have been duly satisfied.

20. Further, as noted above, once the execution of the cheque by the Accused is proved/admitted, the presumption of the same being drawn for consideration stands Page 10 of 18 Uphar Finvest Limited v. Insaf Khan CC No.2635/2018 attracted in terms of Section 139 NI Act. Now, in the case at hand, so far as the question of existence of basic ingredients for drawing of presumption U/s 118 (a) and 139 of the NI Act is concerned, from the aforesaid discussion, it is apparent that the Accused has not denied his signatures on the cheque in question that has been drawn in favour of the Complainant on a bank account maintained by the Accused; and hence the said presumption can be drawn. The Ld. Counsel for the Accused has stated that such inference cannot be drawn as the cheque was issued as a blank signed cheque and the particulars on the same have been filled by or at the instance of the Complainant. At this stage, reliance can be laid on the observations of the Hon'ble SC in Bir Singh v. Mukesh Kumar , (2019) 4 SCC 197; wherein it has been held that:

21.The same view has been endorsed by the Hon'ble High Court of Delhi in Ravi Chopra v. State, CRL.M.C. 5211/2006; wherein it was observed that:

22.Hence, in view of such clear stipulation by the Hon'ble Supreme Court and Hon'ble Delhi High Court, it is immaterial whether or not the particulars on the cheque have been filled by the Accused or not, to the extent the Accused has admitted to have Page 12 of 18 Uphar Finvest Limited v. Insaf Khan CC No.2635/2018 appended his signatures on the cheque in question. Accordingly, the applicability of the presumption under Section 139 NI Act is not dependent upon the Accused filling the particulars on the cheque. Accordingly, it is required to be presumed that the cheque in question were drawn for consideration and the holder of the cheque i.e., the Complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the Accused to establish a probable defence so as to rebut such a presumption.

23.In the segment on legal framework, set out above, the legal proposition with respect to the burden of proof upon the Accused has already been discussed. Hence, it is now to be examined as to whether the Accused brought any material on record or pointed out glaring discrepancies in the material produced by the Complainant for dislodging the presumption which meets the standard of preponderance of probabilities.

24.The Accused in the present case, has taken the following line of defence with a view to rebut the presumption:

25.The Accused in his defence evidence as well as statement u/s 251 CrPC as well examination u/s 313 CrPC has submitted that the cheque in question was given as a security cheque and not for repayment, and hence, the provisions of Section 138 NI Act do not apply. In this regard, it is noted that the Hon'ble High Court of Delhi Page 13 of 18 Uphar Finvest Limited v. Insaf Khan CC No.2635/2018 in Suresh Chandra Goyal v. Amit Singhal, Crl . L.P, 706/2014 has succinctly observed that:

26.Hence, it appears that if on the date of presentment of cheque, liability of the Accused existed towards the Complainant, the same would fall under Section 138 NI Act, even if the same was issued as a security cheque; and hence, it is not relevant if the cheque in question was issued with the intent of being a security cheque. In fact, the Hon'ble Supreme Court in a recent judgment of the Sunil Todi Case (supra), has held that the provisions of Section 138 NI Act apply to cheques issued on advance basis as well, if at the time of presentation of the same, liability exists. It was observed that:

27.Hence, unless it is shown that no liability existed on the date of presentation, either because loan had already been repaid by other modes or that no loan was taken; provision of Section 138 NI Act would apply to cheques issued on an advance basis as well. Accordingly, this argument/defence of the Accused, by itself, does not rebut the presumption u/s 139 NI Act.

(b) Liability of the Accused is less than the cheque amount:

28.The Accused has not denied the loan taken from the Complainant. In fact, in his examination u/s 313 CrPC, he has admitted the execution of Mark A, i.e., the loan agreement with the Complainant. Hence, it is an admitted fact that an amount of Rs. 2 Lakhs was taken by the Accused, which was to be repaid in 36 EMIs of Rs. 9,556/-, on the terms and conditions set out in Mark A. Further, the fact of default in payment of the EMIs is also not contested.

29.The only defence raised here is that the quantum of liability of the Accused is less Page 15 of 18 Uphar Finvest Limited v. Insaf Khan CC No.2635/2018 than the cheque amount. It has been stated that the Accused has paid 17 out of 36 EMIs and is only liable to pay 19 installments of Rs. 9,556/-, each.

30.Perusal of record shows that even the AR in cross-examination dt. 17.02.2022, has admitted that 17 installments of Rs. 9,556/- have been paid, which is stated to be reflected in Ex. CW1/G. Hence, the Accused submits that the liability is not of the cheque amount but of Rs. 1,80,000/- only. However, the Complainant has argued that after commission of default in timely payment of the EMIs, as per the agreement, Mark A, the liability of the Accused is not just the EMI amount, but also interest as per clause 5 of the loan agreement, Mark A. Hence, as per the Complainant, the amount of liability has been rightly computed in Ex. CW1/G. The Accused has disputed Ex. CW1/G, by way of suggestions put in the cross- examination.

31.Perusal of schedule to the loan agreement, Mark A, reflects that the due date for payment of EMI was 15th of each month; for 3 years. Perusal of Ex. CW1/G show that while payment had been made for 17 EMIs, the same has been processed for only 15 EMIs, as two cheques of the Accused had been dishonoured and the payment did not reach the Complainant. Hence, only a payment of 15 EMIs has been made by the Accused, as borne out from the record. Further, within the payment of the said EMIs, there are certain monthly EMIs which have been paid late, i.e., later than the due date for that month. It is a matter of record that as per Clause 5 of the loan agreement, i.e., Mark A, it was stipulated that: Page 16 of 18

32.Accordingly, an additional interest on the default/delay in payment of EMIs, was stipulated in the agreement, which has been executed between both parties with their mutual consent. As per Ex. CW1/G, the total amount of outstanding EMIs was 3 4 Rs. 2,00,676 ; and the overdue interest amount as per Mark A was Rs. 1,42,980.78; thereby making the total outstanding amount from the Accused to be Rs. 3,44,706.78/-.

33.Further, the loan period was from 15.02.2015 to 15.02.2018; and the Complainant had issued a letter for recovery for dues, only on 15.01.2018, i.e., after continuous default by the Accused in payment of 20 EMIs, i.e., just one month prior to the expiry of the loan tenure. Mark B, is addressed to the same address, as mentioned by the Accused on his bail bonds. Hence, despite the demand, the outstanding balance was not paid by the Accused.

34.It is only after the expiry of 15 days of the said letter, that the cheque in question 3 Out of 36 EMIs, 15 EMIs were paid; and 21 EMIs were balance. 21 * Rs. 9,556 = Rs. 2,00,676/-. 4 Clause 5, Loan Agreement.

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Uphar Finvest Limited v. Insaf Khan CC No.2635/2018 was presented, and then the same was dishonored. Accordingly, the quantum of the cheque amount has been explained by the Complainant and in fact the cheque amount is less than the total liability reflected in Ex. CW1/G. It is not the case of the Accused that it was agreed between the parties that despite the delay or default, no additional default interest would be imposed. Accordingly, the defence of the Accused that his liability is less than the cheque amount, has not been proved by the Accused by the standard of preponderance of probabilities.

35.In these circumstances and in view of the above detailed discussion, this court is of the considered opinion that the Accused has failed to rebut the presumption under Section 139 of Negotiable Instruments Act, 1881 in favour of the Complainant and ingredients of Section 138 of Negotiable Instruments Act, 1881 are fully proved. Therefore, Accused is held guilty and convicted for commission of offence punishable under Section 138 of the Negotiable Instrument Act, 1881. Let he be heard on the quantum of sentence on 03.08.2022 at 12:00 noon.

Note: This judgment contains 18 pages and each page has been signed by me.

(Twinkle Chawla) MM (NI-Act 02), South East Saket Court, New Delhi Page 18 of 18