Case Law Details
Harcharan Singh Vs Surender Singh (District Court)
Violation of sec. 269SS of Income Tax Act doesn’t dismiss prosecution u/s 138 of Negotiable Instruments Act, 1881
District Court New Delhi held that the prosecution u/s 138 of Negotiable Instruments Act, 1881 cannot be dismissed or stalled for non-compliance of Section 269 SS of the Income Tax Act. Such violation may give rise to an independent criminal offence, but, the prosecution of the accused for the alleged dishonour of cheque u/s 138 NI Act does not become bad in law.
Facts-
Out of a friendly relation between the complainant and accused, the complainant advanced a sum of Rs. 4,75,000/- for a period of 3 months. Accused issued one post dated Cheque and assured the complainant that the same would be honoured on its presentation. However, on presentation of the said Cheque, the same was returned dishonored with the remarks “Account Blocked’’.
Upon this, the complainant sent a legal demand notice to the accused and on failure of accused to pay the cheque amount within the mandatory period of 15 days, the complainant has moved this court with a complaint under section 138 of the Negotiable Instruments Act, 1881.
Conclusion-
Held that culpability of offence under section 138 NI Act will not freeze for the reason that there is violation of section 269 of Income Tax Act and the same does not prevent the operation of the statutory presumption of section 139 of NI Act. The prosecution u/s 138 of NI Act cannot be dismissed or stalled for non-compliance of Section 269 SS of the Income Tax Act. Such violation may give rise to an in- dependent criminal offence, but on account of violation of the said provision, the prosecution of the accused for the alleged dishonour of cheque u/s 138 NI Act does not become bad in law.
Therefore, considering the weight of the attending circumstances viz, the consistency in the prosecution story, and the failure of the accused to put forth any reasonable and believable defense and fact that the accused has not proved his defence to cause the probabilities to lie in his favor, an element of section 138 NI Act stands assembled.
FULL TEXT OF THE JUDGMENT/ORDER OF DISTRICT COURT
1. Briefly, the case of the prosecution is that accused and complainant were known to each other and were having good family relations with each other. It is further alleged that in the first week of September 2017, accused approached the complainant at his residence and requested him for a friendly loan of Rs.4,75,000/- for his urgent requirements and assured the complainant to repay the said loan after three months. It is further alleged that complainant sought some time for arranging the said funds as he was not having that much amount of money, however, after arranging the said money from his friends and family circle, he advanced the sum of Rs.4,75,000/- for a period of three months. It is further alleged that accused had also executed a promissory note in favour of complainant and signed the same. It is further alleged that at the time of taking loan, accused issued one post dated Cheque bearing no.229880 dated 20.12.2017 for a sum of Rs.4,75,000/- drawn on Standard Chartered Bank Narain Manjil, 238 Barakhamba Road, New Delhi and assured the complainant that the same would be honoured on its presentation. However, on presentation of the said Cheque, the same was returned dishonored vide return memo dated 26.12.2017 with the remarks ‘‘Account Blocked’’. Upon this, the complainant sent a legal demand notice to the accused dated 12.01.2018 and on failure of accused to pay the cheque amount within the mandatory period of 15 days, the complainant has moved this court with a complaint under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred as “NI Act”). Orignal Cheque is Ex.C W1/A, Promissory Note is Ex.C W1/B, Undertaking is Ex.C W1/C, Return Memo is Ex.CW1/D, Legal Notice is Ex.CW1/E, Postal Receipt is Ex.C W1/F, Courier receipt is Ex.CW1/G, Delivery reports are Ex.C W1/H and Ex.C W1/I.
2. On finding of prima facie case against the accused, summons were issued against him and accused appeared before the court on 08.2018.
3. The notice under section 251 of the Code of Criminal Procedure (“Cr.P.C.”) was framed against the accused vide order dated 10.2018 to which he pleaded not guilty. He deposed that, “The Cheque in question bears my signatures, however, I have not filled the particulars namely, name of payee, date and sum. I had not issued the Cheque to the complainant. I had issued the Cheque in question in a blank signed condition to one Manoj as I had requested the said Manoj for a loan amounting to Rs. 10,000/-. The said Manoj had demanded 2-3 cheques as security from me in lieu of advancement of loan as security. The said Manoj might have handed over the Cheque in question to the complainant. I had met the complainant through the said Manoj r/o Tilak Nagar, New Delhi. I have not taken any loan from the complainant. I had received the legal demand notice sent by complainant.”
4. The complainant adopted his pre-summoning evidence tendered by way of affidavit as his post-summoning evidence.
5. After framing of notice, complainant was examined in chief and was cross examined by ld counsel for accused. Thereafter, CE was closed and the matter was listed for statement of accused under Section 313 CrPC.
6. Statement of accused was recorded under Section 313 CrPC read with Section 281 Cr.P.C. on 05.2022 wherein all the incriminating circumstances appearing in evidence against the accused was put to him to which he stated that, “ The Cheque in question bears my signatures. I did not fill the particulars on the Cheque in question. I had taken money amounting to Rs.10,000/- from Manoj in 2013 or 2014. The Cheque in question alongwith two other cheques were given to Manoj as security Cheques. He has also filed a complaint under Section 138 NI Act against me. I was acquitted in that matter. After acquittal in that matter, I received legal notice in the present case. I do not know complainant. I have never taken any loan from complainant. Later, I came to know after inquiry that Manoj was working with complainant”.
7. Accused examined himself as DW1 and he was cross examined by counsel for complainant. DE was closed on 07.06.2022. Thereafter, the matter was fixed for final arguments.
8. Thereafter, the Ld. Counsel for complainant and the accused were heard at length in the present case and the matter was reserved for Judgment.
9. Before proceeding to the merits of the case, it is important to lay down the basic provision of law with respect to Section 138 NI Act which is as follows:- Section 138 of Negotiable Instruments Act, 1881 makes dishonor of cheques an offence. It provides that ‘‘where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which extend to twice the amount of the cheque, or with both”.
10. In order to ascertain whether the accused has committed on offence u/s 138 NI Act, the following ingredients constituting the offence have to be proved:-
(a) The drawer of the cheque should have issued the cheque for the discharge, in whole or in part of a legally enforceable debt or other liability.
(b) The cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank.
(c) The drawer of such cheque fails to make the payment of the said amount of money within fifteen days of the receipt of the notice from the payee or the holder in due course demanding the payment of the said amount of money.
It is only when all the above mentioned ingredients are satisfied that the person who has drawn the cheque can be set to have committed an offence u/s 138 NI Act.
11. It is important to recall Section 118 of the Indian Evidence Act 1872 and Section 139 of the N.I Act here. Section 118 (a) of the Act provides that until the contrary is proved, it shall be presumed that ”that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration”. Further, Section 139 of the Act lays down that ”it shall be presumed, unless the contrary is provided, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
12. In the case of Hiten P. Dayal Vs Bratindranath Bannerjee (2001) G SCC 16, the Hon’ble Supreme Court of India had observed that ”Because both sections 138 and 139 CrPC required that the court shall presume the liability of the drawer of the cheque for the amount for which the cheques are drawn as noted in State of Madras Vs A. Vaidhyanatha Iyer AIR 1958 SC 61, it is obligatory on the court that raise this presumption in every case where the factual basis for raising of the presumption has been established. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused”.
13. The core issue that arises for consideration whether the cheque in question were issued by the accused in discharge of his liability.
14. The accused has admitted his signatures on the cheque in question at every stage; from notice u/s 251, Cr.P.C. to his examination u/s 313, P.C. and finally in his evidence, giving rise to the presumption in favor of the holder of the cheque under S. 139 of NI Act. Thus, unless the contrary is proved, it shall be presumed that the complainant received the cheque in discharge of the debt/ liability from the accused. The standard of proof for rebuttal is on preponderance of probabilities. As held by the Hon’ble Supreme Court in decision cited as K.N. Beena vs Muniyappan And Another;(2001) 8 SCC 458, in order to rebut the presumption, mere denial by the accused will not suffice. The accused must prove by leading cogent evidence that there was no debt/ liability.
15. Major defense led by accused is that the cheque in question was given to Manoj Kumar Vaidya in a blank signed condition as a loan of Rs. 10,000/- was availed from him. He further stated that the Cheque in question alongwith two to three other cheese were given as security to Manoj Kumar and he has handed over the Cheque in question to complainant. In the present case, the onus to prove that the Cheque in question was not issued to discharge liability is upon accused. Section 103 of the Indian Evidence Act, 1872 enunciates that the person who asserts a fact must prove the same unless the law otherwise provides.
16. Perusal of evidence on record reveals that accused has filed only one evidence i.e. Ex.DW1/1 in support of his arguments. Ex.DW1/1 is the cross examination of Manoj Kumar Vaidya in another matter i.e. case under Section 138 NI Act instituted by Manoj Kumar against the accused. In the said cross examination, Manoj Kumar has stated that his employer Shri Harcharan Singh was trader in fruits. Merely this evidence is not sufficient to discharge the burden of proof of accused on the scale of preponderance of probabilities. Accused never got Manoj Kumar Vaidya summoned to prove his defence. Even Manoj Kumar in his cross examination has not stated the father’s name and complete details of Harcharan to prove that the complainant in the present case and Harcharan mentioned by him in his cross examination are two same person. In fact, no complaint has ever been filed against Manoj Kumar or complainant with regard to misuse of Cheque in question.
Perusal of file reveals that statement of accused recorded under Section 313 CrPC in Ex.DW1/1 shows accused in the present case has stated there, three cheques in the same series were given to Manoj Kumar Vaidya, however, page no.11 of Ex.DW1/1 and Ex.CW1/A reveals that both cheques are of different banks with different series. Thus the story of accused does not appear to be credible.
17. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their nonexistence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. It will be utter disregard to the established principles of evidence, if the court accepts this evidence of the accused devoid of any documentary evidence to concrete the proof. The story of accused, in the absence of any credible evidence, cannot be taken as gospel truth.
18. Further, the Hon’ble Supreme Court in the judgment in Kumar Exports vs Sharma Carpets, (2009) 2 SCC 513 observed, ” 19. The use of the phrase “until the contrary is proved” in Section 118 of the Act and use of the words “unless the contrary is proved” in Section 139 of the Act read with definitions of “may presume” and “shall presume” as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over”. That bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant.
19. Another argument raised by accused’s counsel is that the complainant does not remember the family details of accused and the name of accused’s friend in whose presence the loan in question was advanced. He further pointed out that the complainant does not know the purpose of loan advancement and RBI Circular with regard to MICR Cheque even when he does the monthly transaction of Rs.3-4 lacs in his bank account. This court is of the opinion that merely raising suspicion will not suffice in discharging the burden of proof. Accused should have brought some concrete evidence in his support to prove non existence of liability.
20. Another argument raised by accused is Manoj Kumar has handed over one Cheque to Arvinder Singh who is the brother of complainant and has also filed a case against the accused. Accused has neither examined Arvinder Singh to corroborate his story nor proved complainant and Arvinder Singh are brothers. Counsel for accused further pointed out Ex.CW1/C wherein date and heading are mentioned in the same heading, therefore, it appears to be false and fabricated. While perusing the same, it does not appear that Ex.CW1/C is false and fabricated just because the date and title are written in the same line. He further argued that Ex.CW1/B and CW1/C were given to Manoj Kumar and same have been misused by complainant. No concrete evidence to prove this defense.
21. Counsel for accused further argued that the complainant is a money lender by profession. Counsel for complainant has cited Guddu Devi @ Guddi vs. Bhupender Kumar in support of his arguments. There is no material on record to prove that complainant was doing the business of advancing the loan. Merely lending money to 3-4 people does not lead any inference that complainant is money lender by profession.
22. Furthermore, the counsel for accused has contended that complainant did not disclose the factum of advancement of loan in question in his ITR, yet such factor alone cannot be enslaving enough to shroud the prosecution story with doubt. The averment of the counsel for accused regarding non mentioning of loan amount in ITR to doubt the case of complainant do not inspire confidence as culpability of offence under section 138 NI Act will not freeze for the reason that there is violation of section 269 of Income Tax Act and the same does not prevent the operation of the statutory presumption of section 139 of NI Act. The prosecution u/s 138 of NI Act cannot be dismissed or stalled for non-compliance of Section 269 SS of the Income Tax Act. Such violation may give rise to an in- dependent criminal offence, but on account of violation of the said provision, the prosecution of the accused for the alleged dishonour of cheque u/s 138 NI Act does not become bad in law.
23. Additionally, the accused has averred that he has not filled the particulars on the cheque in question. Even if for the sake for the arguments, it is believed that cheque in question was blank but the fact that the Cheque is in possession of the complainant with no plausible explanation coming from accused to show as to how it ended up with the complainant does not dilute the liability of the accused as the legal position on inchoate instruments is well settled. Further, inaction on the part of accused to take steps for stopping misuse or wrong encashment of his cheque by complainant suggests that he never took steps to procure back his alleged blank signed cheque. Section 20 of the NI Act provides that if a person signs and delivers a paper stamped in accordance with the loan and either wholly blank or have written thereon an incomplete negotiable instrument, such person thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, a negotiable instrument for any amount specified therein and not exceeding the amount covered by the stamp.
24. In Ravi Chopra v. State and others [2008 (102) DRJ 147], the Hon’ble High Court of Delhi has held that if a blank signed cheque is given then it is possible that the drawer has consented impliedly or expressly to filling up of the cheque by the payee on a later date.
25. Therefore, considering the weight of the attending circumstances viz, the consistency in the prosecution story, and the failure of the accused to put forth any reasonable and believable defense and fact that the accused has not proved his defence to cause the probabilities to lie in his favor, an element of section 138 NI Act stands assembled.
26. Another condition with regard to Section 138 NI Act is receiving of legal notice. Accused has admitted to the receiving of legal notice at the stage of notice framed under Section 251 Cr PC, however, has denied the same in his evidence but admitted his address to be correct. This court is of the view that the address on the legal notice once having been shown to be the correct address of accused and legal notice having been dispatched by registered AD, a presumption of due service arises in view of Section 27 of General Clause Act & Section 114 of Indian Evidence Act and now it is upon accused to prove that notice was not served upon him. Not even an iota of evidence has been brought on record by the accused to displace the presumption of due service. To the contrary, perusal of record shows that complainant has issued a legal demand notice to the accused and same was dispatched by way of speed post. Thus, a mere denial of the service of legal notice would not ipso fact rebut the presumption of due service.
Also in CC Alavi Haji Vs. Palapatti Mohammad (Crl.)767/2007 the Hon’ble Supreme Court of India held that “where the notice is sent by Registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issue of notice in terms of clause (b) of proviso to section 138 Act stands complied with.” Further, the above judgment also stated that any drawer who claims that he did not receive the notice sent by post, can within 15 days of receipt of summons from the court in respect of the complaint u/s 138 NI Act make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of summons. In the present case, the accused has failed to adduce any evidence to rebut the presumption of due service. As such, the legal notice stood served upon the accused.
27. Another condition qua the presentation of the cheque within three months is concerned, the same is satisfied upon the perusal of the cheque in question (Ex CW1/A) dated 20.12.2017 while the return memo (Ex.C W1/B) dated 26.12.2017 thus, being presented within the prescribed period of limitation of three months. The defense did not adduce any evidence whatsoever to contradict the same.
28. Another condition pertains to the cheque being returned unpaid owing to their being dishonored. Bank return memo or slip is prima facie proof of dishonor. Section 146 of the Negotiable Instruments Act, 188, in this regard comes into play which raises a presumption that the court shall presume the fact of dishonor of the cheque in case of cheque is returned vide a return memo issued by the bank having thereon the official mark denoting that the cheque has been dishonored. Again, as the defense has failed to rebut the said presumption, hence the said condition is also satisfied.
29. The last condition is that accused fails to make the payment within fifteen days from the date of the receipt of the legal demand notice. In the present case, the accused has evidently failed to make the payment within the fifteen days contending that he owes no legal liability to pay the amount mentioned in the cheque in question. The accused has miserably failed to prove that said assertion and thus, the last limb of what will entail the liability against the accused, is also structured.
30. In view of the forgoing discussion, the accused has miserably failed in probabilising his defense, even on the scale of preponderance of probabilities.
31. The complainant has with the aid of evidence led a presumption of legal liability under Section 118 read with Section 139 of N. I. Act and has successfully proved the basic ingredients of offence under section 138 N. I
32. Resultantly, the accused SURENDER SINGH stands convicted for the offence under Section 138 NI Act. Let the convict be heard separately on the quantum of sentence.
33.Let a signed copy of the Judgment be supplied to the accused, free of cost, and a copy of the same be placed on record.
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