Ramesh Goyal vs State & Anr.
2017 Latest Caselaw 2801 Del

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
                                           Reserved on: 11 th May, 2017
                                         Pronounced on:31st May, 2017
+       Crl. A. 128/2017

        RAMESH GOYAL                              ..... APPELLANT
                             Through: Mr. Yogesh Chhabra, Advocate

                             Versus


        STATE & ANR.                             .... RESPONDENTS
                             Through: Mr. Akshai Malik, APP for
                             R-1/State
                             Mohd. Azharuddin, Advocate for R-2
CORAM:
HON'BLE MR. JUSTICE R.K.GAUBA
                               ORDER

1. The second respondent (Ram Prakash Yadav) was summoned by the Metropolitan Magistrate on the complaint (CC No.6621/1/12) of the petitioner herein as presented on 11.12.2012, and put on trial for offence under Section 138 Negotiable Instruments Act, 1881 by notice of accusations under Section 251 of the Code of Criminal Procedure, 1973 (Cr. PC), issued and served on 12.08.2013. On conclusion of the trial, by judgment dated 16.07.2015, the respondent was acquitted. It is the said result of the complaint case which is assailed through the criminal appeal at hand, submitted with the leave of the court, under Section 378(4) Cr. PC, obtained on 01.02.2017.

2. The trial court record has been called for and perused. The learned counsel on both sides have been heard at length.

3. The background facts, as culled out from the trial court record, are that in the complaint before the Magistrate, the appellant (the complainant) alleged that the respondent (the accused) being on friendly and business terms had availed from the former a friendly loan of Rs.6 Lakh in August 2012 and had assured its repayment within one month and, for discharge of the said liability, had issued post-dated cheque bearing no.414166 dated 04.09.2012 (Ex. CW1/1) drawn on his account in Corporation Bank, Main Rohtak Road, Mundka, Delhi-41 in favour of the complainant. The said cheque was deposited in the bank but it was returned with memo dated 22.10.2012 (Ex. CW1/2) with report "funds insufficient". The complainant issued a legal demand notice dated 05.11.2012 (Ex. CW1/3) sending it by post (postal receipt Ex. CW1/4) and also by courier (courier receipt CW1/5) on 05.11.2012 to the accused, the article sent by courier having been delivered, as per tracking report (Ex. CW/1/6), on 06.11.2012, but the accused did not make the payment thereby giving rise to the cause of action for complaint to be instituted.

4. The complainant led evidence by examining himself on the strength of his own affidavit (Ex. CW/1A) on which he was cross- examined.

5. The respondent as accused in answer to the notice under Section 251 Cr. PC, while entering the plea of not guilty, explained his defence as under :-

―The cheque in question pertains to my bank account. I have signed the cheque and the particulars i.e., date and name of complainant and amount in words and figure were not filled by me. I have not received legal notice sent by the complainant. I was working with the brother of complainant namely Bittoo as I used to supply him iron scrap to him. I had given the cheque in question to Bittoo as I took some advance money from him. Due to financial crises, I could not pay Rs.4,50,000/- to Bittoo. I had not connection whatsoever with the complainant and the cheque in question has been misused by him in connivance with his brother Bittoo. I do not owe legally recoverable debt to the amount of Rs.6,00,000/- as alleged by the complainant. The cheque in question was given for security purpose by me to Bittoo.‖

6. This is the plea which was reiterated by the respondent in the statement under Section 281 Cr. PC recorded on 26.08.2014. The respondent examined himself in his defence appearing in the witness box (as DW-1) also stating the same very facts during cross examination, he admitting that the cheque bears his signatures and denying the case of the complainant put to him.

7. The Metropolitan Magistrate, by the impugned judgment, found the accused had succeeded in rebutting the presumption arising out of the cheque. He was of the view that the story of advancing the friendly loan sounded hollow, it being highly improbable that the complainant would advance loan of such a huge amount to a stranger (the complainant), not disclosing the source from which the money had been arranged, also taking into account similar loan statedly extended by his wife again to the same person, and taking note of the fact that the Income Tax Return (ITR) for the corresponding period had not been placed on record nor the

chartered accountant in whose presence the money had been given examined. The Magistrate found the defence theory, as set out to be probable and therefore, declined to return a finding of guilty against the respondent.

8. Having heard the learned counsel on both sides and having gone through the trial court record, this court is of the opinion that the approach of the learned Magistrate in appreciating the evidence in the present case was wholly misconceived and mis-directed.

9. The offence punishable under Section 138 of Negotiable Instruments Act, is provided as under:

―138. Dishonour of cheque for insufficiency, etc., of funds in the account.-- 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 provision of this Act, be punished with imprisonment for a term which may extend to two year, or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless --

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to

the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice. Explanation -- For the purposes of this section, ―debt or other liability‖ means a legally enforceable debt or other liability.‖

10. The Supreme Court in Kusum Ignots & Alloys Ltd. v. Pennar Peterson Securities Ltd. (2000) 2 SCC 745 explained the ingredients of the offence under Section 138 of the Negotiable Instruments as under:-

(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;

(ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(iii) that cheque is returned by the bank unpaid, either because the amount of money standing to the credit of the 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 the bank;

(iv) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days (now 30 days) of the receipt of information by him from the bank regarding the return of the cheque as unpaid;

(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.‖

11. As observed by this court, in Col. (Retd.) H.C. Goswami vs. State of Delhi & Anr. in WP(Crl) 949/2009 decided on 18th May, 2017:-

―8. A bare reading of the above provision shows that mere issuance of a cheque does not constitute an offence. The return of the cheque by the bank without payment for either of the two reasons set out in the above provision also does not complete the offence. It is the non-payment of the amount of money represented by the cheque within the statutory period, after service of a notice of demand on the drawer by the drawee of the cheque which constitutes the offence made punishable by the above provision of law‖.

12. In the context of prosecution for offence under Section 138 Negotiable Instruments Act, the provisions contained in Section 118 (to the extent relevant here) and Section 139 Negotiable Instruments Act are also relevant and may be taken note of as under:-

118. Presumptions as to negotiable instruments. -- Until the contrary is proved, the following presumptions shall be made:--

(a) of consideration --that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;

(b) as to date --that every negotiable instrument bearing a date was made or drawn on such date; xxx

(g) that holder is a holder in due course --that the holder of a negotiable instrument is a holder in due course:

xxx "139. Presumption in favour of holder.--It shall be presumed, unless the contrary is proved, 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‖.

13. It may be added here that in terms of Section 142 of Negotiable Instruments Act, the prosecution for offence under Section 138 Negotiable Instruments Act requires cognizance to be taken upon a complaint in writing made "by the payee" or "the holder in due course of the cheque", such complaint necessarily to be made within one month of the expiry of the period of fifteen days, the said one month beginning with the cause of action arising i.e. failure of the drawer to make the payment of the money to the payee within fifteen days upon receipt of the notice of demand, though such period of one month for filing of complaint may be enlarged upon the court being satisfied about the sufficiency of cause for the delay.

14. In another similarly placed matter, it being Crl. A. 98/2017, Sanjay Arora Vs. Monika Singh, also being decided by a separate judgment today, this court, after tracing the law on the subject of presumption, as per rulings in Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal (1999) 3 SCC 35, M.M.T.C. Ltd. vs. Medchl Chemicals & Pharma (P) Ltd. (2002) 1 SCC 234, Hiten P. Dalal vs. Bratindranath Banerjee (2001) 6 SCC 16, Malllavarappu

Kasivisweswara Rao v. Thadikonda Ramulu Firm (2008) 7 SCC 655 and Rangappa vs. Sri Mohan (2010) 11 SCC 441 has held as under :-

―21. It is clear from the above overview that once the execution of the cheque is admitted, the complainant having been proved to be the payee of the cheque, or its holder in due course, statutory presumptions under Sections 118 and 139 of Negotiable Instruments Act arise to the effect that such cheque was drawn or indorsed, for consideration, the holder being its holder in due course, the cheque having been received by such holder for discharge, in whole or in part, of any debt or other liability. The legal presumption, undoubtedly, is rebuttable, the initial burden to rebut being on the defendant who must show, by positive evidence or pre- ponderance of probabilities, non-existence of the consideration by proving the necessary facts and circumstances, either by direct evidence or by bringing on record requisite material, possibly even through the evidence of the complainant, leading the court to believe that the existence of the consideration was doubtful or illegal. A bare denial of liability obviously cannot suffice. It is the onus of the accused to show the improbability by some evidence on record.‖

15. The doubts expressed by the trial court as to the impropriety of the complainant extending a loan of such magnitude to the accused are unfounded, stemming from selective reading of the deposition of the complainant. The trial court did not notice that the complainant (CW-1) having at one stage admitted that he did not have any direct relation or link with the accused, also stated that he and his brother were working together in the same business and since the accused had business terms with his brother, there was due acquaintance and friendly relationship. The complainant did state

that he had indicated the loan extended to the accused in his ITR for the corresponding year but the accused did not press home to insist on production of such ITR. The non-production of the ITR in corroboration, or non-examination of the chartered accountant or the brother who may have been present at the time of taking of the loan by themselves do not mean that the version of the complainant becomes unbelievable.

16. It is the claim of the accused that he had handed over the cheque in question as one of the two cheques to the brother of the complainant against the liability he owed to him. Apart from his own oral word in this regard, he made no effort to substantiate such plea. He did not adduce any evidence confirming that the amount of Rs.4,52,000/- which he owed to the brother of the complainant had been duly accounted for substantially, the balance amount being only to the tune approximately of Rs.2,04,000/-. He did not produce any record regarding the payments made to the brother of the complainant. In the defence set up, it was essential for the accused to prove the fact that the cheque in question had been given to his brother rather than to the complainant in which regard the requisite proof is amiss. If the liability of the accused to the brother of the complainant was for a specific amount, there is no reason why he should have handed over a blank cheque as is claimed.

17. Even if the theory of blank cheque were to be accepted for the sake of consideration, the burden is on the accused to justify it by cogent reasons. There is no law that a person drawing the cheque must necessarily fill it up in his own hand writing. Once the signatures on the cheque are admitted, the liability arising therefrom

cannot be evaded on the specious plea that the contents were not filled up by the drawer of the cheque. When a blank cheque is signed and handed over, it only implies that the person signing it, and handing it over, has given implied authority to the holder of the cheque to fill up the blank portions, it being a matter of legitimate presumption that he would understand the consequences of doing so. Undoubtedly, it is inherent in handing over of a blank cheque that the drawer reposes trust in the person receiving such instrument for the blanks to be filled in as per mutual understanding. Evidence can be adduced to demonstrate breach of such trust in the event of blank cheque being mis-used but such evidence necessarily would involve material concerning the conduct of the person to whom the drawer claims to have handed over the cheque. In taking this view, this court adopts the opinion expressed by a judgment of the Supreme Court in Suryalakshmi Cotton Mills Ltd. Vs. Rajvir Industries Ltd. (2008) 13 SCC 678 and by a learned single judge of this court in Vijender Singh Vs. M/s. Eicher Motors Limited and Anr., 2011 SCC Online Del. 2095. Similar view was taken by learned single Judges of Gujarat High Court in cases reported as Hitenbhai Parekh Proprietor - Parekh Enterprises vs. State of Gujarat, 2009 (3) GLH 742 and Nikhil P. Gandhi Vs. State of Gujarat & 2, 2016 SCC Online Guj. 1856.

18. The evidence adduced by the accused in the case from which the present appeal arises, thus, did not bring in sufficient material as could successfully rebut the presumptions arising in favour of the complainant under Section 118 and 139 of the Negotiable Instruments Act. Consequently, the impugned judgment cannot be

upheld. The guilt of the respondent (accused) for offence under Section 138 of Negotiable Instruments Act stands brought home by the evidence adduced by the trial court before the court of the Metropolitan Magistrate.

19. In the result, the appeal is allowed. The impugned judgment is set aside. The second respondent (Ram Prakash Yadav) is held guilty and convicted for offence under Section 138 Negotiable Instruments Act, 1881.

20. This matter shall be listed for hearing on the question of sentence on 04.07.2017.

(R.K. GAUBA) JUDGE MAY 31, 2017 yg