A Trial Court in Delhi dealt with a unique case under Section 138 NI Act where the Accused admitted his signature on Cheque but denied knowing the Complainant or delivering the Cheque to him.

Complainant's Case

It was pleaded by the Complainant that the accused is having cordial relations with the him as he is known to him from long time and also having friendly relations with him, the second week of August 2017, the accused came to complainant and asked for arrangement of financial assistance to the tune of Rs. 2,15,000/­ as the same was required by him for some business purpose which the accused agreed to repay the said loan within 2 months. In the pursuance of the same, the complainant lend the friendly loan to the accused to the tune of Rs. 2,15,000/­ on 13.08.2017 in cash.

Thereafter towards the repayment of the abovesaid loan amount, the accused issued a cheque for a sum of Rs.2,15,000/­ drawn on drawn on HDFC Bank, Vikas Puri, New Delhi­ 110018 to the complainant with representation and assurance that the abovesaid cheque issued by him shall be honoured by his banker on presentation for clearance by the banker of the complainant. The complainant deposited the abvoesaid cheque with his banker, IDBI Bank, Vikas Puri, New Delhi­110018 and the same was returned unpaid vide cheque returning memo dated 24.10.2017 with the reasons "Account Closed".

The complainant left with no other alternative sent a legal demand notice dated 01.11.2017 to the accused through speed post at his address itself but the accused failed to make the payment of the cheque amount within stipulated time of 15 days despite receipt of the legal demand notice and accordingly the present case has been filed by the complainant for prosecution of the accused for the offence under Section 138 of the NI Act.

Accused's Defence

Accused took a plea that he did not know the complainant and he never approached the complainant for taking any loan of Rs. 2, 15,000/­ on 13.08.2017. He further stated that he had taken a loan of Rs. 1,00,000/­ from one known person and the same has been repaid by way of two cheques of Rs. 20,000/­ each and Rs. 60,000/­ by way of cash. Accused further stated that he has not issued the cheque in question to the complainant. The complainant has misused the cheque in question. He further stated that he has not received any legal demand notice. He further stated that the present case has been wrongly instituted against him.

Court's Decision

Upon evaluating the evidence led, Trial Judge trashed the plea of Accused that he did not receive any Legal Demand Notice. The Judge relied on Alavi Haji vs Palapetty Muhammed & Anr (2007) 6 SCC 555, the Hon'ble Apex court has held;

" It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. 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 under Section 138 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 the 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 the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation... "

However the Trial Judge found that the story of Defence of not knowing the Complainant was quite probable. He relied on Kumar Exports vs. M/s Sharma Carpets, (2009) 2 SCC 513, it was held by the Apex Court that mere denial of existence of debt will not serve any purpose but accused may adduce evidence to rebut the presumption.

The Court observed,

Section 139 introduces an exception to the general rule as to the burden of proof and shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the prosecution to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law and presumptions of fact unless the accused adduces evidence showing the reasonable possibility of the non­existence of the presumed fact as held in Hiten P. Dalal v. Bratindranath Banerjee, 2001 Latest Caselaw 314 SC, (2001) 6 SCC 16 : 2001 SCC (Cri) 960.
The complainant had stated that he had given the alleged loan of Rs. 2,15,000/­ to the accused in cash out of his savings kept at home. Considering the income shown in the ITR of the complainant it is highly improbable that such a huge amount of Rs. 2,15,000/­ was given to the accused in cash. Surprisingly, no agreement/ receipt was executed qua the loan transaction and the complainant had nowhere mentioned the exact purpose and date for which the loan was taken by the accused thereby denting the story of the complainant. Therefore, the complainant has failed to prove that he had the financial capacity to grant the loan of Rs. 2,15,000/­ to the accused.
In my opinion the prosecution has failed to make out a case against the accused and has miserably failed to stand on its own legs. There are glaring inconsistencies indicating gaping hole in the complainant's version that the cheque in question was issued to him towards discharge of any legal debt.
Therefore, In view of the aforesaid discussion, I hereby hold that the presumptions in favour of the complainant under section 139 read with Section 118 (a) NI Act stands rebutted. The complainant has failed to prove and substantiate its allegation against the accused and all the ingredients of Section 138 of NI Act could not be proved against the accused. 

With these observation Accused was Acquitted  for the offence u/s 138 of the NI Act and the Complaint was dismissed.

Delhi Court Judgement on Cheque Dishonour (PDF File)

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