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2010 DIGILAW 1218 (DEL)

Investor Plaza v. Vijay Sachdeva

2010-11-23

KAILASH GAMBHIR

body2010
JUDGMENT Kailash Gambhir, J. 1. By this criminal revision filed under Section 397 r/w Section 401 and 482 of Cr.P.C., 1973, which was directed to be treated as an appeal pursuant toan order dated 4.2.2005 passed by this Court, the Appellant seeks to challenge theorder dated 8.10.2003, passed by the Additional District Judge, whereby the complaint case filed by the Appellant under Section 138 of the NegotiableInstruments Act, 1881, was dismissed. 2. The brief facts of the case relevant for deciding the present petition are as under:- The case of the Appellant is that the accused Respondent Shri VijaySachdeva was the client of the Appellant firm and had been placing orders for the purchase and sale of shares and debentures and other securities in his name through the Appellant firm. The Appellant runs an account No. 250 with Oriental Bank ofCommerce, Branch Office at G.T. Karnal Road, Delhi and the Respondent was runningan account No. 55437 with Punjab National Bank, Branch Office, Subzi Mandi, Delhi. The Respondent issued a cheque bearing No. 503386 dated 28.6.2001 forRs.1,55,000/- drawn on Punjab National Bank, Branch Office, Subzi Mandi, Delhibeing part payment of his total liability in favour of the Appellant. On 26.7.2001 the Appellant deposited the said cheque with its banker i.e. Oriental Bank ofCommerce, Branch Office at G.T. Karnal Road, Delhi for encashment. On27.7.2001,Punjab National Bank, received the said cheque through Oriental Bank ofCommerce and the cheque was dishonoured on account of 'insufficiency of funds'and also because of 'signature of drawer differing'. The Appellant served a legalnotice dated 31.7.2001 on the Respondent asking for the payment of the bouncedcheque amount but the Respondent did not make the said payment within the stipulated period hence the Appellant filed a complaint before the competentcourt. The learned trial court after appreciating evidence on record acquittedthe Respondent with the observation that Section 138 of Negotiable InstrumentsAct, 1881 will not be attracted in case the cheque is returned unpaid on accountof difference in signature of drawer and further held that the offence underSection 138 N.I. Act is not proved in the instant case. Feeling aggrieved withthe same, the Appellant has preferred the present appeal. 3. Vide order dated 3.8.2010, notice of default was sent to both the counsel representing the parties and even despite service of notice, counsel for the Respondent did not choose to appear in the matter. Feeling aggrieved withthe same, the Appellant has preferred the present appeal. 3. Vide order dated 3.8.2010, notice of default was sent to both the counsel representing the parties and even despite service of notice, counsel for the Respondent did not choose to appear in the matter. This matter was heard by this Court on 18.11.2009 and the matter thereafter was reserved for orders. Both the parties have also filed their written synopsis. 4. Mr. Khan, counsel for the Appellant, states that as undertaken by himhe had informed about this date to Mr. Ajay Bir Singh Jain, counsel who has beenrepresenting the Respondent. Mr. Khan also states that the matter may be decidedby this Court based on the written submissions filed by both the parties. Accordingly, I proceed to decide this appeal based on the written submissionsplaced on record by the parties. 5. Counsel for the Appellant, submits that the impugned judgment passedby the learned Trial Court is ex- facie illegal as the learned Trial Court, withoutthere being any evidence on record, had assumed that the ground of "insufficientfunds" for the return of the cheque in the bank memo had been added subsequentlyand the main ground for return of the cheque was the difference of signatures ofthe drawer. Drawing attention of this Court to the deposition of bank witnessproduced by the Respondent, counsel submitted that DW1 Shri Rakesh Kumar Jain inhis examination-in-chief clearly stated that the accused did not operate hisaccount since 1999 and that no such instructions were received by the bank fromthe drawer of the cheque to stop payment of the cheque on the ground of loss of thesame. Counsel further submits that the Respondent failed to rebut thepresumption as arising in favour of the Appellant under Section 139 and 118 of theNegotiable Instruments Act read with Section 114 of the Evidence Act as theRespondent failed to lead any evidence to show that the said cheque was returned onaccount of difference in signatures. Counsel further submits that even theRespondent accused did not place any material on record to show that there weresufficient funds in his account to clear the amount of the cheque issued by him. Counsel further submits that even theRespondent accused did not place any material on record to show that there weresufficient funds in his account to clear the amount of the cheque issued by him. Counsel thus submits that if the bank has given the reasons that the cheque wasdishonoured on account of insufficient funds then the Appellant has a remedy tofile the complaint under Section 138 of the Negotiable Instruments Act and theCourt need not look into other grounds given in the memo. The contention raised bythe counsel for the Appellant is that in the bank memo one of the reasons disclosedwas "insufficient funds" for the return of the cheque and this ground wassufficient to invoke Section 138 of the Negotiable Instruments Act. Counsel furthersubmits that the main defense raised by the Respondent was that he lost the chequein question and the Appellant had filled up the cheque in question and presentedthe same with his name. Counsel further submits that the Appellant had successfullyproved his case before the learned Trial Court, but the Respondent did not lead anypositive evidence to rebut the presumption which arose in favour of the Appellant. Counsel while referring to question No. 13 of the statement of the Respondent underSection 313 Code of Criminal Procedure submits that the Respondent has taken a stand that his wife hadsent a request to the bank regarding missing of the cheque but no such request wasproduced on record by the Respondent and the said stand taken by the Respondent isotherwise in contradiction to the stand taken by DW1 wherein he stated that nosuch request was ever received by the bank to stop the payment of the cheque onaccount of loss of the said cheque. The contention of the Appellant is that thesaid statement of DW-1 clearly shows that no intimation was sent by the Respondentto the bank about loss of the said cheque. Counsel further refers to thedeposition of another bank witness PW-3 who also made a categorical depositionthat the cheque was dishonored on account of both the grounds, then, how the courtin the absence of any material could assume that the cheque was dishonored onlyon account of difference in signature. In support of his arguments, counsel forthe Appellant placed reliance on the following judgments: 1) K.N. Beena v. Muniyappan and Anr. In support of his arguments, counsel forthe Appellant placed reliance on the following judgments: 1) K.N. Beena v. Muniyappan and Anr. 2001 Cri L. J. 4745 2) Hiten P. Dalal v. Bratindranath Banerjee AIR 2001 SC 3897 3) M/s P.V. Constructions v. Sh. K.J. Augusty 2007 CriLJ 154 4) NEPC Micon Ltd. and Ors. v. Magma Leasing Ltd. - 1999 Cri. L.J. 2883 5) K. Bhaskaran v. Shankaran Vaidhyan Balan and Anr. AIR 1999 SC 3762 6) Abdul Rehman M. Mulgand, Civil Contractor v. Sh. Mohammad Hashan Mulgand & State through Public Prosecutor 2006 Cri L.J. 1159 7) T. Kalavathy v. Veera Exports 2001 (1) ALT 465 8) Ramesh Chandra Rajnikant Kothari v. Gunvantlal Shivlal Shah And Anr. (1998)94 Comp Cas 549 (Guj) 9) Om Prakash Bhojraj Maniyar v. Swati Girish Bhide and Ors. v. 1992 (2) BomCR 106 10) G. Venkataramaniah v. Sillakollu Venkateswariluand Anr. 1999 Cri LJ 1219 11) Canbank Financial Services Ltd. v. Gitanjali Motors Ltd. & Ors- 1995 Cri. LJ1222 6. The stand of the Respondent is that admittedly there was a structuraldefect in the negotiable instrument because of the difference in the signatures asindicated by the bank in the bank memo in terms of Clause 12. The contention of theRespondent is that if the cheque is returned on account of the structural defectthen the bank is not supposed to give any other reason in the bank memo and if anyother ground is given that cannot be considered because the negotiable instrumentitself was defective due to the structural defect. The Respondent has submittedthat it was incumbent upon the complainant to establish a clear case to provethe fact that the cheque was dishonored on account of insufficient funds and notfor the reason of difference in signature. The Respondent has further submittedthat it was proved on record that his bank account No. 55437 with Punjab NationalBank, Branch Office, Subzi Mandi, Delhi was an inoperative account. Respondentfurther submitted that in fact the Respondent had never accepted that any suchcheque was issued by him and rather the stand of the Respondent in his defence isthat the cheuqe was lost by his wife for which even the bank was duly apprised of. The Respondent has thus submitted that he has successfully rebutted thepresumption and, therefore, the learned Trial Court has rightly dismissed thecomplaint filed by the Appellant. The Respondent has thus submitted that he has successfully rebutted thepresumption and, therefore, the learned Trial Court has rightly dismissed thecomplaint filed by the Appellant. In support of his case, counsel for theRespondent has placed reliance on the following judgments: 1 Shri Babulal Nainmal Jain v. Sh. Khinji Ratansha Dedhia and Ors. - 1998 CriLJ 4750 2 Rejikumar v. Sukumaran 2002 CriLJ 3255 7. I have heard learned Counsel for the parties and perused the records. 8. Section 138 of the Negotiable Instruments Act was incorporated with a specific object of enacting a special provision to impose a strict liability so far as the negotiable instruments are concerned. The law relating to negotiable instruments is the law of commercial world legislated to facilitate the activities in trade and commerce making provision of giving sanctity to the instruments of credit which could be deemed to be convertible into money and easily passable from one person to another. In the absence of such instruments, the trade and commerce activities in the present day world are likely to be adversely affected as it is impracticable for the trading community to carry on with the bulk of the currency in force. 9. Coming to Section 138 of the Negotiable Instruments Act, In Dalmia Cement (Bharat) Ltd. v. Galaxy Traders & Agencies Ltd. (2001) 6 SCC 463 , the offence is explained in the following words: 4. Section 138 of the Act makes a civil transaction to be an offence by fiction of law. 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 is returned by the bank unpaid either because of the amount or money standing to the credit of that person being insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account, such person, subject to the other conditions, shall be deemed to have committed an offence under the section and be punished for a term which may extend to one year or with fine which may extend to twice the amount of cheque or with both. To make the dishonour of the cheque as an offence, the aggrieved party is required to present the cheque 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 and the payee or the holder in due course of the cheque makes a demand for payment of the cheque amount by giving a notice in writing to the drawer of the cheque within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid and drawer of such cheque fails to make the payment of the amount within 15 days of the receipt of the said notice. Section 139 refers to presumption that unless the contrary is proved, the holder received the cheque of the nature referred to under Section 138 for the discharge in whole or in part or of any debt or other liability. Section 140 restricts the defence in any prosecution under Section 138 of the Act and Section 141 refers to such offence committed by the companies. Section 142 provides that, notwithstanding anything contained in the Code of Criminal Procedure, no court shall take cognizance of an offence under the section except upon a complaint in writing made by the payee or, as the case may be, the holder of the cheque and that such complaint is made within one month of the date on which the cause of action arose under Clause (c) of proviso to Section 138 of the Act. 10. In Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745 , the Hon'ble Apex Court explained the ingredients of the offence under Section 138 N.I. Act as under: 10. 10. In Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745 , the Hon'ble Apex Court explained the ingredients of the offence under Section 138 N.I. Act as under: 10. On a reading of the provisions of Section 138 of the NI Act it is clear that the ingredients which are to be satisfied for making out a case under the provision are: (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 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. It is a well settled legal position that the presumption Under Section 118 and 139 N.I. Act is a rebuttable presumption and the burden lies on the accused to prove that he had no liability/debt on the date of issue of the cheque. It is also a settled principle of law that to bring home an offence under any of the penal provisions, it is essential to prove the case beyond reasonable doubt and the ingredients of the offence should be satisfied. It is also a settled principle of law that to bring home an offence under any of the penal provisions, it is essential to prove the case beyond reasonable doubt and the ingredients of the offence should be satisfied. It would be relevant to refer to the judgment of the Apex Court in the case of Hiten P. Dalal v. Brantindranath Banerjee AIR 2001 SC 3897 , where it was held that: The Appellant's submission that the cheques were not drawn for the 'discharge in whole or in part of any debt or other liability' is answered by the third presumption available to the Bank under Section 139 of the Negotiable Instruments Act. This section provides that "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". The effect of these presumptions is to place the evidential burden on the Appellant of proving that the cheque was not received by the Bank towards the discharge of any liability. 22. Because both Sections 138 and 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras v. A. Vaidvanatha Iyer: 1958CriLJ232: 1958CriLJ232, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had 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" (ibid). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged 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 or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact. 23. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact. 23. In other words, provided the facts required to form the basis of a presumption of law exists, the discretion is left with the Court but the draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the 'prudent man'. 24. Judicial statements have differed as to the quantum of rebutting evidence required. In Kundan Lal Rallaram v. Custodian, Evacuee Property, Bombay AIR 1961 SC 1316 , this Court held that the presumption of law under Section 118 of Negotiable Instruments Act could be rebutted in certain circumstances, by a presumption of fact raised under Section 114 of the Evidence Act. The decision must be limited to the facts of that case. The more authoritative view has been laid down in the subsequent decision of the Constitution Bench in Dhanvantrai Balwantrai Desai v. State of Maharashtra: 1964CriLJ437: 1964CriLJ437, where this Court reiterated the principle enunciated in State of Madras v. Vaidyanath Iyer (Supra) and clarified that the distinction between the two kinds of presumption lay not only in the mandate to the Court, but also in the nature of evidence required to rebut the two. In the case of a discretionary presumption the presumption if drawn may be rebutted by an explanation which "might reasonably be true and which is consistent with the innocence" of the accused. In the case of a discretionary presumption the presumption if drawn may be rebutted by an explanation which "might reasonably be true and which is consistent with the innocence" of the accused. On the other hand in the case of a mandatory presumption "the burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under Section 114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The words 'unless the contrary is proved' which occur in this provision make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted... 12. Coming to the facts of the case at hand, the complaint under Section 138 of the Negotiable Instruments Act was filed by the Appellant mainly on theallegation that the Respondent had issued a cheque bearing No. 503386 in favourof the Appellant and the said cheque on presentation by the Appellant was returnedby the drawee bank with the reasons "insufficient funds" and "signature differs The Appellant served a legal notice dated 31.7.2001 upon the Respondent butdespite receipt of the said legal notice, the Respondent did not come forward tomake payment of the said dishonoured cheque within the stipulated period. TheAppellant examined three witnesses in support of his complaint case, i.e., PW-1, proprietor of the Appellant firm, while PW-2 and PW-3 were the bank witnesses. Onthe other hand, the Respondent examined only one witness in his defense i.e. DW-1Shri Rakesh Kumar Jain, clerk of Punjab National Bank. TheAppellant examined three witnesses in support of his complaint case, i.e., PW-1, proprietor of the Appellant firm, while PW-2 and PW-3 were the bank witnesses. Onthe other hand, the Respondent examined only one witness in his defense i.e. DW-1Shri Rakesh Kumar Jain, clerk of Punjab National Bank. The Appellant in hisevidence duly proved its statement of account as Ex.PW2/A and the bank memo as Ex.PW2/C. Statement of account of the Respondent was also proved on record asEx.DW1/A to DW1/D. The Respondent in his statement recorded under Section 313, Code of Criminal Procedure took a stand that the cheque in question had been lostand his wife had sent a request to the bank regarding missing of the said cheque. The learned trial court after taking into consideration the evidence produced onrecord by both the parties came to the conclusion that the ground of 'insufficientfunds' on the bank memo was added subsequently by the Appellant while the mainground for return of the cheque was difference of signatures. The court thustook the position that Section 138 of the Negotiable Instruments Act will not beattracted in a case where the cheque was returned on account of difference insignatures. 13. The finding of the learned trial court is perverse and irrational onthe very face of it. This Court is not able to find as to how the said finding wasarrived at by the learned trial court. In the bank memo proved on record as Ex.PW2/C, the ground at serial No. 7 i.e. insufficient funds was circled while theground at serial No. 12 was tick marked. The witness PW-2 and PW-3 in theirdepositions clearly deposed that the said cheque was returned as dishonored onaccount of 'insufficient funds' and also because of the 'difference in thesignature'. PW-2 Davender Kumar, in his cross-examination affirmed the fact thatthe said memo besides containing the ground of insufficient funds also containedanother ground i.e. difference in signature of the drawer. Once the bankwitnesses had taken a position that the said cheque was dishonoured on account ofthe abovesaid two grounds, then how did the learned trial court assume thatthe ground of insufficiency of funds was added later on in the said bank memo. The finding of the learned trial court is thus ex-facie illegal and perverse. The Respondent also failed to substantiate his defense to prove that the saidcheque was lost by him. The finding of the learned trial court is thus ex-facie illegal and perverse. The Respondent also failed to substantiate his defense to prove that the saidcheque was lost by him. The bank witness DW-1 nowhere stated that any intimationwas received by the bank with regard to the loss of the said cheque. 14. The judgment of the Bombay High Court in the case of Shri Babulal Nainmal (supra) cited by the Respondent would be of no help as in the said case there was no mention of insufficiency of funds in the account and the bank memo only mentioned 'refer to drawer' as the ground for returning the cheque as it was not in proper form. Hence it is clearly distinguishable on facts from the present case. The other judgment of the Kerala High court cited by the Respondent in the case of Rejikumar (supra) would also not help the case of the Respondent as in the said case the issuance of cheque could not be proved and therefore liability under Section 138 could not be fastened on the accused, which is not the situation in the present case. 15. In the light of the aforesaid discussion, this Court is of theconsidered view that the Appellant has successfully proved the ingredients ofSection 138 of the Negotiable Instruments Act based on the said dishonored chequewhich was dishonored by the bank on account of two grounds and one of the groundsbeing 'insufficient funds'. 16. The impugned order 8.10.2003 is accordingly set aside. 17. The Respondent is hereby directed to pay the cheque amount of Rs. 1,55,000/- along with a fine of Rs. 1,55,000/- within a period of one month from the date of this order and on failure to pay the said amount the Respondent shall undergo imprisonment for a period of three months. 18. The appeal is allowed accordingly.