Interim Order 29

Order Details: COPY OF ORDER
Pdf Text: IN THE COURT OF MS. NISHTHA MEHTANI,
JUDICIAL MAGISTRATE (NI ACT), DIGITAL COURT-03
NEW DELHI DISTRICT, PHC, NEW DELHI
1. Complaint Case
number
: 3709/2021
2. Name & address of the
complainant
: Aas Mohd
s/o Late Mohd. Rafiq r/o T-385-A,
Basti Hazrat Nizamuddin
New Delhi-110013
3. Name and address
of the accused
: Md. Ashfaque s/o Md. Usman, r/o D-
5/131, Gali No.5, Block D, Sangam
Vihar, New Delhi.
4. Offence complained : Section 138, Negotiable Instruments
Act, 1881.
5. Plea of the guilt : Pleaded not guilty
6. Final Order : Acquitted
7. Date of institution : 07.08.2021
8. Date on which
reserved for judgment
: 25.07.2024
9. Date of judgment : 08.08.2024
-- 1 of 13 --
BRIEF STATEMENT OF FACTS
1. Vide this judgement, this court shall dispose of the aforementioned complaint
case filed by the complainant namely Aas Mohd. against the accused, namely
Md. Ashfaque in respect of the dishonour of the cheque bearing no. 308694
dated 21.06.2021 for an amount of Rs.1,17,000 /- (Rs. One lakh seventeen
thousand only) drawn on State Bank of India, Ahilya building, GK-II New
Delhi-110048(hereinafter referred to as the “cheque in question”).
2. Via Order dated 07.08.2020, The complainant was apprised of the requirement
to submit the complete original documents along with the physical signed
original complaint, it’s supporting affidavit and attested affidavit of pre
summoning evidence with the reader-cum-Ahlmad of this court. In compliance
of the same the complaint and the documents were submitted to the Reader cum
ahlmad of this court , however the complainant sought an opportunity to amend
the complaint as some of the part payment had been made by the accused. In
order to bring the entire facts before this court and in the interest of justice the
request of the complainant was allowed and the amended complaint along with
the requisite affidavit was taken on record via order dated 16.11.2021.
Thereafter cognizance of the offence was taken by this court and the accused
was summoned
3. It is the case of the complainant that the complainant, a resident of Delhi,
provided a friendly loan of Rs. 1,17,000/- to the accused, a known
acquaintance, on 10.10.2020 for a period of 20 months. That the accused
assured repayment of the loan amount and that he will give a security cheque of
the loan amount if he fails to return the same. That the accused returned Rs.
17,000/- in December 2020 and undertook to pay the remaining amount of
-- 2 of 13 --
rupees one lakh in instalments of Rs. 5000/- per month. That thereafter an
agreement in writing dated 10.02.2021 was entered with the accused , stating
the remaining loan amount and repayment terms that the accused will return the
said amount in the instalments of Rs. 5000/- per month till the completion of the
loan amount.
4. The accused also issued a post dated cheque bearing No. 308694 that is the
“cheque in question”, with the assurance that the said cheque would be
honoured on its presentation if the accused failed to make the payment of the
loan amount in instalments. That the accused paid only two instalments of Rs.
5000/- each for the month of March and April 2021 and thereafter stopped to
pay any further instalments. That the complainant then presented the cheque in
dispute on 22.06.2021 which was given by the accused as a security but it was
dishonored upon presentation via return memo dated 23.06.2021 with the
remarks “refer to drawer”. That a legal notice was sent to the accused on
30.06.2021, demanding repayment, but the notice was returned with remarks no
such person, indicating the accused could not be found. That the complainant
alleges that the accused deliberately avoided payment and committed an offence
under Section 138 of the Negotiable Instruments Act, 1881. The accused having
failed to make the payment within the statutory period of 15 days, the present
complaint has been filed by the complainant against the accused.
5. In the pre-summoning evidence, the complainant namely Mr. Aas Mohd.
examined himself as CW-1 on affidavit being Ex. CW1/1 and placed on record
certain documents i.e. Original agreement dated 10.02.2021 being Ex.CW-1/A,
the cheque in question dated 21.06.2021 being Ex.CW1/B, bank return memo
dated 23.06.2021 being Ex. CW1/C , legal demand notice dated 29.06.2021
being Ex. CW1/D, postal receipt dated 30.06.2021 being Ex. CW1/E and
-- 3 of 13 --
returned envelope thereof being Ex. CW1/F
6. Upon prima facie consideration of the pre-summoning evidence, the accused
was summoned vide order dated 16.11.2021.
7. Upon the appearance of the accused, notice under Section 251, Cr.P.C was
served upon him on 15.03.2023 to which he pleaded not guilty. At this stage,
the accused admitted that the cheque in question belonged to him and bear his
signatures. He stated that he had taken a loan of Rs.1,17,000/- from the
complainant on 10.02.2021. He further stated that he had returned Rs.17,000/-
in cash and Rs.35,000/- through Paytm to the complainant and he could not pay
the remaining amount.
8. Ld. Counsel for accused refused to move any application u/s. 145(2) NI Act and
expressed his unwillingness to cross examine the complainant. For his
examination in chief, the complainant relied upon his affidavit filed at the stage
of pre-summoning evidence at the post summoning stage as well and deposed
as CW-1.
9. Statement of accused under Section 313 read with Section 281 Cr.P.C was
recorded on 04.07.2023 whereby the entire incriminating evidence was put to
him. At this stage the accused stated that he had taken a loan of Rs. 1,17,000/-
from the complainant for a period of 20 months. That he returned Rs. 17,000/-
in 2020 and agreed to repay the remaining amount in installments of Rs. 5,000/-
per month. That the accused made payments of Rs. 5,000/- each in March and
April 2021. However, due to the COVID-19 pandemic, he was unable to make
further payments for four months. That in September 2021, he paid a total of
Rs. 20,000/- in four installments: Rs. 10,000/- on 04.09.2021, Rs. 5,000/- on
05.09.2021, and Rs. 5,000/- on 20.09.2021. Additionally, the he paid Rs. 5,000/-
on 28.10.2021. He further stated that he did not receive any legal demand notice
-- 4 of 13 --
from the complainant.
10.At this stage, the accused chose to lead defence evidence and after the
application under Section 315 Cr.P.C was allowed the matter was adjourned for
the evidence of accused as DW-1. However, on 25.08.2023 an application
under section 311 CrPC was filed by the accused for recalling the complainant
and conducting his cross-examination . The same was dismissed by this court as
no plausible defence was raised by the accused. The accused then deposed as
DW-1 and relied upon the copy of the payment transactions slips Mark X
(colly). DW-1 was duly cross examined and discharged. During the course of
his cross-examination, DW1 was confronted with agreement dated 10.02.2021
i.e. EX-CW1/A and handwritten letter dated 25.08.2021 Mark A which was
duly admitted by him. Since no other witnesses were sought to be examined by
the accused, DE was closed vide his separate statement and order of this court
dated 18.11.2023. Thereafter, the matter was adjourned for advancement of
final arguments.
11.Final arguments were addressed on behalf of both the parties. I have heard the
counsels for both parties at length, considered the evidence led by them
carefully and have perused the court records thoroughly.
LAW UNDER CONSIDERATION
12.Before delving into the facts of the present case, it is relevant to discuss the law
applicable to the present proceedings. To bring home a liability under Section
138 of the NI Act, following elements must spring out from the averments in
the complaint and the evidence adduced by the complainant, which are:
“(a) The accused issued a cheque on an account maintained by
him with a bank.
-- 5 of 13 --
(b) The said cheque has been issued in discharge, in whole or
in part, of any legal debt or other liability, which is legally
enforceable.
(c) The said cheque has been presented to the bank within a
period of three months from the date of cheque or within the
period of its validity.
(d) The aforesaid cheque, when presented for encashment, was
returned unpaid/dishonoured.
(e) The payee of the cheque issued a legal notice of demand to
the drawer within 30 days from the receipt of information by
him from the bank regarding the return of the cheque.
(f) The drawer of the cheque failed to make the payment
within 15 days of the receipt of aforesaid legal notice of
demand.”
13.Once the other ingredients mentioned in the foregoing paragraph are established
by the complainant, then as soon as the execution of impugned cheque is
admitted by the accused, a factual base is established to invoke the presumption
of cheque having been issued in discharge, in whole or in part, of any debt or
other liability by virtue of Section 118(a) read with Section 139 of NI Act. This
is a reverse onus clause, which means that unless the contrary is proved, it shall
be presumed that the impugned cheque was drawn by the accused for a
consideration and that the complainant had received it in discharge of a debt/
liability from the accused. In the case titled Bir Singh Vs. Mukesh Kumar,
(2019) 4 SCC 197, it was held by Hon’ble Supreme Court of India that once the
accused has admitted the signatures on the cheque in question, then the court is
bound to raise presumption under Section 139 NI Act.
14.It has been held by Hon’ble Supreme Court of India in the judgment titled
Rangappa Vs. Sri Mohan, (2010) 11 SCC 441 that a reverse onus clause
usually imposes an evidentiary burden and not a persuasive burden and when an
-- 6 of 13 --
accused has to rebut the presumption under Section 139, the standard of proof
for doing so is that of “preponderance of probabilities”. Therefore, if the
accused is able to raise a probable defence which creates doubts about the
existence of a legally enforceable debt or liability, the prosecution can fail. It
was further held that the accused can rely on the materials submitted by the
complainant in order to raise such a defence and it is conceivable that in some
cases the accused may not need to adduce evidence of his/her own.
15.In the present case, in order to discharge his initial burden to prove the above
mentioned ingredients, the complainant relied upon his affidavit being
Ex.CW1/1 and placed on record documents mentioned hereinbefore. Ld.
Counsel for the complainant submitted that the accused has already admitted his
signatures on the impugned cheque and hence presumption of the impugned
cheque having been issued in discharge of debt or other liability arises in favour
of the complainant in terms of Section 118(a) read with Section 139 of NI Act.
He further argued that the accused has also admitted the genuineness and
correctness of the bank return memo being Ex.CW1/C and the cheque in
question being Ex.CW1/B and his address on the legal demand notice being
Ex.CW1/D. He further argued that the fact that the complainant received no
payment within 15 days of the service the legal demand notice, duly proves all
the ingredients of the offence under Section 138 NI Act. He thus submitted that
since all the ingredients laid down under Section 138 NI Act are fulfilled, the
accused should be convicted.
DEFENCE OF NON RECEIPT OF LEGAL DEMAND NOTICE
16.Accused has raised his first defence that he did not receive the legal demand
notice and hence the fifth and sixth ingredients of the offence are not fulfilled.
17.With respect to the non receipt of the legal demand notice, it is pertinent to note
-- 7 of 13 --
that the accused has admitted his address as mentioned on the legal demand
notice being Ex.CW1/D. Therefore, it emerges that the legal demand notice,
being properly addressed and posted by the complainant, as proved by the
courier receipt is presumed to have been delivered to the accused persons in
terms of Section 114 of the Indian Evidence Act, 1872 and the accused has
failed to rebut this presumption.
18.Further, it is an admitted fact that payment was not made by the accused within
15 days of the deemed receipt of the legal demand notice. It was held by the
Hon’ble Supreme Court of India in the decision cited as C.C. Alavi Haji Vs.
Palapetty Muhammed & Anr. (2007) 6 SCC 555 that 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 required under Section 138 NI Act,
by ignoring statutory presumption to the contrary under Section 27 of the
General Clauses Act and Section 114 of the Indian Evidence Act. Thus, the
plea of the accused that the legal demand notice was never received by her is
not tenable on this ground as well and is accordingly rejected.
19.In the case at hand, since the complainant who deposed as CW-1 has discharged
his initial burden on the basis of the documents mentioned hereinbefore and the
admissions of the accused, all the other ingredients of the offence under Section
138 of the NI Act stand successfully established. Further, since the accused has
not specifically denied his signatures on the cheques in question and has
admitted that the same are drawn on his proprietorship firms account coupled
with the fact that they have not been dishonoured for the reason of difference in
drawer’s signatures, thus, the presumptions under Sections 118(a) and 139 of
the NI Act arise against the accused with respect to the existence of legally
enforceable debt/liability in favour of the complainant. The onus is now upon
-- 8 of 13 --
the accused to rebut the mandatory presumptions under the NI Act by raising a
probable defence to show that the cheques in question were not issued in
discharge of a debt/ liability.
DEFENCE OF ABSENCE OF A LEGALLY ENFORCEABLE
DEBT/LIABILITY
20. In order to rebut the mandatory presumptions, the accused has raised a defence
that there is no legally enforceable debt or liability to the tune of the amount of
the cheque in question against him and in favour of the complainant as on the
date of its presentation.
21.Ld. Counsel for the accused argued that it is the case of the complainant that a
friendly loan of Rs. 1,17,000/- was given to the accused on 10.10.2020 and that
the accused had returned a sum of 17,000 in the month of December 2020.	₹
The complainant has also submitted that a post dated bearing No. 308694 dated
21.06.2021 was given by the accused to the complainant with the assurance that
the same will be honoured on its presentation. The complainant has admitted
these facts in his complaint, his evidence affidavit and also in the agreement
dated 10.02.2021 being exhibit CW-1/A which was executed by both the
parties.
22.The counsel for the accused further argued that it is also an admitted fact on
behalf of the complainant that in compliance of the above stated agreement the
accused had paid two instalments of Rs. 5000/- each in the month of March
2021 and April 2021. Hence there was no legally enforceable debt/liability to
the tune of the amount of the cheque in question on the date of its presentation
and offence under section one 138 NI act is not made out.
23.Per contra, counsel for the complainant argued that the liability has been
admitted by the accused in his cross-examination.
He drew the attention of this court to the following portion of the cross
-- 9 of 13 --
examination of the accused as DW-1 conducted on 25.08.2023:
“ I am willing pay 65,000/- to the complainant in 4 instalments	₹ ”
He again drew the attention of this court to the following portion of the cross
examination of the accused as DW-1 conducted on 21.10.2023:
“it is correct that out of the total loan amount Rs. 65,000/- is still outstanding
against me”
He further argued that the mandatory presumption regarding the existence of a
legally enforceable debt or liability to the tune of the amount of the impugned
cheques is resting in the favour of the complainant which the accused has failed
to rebut and hence he deserves to be convicted.
24.This court has patiently heard both the parties and has carefully gone through
the entire record. Apropos this defence of the accused, this court has arrived at
the following findings:
25.In the present case it is an admitted position that out of the total loan amount of
Rs. 1,17,000/- which was given to the accused on 10.10.2020, Rs.17,000/- had
already been returned to the complainant by the accused in the month of
December 2020. It is also an admitted fact that after the agreement EX CW-1/A
dated 10.02.2021 was entered between the parties, 2 instalments of Rs.5000/-
each were received by the complainant in the month of March and April 2021.
Thus on the date when the cheque was presented the liability would by no
stretch of imagination be of rupees 1,17,000/- which is the amount as
mentioned on the cheque in dispute. Even in the agreement dated 10.02.2021
EX-CW1/A which was entered into between the parties, there is no condition
with respect to any interest or other charges on the loan amount given to the
accused which could have resulted in a higher liability.
26.In this context, reference may be made to judgement of the Apex Court titled as
Dashrathbhai Trikambhai Patel Vs. Hitesh Mahendrabhai Patel & Anr.,
-- 10 of 13 --
whereby it was held:
In view of the discussion above, we summarise our findings
below:
(i) For the commission of an offence under Section 138, the
cheque that is dishonoured must represent a legally enforceable debt on the
date of maturity or presentation;
(ii) If the drawer of the cheque pays a part or whole of the sum
between the period when the cheque is drawn and when it is encashed upon
maturity, then the legally enforceable debt on the date of maturity would not be
the sum represented on the cheque;
(iii) When a part or whole of the sum represented on the cheque
is paid by the drawer of the cheque, it must be endorsed on the cheque as
prescribed in Section 56 of the Act. The cheque endorsed with the payment
made may be used to negotiate the balance, if any. If the cheque that is
endorsed is dishonoured when it is sought to be encashed upon maturity, then
the offence under Section 138 will stand attracted;
27.It is also pertinent to reproduce section 56 of the Act:-
Indorsement for part of sum due - No writing on a negotiable instrument is
valid for the purpose of negotiation if such writing purports to transfer only a
part of the amount appearing to be due on the instrument; but where such
amount has been partly paid a note to that effect may be indorsed on the
instrument, which may then be negotiated for the balance.”
28.With respect to the post dated cheques, the following was held:-
“Though a post- dated cheque might be drawn to represent a
legally enforceable debt at the time of its drawing, for the offence to be
attracted, the cheque must represent a legally enforceable debt at the time of
encashment. If there has been a material change in the circumstance such that
-- 11 of 13 --
the sum in the cheque does not represent a legally enforceable debt at the time
of maturity or encashment, then the offence under Section 138 is not made out.”
29. Having applied the ratio of the Dashrathbhai Trikambhai judgement, to the case
at hand, it can be held that no offence is made out in the present case as no
legally enforceable debt on the date of maturity or presentation of the post dated
cheque i.e. the ‘cheque in dispute’ existed in view of the admission of the
Complainant that out of the loan amount of Rs. 1,17,000/-given to the accused,
Rs.17,000/- had already been returned to him in December 2020 and 2
instalments of Rs.5000/- each were received by him in the month of March and
April 2021. No indorsement with respect to the part payment was made by the
complainant in terms of section 56 of the Negotiable Instruments Act on the
cheque. The legally enforceable debt would not be the sum represented on the
cheque in question and thus, no liability to the tune of cheque amount was
outstanding on the day when the cheque in question was presented.
30.That in a criminal prosecution u/s 138 of the Negotiable Instruments Act, 1881,
the burden of proof always rests upon the Complainant, though he is aided by
the presumptions existing in his favour. The Accused is not required to establish
his defence beyond reasonable doubt. The Accused can establish his defence on
a preponderance of probabilities and his burden may be discharged. The
presumption had though arisen in favour of the Complainant and it was for the
Accused to rebut the same by producing either cogent evidence or by pointing
out the circumstances which make the non-existence of the debt or liability
probable. The Accused needs only to establish a preponderance of probabilities,
which he has done by highlighting circumstances that cast doubt on the
Complainant's version.
31. In view of the above discussion, the debt or liability, if at all on the date when
the cheque in question was presented, was not legally enforceable, thus, no
-- 12 of 13 --
offence is made out under sec138 NI Act.
32. In conclusion, the Accused has successfully rebutted the presumption against
him, demonstrating the improbability of the Complainant's case. Thus, the first
element remains unfulfilled against the Accused. Since the basic ingredient
which is pivotal to attract liability under Section 138 NI Act has not been
proved by the complainant, accordingly, no offence of dishonour of the cheque
in dispute under the said Section is made out.
FINAL ORDER
33.In view of the aforesaid discussion, this court finds the accused Md.Ashfaque
S/o Md.Usman not guilty of the offence under Section 138 Negotiable
Instruments Act, 1881 and acquits him accordingly.
Announced in open (Nishtha Mehtani)
Court on 08.08.2024 JMFC(first class)(NI Act)
Digital Court-03,PHC,NEW DELHI
This judgment contains 13 signed pages and each page has been signed by the
undersigned.
-- 13 of 13 --