Bharat Bhushan vs State and Another

Suresh Kait, J.—By the instant petition, the petitioner has prayed to set aside the judgment dated 22.11.2004 and order on sentence dated

24.11.2004, whereby, the petitioner was sentenced to undergo SI for one year and fine of 5,000/-.

He has further challenged the order dated 02.02.2011 passed by the learned Addl. Sessions Judge, South East, Saket Courts, New Delhi,

whereby, the substantive sentence of one year awarded by the Id. trial court was done away with. However, the fine was enhanced to

16,40,000/-.

The case of the respondent No.2./ complainant in brief was that he was in need of a loan of i 30 lacs and as such he came into contact with the

petitioner who assured him of loan. After discussion, the petitioner told the respondent No.2 that Manager of Vaish Cooperative Bank, Darya

Ganj Branch had agreed to advance a loan of i 30 lacs.

The respondent No.2 signed various documents in respect of grant of loan of 30 lacs, trusting the petitioner.

It was also the case of the respondent No. 2 that he paid in cash a sum of i 8.21.600/ - to the petitioner on his representation that this amount

was to be deposited in the bank as margin money and also towards other related expenses. The petitioner told the respondent No. 2 that he had

deposit the aforesaid amount with the bank. In this respect he showed a receipt to the respondent but did not handed over the same to him.

When the respondent No. 2 enquired about the loan, he was told by the petitioner that proposal was at the final stage. Ultimately, when the

petitioner failed to get the loan sanctioned, the respondent demanded the aforesaid amount of i 8,21,600/-. To discharge that liability, the petitioner

was alleged to have issued cheque in the sum of i 8,21,600/-bearing No.989849 dated 19.10.2001 drawn on State Bank of Bikaner and Jaipur,

Janakpuri, New Delhi.

Further, the case of the respondent No.2 was that on presentation for encashment the aforesaid cheque issued by the petitioner the same was

received back dishonoured with the remarks ""Insufficient Funds"". Whereupon, legal notice dated 10/12.11.2001 was sent to the petitioner by

registered post dated 12.11.2001 and through certificate of posting dated 13.11.2001, but the petitioner failed to make the payment. Thereafter,

the respondent No. 2 filed the complaint against the petitioner.

Vide order dated 02.01.2002 the petitioner was ordered to be summoned for an offence u/s 138 of the Negotiable Instruments Act, because

prima facie case had been made out against the petitioner and notice for the aforesaid offence was served upon the petitioner on 26.11.2002.

Since the petitioner pleaded not guilty and claimed trial, respondent No.2 examined himself as CW1.

The petitioner, when examined under `281 of Cr.P.C., denied to have issued cheque in question in favour of the complainant. The case of the

petitioner was that the respondent No.2 was to supply him cloths which were never supplied and he had been falsely implicated. However, the

petitioner opted not to lead any evidence in defence.

It is pertinent to mention here that when the case was pending for final arguments, the petitioner came forward with an application u/s 315 of

Cr.P.C. Ultimately, he examined himself as his own witness as DW1 while tendering into evidence his affidavit Ex.CX.

Ld. counsel for the respondent No.2 while arguing before the trial court has referred to the statement of respondent No.2 and other documents

available on record and argued that the case of the respondent No.2 stood duly established against the petitioner.

On the other hand, Id. counsel for the petitioner has referred to the material available on record and argued that the petitioner issued the

cheque in question only towards security for the goods which were to be supplied by the respondent No.2 to the petitioner but since the

respondent No.2 never supplied those goods, the petitioner had no liability to discharge and as such the complaint was liable to be dismissed.

The respondent No. 2 filed complaint on the basis of which the alleged cheque No.989849 dated 19.10.2001 for 18,21,600/ - was issued by

the petitioner. While appearing in court as CW1, he has proved cheque Ex.C1, and after deposing about the circumstances which led to its

issuance by the petitioner in his favour. He has stated in his statement that he wanted loan for MRI machine, advertised for the same and the

petitioner contacted him and assured to arrange for loan from Vaish Co-operative Bank. He further deposited that the petitioner asked him to

become member of said bank but for that he was required to pay some amount so that loan could be sanctioned. Since he was in need of i

30,00,000/- for the machine and the petitioner told him that he would have to pay 5% margin money to get this much amount of loan. Further,

according to the respondent No. 2 he paid i 8,21,600/- to the petitioner towards margin money. He had explained that initially the margin money

was to be extent of 5% but ultimately petitioner went on increasing the same. The petitioner had told the respondent No. 2 that insurance premium

was also to be paid.

The respondent No. 2 further deposed that he had been asking the petitioner about sanctioning of the loan. The petitioner always gave an

assurance that the same was in process. Ultimately, the petitioner told him that he could not get the loan from the aforesaid Vaish Co-operative

Bank and rather he would get the loan sanctioned from Delhi Co-operative Bank. He further deposed to have approach Delhi Co-operative Bank,

as per membership given by the accused but the same was found to be false. Thereafter, he asked the petitioner either to get the loan sanctioned or

to return the money which he has obtained from him. According to the respondent No. 2, the petitioner then gave him cheque Ex. C1.

There is nothing in cross-examination of the respondent No. 2 to disbelieve this version narrated by him. It is true that the respondent No. 2

did not obtain any receipt from the accused while paying him i 8,21,600/-towards margin money to get loan sanctioned from the bank, the same

did not adversely affect the case of the respondent No.2 particularly when accused had not disputed his signature on cheque Ex. C1.

During cross-examination u/s 281 of Cr.P.C, the petitioner came forward with the plea that the cheque was not issued by him in favour of the

respondent No. 2. At the same time, he pleaded that respondent No. 2 was to supply him clothes which were never supplied and that he had been

falsely implicated. Thereafter, the petitioner stepped into witness box as DW1 and tendered into evidence his affidavit Ex. DX.

As has been observed by the ld. Trial Judge on perusal of para No.2 of the affidavit Ex.DX would reveal that the petitioner in the third line of

that paragraph denied to have issued that cheque Ex. C1 to re-pay any debt amount, but in the fourth line of that paragraph he admitted to have

given that cheque to the respondent No. 2, further pleading that it was given by him without any amount and by way of security.

The Trial Judge has recorded from this deposition in that paragraph, it can safely be said that petitioner has come forward with inconsistent and

self-contradictory pleas. Version of petitioner appears to be that the cheque was blank at the time it was given to the complainant. However, in his

cross-examination as DW1 the accused admitted to have given cheque Ex. C1 to the complainant towards security. However, the petitioner has

not led any cogent and convincing evidence that the cheque Ex. C1 is in his handwriting. He could get the contents of cheque scientifically

examined from any expert but he did not take any step in that direction, for the reasons best known to him. The petitioner has admitted in his

cross-examination that the cheque bears his signatures. Presumption of consideration is attached to the cheque.

The petitioner had come forward with the plea that that cheque was given to the respondent No. 2 towards security. He is alleged to have

placed orders with the complainant for supply of clothes. However the petitioner had not placed on record any document to show that any such

order was placed by him with the respondent No. 2.

In his cross-examination he deposed that first order placed by him with the respondent No. 1 was of i 50,000/60,000/-. However, for want to

any documentary evidence in this respect. It cannot be said that petitioner had placed any such order with the respondent No. 2.

It is also not the case of the petitioner that any point of time he issued any notice to the respondent No. 2 asking him not to present the cheque,

or to bankers for stoppage of payment, on account of non-supply of goods/ clothes to him by the complainant. Consequently, it cannot be said that

cheque Ex.C1 was given by him to the complainant by way of security.

The respondent No. 2 had proved on record cheque return memo''s Ex.C2 and Ex.C3 which would reveal that cheque Ex.C1 presented for

encashment was received back as dishonoured with reason ""insufficient funds"". Legal notice Ex. C-4 had been issued had been duly proved on

record. The petitioner has admitted in his cross-examination to have sent reply to the notice received from the respondent No. 2. Reply to the legal

notice is Ex.C7 dated 27.11.2001. The evidence on record showed that the petitioner did not make any payment to discharge liability to the

cheque whereby the respondent No. 2 had to knock at the door of the court by filing the complaint on 02.01.2002.

The ld. trial judge, keeping in view the aforesaid evidence, was of the view that the cheque Ex.C1 was issued in favour of the respondent No.

2 to discharge liability of i 8,21,600/-, therefore, the trial judge held that the allegations in the complaint stands fully established against the

petitioner. Therefore, the petitioner was held guilty by the trial judge.

The petitioner, being aggrieved by the aforesaid judgment of the trial judge had assailed and filed appeal in the Court of Addl. Sessions.

The ld. counsel for the petitioner argued that before the ld. ASJ in appeal that the respondent No. 2 had come forward with a false and

concocted story regarding the issuance of cheque by the petitioner in discharge of any legally recoverable liability. He submitted that as per the

version of respondent No. 2, payments of money were made to the petitioner outside the car parking of Maurya Hotel and that too without taking

any receipts of acknowledgements from the petitioner. He submitted that neither 5% of i 30 lacs nor 20% of i 30 lacs was paid and the amount

given was i 8,21,600/-. Further, the ld. counsel for the petitioner submitted that respondent No.2 was not very sure about the purpose for which

he required the loan amount. In cross-examination, respondent No.2 stated that he took loan as he wanted to pledge the machines and later on

stated that the loan amount was required for maintenance of MRI machine.

Ld. ASJ that the money which respondent No.2 had paid to the petitioner was stated to be withdrawn from his personal account but in cross-

examination he stated that the amount paid to the petitioner consisted of amount paid by Doctor V.K. Jaiswal. He argued that the cheque in

question was issued by the appellant by way of security during the business dealings as the respondent was to supply clothes to the appellant and

respondent failed to prove his version.

On the other hand, ld. counsel for the respondent No. 2 submitted that the money was taken out of his personal bank account and thereafter, it

was explained in the cross-examination that it included the amount paid by Dr. Jaiswal. He had submitted that it was not the stand of respondent

No.2 that i 8,21,600/- was paid to the appellant as 5% or 20% margin of the loan amount of i 30 lacs. Initially, the margin demanded was 5%

which was later increased to 20%. It was evident from affidavit of the respondent No.2. and his cross-examination that i 8,21,600/- was

demanded by the petitioner and was paid to him on account of 20% of the loan amount apart from insurance and other related expenses.

Respondent No. 2 deposed that he took some amount in cash from Dr. Jaiswal and deposited in his own account from which it was later

withdrawn and cash was given to the petitioner. Dr. Jaiswal and the respondent no. 2 are stated to be business associates. It was the admitted

case of the petitioner that he had issued the cheque to respondent No.2.

Ld. A.S.I had gone in the depth of the case and discussed the relevant law as laid down in the case of Hiten P. Dalai Vs. Bratindranath

Banerjee 2001 (2) JCC (SC) 51, as under:-

The nature of the presumption u/s 138 is subject to the three conditions specified relating to presentation, giving of the notice and the non payment

after receipt of notice by the drawer of the cheque. All three conditions have not been denied in this case. 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 u/s 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. 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.

It is well settled that 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 complainant may be

discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the

nonexistence of the presumed fact. 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 S. 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.

The ld. ASJ noted that record showed that the petitioner had been taking shifting stands. In the statement of the petitioner u/s 313 of Cr.P.C,

he stated that ""he never issued the cheque in favour of the complainant."" Later on, he submitted that he did issue the cheque but it was given as

security to the respondent No.2 for payment that was to be made by the petitioner to the respondent No.2 for supplying clothes to the petitioner

and thus it was not against a legally enforceable debt as the respondent No.2 failed to supply the clothes.

The ld. A.S.J. further found merits in the submissions of ld. counsel for the respondent that minor discrepancies are natural due to time gap

between the date of incident and date of evidence and also due to human fallibility.

The ld. A.S.J. further discussed the case law as held in the case of Inder Singh and Another Vs. The State (Delhi Administration), , Which is as

under:-

An unmerited acquittal does no good to the society. Court should not lean in favour of acquittal by giving weight to irrelevant or insignificant

circumstances or by resorting to technicalities or by assuming doubts and giving benefits thereof where none reasonably exists. A doubt has to be a

reasonable doubt and not an excuse for a finding in favour of acquittal. The courts should display a greater sense of responsibility and have to be

more sensitive.

The ld. trial judge has noted the contention of the petitioner that the cheque issued by him was not in discharge of a legally enforceable debt as

payment was made by the respondent No.2 outside Maurya Hotel, has no merit. Only because, the venue at which the cash exchange hands was

at a public place like outside the Maurya Hotel, would not imply that the cheque was not-given in discharge of a legally enforceable debt.

The ld. trial judge found no merit in the contention that the cheque issued by him was not in discharge of a legally recoverable debt as no

receipts were taken by the respondent when he made payment to the petitioner. The ld. A.S.J. was of the opinion that there was no requirement of

law that a receipt has to be taken whenever cash exchanges hands. However, it appears from the testimony of the respondent No. 2 that it is

evident that after two days of receiving payment, petitioner showed a receipt to the respondent No. 2 which purportedly was receipt of the

payment to the bank by the petitioner. However, the petitioner refused to give the receipt to the respondent No.2. Respondent No.2 insisted that

he wanted payment in cash from the petitioner.

The trial judge has also dealt with the other contentions urged by the ld. counsel for the petitioner that the cheque issued by him was not in

discharge of a legally enforceable debt as cheque was issued by the petitioner as security against the respondent supplying clothes to the petitioner

and not against a legally enforceable debt. The ld. trial judge was of the view that in this respect, petitioner has failed to produce any evidence to

show that he had issued the cheque as a ''security'' to the respondent No.2 for payment that was to be made by the petitioner to the respondent

No.2 for supplying clothes to the appellant. Appellant appeared in the witness box to support his case as DW1. In cross-examination, he deposed

that turn over was about 10-12 lacs. He further stated that the respondent did not tell the name of his company and was accompanied by Doctor

Jaiswal. He did not get this fact verified whether the respondent was actually dealing with clothes. He did not place any written order but only

placed verbal orders. He further deposed that the first order which petitioner placed was i 50,000/- to i 60,000/- and gave the cheque Ex.C1 as

''security''.

The ld. ASJ in appeal has observed that the burden was on the petitioner to disprove the presumptions under Sections 138 and 139, which he

failed to discharge at all. The petitioner did not produce any order or agreement that allegedly took place between the two. The ld. A.S.J, was of

the view that it does not appeal to common sense and is not convincing at all on the face of it, that one would give a blank cheque as security for

making payment for clothes worth i 50,000/ - to i 60,000/- to someone with whom up to that time there was not even a single agreement or

dealing.

The ld. A.S.J, in appeal has also dealt with the contention of the petitioner that the cheque was not filled by him but by someone else. Even

otherwise, in view of Section 20 ''when a cheque is given in blank, person regarding the cheque given prima facie, authority to the holder thereof to

make or complete, as negotiable instrument''.

Thus, in view of the ld. A.S.J., the petitioner had taken shifting stands. In his statement u/s 313 of Cr.P.C, petitioner submitted that he never

issued the cheque in favour of the respondent No.2. Secondly, it was submitted that he did issue the cheque, but it was given as ''security'' to the

respondent No.2 for payment, that was to be made by the petitioner to the respondent No.2 for supplying clothes to him and that it was not

against a legally enforceable debt as the respondent No. 2 failed to supply the clothes.

Respondent No.2 has categorical deposed that he withdrew cash from his personal account so as to pay to the petitioner and stated that he

could prove this by producing his Income Tax Return and bank statement. The petitioner did not ask for and called him to produce the Income

Tax Return and bank statement to disprove the same. He could have asked the court to direct respondent No.2 to produce the same.

Keeping in view the aforesaid discussion in view, the learned A.S.J, found no infirmity or illegality in the impugned order passed by the learned

MM. Therefore, conviction of the petitioner for the offence punishable u/s 138 of the Negotiable Instruments Act was upheld.

While dealing with sentence the ld. appellate court has held that the objectives of the provisions of Section 138 of the Negotiable Instruments

Act are to enhance the acceptability of cheques in settlement of liabilities by making the drawer liable for penalties in face of bouncing of cheques

due to insufficiency of funds in the accounts or for the reason that it exceeds the arrangements made by the drawer, with adequate safeguards to

prevent harassment of honest drawers. It was intended to prove a speedy remedy to avoid injury or inconvenience to the payee or endorsee in

view of the fact that due to the latter''s unexpected disappointment he will have to lick the dust while meeting his own future commitments made to

others.

The ld. counsel for the respondent No. 2 submitted that since the respondent No. 2 had prosecuted the appellant under the Negotiable

Instruments Act, he had not filed any suit for the recovery of the amount covered by the cheque and because of that the respondent has suffered a

huge financial loss. According to the learned counsel, the respondent No. 2 has not filed any suit for the recovery of money as he was hopefully

expecting that the courts below would have convicted the appellant. There is need for making liberal use of provisions contained in Section 357(3)

of Cr.P.C. while dealing with the case arising under the Negotiable Instruments Act, the trial court has to consider as to what would be the

reasonable amount of compensation payable to the respondent No.2.

The learned appellate court was of the opinion that while imposing sentence under the provisions of the Negotiable Instruments Act, the court

has to take into consideration all aspects of the case including the financial loss caused to the payee or holder in due course of the cheque, the

quantum of the amount involved in the cheque, status of the appellant as well as of the respondent, time and costs consumed in the litigation, etc.

In this case, the Ld. Appellate Court has noted that the trial court has not assigned any reasons whatsoever for not awarding the compensation

to the respondent No.2. The learned trial court ought to have awarded adequate compensation to alleviate the distress of the respondent.

In the present case, it is to be noted that the cheque was issued in the year 2001. Almost 10 years have elapsed. The respondent No.2 must

have suffered financially due to the non-availability of the amount due to the conduct of the petitioner in issuing cheques dishonoured.

The appellate court was of the view that the court below has erred in imposing a meagre fine of i 5,000/- and payment of compensation of i

5,000/- for the loss suffered by the respondent No.2. Accordingly, the substantive sentence of one year awarded by the ld. trial court was done

away with. However, fine was enhanced to i 16,40,000/-. It was further directed that the entire fine proceeds were directed to be given to the

respondent No.2 as compensation.

I find no discrepancy or illegality in the judgment dated 28.02.2011 passed by the learned appellate court. The learned counsel for the

petitioner could not point out any illegality or infirmity in the order assed by the two courts below. I concur the same.

I note, vide order dated 23.03.2011, this Court had stayed the operation of the impugned order subject to the condition that the petitioner

shall deposit i 10 lacs with the Registrar General of this Court within four weeks from that date.

Vide order dated 02.06.2011, this Court has observed that neither the amount has been deposited within four weeks nor the interim order has

been continued after 19.05.2011.

Furthermore, vide order dated 05.07.2011, Crl. M.B. No. 509/2011 was dismissed and the stay of the impugned order was vacated.

The conduct of the petitioner is not appreciated, therefore, while dismissing the petition, I impose a cost of i 50,000/- on the petitioner which

shall be paid to the respondent No.2.

I further direct that if the petitioner does not pay the entire fine amount to the respondent No.2 within four weeks, then he shall pay 9% interest

on the entire amount till the realization of the same.

Accordingly, the Crl Rev. P.No. 126/2011 is dismissed with costs of ''50,000/- as mentioned above.