TaxTMI 
TaxTMI 
2023 (11) TMI 1066
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....ault sentence. Appeals against those judgments have been dismissed against conviction but with modification of the sentence. 2. To avoid confusion, parties shall be referred as per their status before Ld. Trial court. 3. Necessary details in the tabulated form are given below: - 4. (i) The facts, in brief, are being extracted from CRR-3456-2019, which is the offshoot of Criminal Complaint No.1105/2015 titled as "Dharam Singh Vs. M/s Pal Infrastructure Pvt. Ltd. and another". It was pleaded by the complainant that on the persuasion of the accused, he invested various amounts from time to time in the company of the accused on the assurance that he would receive Rs.3 lakh after a period of one year over investment amount of Rs.10 lakh and that after lapse of two years, he (Complainant) will be entitled to receive Rs.10 lakh besides Rs.3 lakh as assured return. As per the complainant, he invested total amount of Rs.1,40,00,000/- on different dates, out of which Rs.1,09,35,000/- was paid through different cheques as per the details given in para-No.2 of the complaint and rest of the amount was paid in cash. On completion of one year, complainant received some of the amount and ....
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.... the NI Act vide order dated 19.08.2015. On the application moved by the complainant, production warrant of the accused Harpal Singh was issued, as said accused was in custody in some other case. Accused was produced before the Court on 23.12.2015 and was allowed bail. Notice of accusation was served upon the accused under Section 138 of the NI Act on 25.01.2016, to which he pleaded not guilty and claimed trial. 6. Complainant examined himself as CW1 and relied upon documents Ex.C1 to C to C14, supporting the complaint version. Complainant further examined Dwarkesh Muchhal, Assistant Manager, Indian Bank, Sushant Lok Branch, Ph-I, Gurgaon, as CW2, who proved documents Ex.CW2/1 to Ex.CW2/6. 7. After closure of evidence by the complainant, statement of the accused under Section 313 CrPC was recorded, confronting him with all the incriminating circumstances appearing against him. The accused did not dispute either his signature or the issuance of cheque, but stated that the cheque was given as a security, which has been misused by the complainant by filing this complaint. Accused pleaded further that he is in judicial custody since March 2015 and that his account was freezed by ....
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....o appreciate the factual and legal controversy involved in the case in the light of the evidence available on record in right prospective. It was ignored that at the time of presentation of the cheque, the bank account of the petitioner was already freezed by the order of the Court, although the cheque was returned with remarks as 'funds insufficient'. Ld. counsel contends that in other cases, remarks have been given by the same bank either as 'attachment order/Court order'. It is urged that since the account of the petitioner was already freezed at the time of presentation of the cheque, so basic ingredients of Section 138 of the NI Act are not made out. (ii) Ld. counsel contended further that the principle of 'payment stopped' or 'payment blocked' or 'account closed' could not have been applied in this case, because the petitioner was not in control of his account and so, he was not in a position to maintain the account. Ld. counsel has relied upon a decision of this Court rendered in Rajesh Meena Vs. State of Haryana and others, 2020(3) RCR (Criminal) 888; and Vijay Chaudhary Vs. Gyan Chand Jain, 2008(4) RCR (Criminal) 159. (iii) Ld. counsel further contends that petitione....
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....ped by Court order' and (ii) 'payment stopped by drawer', and therefore, all the cases cannot be decided jointly. It is contended that no evidence has been led by the petitioner-accused regarding the reason behind the dishonour of cheque. It is urged that in fact, when all these cheques were presented, there was no sufficient funds in the account of the accused-petitioner as will be evident from the statement of Bank account Ex.CW2/4. (iii) By referring a decision of Himachal Pradesh High Court in Nexus Health & Beauty Care Private Limited & another Vs. National Electrical Office" 2012(18) RCR (Criminal) 793, it is contended that even if a cheque has been dishonoured due to payment stopped by attachment order/Court order, still there is presumption under Section 139 of the NI Act, which of course can be rebutted by the accused by producing the defence that he had sufficient funds in his account at the time of attachment order of the Court and that burden in this regard is upon the accused. It is urged that in this case, accused has not led any evidence that at the time when the account of the accused was freezed by any order, he had sufficient amount in his account or had any ar....
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.... M/s Pal Infrastructure Pvt. Ltd. Ex.C10 is the return memo dated 24.06.2015 revealing that cheque was dishonoured with a remark 'funds insufficient'. Ex.C11 is copy of the legal notice dated 14.07.2015 sent by the complainant though his advocate Devinder Singh to the accused demanding payment of the cheque amount within 15 days from the date of receipt of the notice. Ex.C12 to C14 are the copies of postal receipts to show that legal notice was sent through registered post. All these documents are proved by the testimony of CW1 Dharam Singh complainant. 15. During his cross-examination, it has been disclosed by CW1 Dharam Singh-complainant that he had also lodged FIR against the accused raising allegation of cheating. He also disclosed that 7 of the cheques were given to him in January 2015 and 3 in February 2015. He specifically deposed that all the cheques were issued and filled by accused himself in his own handwriting and that he (complainant) did not fill even a single particular in any of the cheques on his own or with the help of another person. CW1 Dharam Singh-complainant pleaded ignorance as to whether the account of the accused was seized by any Court order. 16. CW....
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....of consideration. - that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration; (b) as to date. - that every negotiable instrument bearing a date was made or drawn on such date;" 19. In Goa Plast (P) Ltd. Vs. Chico Ursula D'souza & Anr 2003 (3) SCC 232, Hon'ble Supreme Court has held that the provisions of Section 138 to 142 of the N.I. Act, is for the purpose of giving credibility to negotiable instruments in business transactions. In view of section 139 of the NI Act, it has to be presumed that a cheque is always issued in discharge of any debt or other liability. The presumption could be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. 20. In Rangappa vs. Sri Mohan, 2010 (11) SCC 441, a three judges' bench of the Hon'ble Supreme Court held that Section 139 of the NI Act includes the presumption regarding the existence of a legally enforceable debt or liability and that the holder of a cheque is also presumed to have received the same i....
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....mption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. * Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden. * It is not necessary for the accused to come in the witness box to support his defence. 23. It is in the light of the aforesaid legal position that it is required to be seen that whether accused has been able to probabilise his defence. Here itself, it may be noted that the accused is not required to prove his defence on the standard of proof 'beyond reasonable doubt' and rather, he is simply required to probabilise his defence. The presumption under Section 139 of the Act can be rebutted even by evidence led by the complainant; and it is not required for the defence to lead evidence to rebut presumption, as has been held in Pawan Kumar Vs. Sun....
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....t account apart from the fact that it may amount to another offence, it would certainly be an offence under Section 138 as there was insufficient or no fund to honour the cheque in that account. Further, cheque is to be drawn by a person for payment of any amount of money due to him on an account maintained by him with a banker and only on that account cheque should be drawn. This would be clear by reading the Section along with provisos (a), (b) & (c)." 27. In the above case before Hon'ble Supreme Court, proceedings were challenged on the ground of maintainability of complaint, as the cheque was dishonoured because account stood closed. Hon'ble Supreme Court held that the provisions of Section 138 NI Act cannot be interpreted narrowly because if argument of the drawer is accepted, it would defeat the legislative intent. 29. The situation, when the cheque in question was dishonoured due to 'stop the payment' by drawer, would be punishable under Section 138 NI Act was considered by the Hon'ble Supreme Court, in M.M.T.C Ltd. and Anr Vs. Medchl Chemicals and Pharma (P) Ltd. and Anr, 2001 (1) SCC 234, wherein it was held as under: - "It has been held that eve....
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.... holder over the account ceased to exist. It was in these background facts that this Court observed as under: - "The expression "account maintained by him" as appearing in Section 138 of NI Act carries great significance and meaning. The dictionary meaning of "Maintain" (as contained in Oxford Dictionary) is defined as: - the act of making the state or situation continue. Therefore, the said expression "account maintained by him" cannot be construed narrowly to mean that if the account belongs to the accused, the necessary ingredient would be complete. This expression "account maintained by him" must necessarily include that the said account is not only alive and operative, but the account holder is capable of executing command to govern the financial transactions which include the clearance of cheques etc. The authority and control of the account holder upon the account must exist on the effective date i.e., when the cheque becomes valid for presentation in the bank. It is settled law that mere issuance of a cheque is not an offence, but it becomes punishable when the said cheque is dishonoured. Mere fact that the record of the drawer bank shows a particular name as accou....
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....Turning to the facts of the present case, one finds that the attachment by an order of the Court in this case was after the alleged issuance of the cheque, but prior to its presentation for encashment. The attachment of the bank account of the petitioner had the effect of disabling the petitioner from operating or maintaining the said account. The petitioner could not exercise his right either to deposit into or with draw from the said account. Even if it were to be assumed for the sake of argument, that the cheque was in fact issued in discharge of the petitioner's liability owed to the respondent, and that at the time of issuance of the cheque, he did not have sufficient balance in the account, or an arrangement with his banker, in case the bank account had not been attached under the orders of a Court, nothing prevented the petitioner from either depositing money in his account or entering into an agreement with his bank to arrange for sufficient funds in the account, to be able to honour the cheque in question by the date when the said cheque could have been presented for payment at the earliest. This is so because there was sufficient time gap i.e. of nearly one year and e....
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....e funds or to make arrangement with the bank by entering into any agreement with the Bank and that act of attachment of the bank account was not the voluntary act on the part of the petitioner and so, he cannot be held liable 36. I am afraid that this Court does not find any merit in the aforesaid submissions, having regard to the factual position of this case. It has already been noticed that as per the bank account statement Ex.CW2/6 for the period 01.01.2013 to 27.03.2016, petitioner did not have the amount in his account so as to honour the cheque in question at any point of time, either before seizure of the account by the Court/police or thereafter. Further the cheques were handed over in January/February 2016 only and the account was seized in March 2015. Neither at the time of handing over the cheques nor at the time of seizure nor at the time when the payments became due under the cheque, the petitioner had the sufficient amount in his account. It is not the defence of the petitioner that he wanted to make arrangement with his bank so as to honour the cheques. 37. At this stage, it will also be relevant to refer to certain observations made by Hon'ble Supreme Court i....
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....proviso is not meant to protect unscrupulous drawers who never intended to honour the cheques issued by them, it being a part of their modus operandi to cheat unsuspecting persons." (Emphasis added). 38. Even Delhi High Court in Vijay Chaudhary (Supra) referred to the above said observations of Hon'ble Supreme Court in D. Vinod Shivrappa (Supra) case and noted that the aforesaid extract clearly shows that Hon'ble Supreme Court consciously used the words "which was demonstrated by the fact that there was no sufficient balance in the account to discharge their liability". This observation of the Hon'ble Supreme Court is sufficient to show that whatever be the reason for dishonour of the cheque, it has to be correlated with the insufficiency of funds in the account or to the lack of the arrangement made by the drawer with his bank under an agreement. Accused cannot be allowed to plead that had his account been not seized, he could have deposited the amount or that he could have made necessary arrangement with the banker. What is necessary to take note is that at the time when the account was seized or when the cheque was presented, there was no sufficient fund in the accou....
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....ited & another (Supra). In that case also, it was contended on behalf of the petitioner-accused that cheque was returned on account of payment stopped due to attachment order/Court order and not due to insufficient funds and therefore, they cannot be prosecuted under Section 138 of the NI Act for bouncing of the cheque. Negating the said contention, it was held that presumption under Section 139 of the NI Act is available in such case also because Section 140 of the NI Act excludes the defence that accused had no reason to believe that cheque would be dishonoured for reasons stated in Section 138 of the Act. 42. Section 140 of the Act reads as under: - 40. Defence which may not be allowed in any prosecution under section 138. -It shall not be a defence in a prosecution for an offence under section 138 that the drawer had no reason to believe when he issued the cheque that the cheque may be dishonoured on presentment for the reasons stated in that section. 43. Thus, plain language of Section 140 of NI Act would clearly reveal that a drawer of the cheque cannot be allowed to take the plea as a defence in prosecution for an offence under Section 138 of the Act that he d....
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....noring 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. As observed in Bhaskaran's case (supra), if the "giving of notice" was the same as the "receipt of notice" a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act." 46. Hon'ble Supreme Court further held as under: "In the instant case, the averment made in the complaint in this regard is: Though the complainant issued lawyer's notice intimating the dishonour of cheque and demanded payment on 4.8.2001, the same was returned on 10.8.2001 saying that the accused was out of station. True, there was no averment to the effect that the notice was sent at the correct address of the drawer of the cheque by registered post acknowledgement due. But the returned envelope was annexed to the complaint and it thus, formed a part of the complaint which showed that the notice was sent by registered post acknowledgement due to the correct address and was return....
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....umed for the sake of arguments that cheques were issued as a security, the dishonour thereof will still attract Section 138 of the NI Act. In Shalini Enterprise Vs. Indiabulls Financial Services Ltd., 2013 (2) Civil Court Cases 835, similar plea of security cheque was taken. It was held by this Court: - "11. Additional plea of the petitioner that dishonour of a security cheque cannot fasten the liability on the drawer under the Negotiable Instruments Act is also not acceptable. There can be no doubt regarding the fact that the security cheque is an integral part of the commercial process entered into between the Petitioner and Respondent/Complainant. The security cheque is not only a deterrent for the drawer against dishonoring his financial commitment but can also be legally and validly utilized towards the discharging of the liability of the Drawer. It cannot by any stretch be argued that a security cheque is not handed over or issued in pursuance of any undischarged liability. To hold so would defeat the whole purpose of a security cheque. In the considered opinion of the Court, a security cheque is an acknowledgment of liability on the part of the drawer that the chequ....