IN THE COURT OF THE JUDICIAL MAGISTRATE FIRST CLASS ...kamrupjudiciary.gov.in/dec 19/dj dec...

C.R. Case No.1399c of 2014

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IN THE COURT OF THE JUDICIAL MAGISTRATE FIRST CLASS, KAMRUP

(METRO): GUWAHATI


U/S 138 of Negotiable Instruments Act, 1881

Shri Benudhar Das,

S/o- Late Bhorot Ch. Das,

R/o – H. No.46, Nawjan Road,

Uzan Bazar, Guwahati -1…………………………………………..Complainant

-Vs-

Shri Suresh Kr. Kashliwal,

S/o- Late D. Chand Kashliwal,

Director of M/S Ottis Associates (P) Ltd.

PICKME Building, 2nd Floor, Kamarpatty,

Fancy Bazar, Guwahati -1………………………………………………Accused

Present: Dimpy Naroh, AJS

Judicial Magistrate First Class, Kamrup (Metro), Guwahati

ADVOCATES PRESENT:

For the Complainant- Mr. P. Bhowmick, Mr. D. Nath……….Learned Advocate

For the Accused- Mr. D. Mazumdar……………………………...Learned Advocate

Evidence recorded on: 21.09.2017, 08.11.2017, 11.01.2018

Argument heard on: 13.11.2019, 19.11.2019

Judgment delivered on: 04.12.2019

JUDGMENT

1. This is a case instituted under Section 138 of the Negotiable Instruments Act,

1881 (In short ‘the N.I. Act’) alleging that the accused Shri Suresh Kr. Kashliwal

had issued four cheques in favor of the complainant Shri Benudhar Das which were

dishonored due to the reason “Insufficient Fund” in the account of the accused.


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2. The brief facts giving rise to the institution of this complaint case is that since

the year 2008 for utilizing the amount for the company of the accused for

company’s construction purposes for sale of flats etc., the accused took loan from

the complainant with interest at 15% to 20% from time to time and as per various

agreements executed between the complainant and the accused on 26.06.2012

and 16.08.2012 the accused agreed to pay the amount in a time bound manner

and having failed to do so, the accused by a letter dated 15.09.2013 accepted the

total outstanding of the loan and interest amount to be Rs.31,00,000/- (Rupees

Thirty One Lakhs) only as on 31.12.2013 and out of the aforesaid outstanding

amount, the accused has paid an amount of Rs.6,95,000/- (Rupees Six Lakhs

Ninety Five Thousand) only.

3. Having failed to pay the balance amount, the accused in discharge of his

outstanding liability to the extent of Rs.21,13,277/- (Rupees Twenty One Lakhs

Thirteen Thousand Two Hundred And Seventy Seven) only issued cheques for

Rs.21,13,277/- only by issuing four cheques in favor of the complainant, cheque

bearing No.748109 dated 30.03.2014 for a sum of Rs.14,98,659/- (Rupees

Fourteen Lakhs Ninety Eight Thousand Six Hundred And Fifty Nine); cheque

No.748121 dated 30.03.2014 for Rs.2,14,618/- (Rupees Two Lakhs Fourteen

Thousand Six Hundred And Eighteen); cheque No.748082 dated 15.04.2014 for

Rs.2,00,000/- (Rupees Two Lakhs); and cheque No.748084 dated 15.04.2014 for

Rs.2,00,000/- (Rupees Two Lakhs); to be drawn at State Bank of India, Guwahati

Branch, Guwahati-1, Assam total amounting to Rs.21,13,277/- (Rupees Twenty

One Lakhs Thirteen Thousand Two Hundred And Seventy Seven) only in discharge

of his liability in favor of the complainant.

4. The complainant had deposited the aforesaid four cheques to his banker State

Bank of India, Guwahati Branch, Guwahati-1, Assam for clearance, but the four

cheques were returned unpaid with return memo dated 05.05.2014 for the reason

“Insufficient Fund”.

5. The complainant then send one legal demand notice on 06.05.2014 under

Section 138 of the N.I. Act to the accused by registered post with A/D through his

counsel calling upon the accused to pay the sum of Rs.21,13,277/- only towards

the cheque amount along with cost. The said notice of demand was duly received


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by the accused and thereafter the accused by a letter dated 13.05.2014 while

referring to the aforesaid legal notice undertook to clear the outstanding dues and

requested the complainant to grant him time till 02.06.2014.

6. But despite that the accused failed to make the payment within the stipulated

period of 15 days or within 02.06.2014 and as such the complainant lodged the

case against the accused under Section 138 of the N.I. Act, 1881.

7. The accused was called upon to enter trial and upon his appearance the

particulars of offence under Section 138 of the N.I. Act, 1881 was explained to him

to which he pleaded not guilty and claimed to be tried.

8. To prove his case, the complainant Shri Benudhar Das has examined himself as

PW 1 by way of affidavit, Shri Chinmoyjyoti Borthakur as PW 2 and Shri Dipankar

Nath as PW 3 in support of his case and has also relied on 17 (Seventeen)

documents. The accused Shri Suresh Kumar Kashliwal did not lead any evidence

in his defense.

9. The accused in his statement under Section 313 of Cr.P.C. admitted that he had

issued the four cheques as security. He further stated that he had not received the

demand notice and had already cleared all his dues.

10. The accused had taken a defense that he had given the cheques as security

to the complainant at the time of taking the loan and as he had already repaid the

entire loan amount to the complainant, he does not owe any liability towards the

complainant. He further stated that the complainant has not returned the cheques

in spite of clearing the dues and misused the said cheques in question. Accordingly

the learned counsel for the accused submitted that the complainant is not entitled

to get payment as sought for and the accused is also not legally liable to pay the

amount.

11. I have heard the learned counsel appearing for the complainant and the

accused. Upon hearing and on perusal of case record I have framed the following

points for determination in order to arrive at a definite finding as regards the

dispute in this case:-


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12. POINTS FOR DETERMINATION:

(i) Whether the accused issued the four cheques bearing cheque No. 748109

dated 30.03.2014 for a sum of Rs.14,98,659/-; cheque No.748121 dated

30.03.2014 for Rs.2,14,618/-; cheque No.748082 dated 15.04.2014 for

Rs.2,00,000/-; and cheque No.748084 dated 15.04.2014 for Rs.2,00,000/- only for

the discharge of any legally enforceable debt or liability towards the complainant?

(ii) Whether the four cheques were dishonored for the reason “Insufficient Fund”

in the account of the accused?

(iii) Whether the accused received the demand notice issued by the complainant

regarding the dishonor of the cheque?

(iv) Whether the accused has committed the offence under Section 138 of the

Negotiable Instruments Act, 1881?

13. I have carefully gone through the case record and perused the entire evidence

on record both oral and documentary. I have heard and perused the arguments

advanced and the submissions made by the learned counsel on behalf of the

complainant and the learned counsel for the accused. It is submitted by the learned

counsel for the complainant that the complainant has been able to prove all the

ingredients of offence under Section 138 of the N.I. Act beyond reasonable doubts

by way of testimony of PW 1, PW 2 and PW 3 which stood corroborated by the

documentary evidence in the form of documents Ext. 1 to Ext. 16. It is submitted

that the complainant is a holder of the four cheques in due course and the accused

had issued him the cheques. The complainant further submits that the accused

had taken vague, false and baseless defense that he had issued the signed cheques

as security and that he had already paid the entire due amount to the complainant.

It is further submitted by him that the accused has miserably failed to rebut the

presumption arising in favor of the complainant in terms of Section 118 and 139

of the N.I. Act in as much as testimony of PW 1, PW 2 and PW 3, during their

cross-examination, has remained uncontroverted in material particulars. He

submits that the accused has not denied having availed the loan in question nor

has he denied his signatures on the documents. Even the issuance of the cheques


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has not been disputed by the accused and his only defense is that the cheques

were issued as security.

14. In support of his contention the following decisions of the Hon’ble Supreme

Court and the Hon’ble High Courts have been relied on by the learned counsel for

the complainant:-

1. Mainuddin Abdul Sattar Shaikh vs. Vijay D. Salvi (2015) 9 SCC 622,

2. Jugesh Sehgal vs. Shamsher Singh Gogi (2009) 14 SCC 683,

3. Babli Majumder vs. The State of West Bengal (2008) 2 CALLT 582: (2008) 3

CHN 119

4. Kavuri Suwarna Bala Sundaram vs. Karmati Poorna Chandra Rao & Anr. 2004

(2) Bankman 42.

15. Whereas, to buttress his submission the learned counsel for the accused has

placed his reliance upon the following decisions of the Hon’ble Supreme Court:-

1. Krishna Janardhan Bhat vs. Dattatraya G. Hegde (2008) 4 SCC 54,

2. Nanda w/o Dharam Nandanwar vs. Nandkishor s/o Talakram Thakur 2010 SCC

Online Bom 54,

3. Shib Kumar Todi vs. Amal Chand Champalal 1992 SCC OnLine Cal 165: (1994)

1 CHN 49: (1993) 2 Cal LJ 135,

4. Associated Timber Industries And Others vs. Central Bank of India And Another

(2000) 7 SCC 93,

5. Aneeta Hada vs. Godfather Travels And Tours Private Limited (2012) 5 SCC 661,

6. N. Harihara Krishnan vs. J. Thomas (2018) 13 SCC 663,

7. Anil Kumar vs. State of Punjab (2000) 9 SCC 455.

16. DISCUSSIONS, DECISION AND REASONS FOR DECISION:

17. Point No. (i)- Whether the accused issued the four cheques viz; cheque bearing

No. 748109 dated 30.03.2014 for a sum of Rs.14,98,659/-; cheque No.748121


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dated 30.03.2014 for Rs.2,14,618/-; cheque No.748082 dated 15.04.2014 for

Rs.2,00,000/-; and cheque No.748084 dated 15.04.2014 for Rs.2,00,000/- only for

the discharge of any legally enforceable debt or liability towards the complainant?

18. The complainant as PW 1 has reiterated the same facts as stated in his

complaint petition. The PW 1 in his evidence deposed that as per agreements

executed between him and the accused on 26.06.2012 and 16.08.2012 the

accused agreed to pay the amount due in a time bound manner and having failed

to do so, the accused by a letter dated 15.09.2013 accepted the total outstanding

of the loan and interest amount to be Rs.31,00,000/- (Rupees Thirty One Lakhs)

only as on 31.12.2013. The PW 1 exhibited the agreement dated 26.06.2012

executed between him and the accused as Ext. 1, the signature of the accused as

Ext. 1(1) and Ext. 1(3), his signature as Ext. 1(2) and Ext. 1(4) and the signature

of Shri Hemanta Kumar Sarma who was a witness to the aforesaid agreement as

Ext. 1(5). Ext. 2 is another agreement dated 26.06.2012 executed between him

and the accused and Ext. 2(1) and Ext. 2(3) are the signatures of the accused,

Ext. 2(2) and Ext. 2(4) are his signatures and Ext. 2(5) is the signature of witness

Shri Hemanta Kumar Sarma. Ext. 3 is the agreement dated 16.08.2012 executed

between him and the accused and Ext. 3(1), Ext. 3(3) and Ext. 3(4) are the

signatures of the accused, Ext. 3(2) and Ext. 3(5) are his signatures and Ext. 3(6)

is the signature of witness Shri Hemanta Kumar Sarma. Ext. 4 is another

agreement dated 16.08.2012 executed between him and the accused and Ext. 4(1)

and Ext. 4(3) are the signatures of the accused, Ext. 4(2) and Ext. 4(4) are his

signatures and Ext. 4(5) is the signature of witness Shri Hemanta Kumar Sarma.

19. After having failed to refund the amount obtained towards loan as per the

aforesaid agreements, the accused in order to discharge his legally enforceable

debt, issued cheques for Rs.21,13,277/- only by issuing four cheques in favor of

the complainant; cheque bearing No.748109 dated 30.03.2014 for a sum of

Rs.14,98,659/-; cheque No.748121 dated 30.03.2014 for Rs.21,46,18/-; cheque

No.748082 dated 15.04.2014 for Rs.2,00,000/-; and cheque No.748084 dated

15.04.2014 for Rs.2,00,000/-; to be drawn at State Bank of India, Guwahati

Branch, Guwahati-1, Assam total amounting to Rs.21,13,277/-. The PW 1 exhibited

the cheque No.748109 dated 30.03.2014 as Ext. 5 and the signature of the accused


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as Ext. 5(1). Ext. 6 is the cheque No.748121 dated 30.03.2014 wherein the

signature of the accused is exhibited as Ext. 6(1). Ext. 7 is the cheque No.748082

dated 15.04.2014 wherein the signature of the accused is exhibited as Ext. 7(1).

Ext. 8 is the cheque No.748084 dated 15.04.2014 wherein the signature of the

accused is exhibited as Ext. 8(1).

20. But on presentation in his bank, State Bank of India, Guwahati Branch in his

S/B A/C No.1082398676 on 02.05.2014 for clearance, all the aforesaid four

cheques were dishonored due to insufficient fund. The accused cross-examined

the PW 1 in this regard. In his cross-examination the PW 1 admitted that the

cheque numbers in the legal notice are wrong. He admitted that the dishonored

cheque numbers are cheque bearing No. 748109 dated 30.03.2014 for a sum of

Rs.14,98,659/-; cheque No.748121 dated 30.03.2014 for Rs.2,14,618/-; cheque

No.748082 dated 15.04.2014 for Rs.2,00,000/-; and cheque No.748084 dated

15.04.2014 for Rs.2,00,000/- only but in the legal notice the cheque numbers have

been wrongly mentioned as cheque bearing No. 784109 dated 30.03.2014 for a

sum of Rs.14,98,659/-; cheque No.784121 dated 30.03.2014 for Rs.2,14,618/-;

cheque No.784082 dated 15.04.2014 for Rs.2,00,000/-; and cheque No.784084

dated 15.04.2014 for Rs.2,00,000/- only.

21. PW 2 Shri Chinmoyjyoti Borthakur, Deputy Manager, State Bank of India,

Guwahati Branch, deposed that the cheque No.748109 has been issued from

account number 30526329784 which is in the name of M/s Ottis Associates (P)

Ltd. He further deposed that the Director has been authorized to issue the cheques

and that Mr. Suresh Kr. Kashliwal is the authorized signatory of the cheque. He

deposed that the cheque account was from SBI amounting to Rs.14,98,659/-and

Mr. Suresh Kr. Kashliwal had issued the cheque for Benudhar Das. He does not

know whether Benudhar Das presented the cheque bearing No.748109 in his bank.

He proved the deposit slip of SBI as Ext. 10. He also produced the cheque return

memo as Ext. 13 wherein there is mention of cheque No.748109. He deposed that

the cheque was dishonored due to insufficiency of funds. PW 2 further deposed

that cheque No.748121 was issued from account number 30526329784 of SBI

amounting to Rs.2,14,618/- which was also dishonored due to insufficiency of


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funds. Similarly, cheque Nos. 748082 and 748084 for Rs.2,00,000/- each were also

dishonored due to insufficiency of funds.

22. PW 3 Dipankar Nath, Advocate, deposed that he was entrusted by the

complainant to issue demand notice to the accused after the dishonor of the four

cheques. The cheque Nos. were 748109, 748121, 748082 and 748084. During his

cross-examination PW 3 admitted that the cheque numbers as mentioned in the

legal notice is wrong. He denied that since he had sent the demand notice

mentioning wrong cheque numbers which had never been dishonored the said

legal notice is wrong.

23. Now the accused side submitted that since the complainant side has not been

able to adduce any evidence or produce any document to show that the accused

is liable to pay an amount of Rs.21,13,277/- to the complainant or has issued the

four cheques in discharge of any debt or liability so the accused should be

acquitted.

24. The first defense taken by the accused is that in the legal notice (Ext.14) the

complainant has mentioned cheques with different cheque numbers since the

alleged dishonored cheques exhibited by the complainant as Ext. 5, 6, 7 and 8

respectively bears cheque numbers 748109, 748121, 748082 and 748084 whereas

in the demand notice the cheque numbers mentioned are 784109,784121,784082

and 784084 which implies that the complainant has made a demand of cheques

which had never got dishonored and hence the accused prayed for outright

dismissal of the complaint.

25. In this regard the complainant has relied on a single bench decision of the

Hon’ble Calcutta High Court reported in (2008) 2 CALLT 582: (2008) 3 CHN

119 wherein the Hon’ble Calcutta High Court has held that,

12“…The number on the dishonored cheque is of no relevance for the

drawer to pay the amount covered by such dishonored cheque and the

mere ground that a wrong cheque number was written on the demand

notice is no ground for quashing of the proceeding”.


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26. In this connection the complainant has also relied on a decision of the Hon’ble

Andhra Pradesh High Court reported in 2004 (2) Bankman 42, wherein the

Hon’ble High Court held that,

6 “…When Section 138 of the Act contemplates only the amount covered

by the dishonored cheque, but not its number, being mentioned in the

notice contemplated by that section, it is not necessary for the drawer

to mention the number of the cheque, for the drawer to comply with the

demand made in the notice, because the drawer shall have 15 days time

to comply with the demand made and the drawer can easily find out from

his Bank, within that time, which out of the several cheques issued by

him was dishonored. In fact the number on the dishonored cheque is of

no relevance for the drawer to pay the amount covered by such

dishonored cheque. Therefore, mentioning of the number of the

dishonored cheque is wholly unnecessary and irrelevant in a proceeding

under Section 138 of the Act. In view thereof the fact that there is a

variation in the number of the cheque mentioned in the notice of

dishonor and in the body of the complaint and the cheque that is filed in

the court is of no consequence when in the notice of demand the amount

covered by the dishonored cheque is correctly mentioned. So, merely on

the ground that, wrong cheque number of the dishonored cheque is

mentioned in the notice under Section 138 of the Act and the complaint;

the complaint cannot be quashed.”

27. Another limb of argument of the learned counsel for the accused is that the

four cheques which were issued by him were of M/S Ottis Associates (P) Ltd. of

which the accused is the authorized signatory but the complainant has never made

M/S Ottis Associates (P) Ltd. a party in the instant case and so the instant case is

liable to be dismissed of. Here in support of his submission the accused side has

placed reliance on Aneeta Hada vs. Godfather Travels And Tours Private

Limited and on N. Harihara Krishnan vs. J. Thomas.

28. In this connection the complainant has relied upon a decision of the Hon’ble

Apex Court reported in Mainuddin Abdul Sattar Shaikh vs. Vijay D. Salvi

(2015) 9 SCC 622 wherein it has been held that a person who is responsible for


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the affair of a company can be made liable under Section 138 of the Negotiable

Instrument Act, even though the company has not been named in the notice or

the complaint.

29. In his cross-examination the PW 1 admitted that he had not made M/S Ottis

Associates (P) Ltd. a party in this case. He further admitted that the cheques which

were dishonored were of M/S Ottis Associates. He admitted that the account

number as reflected in the said cheques are of M/S Ottis Associates (P) Ltd. PW 1

further deposed that he does not remember whether 30526329784 is his bank

Account Number or not. He denied the suggestion that after issuance of the

cheques the accused paid Rs.5,75,000/- in the aforementioned account. PW 1

admitted that the accused had paid Rs.1,00,000/-. He further deposed that

Rs.1,00,000/- had not been deducted as mediation process was entered into with

the accused. In his income tax file, only Rs.12,38,277/- has been shown. PW 1

admitted that out of Rs.31,00,000/- the accused paid Rs.6,95,000/- prior to filing

of this case.

30. The next alternative argument of the learned counsel for the accused is that

at the very onset the complainant had asserted that the accused had liability to

pay Rs.31,00,000/- to the complainant and thereafter the accused paid an amount

of Rs.6,95,000/- which therefore makes the total outstanding amount to be

Rs.24,05,000/- only, then why the complainant conceded in taking cheques only

amounting to Rs.21,13,277/-.

31. The answer of the same lies in the four cheques issued by the accused for

Rs.21,13,277/- only towards discharge of part liability. Accused may have been

liable to pay Rs.24,05,000/- to the complainant but the cheques issued by him

were for Rs.21,13,277/- only. As such, the complainant has no hold over it. So he

has instituted this case for Rs.21,13,277/- only. This argument holds no water as

it is not a money suit wherein the complainant is seeking recovery of entire loan

amount. It is a case u/s 138 of N.I. Act and the accused had issued the cheques

for Rs.21,13,277/- which may be less than the total outstanding amount of

Rs.24,05,000/- but then liability of the accused to pay remaining amount does not

cease with the issuance of the cheques in the instant case. The fact that the

accused had issued not one but four numbers of cheques makes it very clear that


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he intends to repay the loan in instalments. So it can be deduced that he still has

the liability to pay the remaining outstanding loan amount. Hence, I am of the

considered view that the complainant has not conceded in taking only

Rs.21,13,277/-.

32. Another defense taken by the accused is that the cheques were issued as

security. The expression ‘security cheque’ is not a statutorily defined expression in

the N.I. Act. Section 138 of N.I. Act does not distinguish between a cheque issued

by the debtor in discharge of an existing debt or other liability, or a cheque issued

as a security cheque on the premise that on the due future date the debt which

shall have crystallized by then, shall be paid. So long as there is a debt existing, in

respect whereof the cheque in question is issued, the same would attract Section

138 of N.I. Act in case of its dishonor.

33. In I.C.D.S. Vs. Beena Shabeer and Another; (2002) 6 SCC 426 the

Hon’ble Apex Court has held that:

“The commencement of the Section stands with the words “Where

any cheque”. The above noted three words are of extreme

significance, in particular, by reason of the user of the word “any”

the first three words suggest that in fact for whatever reason if a

cheque is drawn on an account maintained by him with a banker

in favor of another person for the discharge of any debt or other

liability, the highlighted words if read with the first three words

at the commencement of Section 138, leave no manner of doubt

that for whatever reason it may be, the liability under this

provision cannot be avoided in the event the same stands

returned by the banker unpaid. The legislature has been careful

enough to record not only discharge in whole or in part of any debt

but the same includes other liability as well.”

34. Thus even if the contention of the accused that the cheques-in-question were

issued as security is believed, then also as per the ratio as laid down in I.C.D.S.

Vs. Beena Shabeer And Another; (supra), security cheque will also come

under the purview of Section 138 of the N.I. Act if it is proved by the complainant


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that the accused was liable to pay the cheque amount when the same was

deposited for encashment.

35. Learned counsel for the accused contended that the complainant was dealing

in money lending business as it is admitted in the complaint that the complainant

had advanced loan to the accused and interest of 15% to 20% was charged,

therefore the complainant was required to have a license as laid down under

Section 7-C of the Assam Money Lenders Act, 1934 which says-“no person shall

carry on the business of money lending unless he holds a valid registration

certificate in this behalf.”

36. However, the accused has not led any evidence to prove that the complainant

does business of money lending and hence the money which was advanced by the

complainant is not “debt or other liabilities” as per explanation to Section 138 of

N.I. Act and that provision of Section 138 of N.I. Act would not apply to such

transaction.

37. In my considered opinion, it is now well settled that for the offence under

Section 138 of the Act to be made out against the accused, the complainant must

prove the following points, that:-

1. The accused issued a cheque on account maintained by him with a bank.

2. The said cheque has been issued in discharge, in whole or in part, of any legal

debt or other liability.

3. The said cheque has been presented to the bank within a period of three months

from the date on which it is drawn or within the period of its validity whichever is

earlier.

4. The aforesaid cheque, when presented for encashment, was returned by the

bank unpaid/dishonored.

5. 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.


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6. The drawer of the cheque failed to make the payment within 15 days of the

receipt of aforesaid legal notice of demand.

38. The N.I. Act raises two presumptions in favor of the holder of the cheque i.e.

complainant in the present case; firstly, in regard to the passing of consideration

as contained in Section 118 (a) and secondly, a presumption that the holder of

cheque receiving the same of the nature referred to in Section 139 discharged in

whole or in part any debt or other liability.

39. Section 118 of the N.I. Act provides:-

“Presumptions as to negotiable instruments: Until the contrary is proved, the

following presumptions shall be made: (a) of consideration- that every negotiable

instrument was made or drawn for consideration, and that every such instrument,

when it has been accepted, indorsed, negotiated or transferred was accepted,

indorsed, negotiated or transferred for consideration.”

40. Section 139 of the N.I. Act further provides as follows:-

“Presumption in favor of holder- 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.”

41. For the offence under Section 138 of the Act, the presumptions under Section

118 (a) and 139 have to be compulsorily raised as soon as execution of cheque by

accused is admitted or proved by the complainant and thereafter burden is shifted

to accused to prove otherwise. These presumptions shall be rebutted only when

the contrary is proved by the accused, that is, the cheque was not issued for

consideration and in discharge of any debt or liability etc. A presumption is not in

itself evidence but only makes a prima facie case for a party for whose benefit it

exists. Presumptions both under Section 118 and 139 are rebuttable in nature.

Both Section 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. Same

was held by the Hon’ble Supreme Court of India in Hiten P. Dalal v. Bratindranath

Banerjee [(2001) 6 SCC 16)]. Following the judgment of the Hon’ble Supreme

Court in State of Madras vs. Vaidyanatha Iyer AIR 1958 SC 61, it was held by the


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Hon’ble Supreme Court that it was obligatory on the Court to raise this

presumption.

42. A meaningful reading of the provisions of the N.I. Act, makes it amply clear

that a person who signs a cheque and makes it over to the payee remains liable

unless he adduces evidence to rebut the presumption that the cheque had been

issued for payment of a debt or in discharge of a liability. Initially, the complainant

has to prove the existence of debt and other liabilities and thereafter the burden

shifts upon the accused to prove that the cheque was not issued towards discharge

of a lawful debt but was issued by way of security or any other reason on account

of some business transaction or was obtained unlawfully.

43. In the present case, the accused has admitted the issuance of the cheques in

question, in his statement under Section 313 Cr.P.C. Reference can be made to

judgment of Hon’ble Apex Court in Rangappa vs. Sri Mohan, AIR 2010 SC

1898, that,

6. “Once the cheque relates to the account of the accused and he accepts

and admits the signatures on the said cheque, then initial presumption

as contemplated under Section 139 of the Negotiable Instruments Act

has to be raised by the Court in favour of the complainant.”

44. Also in the case of K. Bhaskaran vs. Sankaran Vaidhyan Balan 1999 (4)

RCR (Criminal) 309, it has been held by the Hon’ble Supreme Court as under:

“As the signature in the cheque is admitted to be that of the accused, the

presumption envisaged in Section 118 of the Act can legally be inferred

that the cheque was made or drawn for consideration on the date which

the cheque bears. Section 139 of the Act enjoins on the Court to presume

that the holder of the cheque received it for the discharge of any debt or

liability.”

45. The accused has not denied issuing the four cheques. He has contended that

the complainant has misused his security cheques but he failed to produce any

materials on record to show that he has taken any action against the complainant

after coming to know that the complainant has misused his cheques. He has not


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produced any document to show that he has cleared all his dues to the

complainant. He had also not filed any complaint before the law enforcing

authorities for the misuse of his cheques by the complainant. He did not issue any

written notice to the complainant to return his cheques. Bare averments do not aid

the case of the accused as he had not lead cogent evidence supporting them. What

has to be seen is the existence of the liability towards the complainant when the

cheque in question is presented to the bank. It is, thus clear, that for whatever

reason if a cheque is drawn on an account maintained by a drawer with its bank

in favor of any person for the discharge of any debt or other liability the ingredients

of offence under Section 138 of the N.I. Act gets attracted in case the cheque is

returned dishonored and the cheque amount remains unpaid within the statutory

period, despite service of notice. The defense above, therefore, of the accused is

no longer relevant in the given facts and circumstances of the present case as the

accused has been unable to establish the non-existence of any liability as on date

of presentment of the cheques by the complainant. The accused was unable to

elicit anything material from the complainant during his cross-examination. Rather,

the complainant held strongly and consistently to his contention making his story

more credible vis a vis that of the accused. Further the accused has not brought

on record even a single document which could show that the cheques were not

given to the complainant for the purpose as alleged by the complainant.

46. Mere suggestion to the complainant that he had misused the cheques and that

accused did not have any legal debt or liability or mere explanation given in the

statement of accused under Section 313 Cr.P.C. that the cheques were given as

security does not amount to proof. Since in the instant case, the accused has failed

to lead any convincing evidence to aid him in discharge of his onus, the

presumption of law operates in favor of existence of debt or liability. I am of the

opinion that the defense set up by the accused is neither definitive nor consistent

with his innocence. It was the sole burden and duty of the accused to prove

absence of liability by raising a probable defense. However, he has failed to

discharge his onus. Except for making bare averments, accused has not led any

cogent evidence which could be termed as a probable defense. According to the

complainant, had there been no liability of the accused towards the complainant

under the cheques in question, accused would not have written the letter dated


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13.05.2014 to the complainant to grant him time till 02.06.2014 to pay the amount.

Also in the Ext. 16 mediation report dated 01.04.2016 the complainant in

paragraph 1 had agreed to pay a sum of Rs.20,18,237/- to the complainant within

31.12.2016.

47. Now the question that would arise is whether the accused has rebutted the

statutory presumptions available in favor of the complainant. The counsel for the

accused submitted that there was no existing debt or liability but the accused failed

to substantiate his claim.

48. The Hon’ble Gauhati High Court in Ambika Baishya Vs. State of Assam

and another [(2009) 6 GLR 726] held that holder of a cheque shall be

presumed to have received the cheque in discharge of a debt or liability which the

drawer of the cheque had and presumption cannot be discharged by the drawer

by merely offering a reasonable or plausible explanation, the presumption can be

discharged only when the drawer proves that he had no such debt or liability as

the sum mentioned in the cheque reflects. But in this case there is nothing from

the part of the accused to rebut the presumption that the four cheques were not

issued to discharge any liability in part or whole towards the complainant by him.

Also the plea of the accused that there is no existing debt or liability is of no help

in view of admitted signature of the accused on the cheques. The defense could

not rebut the presumption cast upon him. There is no remote whisper that the

accused did not execute any of the documents. Except giving suggestion the

accused adduced no rebuttal evidence, nether there is any effective cross-

examination of the complainant’s evidence to rebut the statutory presumption that

on the day of issuance of the cheques there is no such legally enforceable debt

against the accused. Except mere suggestion no any material was brought on

record to rebut the statutory presumption. In his statement under Section 313

Cr.P.C. the accused readily admitted all about issuance of the cheques and only

plea he raised is that he issued the cheques as security. The decisions relied on by

the accused is of no help to the accused in view of such clear admission because

the fact admitted need not be proved. The accused in his reply to the legal notice


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vide Ext. 14 has also not challenged the documents, instead prayed time for

payment. So in my opinion it can be presumed that the cheques were issued by

the accused to the complainant to discharge his liability towards the complainant.

Hence from the above discussions it is held that the accused issued the cheques

for the discharge of a legally enforceable debt or liability towards the complainant.

49. Point No. (ii)- Whether the four cheques were dishonored for the reason

“Insufficient Fund” in the account of the accused?

50. The PW 1 deposed that he had deposited all the four cheques viz; cheque

bearing Nos.748109, 748121, 748082 and 748084 on 02.05.2014 but they were

returned unpaid by the banker of the accused with the remark “Insufficient Fund”

vide cheque return memo dated 05.05.2014. He exhibited the four deposit slips as

Ext. 9, Ext. 10, Ext. 11 and Ext. 12, wherein his signatures were exhibited as Ext.

9(1), Ext. 10(1), Ext. 11(1) and Ext. 12(1). The PW 1 exhibited the cheque return

memo dated 05.05.2014 as Ext. 13 wherein the reason for dishonor was mentioned

as “Insufficient Fund”. The accused in his statement under Section 313 of Cr.P.C.

stated that he does not have any knowledge about the dishonor of the aforesaid

four cheques due to insufficient fund.

51. Now in my opinion when a cheque is accepted it may be presumed that the

money will be available when the cheque is presented before the bank for

encashment. So considering the exhibited return memo and in absence of anything

from the accused side in his defense it is held that the four cheques were

dishonored for the reason “Insufficient Fund” in the account of the accused.

52. Point No. (iii)- Whether the accused received the demand notice issued by the

complainant regarding the dishonor of the four cheques?

53. The PW 1 admitted in his cross-examination that he had not annexed the A/D

card. He exhibited the legal demand notice dated 06.05.2014 which was marked

as Ext. 14 and the signature of the advocate Shri Dipankar Nath as Ext. 14(1). PW

1 deposed that the said notice of demand was duly received by the accused and

thereafter the accused by a letter dated 13.05.2014 while referring to the aforesaid


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notice dated 06.05.2014 had undertaken to clear the outstanding dues and

requested to grant him time till 02.06.2014. But in spite of receiving the demand

notice and the undertaking given by him the accused failed to liquidate the amount

of the four cheques within 02.06.2014 or within a period of 15 days after receipt

of the demand notice. The PW 1 exhibited the letter dated 13.05.2014 which was

marked as Ext. 15 and the signature of the accused Shri Suresh Kumar Kashliwal

was exhibited as Ext. 15(1).

54. Although the accused in his statement u/s 313 of Cr.P.C. stated that he had

not received the demand notice, but he has not led any evidence in support of his

claim. Though service of demand notice is denied by the accused, however,

address mentioned in the legal notice is the same as the address mentioned by

the accused during the proceedings. Therefore, a presumption of due service is

drawn under Section 27 of General Clauses Act which provides that where notice

is sent to the correct address, the same shall be presumed to have been duly

served. Moreover, on perusal of the above exhibits and in view of the letter dated

13.05.2014, there is nothing on record to doubt or disbelieve the genuineness of

the above exhibits. In view of the ratio as laid down in C.C. Alavi Haji (2007 Crl.

L.J. 3214) the accused cannot take any advantage of the plea that he has not

received the legal demand notice. Thus the demand notice dated 06.05.2014 was

duly served upon the accused.

55. Point No.(iv) Whether the accused has committed the offence under Section

138 of the Negotiable Instruments Act, 1881?

56. The offence under Section 138 of the N.I. Act is complete on the satisfaction

of certain conditions which are that the cheque has to be issued on the account

maintained by the accused and that the cheque has to be issued for the discharge

of a debt or liability. It is further provided that the said cheque has to be deposited

within three months of its issuance or within its validity and that the notice

regarding the dishonor of the cheque ought to be given within 30 days of the

receipt of information regarding the dishonor.


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57. In the instant case at hand it is already held that the four cheques were issued

by the accused in the account maintained by him and that the said cheques were

dishonored due to the reason “Insufficient Fund” in the account of the accused.

The cheque No. 748109 was issued in the instant case on 30.03.2014 as it

appeared from Ext. 5, cheque No. 748121 was issued on 30.03.2014 as it appeared

from Ext. 6, cheque No. 748082 was issued on 15.04.2014 as it appeared from

Ext. 7 and cheque No. 748084 was also issued on 15.04.2014 as it appeared from

Ext. 8. All the four cheques were presented for encashment before the banker of

the complainant on 02.05.2014 and the cheques were dishonored on 05.05.2014.

The demand notice was issued by the complainant on 06.05.2014 which is within

30 days from the receipt of information of dishonor. The notice was received by

the accused by 13.05.2014 and the complainant lodged this case on 03.06.2014

which is within 30 days after the lapse of 15 days from the date of receipt of

demand notice; hence the complaint is lodged within the period of limitation.

58. In view of the above discussion it is held that all the ingredients of the offence

under Section 138 of the N.I. Act, 1881 are satisfied in the instant case and further

the complainant has satisfied all the requisites for the institution of the complaint;

hence it is held that the accused Shri Suresh Kumar Kashliwal has committed the

offence under Section 138 of the N.I. Act, 1881.

59. In view of the discussions made above and the decisions reached in the

foregoing points for determination it is held that the accused has committed

offence under Section 138 of the N.I. Act, 1881 and as such the accused is

convicted under Section 138 of the N.I. Act, 1881.

60. I have heard the parties. I am not inclined to extend the benefit of the

provisions of the Probation of Offenders Act, 1958, because the offence committed

is in the nature of an economic offence and the backbone of the nation depends

on a healthy economy. Moreover the real intention behind the enactment of the


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said law is to provide quick remedy to the payee or the holder of the cheque, and

also to instil a sense of confidence and assurance to the business community.

61. Considering the nature of the offence and the other attending facts and

circumstances of this case, the accused is convicted of the offence under Section

138 of the N.I. Act, 1881 and he is sentenced to undergo simple imprisonment for

12 (twelve) months and further to pay compensation of Rs.42,26,554/- (Rupees

Forty Two Lakhs Twenty Six Thousand Five Hundred And Fifty Four) only to the

complainant as the total cheque amount of the four cheques is Rs.21,13,277/-

(Rupees Twenty One Lakhs Thirteen Thousand Two Hundred And Seventy Seven)

only and more than 5 years 7 months have elapsed from the date of issuance of

the four cheques. It is further directed that the convict shall undergo simple

imprisonment for another 4 (four) months in default of the payment of

compensation.

62. Furnish a free copy of the judgment to the convict immediately. The case is

disposed of on contest.

63. Given under my hand and seal of this Court today the 04th of December, 2019

at Kamrup (Metro), Guwahati.

(Dimpy Naroh)

Judicial Magistrate First Class

Kamrup (Metro), Guwahati


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APPENDIX

(A) Complainant’s Exhibits:

Ext. 1- Agreement dated 26.06.2012 executed between the

complainant and the accused.

Ext. 1 (1) - Signature of the accused on the agreement.

Ext. 1 (1) - Signature of the complainant on the agreement.



Ext. 1 (5) - Signature of the Shri Hemanta Kumar Sarma, witness to

the Agreement dated 26.06.2012 executed between the complainant

and the accused.







Ext. 2 (5) - Signature of Shri Hemanta Kumar Sarma, witness to the

Agreement dated 26.06.2012 executed between the complainant and

the accused.






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the accused.

Ext.4-Agreement dated 16.08.2012 executed between the








the accused.

Ext. 5- Cheque No.748109 dated 30.03.2014.

Ext. 5 (1) - Signature of the accused on the cheque.








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Ext. 9- Deposit Slip dated 02.05.2014 as regard deposit of Cheque

No.748109 dated 30.03.2014.

Ext. 9 (1)- Signature of the complainant.


No.748121 dated 30.03.2014.



No.748082 dated 30.03.2014.



No.748121 dated 30.03.2014.


Ext. 13- Return Memo dated 05.05.2014.

Ext. 13 (1)- Signature of the concerned Officer of the State Bank of

India, Guwahati Branch, Pan Bazar, Guwahati-1.

Ext. 14- Copy of the Notice dated 06.05.2014.

Ext. 14 (1) - Signature of the Advocate Dipankar Nath.

Ext. 15- Letter dated 13.05.2014.

Ext. 15 (1)- Signature of the accused.

Ext. 16- Report dated 01.04.2016 of Mediator Smt. Banashree Gogoi.

Ext. 16 (1)-Signature of Smt. Banashree Gogoi.

Ext. 17- Evidence-on-affidavit of the Complainant.

(B)Defence Exhibits:- NIL

© Witnesses Exhibits:-NIL


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(D)Complainant’s Witness:-

PW 1- Shri Benudhar Das

PW 2- Shri Chinmoy Jyoti Borthakur

PW 3- Shri Dipankar Nath

(E) Defence Witness:-NIL

(F) Court Witness:-NIL

(Dimpy Naroh)




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C. R. Case No.1399c of 2014

ORDER

04/12/2019 Complainant Shri Benudhar Das is present.

Accused Shri Suresh Kumar Kashliwal is present.

Judgment is pronounced and delivered in the open Court. Judgment pronounced

is tagged with the case record.

In the result, the complainant has been able to prove that the accused person is

guilty of committing offence punishable u/s 138 of the Negotiable Instruments Act,

1881.

Considering the nature of the offence and the other attending facts and

circumstances of this case, the accused is convicted of the offence under Section

138 of the N.I. Act, 1881 and he is sentenced to undergo simple imprisonment for

12 (twelve) months and further to pay compensation of Rs.42,26,554/- (Rupees

Forty Two Lakhs Twenty Six Thousand Five Hundred And Fifty Four) only to the

complainant as the total cheque amount of the four cheques is Rs.21,13,277/-

(Rupees Twenty One Lakhs Thirteen Thousand Two Hundred And Seventy Seven)

only and more than 5 years 7 months have elapsed from the date of issuance of

the four cheques. It is further directed that the convict shall undergo simple

imprisonment for another 4 (four) months in default of the payment of

compensation.

Furnish a free copy of the judgment to the convict immediately.

The case is disposed of on contest.

(Dimpy Naroh)




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IN THE COURT OF THE JUDICIAL MAGISTRATE FIRST CLASS ...kamrupjudiciary.gov.in/dec 19/dj dec...

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