PR. CIT-21 vs. THE MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD.

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v. Cheques no. 680665 and 680668 were returned dishonored vide return memos dated 08.05.2009, cheque no. 680667 was returned dishonored vide return memo dated 04.04.2009 and cheque no. 680666 was returned dishonored vide return memo dated 28.02.2009, due to 'insufficient funds'. vi. Thereafter, the respondent asked the appellant to deposit the cheques again in the first week of June 2009, saying that he would arrange for funds by then. vii. Accordingly, the appellant deposited the cheques again, however, all four of which were returned dishonored due to ‘insufficient funds,’ vide return memo dated 03.06.2009. viii. The appellant sent a legal notice dated 06.06.2009 calling upon the respondent to make these payments but no response was given by the respondent person to the same. ix. Upon not receiving the cheque amounts, the appellant initiated the proceedings under Section 138 of the NI Act before the Court of learned ACMM (Shahdara), Karkardooma Courts, Delhi dated 11.07.2009. 3. The learned Magistrate, after going through the averments made in the complaint issued summons to the respondent. The respondent thereafter appeared in pursuance of a summons issued to him and in his statement under section 251 of the Cr.P.C., pleaded innocence, and claimed trial. 4. During the trial, the appellant to prove his case, examined himself as CW-1 and reiterated the contents of his complaint in his evidence. He also examined his bank account statement (CW-2/A) which was produced by the Digitally Signed By:RANJU BHALLA Signing Date:11.12.2023 18:52:15 Signature Not Verified

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clerk of the bank (CW-2). On the other hand, the respondent had not examined himself as a witness however, he examined Mr. Manoj Kumar (DW-1) as his sole defence witness, who stated that the appellant had taken the cheques from him on the pretext that the accused had authorized him to receive those cheques. 5. On appreciation of evidence, the learned Magistrate held that the cross- examination of the appellant did not inspire confidence hence, the same could not be relied upon for the conviction of the respondent for the offence under Section 138 of the NI Act. The learned Magistrate noted that there was no corroborative evidence in the bank account statement of the appellant (Ext. CW-2/A), as produced by the Assistant Manager, SBI Khureji Khas Branch, Delhi, that can substantiate the claim and financial capacity of the appellant that he had paid these alleged sums of money to the respondent. Therefore, the appellant was not able to establish how he paid the respondent in the first place. The learned Magistrate further noted that the cross-examination of the appellant had demolished his case and concluded that reliance could not be placed on his testimony. In view of the aforesaid, the learned Magistrate acquitted the appellant vide judgment dated 05.04.2016 in CC No. 789/2015 titled ‘Irshad Ahmed v. Sukhe Singh @ Mahesh Master’. 6. Feeling aggrieved by the impugned judgment, the appellant has preferred the present appeal against the judgment of acquittal given by the learned Magistrate. Submissions on behalf of the Appellant/Complainant 7. Learned counsel for the appellant contended that no receipt of payment was taken from the respondent as the payment was given in good faith as the Digitally Signed By:RANJU BHALLA Signing Date:11.12.2023 18:52:15 Signature Not Verified

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respondent was known to the appellant and was residing near his in-laws' home. It was submitted that the money which was given to the respondent by the appellant was from his annual savings. The appellant has contended that no one was with him when he had extended the alleged sum of money to the respondent or when the respondent handed over the cheques to him. It is the case of the appellant that the respondent was not able to rebut the presumption under Section 139 of the NI Act, which is in favour of the holder of the cheque i.e., the appellant. 8. Learned counsel for the appellant further contended that the respondent has not disputed the fact that he has not filled those cheques nor there is any suggestion made during the cross-examination of the appellant regarding this fact at the instance of the respondent. It is the case of the appellant that the respondent has not taken any active steps on his part regarding the non-return of signed cheques by the appellant including the registration of a complaint or any legal notice demanding the return of the alleged cheques for that matter. In addition to this, it was submitted that the respondent has raised a sole defence that the complainant had taken the cheques which were lying with Manoj Kumar (DW-1) and misused them. Moreover, he placed reliance on the testimony of Manoj Kumar (DW-1), the only defence witness examined by the respondent, and contended that Manoj Kumar (DW-1) had identified the cheques taken by the appellant from him during his examination and the respondent had not disputed the handing over of the cheques by Manoj Kumar (DW-1) to the appellant.

Digitally Signed By:RANJU BHALLA Signing Date:11.12.2023 18:52:15 Signature Not Verified

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Submissions on behalf of the Respondent/Accused 9. Refuting the contentions of the appellant, the learned counsel for the respondent submitted that the appellant had not paid any money to the respondent. The appellant does not have any receipt to prove the payment of the alleged amount to the respondent nor he has shown any bank account or disclosed any other place from where he could have gotten the said amount which raises doubt regarding the financial capacity of the appellant to extend the alleged sum of money to the respondent. It is the case of the respondent that these cheques were lying with Manoj Kumar (DW-1) and the appellant took those cheques from him and misused them. The respondent came to know about the dishonour and misuse of the cheques only when he received the summons from the Court of learned Magistrate. 10. Learned counsel for the respondent further submitted that the respondent had rebutted the statutory presumption under Section 139 of the NI Act made against him at the beginning of the case and the burden to prove this case beyond any reasonable doubt was on the appellant. The appellant had not produced any witness or document to prove the payment of the alleged amount of money. Learned counsel for the respondent placed reliance on the testimony of the appellant in which he had not revealed the names of the persons to whom the respondent had allegedly sold the plot and where that alleged plot was situated. It is the case of the respondent that the cross- examination of the appellant had demolished his case, as his testimony did not appear to be believable and trustworthy. Analysis and Findings 11. Heard learned counsel for the parties and perused the record. Digitally Signed By:RANJU BHALLA Signing Date:11.12.2023 18:52:15 Signature Not Verified

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Cross-examination on 11.04.2012: “I do not remember the exact date when I contacted to the accused in his house where 2/3 persons were present. It is wrong to suggest that no such incident was taken place that is why I do not remember the exact date. The rate of the plot was 2100/- per sq. yards. I do not remember whether Digitally Signed By:RANJU BHALLA Signing Date:11.12.2023 18:52:15 Signature Not Verified

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I told to my counsel or not at the time of preparing the complaint case, legal notice as well as in my statement by way of directions/surrounding of the plot at the time of purchasing the said plot. It is correct that I had not mentioned the amount in my Income Tax Return in the year 2007. It is wrong to suggest that I did not pay any amount to the accused therefore I had not mentioned in my Income Tax Return. I will try best to produced the record regarding the Income tax return of the year 2007 on the next date of hearing. ***

***

***

…. The amount which was given to the accused was the saving of 2/3 years. I have a bank account but I do not remember the number of the bank account. The name of the bank is SBI at Khureji, Delhi. The saving of my income was not deposited in the bank, but I keep at my house. At first, I gave Rs. One Lakh to the accused in the denomination of Rs.500/- , 100/-. I do not remember the number of the notes. The same was given to the accused in the presence of 2/3 persons in the office of the accused. I do not remember the exact number of the office but it is situated at East Vinod Nagar, near Gurudwara. Vol. At that time above said 2-3 persons were known to the accused.”

Cross-examination on 04.12.2012:

“…. I came to know after payment of money that the plot had been sold several times to other persons. I do not remember the dates on which I visited the site. I do not know as to who had previously purchased the plot. (Vol. the people. present on the site when I had visited the site told me that they had already purchased the plot). I do not know their names and addresses. I cannot produce my income and expenditure account to show the source from which I purchased the plot. I had paid the money to accused which was accumulated through my regular savings of my business. I do not maintain the record of people, who do business with me. It is wrong to suggest that I have not purchased any plot from accused or that I have made no payment to accused. I had asked for return of my money from accused, 5-8 days after making the last payment on 7.7.2007. I do not remember the exact date. This fact is not mentioned in my complaint as well as my affidavit that I had asked for return of money after 5-8 days. (Vol. I may have disclosed the said fact to my advocate). I had gone to the house of accused to demand Digitally Signed By:RANJU BHALLA Signing Date:11.12.2023 18:52:15 Signature Not Verified

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money in Shakarpur Village. I do not know the house number and the name of land lord. (Vol. However, I can show the place, where the accused was residing on rent). I do not remember the exact date on which the accused gave me the cheque, however, he had given the cheque 15-30 days prior to 30.01.2009. It was a postdated cheque. ***

***

*** I have not mentioned this fact that the cheque was given to me 15-30 days prior to the date of cheque in my complaint and affidavit. No one else was present at the time of giving of cheque. After dishonour the cheque, I called the accused on phone, thereafter, I also personally me him for return of my money. ***

*** *** I do not remember the date, month and year, when I talked with the accused regarding dishonour the cheque and I also do not remember the phone number. It is correct that the above said fact that after dishonour of four cheques when I met the accused, he told me that he (accused) was about to receive a cheque of Rs. 3,00,000/- and then I should represent all the four cheques) is not mentioned in my complaint, legal notice and affidavit. It is wrong to suggest that no such aforesaid incident took place and so, it is not mentioned in my complaint. It is wrong to suggest that the above said blank cheques were given to one Monoj Kumar S/o Sh. Dheeraj Singh, who is the friend of the accused. It is further wrong to suggest that the above said cheques were taken by me from Manoj (Vol. Cheques were handed over by the accused to me). It is wrong to suggest that I have misused the above said cheques in order to cheat the accused. I had not sent legal notice at the official address of the accused at Khichripur as the accused had already left the said office prior to the sending of the notice. I cannot tell the exact date, when I came to know that the accused has left the official address of Khichripur. The demand legal notice was received by the accused. I had not produced any delivery receipt regarding the service of legal notice.”

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Moreover, the cross-examination of the appellant (CW-1) creates a doubt regarding the following facts: i. the case of the appellant that he had made payment to the respondent for the alleged purchase of the plot of land and the allegation that the said plot had been sold to other people as well and; ii. the financial capacity of the appellant to pay Rs. 2,07,000/- to the respondent. 14. During the proceedings, contentions were raised regarding the rebuttal of statutory presumptions raised against the accused under Section 139 read with Section 118 of the NI Act. 15. In matters pertaining to the dishonour of cheques, the question that a Court has to determine is whether the ingredients of the offence under Section 138 of the Act have been met and if so, whether the accused was able to rebut the statutory presumption as has been envisaged under Section 139 of the Act. However, this statutory presumption under Section 139 read along with Section 118 of the NI Act makes only a prima facie case in favour of the complainant at the threshold of the trial, at time of summoning and framing of notice under Section 251 of the Cr.P.C., but the same can be rebutted by the accused during the course of trial. It is the settled position of law that the accused need not prove his case beyond a reasonable doubt to dislodge these statutory presumptions, he can do so by making a proper case based on the preponderance of probabilities. 16. The Hon’ble Supreme Court, in Rangappa v. Sri Mohan, (2010) 11 SCC 441 wherein the primary question which had arisen for consideration was with respect to the proper interpretation of Section 139 of the NI Act Digitally Signed By:RANJU BHALLA Signing Date:11.12.2023 18:52:15 Signature Not Verified

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which shifts the burden of proof on to the accused in respect of cheque bounce cases and to clarify the manner in which this statutory presumption can be rebutted, has observed and held as under: “27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard or proof. 28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an 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. As clarified in the citations, 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.” (emphasis supplied)

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reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act.” (emphasis supplied)

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“9. It has to be stated that in order to draw the presumption under Section 118 read along with Section 139 of the Negotiable Instruments Act, the burden was heavily upon the complainant to have shown that he had the required funds for having advanced the money to the accused; that the issuance of the cheque in support of the said payment advanced was true and that the accused was bound to make the payment as had been agreed while issuing the cheque in favour of the complainant.”

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accused, a learned Single Judge of this Court in Satish Kumar v. State NCT of Delhi & Anr., 2013 SCC OnLine Del 2963 observed and held as under: “15. It is in the aforesaid context that the learned ASJ had concluded that the petitioner/complainant had failed to prove his case against the respondent No. 2 beyond reasonable doubt and therefore respondent No. 2 ought to have been acquitted for the offence under Section 138 of the Negotiable Instruments Act. This Court is inclined to concur with the decision of the appellate court of overturning the judgment of the learned MM. The said decision is based on a logical appreciation of the evidence placed on record. In fact, the learned trial court had erred in concluding that the respondent No. 2 had not been able to discharge the initial onus placed upon him to show the existence of a reasonably probable defence in his favour. On the contrary, the records summoned by the respondent No. 2 from his bank and the deposition of DW-2 (clerk from the Bank) were themselves sufficient to hold that the respondent No. 2 had been able to raise a plausible defence and the notices issued by him to his banker on 18.1.2002 and 3.2.2002 much prior to issuance of the demand notice issued by the petitioner on 26.3.2002, also substantiated the said defence. However, once the burden of proof had shifted back to the petitioner/complainant, he was unable to prove his case beyond reasonable doubt by establishing the source of the alleged friendly loan extended to the respondent No. 2, thus disentitling him to the grant of relief on the basis of the negotiable instrument.”

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then be, as the learned Magistrate has also rightly concluded, that the respondent has succeeded in rebutting the presumption under Sections 139 read with 118 of the NI Act post framing of notice under Section 251 of the Cr.P.C. He had successfully proved that the cheques were not issued by him in the discharge of any legally enforceable debt or liability as required to prove the offence under Section 138 of the NI Act. Therefore, no offence under Section 138 of the NI Act has been made out against the respondent/accused in the present case. In the present case, the appellant has raised the issue that the respondent has not taken a defense that the writing on the impugned cheques do not belong to him. It is to be noted that no specific plea with regard to this fact has been taken by the respondent in reply to the notice under Section 251 of the Cr.P.C. and as well as during his examination under Section 313 of the Cr.P.C. However, when the foundational facts which could not established by the appellant as discussed hereinbefore, this would not have any material effect. The respondent has been able to demonstrate his defence from testimony of appellant and material on record placed by the latter. 23. At this stage, since the present appeal is an appeal against acquittal, it is to be borne in mind that the powers of the appellate court in an appeal against acquittal under Section 378 of the Cr.P.C. are to be exercised only where it is shown that the findings in judgment are incorrect or perverse in law. The approach of the appellate court in the appeal against acquittal has been dealt with by the Hon’ble Supreme Court in Murlidhar v. State of Karnataka, AIR 2014 SC 2200: (2014) 5 SCC 730. Digitally Signed By:RANJU BHALLA Signing Date:11.12.2023 18:52:15 Signature Not Verified

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(ii) The accused person is entitled to the benefit of reasonable doubt when it deals with the merit of the appeal against acquittal;

(iii) Though, the powers of the appellate court in considering the appeals against acquittal are as extensive as its powers in appeals against convictions but the appellate court is generally loath in disturbing the finding of fact recorded by the trial court. It is so because the trial court had an advantage of seeing the demeanour of the witnesses. If the trial court takes a reasonable view of the facts of the case, interference by the appellate court with the judgment of acquittal is not justified. Unless, the conclusions reached by the trial court are palpably wrong or based on erroneous view of the law or if such conclusions are allowed to stand, they are likely to result in grave injustice, the reluctance on the part of the appellate court in interfering with such conclusions is fully justified; and

(iv) Merely because the appellate court on reappreciation and re- evaluation of the evidence is inclined to take a different view, interference with the judgment of acquittal is not justified if the view taken by the trial court is a possible view. The evenly balanced views of the evidence must not result in the interference by the appellate court in the judgment of the trial court.”

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the guilt of the accused and the other which is inconsistent with the guilt of the accused, the latter must be preferred. Reversal of a judgment and order of conviction and acquittal of the accused should not ordinarily be interfered with unless such reversal/acquittal is vitiated by perversity. In other words, the court might reverse an order of acquittal if the court finds that no person properly instructed in law could have upon analysis of the evidence on record found the accused to be “not guilty”. When there is circumstantial evidence pointing to the guilt of the accused, it is necessary to prove a motive for the crime. However, motive need not be proved where there is direct evidence. In this case, there is no direct evidence of the crime. 191. In Sadhu Saran Singh v. State of U.P., this Court observed that an appeal against acquittal has always been on an altogether different pedestal from an appeal against conviction. In an appeal against acquittal, where the presumption of innocence in favour of the accused is reinforced, the appellate court would interfere with the order of acquittal only when there is perversity. In this case, it cannot be said that the reasons given by the High Court to reverse the conviction of the accused are flimsy, untenable or bordering on perverse appreciation of evidence.”

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“possible view”, having regard to the evidence on record. It is submitted that the trial court has recorded cogent and valid reasons in support of its findings for acquittal. Under Section 378 CrPC, no differentiation is made between an appeal against acquittal and the appeal against conviction. By considering the long line of earlier cases this Court in the judgment in Chandrappa v. State of Karnataka [Chandrappa v. State of Karnataka, (2007) 4 SCC 415 : (2007) 2 SCC (Cri) 325] has laid down the general principles regarding the powers of the appellate court while dealing with an appeal against an order of acquittal. Para 42 of the judgment which is relevant reads as under: (SCC p. 432) “42. From the above decisions, in our considered view, the following general principles regarding powers of the appellate court while dealing with an appeal against an order of acquittal emerge: (1) An appellate court has full power to review, reappreciate and reconsider the evidence upon which the order of acquittal is founded. (2) The Code of Criminal Procedure, 1973 puts no limitation, restriction or condition on exercise of such power and an appellate court on the evidence before it may reach its own conclusion, both on questions of fact and of law. (3) Various expressions, such as, “substantial and compelling reasons”, “good and sufficient grounds”, “very strong circumstances”, “distorted conclusions”, “glaring mistakes”, etc. are not intended to curtail extensive powers of an appellate court in an appeal against acquittal. Such phraseologies are more in the nature of “flourishes of language” to emphasise the reluctance of an appellate court to interfere with acquittal than to curtail the power of the court to review the evidence and to come to its own conclusion. (4) An appellate court, however, must bear in mind that in case of acquittal, there is double presumption in favour of the accused. Firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the trial court. (5) If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court.” 21. Further in the judgment in Murugesan [Murugesan v. State, (2012) 10 SCC 383 : (2013) 1 SCC (Cri) 69] relied on by the learned Senior Digitally Signed By:RANJU BHALLA Signing Date:11.12.2023 18:52:15 Signature Not Verified

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Counsel for the appellant, this Court has considered the powers of the High Court in an appeal against acquittal recorded by the trial court. In the said judgment, it is categorically held by this Court that only in cases where conclusion recorded by the trial court is not a possible view, then only the High Court can interfere and reverse the acquittal to that of conviction. In the said judgment, distinction from that of “possible view” to “erroneous view” or “wrong view” is explained. In clear terms, this Court has held that if the view taken by the trial court is a “possible view”, the High Court not to reverse the acquittal to that of the conviction.” (emphasis supplied)

AMIT SHARMA JUDGE DECEMBER 11, 2023/sn Digitally Signed By:RANJU BHALLA Signing Date:11.12.2023 18:52:15 Signature Not Verified