CASE DETAILS v. AJAY SINGH

From the Judgment and Order dated 01.02.2022 of the High Court of Punjab & Haryana at Chandigarh in CRMA No.148 of 2020. Appearances: Petitioner-in-person Yudhvir Dalal, Surender Singh, Himanshu Singroha, Ms. Sunaina, Kailas Bajirao Autade, Advs. for the Respondent. JUDGMENT / ORDER OF THE SUPREME COURT JUDGMENT ARAVIND KUMAR, J.

1. Leave Granted.

2. The respondent-accused was tried for the off ence under Section 138 of the Negotiable Instruments Act, 1881 (for short ‘NI Act’). The Trial Court acquitted1 him. The High Court dismissed the appellant’s- complainant’s appeal and upheld the order of acquittal2. Challenging the concurrent fi ndings passed by the Courts below, the complainant has preferred this appeal. Case of the Complainant

3. Mr. Ajay Singh (respondent-accused), along with his wife, is said to have approached the appellant-complainant (Mr. Rajesh Jain) on 01.03.2014 with a request for lending him money. The meeting is said to have been facilitated by Ms. Gita Sunar the sister-in-law of Mr. Singh who had been working as an employee under Mr. Rajesh Jain for nearly 15 years then. Mr. Rajesh Jain, appellant appearing in-person contended that he had lent a sum of Rs. 6 lacs on that day and has lent further sums thereafter, in the genuine 1 2 Judgment and Order dated 17.12.2019 in Crl. Complaint No. 221 of 2017 Criminal Appeal No.148 of 2020 was dismissed by Hon’ble High Court of Gujarat by Judgment and Order dated 01.02.2021. RAJESH JAIN v. AJAY SINGH [ARAVIND KUMAR, J.] 791 belief that Mr. Ajay Singh would honour his promise of timely repayment and return the sum borrowed with interest, as agreed.

4. The respondent-accused failed to repay as per the timeline agreed. The complainant’s eff orts to recover his money were met with avoidance tactics. The accused is said to have changed his cellular telephone number without notice to the complainant, with the intent of evading his payment obligations. It is only in the year 2017, that the complainant managed to trace the accused-at which point, the accused sought for forgiveness and promised to repay the amounts borrowed along with interest, within three months. The accused had informed the complainant that he would source the funds to clear his outstanding dues by selling two plots of land he owns in Nepal, by taking a personal loan and from the 7th Pay Commission arrears that he was to receive.

5. Yet again, the accused defaulted on his promise. He was not to be found in his residential address. Having successfully concealed himself for about 7 months, the complainant appears to have located him at a new residential address. On direct confrontation, the accused is said to have issued a post-dated cheque No.163044 (dated 19.10.2017) for a sum of Rs.6,95,204/- towards part repayment of outstanding dues. The accused assured the complainant that the balance dues would be repaid by issuing a second cheque in the month of December 2017.

6. On its presentation, the cheque was returned with the endorsement ‘Funds Insuffi cient. The complainant issued a demand notice through his counsel on 26.10.2017 and called upon the accused to make repayment of the cheque amount (Rs. 6,95,204) and other expenses incurred within 15 days. Since the demand was not complied with, a complaint under Section 138 NI Act was instituted on 29.11.2017, before the Court of Judicial Magistrate First Class (JMFC), Jind. Proceedings before the Trial Court

7. The Trial Court took cognizance of the off ence, summoned the accused and issued notice of accusation. The accused pleaded not guilty and claimed to be tried.

8. In support of his case, the complainant had examined himself as CW- 1. Mr. Gulab Singh, a bank offi cial at SBI, Jind branch offi ce was examined 792 SUPREME COURT REPORTS [2023] 13 S.C.R. as CW-2 and Ms. Gita Sunar as CW3. The complainant had also produced the relevant documentary evidence3 including the cheque in question, cheque return memo, copy of the bank passbook, demand notice, postal register, statement of accounts of the complainant and cheque returned register.

9. In his statement under Section 313 of the Code of Criminal Procedure Code 1973, the accused admits of having borrowed money to the extent of Rs.20 lakhs from the complainant. He admits of having paid some interest amount and has pleaded that he could not pay the remaining amount since complainant had started demanding higher amount. He further admits of having received the legal notice but denies having issued any cheque.

10. No defense evidence has been led on behalf of the accused.

11. On a consideration of evidence on record, the Trial Court returned a fi nding that the accused was not guilty.

12. The Trial Court found that (i) the complainant had discharged his initial onus of proving the essential facts underlying the off ence under Section 138 of the NI Act; (ii) the signature on the cheque [Exh. CW1/A) was admitted by the accused and, hence, it rightly raised the statutory presumption under Section 139 NI Act. It, then, rightly noted that the onus of rebutting the presumption lay on the accused and said onus was to be discharged by raising a ‘probable defence’ which would create a doubt as to the existence of a legally enforceable debt.

13. It then framed the point for determination as follows: “The only question remaining for determination is whether a legally valid and enforceable debt existed qua the complainant and the cheque in question (Ex. CWI/A) was issued in discharge of said liability/debt?”

14. The Trial Court answered the issue in the negative. It held that the complainant had failed to prove his case beyond reasonable doubt. It 3 Ex.CW1/A-Cheque No.163044 dt.19.10.2017 Ex.CW1/B-Cheque return Memo dt. 01.11.2017 Ex.CWA/C- Copy of Bank passbook of complainant Ex.CW1/D-Legal Notice dt. 26.10.2017 Ex.CW1/E-Postal Receipt dt. 28.10.2017 Ex.CW2/1-Statement of account of complainant Dr. Rajesh Jain w.e.f 01.10.2017 to 31.12.2017 Ex. CW2/2-Copy of Cheque Bonus Register RAJESH JAIN v. AJAY SINGH [ARAVIND KUMAR, J.] 793 has been observed that the defence led by the accused has created a doubt regarding the truthfulness of the complainant’s case.

15. The conclusion of the Trial Court was based on the following grounds: (i) That the legal notice [Ex. CW1/D] dated 26.10.2017 was not a valid legal notice since it was not signed by the complainant or his counsel. (ii) In the complaint, legal notice as well as the affi davit evidence, the complainant has failed to mention the date, month and year on which he advanced various sums of money towards loan. (iii) The evidence on records indicates that the complainant is in the business of money lending. Since he does not possess any valid license/ registration4 under the Punjab Registration of Money Lenders Act, 19385 (Money Lenders Act), he could not have fi led a suit for recovery of money advanced as per Section 3 of the Money Lenders Act. The Bombay High Court has in the case of Nanda v. Nandakishor6 interpreted the phrase ‘in any suit’ as found in Section 3, widely, to include even a complaint under Section 138 of the NI Act. Relying on the said decision, the Trial Court has concluded that the complaint has been fi led in respect of an unenforceable claim. (iv) The procedure set out in Section 138 has not been properly followed in that the legal notice has been issued prematurely, even before the complainant had received notice of the cheque return memo. The date refl ected on the cheque return memo is 1.11.2017 and the date on which the legal notice was issued is 26.10.17. The legal notice could not have been issued until the cheque had been dishonoured. (v) The version of the complainant is doubtful since the cheque was, admittedly, issued in part-payment of outstanding dues. Nowhere in the complaint or demand notice has the complainant disclosed the total amount loaned to the accused. The Court found it rather surprising 4 Section 4(2) postulates no money-lender shall carry on the business of advancing loans unless he gets himself registered under sub-section (1) 5 Adaptation of Law Order 1968 – See Page 75 6 (2010) SCC OnLine Bombay 54 794 SUPREME COURT REPORTS [2023] 13 S.C.R. that the complainant, an orthopaedic surgeon, would advance huge amounts of loan to the accused, a Class IV employee, without any formal agreement/acknowledgement of loan advanced.

16. The complainant was granted special leave to appeal under Section 378 (4) CrPC before the High Court of Punjab and Haryana. Proceedings before the High Court

17. On reappreciating the evidence on record, the High Court has found no merit in the appeal and has upheld the order of acquittal passed by the Trial Court. The High Court has reasoned that accused had discharged his onus in rebutting the statutory presumption raised under Section 139 NI Act. The onus, then, once again had shifted to the complainant to prove that the cheque had been issued in respect of a legally enforceable debt and complainant had failed in discharging the onus to prove that cheque was issued in respect of a legally enforceable debt.

18. The underlying basis of the fi ndings in the High Court judgment can be summarised thus:

18.1 The presumption under Section 139 was rebutted by putting questions to the appellant in his cross examination and explaining the incriminating circumstances found in the statement recorded under Section 313 of Cr.P.C.

18.2 The cross examination of the appellant reveals that he had given loan to accused commencing from 1st March, 2014 and on several dates thereafter. The cheque was handed over to the accused only on 19.10.2017, nearly three years thereafter. If the appellant had given loan on various dates, he must have maintained some documents to evidence such loans. He has remained silent as to the specifi c amounts loaned after 01.03.2014 and complainant ought to have tendered in evidence accounts, ledger, statement to prove the debt amount. The stand of the accused was that he did borrow money from the complainant but every month, the complainant would enhance the outstanding dues by Rs 1 lakh. Therefore, the stand of the respondent seems to be more probable than the case of the complainant.

18.3 There is a consistent allegation in the complaint, demand notice and the affi davit in evidence that the loan was given subject to payment of RAJESH JAIN v. AJAY SINGH [ARAVIND KUMAR, J.] 795 interest on the principal amount. The complainant ought to have mentioned the principal amount borrowed and the interest charged thereon in order to arrive at the cheque amount of Rs.6,95,204/-. Since the breakup of the principal amount and interest charged is conspicuously absent in all the three documents, the complaint is bereft of material particulars and deserved to be dismissed at the very outset.

18.4 In so far as the Trial Court’s fi nding that the complaint was not maintainable since the complainant was not registered under the Money Lenders Act, the High Court has observed that there was no necessity of evaluating such a fi nding since that question would only arise if the complainant had succeeded in proving that the cheque was issued in respect of a legally enforceable debt.

19. We have heard Mr. Rajesh Jain, appellant appearing in-person, and Mr. Yudhvir Dalal, learned Counsel for the respondent.

20. Mr. Rajesh Jain, appearing in-person has contended that there is a serious fl aw in the approach of the Courts below while appreciating the evidence on record. According to him, the signature on the cheque not being under dispute, and the presumption under Section 139 having been drawn against the accused, there was nothing available on record to suggest that the accused had discharged his onus of rebutting the presumption. He drew our attention to the reasoning given in the orders of acquittal to contend that courts below had erroneously proceeded to appreciate the evidence as though the onus was on the complainant to prove that ‘the cheque was issued in discharge of a debt’. Once the presumption operates, the onus rests on the accused to prove the non- existence of debt/liability and the courts could not have doubted the complainant’s case from any point of view. He fi nally argued that the respondent cannot be said to have raised a ‘probable defence’ since the case set up in defence was full of inconsistencies and bereft of any evidence. He, accordingly, prays that concurrent fi ndings be set aside, and an order of conviction be passed against the accused.

21. Mr. Yudhvir Dalal, learned counsel has contended that this Court, while hearing an appeal by special leave, must be extremely slow to interfere against concurrent fi ndings. Merely because another view can be taken on reappreciation of the evidence, is no ground to interfere; on the merits, he contends that the accused has discharged the burden fastened by 796 SUPREME COURT REPORTS [2023] 13 S.C.R. raising a ‘probable defence’, which meets the standard of ‘preponderance of probabilities. He has relied on a few judgments to contend that the presumption can be rebutted even without leading any rebuttal evidence. In this regard, he submits that it is always open to the accused to rely on the materials produced by the complainant for disproving the existence of a legally enforceable debt or liability. He submits that the complaint is lacking in material particulars-it fails to state the total sum loaned, the dates on which the loans were given, the basis on which the demand was made for a sum of Rs. 6,95,204/-. These facts coupled with other circumstances has justifi ably created a doubt in the mind of the court as to the genuineness of the complainant’s case and therefore, courts below were justifi ed in disbelieving the complainant’s version. On these grounds he prays for dismissal of the appeal.

22. We have taken note of the rival submissions canvassed and have perused the record. Question for Consideration

23. Since the execution of the cheque is, admittedly, not under dispute, the limited question to be considered, is (i) whether the accused can be said to have discharged his ‘evidential burden’, for the courts below to have concluded that the presumption of law supplied by Section 139 had been rebutted?

23.1 If the answer to this question is found in the affi rmative, the next question to be considered is (i) whether the complainant has, in the absence of the artifi cial force supplied by the presumption under Section 139, independently proved beyond reasonable doubt that the cheque was issued in discharge of a debt/liability? The necessity of dealing with point No. (ii) will only arise if the answer to point No. (i) in the affi rmative. Hence, we shall take up point (i) for consideration. Applicable Legal Principles Scope of Article 136 vis a vis Concurrent Finding of Fact

24. At the threshold, we must note that the challenge in this appeal calls for an interference against concurrent fi ndings by two Courts. The scope of an appeal by special leave under Article 136 of the Constitution of India RAJESH JAIN v. AJAY SINGH [ARAVIND KUMAR, J.] 797 against the concurrent fi ndings is well settled. In Mst. Dalbir Kaur and Ors. vs. State of Punjab (1976) 4 SCC 158, this Court, on a consideration of multiple authorities, has distilled the principles governing interference by this Court in a criminal appeal by special leave, as follows: (1) that this Court would not interfere with the concurrent fi nding of fact based on pure appreciation of evidence even if it were to take a diff erent view on the evidence. (2) that the Court will not normally enter into a re- appraisement or review of the evidence, unless the assessment of the High Court is vitiated by an error of law or procedure or is based on error of record, misreading of evidence or is inconsistent with the evidence, for instance, where the ocular evidence is totally inconsistent with the medical evidence and so on. (3) that the Court would not enter into credibility of the evidence with a view to substitute its own opinion for that of the High Court (4) that the Court would interfere where the High Court has arrived at a fi nding of fact in disregard of a judicial process, principles of natural justice or a fair hearing or has acted in violation of a mandatory provision of law or procedure resulting in serious prejudice or injustice to the accused. (5) this Court might also interfere where on the proved facts wrong inferences of law have been drawn or where the conclusions of the High Court are manifestly perverse and based on no evidence: It is very diffi cult to lay down a rule of universal application, but the principles mentioned above and those adumbrated in the authorities of this Court cited supra provide suffi cient guidelines for this Court to decide criminal appeals by special leave. Thus, in a criminal appeal by special leave, this Court at the hearing examines the evidence and the judgment of the High Court with the limited purpose of determining whether or not the High Court has followed the principles enunciated above. Where the Court fi nds that the High Court has committed no violation of the various principles laid down by this Court and has made a correct approach and has not ignored or overlooked striking features in the evidence which demolish the prosecution case, the fi ndings of 798 SUPREME COURT REPORTS [2023] 13 S.C.R. fact arrived at by the High Court on an appreciation of the evidence in the circumstances of the case would not be disturbed. Section 138 of the NI Act - Necessary Ingredients

25. Essentially, in all trials concerning dishonour of cheque, the courts are called upon to consider is whether the ingredients of the off ence enumerated in Section 138 of the Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by Section 139 of the Act.

26. In Gimpex Private Limited vs. Manoj Goel7, this Court has unpacked the ingredients forming the basis of the off ence under Section 138 of the NI Act in the following structure: (1) The drawing of a cheque by person on do account maintained by him with the banker for the payment of any amount of money to another from that account; (i) The cheque being drawn for the discharge in whole or in part of any debt or other liability; (iii) Presentation of the cheque to the bank arranged to be paid from that account, (iv) The return of the cheque by the drawee bank as unpaid either because the amount of money standing to the credit of that account is insuffi cient to honour the cheque or that it exceeds the amount (v) A notice by the payee or the holder in due course making a demand for the payment of the amount to the drawer of the cheque within 30 days of the receipt of information from the bank in regard to the return of the cheque; and (vi) The drawer of the cheque failing to make payment of the amount of money to the payee or the holder in due course within 15 days of the receipt of the notice.

27. In K. Bhaskaran v. Sankaran Vaidhyan Balan8 this Court had summarised the constituent elements of the off ence in fairly similar terms by holding: 7 8