Source of Money given as loan should be given in case u/s 138 of NI Act

 The case of the petitioner in nutshell is that he had been approached by the respondent and he had advanced a loan of ` 9,30,000/- in the first instance. If such a huge amount of money is advanced as a loan to the respondent, the petitioner ought to have shown to the court concerned as to the source from where he had generated such a huge amount. In his examination/cross-examination, he states that he had sold his machinery but he failed to produce any record to that effect. He has not reflected the loan advanced to the respondent in his income-tax return nor is he able to tell to the court the Ward in which the income-tax return is filed. The learned Magistrate has rightly placed reliance on the provisions of Section 269SS of the Income-Tax Act wherein it is specifically laid down that if a loan is advanced which is more than ` 20,000/-, it has to be by way of writing reflected in the books of account but nothing of that sort has been done in the instant case. Obviously, this clearly creates a doubt regarding the truthfulness of the stand taken by the petitioner that he had advanced a loan of ` 9,30,000/- to the respondent. Moreover, the presumption of law which is to be drawn in favour of the drawee of the cheque, namely, the petitioner, that the cheque has been issued to him for the valid discharge of his debt, gets dislodged by a plausible explanation furnished by the respondent/accused wherein he states that he was a member of a committee where he was contributing an amount and the petitioner used to take two duly signed cheques from each of the member. 

Equivalent Citation: 20132AD(Delhi)81;2013(1)Crimes 80 (del)

IN THE HIGH COURT OF DELHI

Criminal L.P. No. 478 of 2011

Decided On: 04.01.2013

Appellants: Kulvinder Singh
Vs.
Respondent: Kafeel Ahmed

Hon'ble Judges/Coram:V.K. Shali, J.

1. This is a leave to appeal petition filed by the petitioner against the impugned judgment dated 9.9.2011 by virtue of which the learned Metropolitan Magistrate has acquitted the respondent/accused in respect of a case under Section 138 of the Negotiable Instruments Act. Briefly stated the facts of the case are that the petitioner filed a complaint under Section 138 of the Negotiable Instruments Act against the respondent claiming that the respondent had approached the complainant for a friendly loan of ` 10 lacs for expanding his business whereupon the petitioner gave a loan of ` 9,30,000/- in the month of February, 2006 to the respondent. The respondent issued a post dated cheque bearing No. 593765 dated 2,5.2006 for the aforesaid loan amount which, on presentation, was dishonoured with the remarks 'insufficient funds'. After complying with the legal requirement of sending a statutory notice, the present petitioner filed a complaint against the respondent. The petitioner produced pre-summoning evidence whereupon the respondent was summoned and a notice under Section 251 Cr.P.C. was served and the petitioner/complainant was cross-examined by the respondent. The respondent took the plea that the cheque in question was signed by him; however, the same was issued to the petitioner in the month of July, 2004 along with one more cheque bearing No. 593766. These two cheques were purportedly issued by the respondent to the petitioner as the petitioner was running a committee and a person who would give the highest bid for taking the committee, had to pay the balance installments during the committee period and in order to secure the interest of other committee members, a security blank cheque was taken from the members of the committee. It is stated that after the committee period came to an end, the respondent asked the petitioner to return the cheque in question which was duly signed by him, however, the petitioner took the plea that the cheque in question was misplaced by him. It seems that surreptitiously the petitioner had thereafter filled up the amount and presented the cheque for encashment In support of his defence, the respondent produced two witnesses DW-2, Gulam Moinuddin and DW-3, Masoom, who supported the statement of the respondent, who testified as DW-1 and took the plea that the cheques were issued as security at the time of functioning of the committee. All the three witnesses including the respondent were cross-examined by the petitioner; however, their testimony could not be dented. After hearing the arguments, the learned trial court acquitted the respondent/accused by giving a reasoning, firstly, that the petitioner had given a huge amount of ` 9,30,000/- as loan to the respondent, however, the petitioner has failed to show as to from where such an amount could be generated by him. Secondly, his cross-examination was also evasive as the amount of loan was neither reflected in the income-tax return nor was he able to give the details of the Ward number or the information as to whether the cheque bearing No. 593766 was encashed by him on 5.7.2004 amounting to ` 18,000/ - because both the cheques, that is, the cheque bearing No. 593765, the cheque in question and another cheque bearing No. 593766, the next leaf of the cheque book in question, are stated to have been issued by the respondent. The learned trial court has placed reliance on number of judgments including the judgment of the Apex Court in case titled K. Prakashan Vs. P.K. Surenderan; MANU/SC/8009/2007 : 2007 IX AD (S.C.) 334 : (2008) 1 SCC 258 to hold that the presumption of the cheque in question having been issued in discharge of debt gets dislodged because of the testimony of the respondent apart from the fact that he is not able to give the source of such a huge amount having been advanced as a loan.

2. Feeling aggrieved, the petitioner/ complainant has filed the present leave to appeal petition.

3. I have heard Mr. Prag Chawla, the learned counsel appearing on behalf of the petitioner. He has contended that the learned trial court has committed gross error in appreciating the evidence. It is stated by him that the petitioner was able to establish that a loan amount of ` 9,30,000/- was given to the respondent for which the cheque was issued and it was not necessary for the petitioner to show the source of income. Under these circumstances, the respondent ought to have been convicted while as he has been acquitted.

4. This has been resisted by the learned counsel for the respondent, who has taken the court through the entire judgment of the trial court. The learned counsel for the respondent has also referred to the case titled Vipul Kumar Gupta Vs. Vipin Gupta; MANU/DE/4517/2012 : 2012 (4) JCC (NI) 248 which is based on the judgment of the Apex Court passed in K. Prakashan's case (supra) wherein the Apex Court has held that if a huge amount of money is advanced as a loan then the person who has purportedly advanced the loan must also show the solvency to the extent of the loan either through the bank account or through other means.

5. I have carefully considered the submissions made by the respective sides and have gone through the impugned order. I find myself in agreement with the reasoning given by the learned Magistrate.

6. The case of the petitioner in nutshell is that he had been approached by the respondent and he had advanced a loan of ` 9,30,000/- in the first instance. If such a huge amount of money is advanced as a loan to the respondent, the petitioner ought to have shown to the court concerned as to the source from where he had generated such a huge amount. In his examination/cross-examination, he states that he had sold his machinery but he failed to produce any record to that effect. He has not reflected the loan advanced to the respondent in his income-tax return nor is he able to tell to the court the Ward in which the income-tax return is filed. The learned Magistrate has rightly placed reliance on the provisions of Section 269SS of the Income-Tax Act wherein it is specifically laid down that if a loan is advanced which is more than ` 20,000/-, it has to be by way of writing reflected in the books of account but nothing of that sort has been done in the instant case. Obviously, this clearly creates a doubt regarding the truthfulness of the stand taken by the petitioner that he had advanced a loan of ` 9,30,000/- to the respondent. Moreover, the presumption of law which is to be drawn in favour of the drawee of the cheque, namely, the petitioner, that the cheque has been issued to him for the valid discharge of his debt, gets dislodged by a plausible explanation furnished by the respondent/accused wherein he states that he was a member of a committee where he was contributing an amount and the petitioner used to take two duly signed cheques from each of the member. These facts get verified from the testimony of two other independent witnesses DW-2, Gulam Moinuddin and DW-3, Masoom. Their testimony has not been dented. So this clearly establishes that the petitioner was running some kind of committee and was taking two security blank cheques duly signed by the member. The respondent has taken the plea that he had issued two cheques in consecutive order sometime in the middle of the year 2004 when he was a subscriber to a committee. One cheque for a sum of ` 18,000/- was encashed in the month of July, 2007. This further lends strength to the version of the respondent/accused. It is the case of the respondent that the second cheque which was bearing an earlier number 593765 and was signed by him was sought to be retrieved by him from the petitioner but the petitioner stated that the cheque has been lost while as he surreptitiously presented the cheque after filling up the amount in the cheque to the tune of `9,30,000/-. This seems to be fairly possible and creates a doubt in the case of the petitioner. The basic principle in criminal law is that the guilt of the respondent/accused must be proved beyond reasonable doubt and if there is a slightest doubt about the commission of an offence then the benefit has to accrue to him. In the instant case also this doubt has been created by the respondent by adducing evidence. I, therefore, feel that the benefit of this doubt has been rightly given by the trial court to the respondent and he has been rightly acquitted. In view of the aforesaid reasons, I do not find that this is a fit case where the leave to appeal ought to be granted to the petitioner. Accordingly, leave to appeal is dismissed. File be consigned to the record room.