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TMI Blog2023 (11) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... this court and also by the Hon ble Supreme Court in SHIV KUMAR VERSUS RAMAVTAR AGARWAL [ 2020 (2) TMI 1584 - SUPREME COURT] . Contention of ld. counsel for the petitioner is that in the present case also, the cheques in question had been given to the complainant in January/February 2015 as per his Statement. The cheques were payable during June to September 2015, but before the cheques became payable, the account of the petitioner was seized on 10.03.2015 as per Ex.CW2/3. As per the contention, petitioner was left with no control over his bank account either to deposit the funds or to make arrangement with the bank by entering into any agreement with the Bank and that act of attachment of the bank account was not the voluntary act on the part of the petitioner and so, he cannot be held liable - Neither at the time of handing over the cheques nor at the time of seizure nor at the time when the payments became due under the cheque, the petitioner had the sufficient amount in his account. It is not the defence of the petitioner that he wanted to make arrangement with his bank so as to honour the cheques. Thus, it is held that simply because drawer of the cheque is unable to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CRR Nos.3456, 3515, 3520, 3481, 3474, 3476, 3471, 3484 3479 of 2019 and CRR Nos.1421 and 1986 of 2022, arising out of 12 separate judgments of conviction and orders of sentence, whereby complaints filed by Dharam Singh (respondent herein) or his son Ashok Kumar, for dishonour of different cheques issued by same accused Harpal Singh (petitioner herein) as director of M/s Pal Infrastructure Pvt. Ltd., were decided by ld. Judicial Magistrate, 1st Class, Gurgaon, convicting accused Harpal Singh under Section 138 of the NI Act and sentencing him to undergo imprisonment in each case for varying period and also to pay compensation amount with default sentence. Appeals against those judgments have been dismissed against conviction but with modification of the sentence. 2. To avoid confusion, parties shall be referred as per their status before Ld. Trial court. 3. Necessary details in the tabulated form are given below: - 4. (i) The facts, in brief, are being extracted from CRR-3456-2019, which is the offshoot of Criminal Complaint No.1105/2015 titled as Dharam Singh Vs. M/s Pal Infrastructure Pvt. Ltd. and another . It was pleaded by the complainant that on the persuasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with his banker i.e., Punjab National Bank, Sector 49, Gurgaon for realization. However, the cheque was returned unpaid vide bankers return memo dated 25.06.2015 with endorsement funds insufficient . (iii) Complainant informed the accused about the dishonour of the cheque and also met him personally, but the accused kept on lingering the matter at one pretext or the other and did not take any step to clear the legal and enforceable liability towards the complainant. Complainant then issued a legal notice dated 15.07.2015 through his advocate and sent the same to the accused on his address through registered post, asking the accused to pay the cheque amount within 15 days from the date of receipt of the notice. Despite serving the notice, accused failed to make any payment and hence, the complaint so as to summon and prosecute the accused under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 [for short the NI Act ] and Section 420 of the Indian Penal Code, 1860. 5. After recording preliminary evidence, accused were summoned to face prosecution under Section 138 of the NI Act vide order dated 19.08.2015. On the application moved by the complainant, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was preferred by the accused. That Criminal Appeal No.58 of 31.08.2016 was disposed of on 02.11.2019, whereby though the conviction of the accused-petitioner was maintained under Section 138 of the NI Act, but the sentence was modified. After noticing that appellantaccused was aged about 65 years and was facing trial since 2015 and had already suffered more than 3 years custody, the substantive sentence and the compensation clause were kept intact, but the sentence awarded to be convict in default of payment of compensation was set aside and it was held that on non-payment of compensation amount, the complainant will be at liberty to get the same realized by way of attachment and sale etc. of the properties of the accused as per law and so, in default of payment of compensation, the convict-appellant need not undergo any kind of further imprisonment. 11. (i) Assailing the above said judgment dated 02.11.2019 passed by the ld. ASJ, Gurugram, maintaining the conviction and sentence except modification in respect of default sentence, it is contended by ld. counsel that both the Courts below failed to appreciate the factual and legal controversy involved in the case in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date of return memo Remarks on the banker s memo 3456/2019 1105/2015 613205 21.09.2015 Funds Insufficient 3479/2019 1104/2015 216598 25.06.2015 Funds Insufficient 1421/2022 2724/2015 613218 24.06.2015 Funds Insufficient 1760/2022 549/2015 613217 14.02.2015 Funds Insufficient 3515/2019 1103/2015 613189 19.06.2015 Payment stopped by Court order 3471/2019 1101/2015 613198 19.06.2015 Payment stopped by Court order 3466/2019 1100/2015 613233 19.06.2015 Payment stopped by Court order 3474/2019 1106/2015 613201 19.06.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 138 of the NI Act. Ld. counsel has urged that in the case of third situation i.e., funds insufficient there is numerous case law that Section 138 of the NI Act is clearly applicable. (v) It has been further argued that legal notices in all the cases were sent to the accused at his address through registered post and so, there is presumption under Section 27 of the General Clauses Act regarding due service thereof. Even if, the accused was in custody at the relevant time, he could have made offer to make payment within 15 days, after his first appearance before this Court, but he did not do so and so, Courts below have rightly relied upon the case of CC Allavi Hazi (Supra). (vi) Still further, it is argued that no evidence in defence has been adduced by the accused to prove the misuse of the cheque and that evidence produced by the complainant-respondent was more than sufficient to prove the legal and enforceable liability of the accused-petitioner. With all these submissions, the judgments of conviction and orders of sentence passed by ld. Courts below have been defended and prayer is made for dismissal of all the revision petitions. 13. I have considered submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Said notice was issued under Section 91 of the CrPC. CW2 also produced statement of account No.763306871 as Ex.CW2/4 of M/s Pal Infrastructure Pvt. Ltd. besides account opening form Ex.CW2/5 and the account statement for the period from 01.10.2013 to 31.03.2016 as Ex.CW2/6. During cross-examination, CW2 admitted that Bank account bearing No.763306871 and 722748467 had been freezed in case FIR No.343 dated 11.11.2014 of DLF, Phase-I, Gurgaon by the ld. Court order and that these accounts had not been defreezed even once since 10.03.2015. 17. DW1, the witness examined on behalf of the accused, namely, Ajay Balhara, Assistant Superintendent, District Jail, Bhondsi at Gurgaon proved Jail certificate Ex.DW1/A, as per which accused-petitioner Harpal Singh is confined in District Prison, Gurgaon since 11.04.2015. As per the certificate Ex.DW1/A, the accused was involved in as many as 88 cases, out of which 16 cases pertain to complaints under Section 138 of the NI Act, whereas most of the cases have arisen out of different FIRs registered under Sections 406, 420, 204 120B IPC and Section 3 of the Haryana Protection of Interest of Depositors in Financial Establishment Act No.32 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nant. Hon ble Supreme Court further held in above case that Section 139 of the NI Act is stated to be an example of a reverse onus clause, which is in tune with the legislative intent of improving the credibility of negotiable instruments. Section 138 of the NI Act provides for speedy remedy in a criminal forum, in relation to dishonour of cheques. Nonetheless, the Hon ble Supreme Court cautions that the offence under Section 138 of the NI Act is at best a regulatory offence and legally falls in the arena of a civil wrong and therefore, the test of proportionality ought to guide the interpretation of the reverse onus clause. An accused may not be expected to discharge an unduly high standard of proof, reverse onus clause requires the accused to raise probable defence for creating doubt about the existence of a legally enforceable debt or liability for thwarting the prosecution. The standard of proof for doing so would necessarily be on the basis of preponderance of probabilities and not beyond shadow of any doubt. 21. It may be clarified here itself that accused is obliged to set up a probable defence, which cannot be only a 'possible' defence. There should be some c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en dishonoured for three different reasons i.e. (i) funds insufficient; (ii) payment stopped by Court; and (iii) payment stopped by drawer, but it is revealed that return memos in all the cases (except one) have been issued during June 2015 to September 2015. It is only in CRR-1760-2022 that return memo is dated 14.02.2015 with remarks funds insufficient . As per the evidence on record, the accounts of the accused were seized on 10.03.2015 vide Ex.CW2/3. The question arises as to whether on account of seizure of the account of the accused, Section 138 of the NI Act will be made out or not. 26. In NEPC Micon Ltd. Vs. Magma Leasing Ltd. 1999 (2) R.C.R.(Criminal) 648, the Hon'ble Supreme Court had considered as to whether Section 138 NI Act is applicable, when was dishonoured for the reason that account was closed . It was held as under: - Further, the offence will be complete only when the conditions in the proviso (a), (b) and (c) are complied with. Hence, the question is, in a case where cheque is returned by the bank unpaid on the ground that the account is closed, would it mean that cheque is returned as unpaid on the ground that the amount of money standing to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harge, in whole or in part, of any debt or liability. Of course, this is a rebuttable presumption. The accused can thus show that the stop payment instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there was sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then an offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused. Thus, a Court cannot quash a complaint on this ground. 30. It is, thus, clear from the authoritative pronouncements of Hon'ble Supreme Court that Section 138 of the NI Act will be applicable even if the cheque has been dishonored either for the reason that account was closed or that drawer had stopped the payment. 31. In order to contend that this legal position cannot be applied in a case, when the account has been freezed/ seized by the Court or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions are not applicable to this case, as the facts are quite distinguishable. It is true that vide Ex.CW2/3, the two accounts of the petitioner had been seized on 10.03.2015 under Section 91Cr.P.C and as per the cross-examination of CW2, the said accounts were seized due to the Court order, but at the same time, the perusal of the bank account statement of the petitioner Ex.CW2/6 for the period 01.01.2013 to 27.03.2016 would reveal that at no point of time, the said account had the amount so as to honour the cheques in question i.e. either before seizure of the account by the Court/ Police or thereafter. It is revealed that the amount in the account at the time of seizure was ₹62,287/- only. Not only this, during this entire period of 01.01.2013 to 27.05.2016, the maximum amount at any given time in the account of the petitioner was only ₹18,52,033/- on 22.03.2014. This figure clearly indicates that at no point of time, petitioner had sufficient funds in his account so as to honour any of the cheques. 33. Further, even if the account had been seized by the Court order, as is contended by counsel for the petitioner, there is absolutely no evidence that there was any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve so desired, either deposited funds in his account or otherwise made arrangements for the payment of the cheque upon its presentation by entering into an agreement with the bank, since there was a Court attachment on the bank account of the drawer. This Court attachment was by a Court ceased of the case arising out of FIR No. 283/2005 under section 406/420/467/468/471 and 120B Indian Penal Code registered with P.S. Connaught Place. The act of attachment of the bank account of the drawer/petitioner cannot be said to be a voluntary act of the drawer. It cannot be said that the petitioner contrived to have the account attached only for the purpose of warding of the penal consequences under section 138 of the Act. It also cannot be said that after the attachment of the bank account, the same was being maintained by the petitioner. For an account to be maintained by an account holder, it is essential that he is in a position to operate the said account by either depositing monies therein or by withdrawing money therefrom. He should be in a position to give effective instructions to his banker with whom the account is maintained. However, in the present case, once the account has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount to discharge the liability. Apart from civil liability, a criminal liability was imposed on such unscrupulous drawers of cheques. The prosecution, however, was made subject to certain conditions. With a view to avoid unnecessary prosecution of an honest drawer of a cheque, or to give an opportunity to the drawer to make amends, the proviso to Section 138 provides that after dishonour of the cheque, the payee or the holder of the cheque in due course must give a written notice to the drawer to make good the payment. The drawer is given 15 days time from date of receipt of notice to make the payment, and only if he fails to make the payment he may be prosecuted. The object which the proviso seeks to achieve is quite obvious. It may be that on account of mistake of the bank, a cheque may be returned despite the fact that there is sufficient balance in the account from which the amount is to be paid. In such a case if the drawer of the cheque is prosecuted without notice, it would result in great in-justice and hardship to an honest drawer. One can also conceive of cases where a wellintentioned drawer may have inadvertently missed to make necessary arrangements for reasons beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice. The words the drawer of such cheque fails to make the payment are ostensibly different from saying the drawer refuses to make payment . Failure to make payment can be due to the reasons beyond the control of the drawer. An illustrative case is, if the drawer is not a company but individual who has become so pauper or so sick as he cannot raise the money to pay the demanded sum. Can he contend that since failure to make payment was on account of such conditions he is entitled to be acquitted? The answer cannot be in the affirmative though the aforesaid conditions can be put forth while considering the question of sentence. We therefore feel that legislature has thoughtfully used the word fails instead of other expressions as failure can be due to variety of reasons including his disability to pay. But the offence would be complete when the drawer fails to make payment within the stipulated time, whatever be the cause for such failure. The drawer of the cheque can have different explanations for the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Court seizing the account, petitioner cannot be allowed to plead that he is not liable under Section 138 of the NI Act. 44. Another contention raised by ld. counsel for the petitioner is that petitioner was in custody ever since 11.04.2015 as per the custody certificate proved on record by DW1 and therefore, there could be no question of serving legal notice at the address mentioned in the notice and that no attempt was made to serve the legal notice upon him in the jail. This is true that accused was in custody in another case since 11.04.2015, so it may be assumed that legal notice was not served upon him because it was never sent through the Superintendent of the concerned Jail to the accused and rather, it was sent to him at his address. However, again this fact will not exonerate the petitioner. 45. In the case of CC Allavi Hazi (Supra), the accused was abroad at the time when notice was sought to be served upon him. Contention was raised that legal notice having not been served, so accused was not liable. Hon ble Supreme Court observed as under: - It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Crimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing on record to suggest that at any point of time, petitioner-accused ever pleaded before the Court that though he had not received the legal notice, but he was ready to make payment of the cheque amount or that he be allowed to make necessary arrangement with the Bank so as to make payment of the cheque amount. No attempt appears to have been made on the part of the accused to move appropriate application before the concerned Court for getting his account released. In fact, the seizure of the account by the Court in the criminal case came as a boon for the petitioner because he factually did not have any amount in his account at any point of time so as to honour the cheque and on account of seizure of the account, he got the excuse to plead before the Court that his account has been seized. 48. It has also been contended by ld. counsel for the petitioner that petitioner was not in a position to make payment within 15 days after his production in the Court, as apart from his bank account, all his properties, assets and financial resources had been seized by the Court in various criminal cases and even residential houses had been attached by this Court. 49. I am afraid t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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