The judgments relate to section 138 of Negotiable Instruments (NI) Act, 1881. Section 138 lays down the punishment for dishonor of cheques. Any person found guilty of an offence under section 138 shall be liable to be imprisoned for a period of up to 2 years, or a fine up to twice the amount of the dishonored cheque, or both.
Can the borrower raise defense that the lender had no financial capacity to lend money?
The Supreme Court has observed that the accused can raise a defense by doubting the financial capacity of the complainant to lend money. Once the said doubt is raised, the burden to prove their financial capacity shifts to the complainant.
The Supreme Court acquitted the accused since the complainant failed to prove their case beyond a reasonable doubt.
M/S S.S. Auto Gallery vs . on 9 October, 2021
IN THE COURT OF METROPOLITAN MAGISTRATE (NI-05), WEST, TIS HAZARI COURTS, NEW DELHI
Presided over by- Sh. Devanshu Sajlan, DJS
Case No. - 21636/2016
Unique Case ID No. - DLWT02-011923-2016
In the matter of :-
M/s S.S. AUTO GALLERY
Through its Partner Sh. Balvinder Singh A-684/685, near Goan Wala Chowk, Shivaji Collage Road,
New Delhi- 110027
VS.
SH. VANEET SINGH
S/o Sh. Surender Pal Singh H.No. B-107, Janta Colony, Shivaji Vihar, New Delhi
CC No.21636-2016 M/s S.S. Auto Gallery v. Vaneet Singh 1 of 18
1. S.S. Auto Gallery
Name of Complainant : (Through its partner Sh.
Singh)
2. Name of Accused : Sh. Vaneet Singh
3. Section 138, Negotiabl
Offence complained of or proved :
Act, 1881.
4. Plea of Accused : Not Guilty
5. Date of Filing : 09.08.2016
6. Date of Reserving Order : 04.10.2021
7. Date of Pronouncement : 09.10.2021
8. Final Order : Acquitted
Argued by: Sh. Manjeet Singh, learned counsel for the complainant.
Sh. D.K Ahuja, learned counsel for the accused.
CC No.21636-2016 M/s S.S. Auto Gallery v. Vaneet Singh BRIEF STATEMENT OF REASONS FOR THE DECISION:-
A. FACTUAL MATRIX
1. The present complaint has been filed by M/s. SS Auto Gallery (through its partner Sh. Balvinder Singh) (hereinafter "complainant") against Sh. Vaneet Singh (hereinafter "accused") under section 138 of the Negotiable Instruments Act, 1881 (hereinafter "NI Act").
2. The substance of allegations, as contained in the complaint, are as follows:
(a) Balvinder Singh, partner of M/s SS Auto Gallery (complainant), had cordial relations with the accused. Pursuant to the said cordial relations, Balvinder Singh, partner of M/s SS Auto Gallery (complainant), granted a friendly loan of Rs. 21,00,000 to the accused on 15.03.2016 for two months for some urgent need of the accused.
(b) In discharge of the aforesaid legal liability, the accused issued two cheques of Rs. 9,00,000 dated 28.05.2016 and another cheque of Rs. 12,00,000 dated 30.05.2016 in favour of the complainant firm. When the complainant presented the said cheques, the bank returned it unpaid on 01.06.2016 as no balance was available in the account. Thereafter, the complainant sent a legal demand notice dated 24.06.2016 but the accused allegedly failed to pay the cheque amount and therefore, the complainant filed the present complaint.
3. Accused's stance, on the contrary, is that he had taken a loan of Rs. 5,00,000/-1 fro
At the stage of recording of his defense under section 251 CrPC, the accus had taken a loan of Rs. 3,00,000 from the complainant. However, at the stage of record of the accused u/s 313 CrPC and in his defense evidence, the accused stated that he h Rs. 5,00,000 from the complainant.
CC No.21636-2016 M/s S.S. Auto Gallery v. Vaneet Singh 3 of Sh. Sachin Bahl (the other partner of the complainant firm) and that he had given three blank signed cheques as security cheques which have been misused by the complainant. He has further submitted that he has already repaid Rs. 5,00,000 to Sh. Sachin Bahl and hence, he does not owe any amount to the complainant. The accused has denied having taken a loan of Rs. 21,00,000 from the complainant.
B. PRE-SUMMONING EVIDENCE & NOTICE
4. Pre-summoning evidence was led by the complainant and on finding a prima facie case, the accused was summoned to face trial vide order dated 22.08.2016. On appearance, the accused was served with the notice of accusation under Section 251, Code of Criminal Procedure, 1973 (hereinafter "CrPC") on 04.08.2018, to which the accused pleaded not guilty and claimed trial. While the accused admitted his signature on the cheque in question, he stated that rest of the particulars were not filled by him. Further, the following plea of defence was taken by the accused at thi stage:
I do not plead guilty and I have defence to make. The present cheques in question bear my signatures but I have not filled up the other particulars i the cheques. I had issued the cheques in question to one Sh. Sachin for security purpose as I had taken a loan of Rs. 3 lacs from him in October- November 2014. I handed over the same amount in cash to Sh. Sachin in 2015 alongwith 10% interest. I do not know the complainant company. I have not received the legal notice from the complainant company. I asked my cheque back from Sh. Sachin but he did not return the same. The complainant company has filed a false and fabricated complain against me. I do not owe liability towards the complainant qua the cheques in question. I want to lead defence evidence.
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The judgment discusses the NI Act, 1881, which is an Act to amend the laws relating to bills of exchange, promissory notes, and cheques. The objective of the Act is to prohibit the cases of dishonor of cheques, encourage the use and credibility of cheques, facilitate the growth of commercial and banking transactions, and legalize the system governing negotiable instruments.
Filing and defending a complaint made under Section 138 of the Act is a complex procedure. A legally enforceable debt and insufficiency of funds due to which the cheque was dishonored form an essential part of the complaint. Further, it is significant to keep in mind that a complaint made under Section 138 is of civil nature and must not be confused or held parallel to a complaint of criminal nature. Hence, it is important to engage the services of a cheque bounce lawyer who is well-versed with the concerned laws and can ensure a favorable outcome for the case.
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