Delhi District Court
Shriram Transport Finance Co.Ltd vs Ranjit Singh on 25 January, 2025
IN THE COURT OF Ms. AASTHA SHARMA, LD. JMIC (N.I. Act)-09,
SOUTH-WEST DISTRICT, DWARKA COURTS COMPLEX:
DELHI
M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh
Ct. Cases No. 17781/2019
U/S 138 Negotiable Instruments Act, 1881
1. CNR number DLSW02-025305-2019
2. Name of the complainant and the address Shriram Transport Finance Company
Ltd. Having one of it's Branch office
at: G-2, 2nd Floor, New Mahavir Nagar,
Opposite Metro Pillar No. 551,
Janakpuri, New Delhi-110058
3. Name of the accused person(s), parentage Ranjeet Singh
& residential address
S/o Sh. Ratan Singh
R/o L-133A, Block Shastri Nagar,
Delhi-110052.
4. Offence complained of or proved U/s 138 of Negotiable Instruments Act,
1881
5. Plea of the accused Pleaded not guilty and claimed trial
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 1
6. Final Judgment/order Acquitted
7. Date of judgment/order 25.01.2025
Date of Institution : 21.05.2019
Date of Reserving Judgment/Order : 21.12.2024
Date of Pronouncement of Judgment/Order : 25.01.2025
ARGUING COUNSELS:
Ld. Counsel for the complainant: Sh. Abhishak Agarwal, Ld. Counsel for complainant.
Ld. Counsel for the Accused: Sh. N.L. Singh, Ms. Anita Sharma and Ms. Parvesh
Kumari, Ld. Counsels for accused.
JUDGMENT
1. Vide this judgment, this Hon’ble Court shall dispose of the present complaint filed by
the complainant M/s Shriram Transport Finance Co. Ltd. (hereinafter referred to as
“complainant”) against Sh. Ranjit Singh (hereinafter “accused”) under Section 138 of the
Negotiable Instruments Act, 1881 read with Section 142 of Negotiable Instruments Act,
1881 (hereinafter referred to as “NI Act“).
Brief facts of the case:
2. It is the case of the complainant,
A. That, the complainant is a company registered under the Companies Act, 1956, having
its registered office at 3rd Floor, Mookambika Complex, No. 4, Lady Desika Road,
Mylapore, Chennai-600004, and having one of Branch Office at G-2, Second Floor, New
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 2
Mahavir Nagar, Opposite Metro Pillar 551, Janakpuri, New Delhi-110058 and engaged in
the business of financing, leasing, amongst other businesses.
B. That, the accused approached the complainant company for the purchase of a vehicle
bearing registration no. HR38P7828, to which the complainant agreed for financial
assistance subject to conditions of the Loan-cum-Hypothecation Agreement no.
AZDPRO410100001 and the accused agreed to pay monthly EMIs as per the schedule of
agreement on time.
C. That the accused in discharge of his legally enforceable liability, issued a cheque
bearing no. 812821 dated 08.04.2019 for Rs. 26,80,355/-, drawn on State Bank of India,
Shastri Nagar, Delhi in favor of the complainant and the accused while issuing the said
cheque, assured the complainant that the said cheque would be encashed without any
difficulty.
D. That, on presentation of the aforesaid cheque in his bank Axis Bank Ltd., Dwarka,
Sector 12B, New Delhi-110078 for encashment, the cheque was returned dishonoured
with the remarks “Kindly contact drawer/drawee bank” vide returning memo dated
10.04.2019.
E. That, the complainant company got issued a statutory legal demand notice to the
accused through his counsel, dated 16.04.2019, thereby requiring the accused to pay the
amount of the aforesaid cheque within a period of 15 days from the receipt of the said
notice. The said notice under Sec. 138 of NI Act was sent to the accused through
Registered Post and Speed Post on 16.04.2019 at his correct address. It is further
submitted by the complainant that the said notice was duly served on the accused person.
F. That despite service of the above stated notice of demand, the Accused has deliberately
and willfully failed to comply with the said notice of demand and has failed to pay the
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 3
amount of the aforesaid cheque within the stipulated period of 15 days from the date of
receipt of the said notice. Consequently, this case was filed by the complainant against
the accused, which was within limitation period as laid down u/s 138, NI Act.
Proceedings before the court:
3. Upon a prima facie consideration of pre-summoning evidence, it appeared that the
offence u/s 138 NI Act has been made out. After leading pre-summoning evidence by the
complainant, cognizance of the offence u/s 138, NI Act was taken against the accused
and the accused was summoned vide order dated 25.06.2019. Thereafter, accused
entering into appearance on 24.02.2022. On 29.04.2022, a separate notice was framed
against the accused u/s 251 of the Code of Criminal Procedure, 1973 (hereinafter
“CrPC“), which was read over and explained to him, to which the accused pleaded not
guilty and claimed trial. At the stage of framing notice, the following aspects were
admitted/denied by him:
(i) Issuance of cheque to the complainant : Admitted
(ii) Signatures on the cheque in question : Admitted
(iii) Receiving the legal demand notice : Denied but admitted to the address on the legal
demand notice being his correct addressIn his defense, the accused has stated that he took a loan of Rs. 7,00,000/- in 2014 from
the complainant in order to purchase a second hand truck. The accused has stated that he
had made certain installments amounting to Rs. 85,000/- to the complainant and due to
poor financial condition, he could not pay the rest of the loan amount. The accused
further stated that in 2015, the complainant took possession of the truck of the accused
and gave him an inventory check list. The accused has further stated that he had issuedCt. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 4
one blank signed cheque as security to the complainant, which the complainant has
misused.
4. Vide a separate statement of the accused person, the admissions and denials u/s 294
CrPC was recorded in which they admitted that the cheque belonged to them and the
same has been dishonoured and the genuineness and correctness of postal receipt.
Therefore, the witnesses at number 2, 3 and 4 in the list of complainant’s witnesses were
dropped.
5. During the trial, the complainant has led the following oral and documentary evidence
by way of an affidavit Ex. CW1/1, against the accused to prove its case beyond
reasonable doubt and relied upon the following documents :-
● Company Incorporation certificate is exhibited as Mark 1.
● Power of Attorney is Ex-CW1/A (OSR).
● Original Cheque is Ex-CW1/B.
● Original returning memo is Ex-CW1/C.
● Copy of Legal Notice is Ex-CW1/D & Original Postal receipt is Ex-CW1/E.
● Tracking Report is Mark 2.
Thereafter, the accused was granted an opportunity to cross-examine the complainant
under Section 145(2), NI Act and the complainant was duly cross-examined by the Ld.
Counsel for accused. Thereafter, CE was closed vide order dated 08.02.2023.
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 5
6. Thereafter, before the start of defence evidence, in order to allow the accused to
personally explain the circumstances appearing in evidence against him, his statement
under Section 313 CrPC was recorded without oath.
7. The accused opted to lead defence evidence during the statement under Section 313
CrPC, and he examined himself as DW-1, vide an application u/s 315 CrPC moved on
behalf of the accused which was allowed by this Hon’ble court in the interest of justice
vide order dated 16.05.2023. DW-1 and DW-2 were examined, cross-examined and
discharged and DE was closed vide a separate statement of the DW-1 on 17.11.2023.
8. Thereafter, the matter was listed for final arguments. After hearing the final arguments
from both sides and on the basis of the written submissions on record by both the parties,
the matter was reserved for pronouncement of judgment.
Arguments advanced by both the parties:
9. Ld. Counsel for the complainant while reiterating the facts of the complaint, has stated
that the complainant company had financed the truck of the accused and the total liability
of the accused is made out to be Rs. 26,80,355/-.
10. Ld. Counsel for the complainant further argued that the signatures on the cheque in
question have been admitted by the accused alongwith the issuance of the cheque in
question and therefore liability of the accused is made out.
11. Ld. Counsel for the complainant further submits that the accused has admitted to not
paying all the installments to the loan and therefore legally enforceable liability is made
out against the accused. It is further argued by the Ld. Counsel for the complainant that
no documentary proof has been placed on record by the accused to indicate that his
liability is not made out.
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 6
12. Therefore, Ld. counsel for complainant has prayed that since all the ingredients u/s
138, NI Act have been fulfilled, the accused is liable for the offence u/s 138, NI Act and
be punished with maximum punishment in accordance with law and be punished with
imprisonment for a term of two years and fine of double of the amount of the said
cheque.
13. Per contra, Ld. Counsel for the accused in his final arguments has argued that the
accused had taken a loan of Rs. 7,00,000/- and the complainant has nowhere in his
complaint or legal notice elaborated upon the breakup of liability of Rs. 26,80,355/-.
14. Ld. Counsel for the accused further argues that no statement of accounts has been
placed on record to indicate the liability of the accused.
15. Ld. Counsel for the accused further submits that the cheque in question Ex. CW1/B
indicates that the same is valid for an amount of Rs. 10 lakhs or under, which means that
the accused has not filled the details of the cheque and the complainant has misused the
cheque in question.
16. Ld. Counsel for the accused has further argued that Ex. CW1/DX1 is the Inventory
checklist receipt issued by the complainant company which mentions that the truck is in
the possession of the complainant and therefore no liability has been made out against the
accused.
17. The Ld. Counsel for the accused, in consequence, has prayed that the accused be
acquitted as the conditions for Section 138, NI Act have not been fulfilled and the
complainant has misused the cheques against the accused.
Appreciation of evidence:
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 7
18. I have heard counsels on behalf of both the sides, perused the record as well as
relevant provisions of law.
19. Before appreciating the facts of the case in detail for the purpose of decision, let
relevant position of law be discussed first. Section 138, NI provides as under:
“Section 138.- Dishonour of cheque for insufficiency, etc., of funds in the account.-
Where any cheque drawn by a person on an account maintained by him with a banker for
payment of any amount of money to another person from out of that account for the
discharge, in whole or in part, of any debt or other liability, is returned by the bank
unpaid, either because of the amount of money standing to the credit of that account is
insufficient to honour the cheque or that it exceeds the amount arranged to be paid from
that account by an agreement made with that bank, such person shall be deemed to have
committed an offence and shall, without prejudice to any other provisions of this Act, be
punished with imprisonment for a term which may be extended to two years, or with fine
which may extend to twice the amount of the cheque, or with both:”
Provided that nothing contained in this section shall apply unless:
(A) The cheque has been presented to the bank within a period of six months from the
date on which it is drawn or within the period of its validity, whichever is earlier;
(B) The payee or the holder in due course of the cheque, as the case may be, makes a
demand for the payment of the said amount of money by giving a notice in writing, to the
drawer of the cheque, within thirty days of the receipt of information by him from the
bank regarding the return of the cheque as unpaid; andCt. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 8
(C) The drawer of such cheque fails to make the payment of 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.
Explanation — for the purposes of this section, “debt or other liability” means a legally
enforceable debt or other liability.
20. It is well settled position of law that to constitute an offence under Section 138, NI
Act, the following ingredients are required to be fulfilled:
I. drawing of the cheque by a person on an account maintained by him with a banker,
II. The cheque was issued for payment to another person for discharge in whole/part any
debt or liability;
III. Cheque has been presented to the bank within a period of six months from the date on
which it is drawn or within the period of its validity whichever is earlier. RBI in its
notification DBOD.AML BC.No.47/14.01.001/2011-12 has reduced the aforesaid period
from 6 months to 3 months.
IV. Returning of the cheque unpaid by the drawee bank for want of sufficient funds to the
credit of the drawer or any arrangement with the banker to pay the sum covered by the
cheque;
V. Giving notice in writing to the drawer of the cheque within 30 days of the receipt of
information by the payee from the bank regarding the return of the cheque as unpaid
demanding payment of the cheque amount;
VI. Failure of the drawer to make payment to the payee or the holder in due course of the
cheque, of the amount covered by the cheque within 15 days of the receipt of the notice.
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 9
The offence under Section 138, NI Act is made out against the drawer of the cheque, only
when all the aforementioned ingredients are fulfilled.
21. In the present case at hand, the complainant has filed on record the original cheque,
i.e., bearing no. 812821 dated 08.04.2019 for a sum of Rs. 26,80,355/-, drawn on State
Bank of India, Shashtri Nagar, New Delhi Branch (Ex. CW1/B). In notice under Section
251 CrPC, the accused has admitted that the cheque in dispute belongs to him. It is also
not disputed that the cheque in question is not drawn on the account maintained by the
accused person and it is impliedly admitted therefore that the accused is the drawer of the
cheque. Therefore, ingredient number I stands fulfilled in the present case.
22. As per the RBI guidelines, it is essential for the cheque in question be to presented
within a period of three months from the date on which they are drawn and the same be
returned as unpaid by the drawee bank for want of sufficient funds to the credit of the
drawer or any arrangement with the banker to pay the sum covered by the cheque. In the
case at hand, the cheque in question, i.e., Ex. CW1/B dated 08.04.2019 was returned vide
return memo dated 10.04.2019 due to the reason “Kindly contact Drawer/Drawee Bank”.
By implication thereof, the cheque was presented within three months and the same was
returned for want of sufficient funds to the credit of the drawer. Therefore, Ingredient
number III & IV stand fulfilled in the present case.
23. The legal notice dated 16.04.2019 (Ex. CW1/D) was dispatched on 16.04.2019 by
Speed Post, i.e., within 30 days of return of the bank memo indicating cheque in question
being unpaid. The fact that the legal demand notice has made a clear and unambiguous
demand for payment of the cheque in question is not disputed. The accused has not
admitted to the receipt of legal demand notice in notice u/s 251 CrPC, however, he has
admitted that the address on the legal demand notice bears his correct address. As per the
presumption raised under Section 114 of Indian Evidence Act, 1872 and Section 27 of
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 10
General Clauses Act, if the legal demand notice is sent at the correct address, then the
same shall be deemed to have been duly served. As per the precedent laid down by the
Hon’ble Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed, (2007) 3 SCC (Cri),
“A person who does not pay within 15 days of receipt of the
summons from the court along with the copy of the
complaint under Section 138 of the Act, cannot obviously
contend that there was no proper service of notice as
required under Section 138, by ignoring statutory
presumption to the contrary under Section 27 of the GC Act
and Section 114 of the Evidence Act.”
In K. Bhaskaran vs Sankaran Vaidhyan Balan and Anr, Appeal (crl.) 1015 of 1999 (SC)
(hereinafter referred to as “K. Bhaskaran”), the Hon’ble SC observed:
“On the part of the payee he has to make a demand by
`giving a notice’ in writing. If that was the only requirement
to complete the offence on the failure of the drawer to pay
the cheque amount within 15 days from the date of such
`giving’ the travails of the prosecution would have been very
much lessened. But the legislature says that failure on the
part of the drawer to pay the amount should be within 15
days `of the receipt’ of the said notice. It is, therefore, clear
that `giving notice’ in the context is not the same as receipt of
notice.”
The burden of giving notice within 30 days of return of bank memo, falls on the
complainant/payee to constitute the offence u/s 138, NI Act. If the notice is sent on the
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 11
correct address, then the presumption u/s 27 General Clauses Act and Section 114, Indian
Evidence Act arises in the favour of the complainant/payee.
Therefore, it is deemed that the legal notice was duly served on the accused person.
The ingredient number V is fulfilled by virtue of giving of legal demand notice within 30
days from the bank return memo. The receipt of legal demand notice by the accused is
deemed to be admitted as per the discussion above.
24. Moving on, it is not disputed that the accused has not made the payment of the
cheque amount within 15 days of the receipt of legal demand notice. Therefore,
ingredient number VI also stands fulfilled in the present case.
25. Let us now move on to ingredient number II,
The NI Act raises two presumptions in favour of the holder of the cheque, i.e.,
complainant; firstly, with regard to the issuance of cheque for consideration, as contained
in Section 118(a) and secondly, with regard to the fact that the holder of cheque received
the same for discharge, in whole or in part, of any debt or other liability, as contained in
Section 139 of the Act.
Analysing all the concerned provisions of law and various pronouncements in this regard,
the Hon’ble Apex Court in the case of Basalingappa v. Mudibasappa [AIR 2019 SC
1983] held that:
I. Once the execution of cheque is admitted, Section 139 of the Act mandates that a
presumption be drawn that the cheque in question was for the discharge of any debt or
other liability.
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 12
II. The presumption under Section 139 is a rebuttable presumption and the onus is on the
accused to raise the probable defence. The standard of proof for rebutting the
presumption is that of preponderance of probabilities.
III. To rebut the presumption, it is open for the accused to rely on evidence led by him or
accused can also rely on the materials submitted by the complainant in order to raise a
probable defence. Inference of preponderance of probabilities can be drawn not only
from the materials brought on record by reference to the circumstances upon which they
rely.
IV. That it is not necessary for the accused to come in the witness box in support of his
defence. Section 139 imposes an evidentiary burden and not a persuasive burden.
It is therefore implied that the law regarding the presumption for the offence under
Section 138, NI Act, the presumptions under Section 118(a) and Section 139 have to be
compulsorily raised as soon as the execution of cheque by the accused is admitted or
proved by the complainant and thereafter the burden is shifted upon the accused to prove
otherwise.
26. These presumptions shall end only when the contrary is proved by the accused, that
is, the cheque was not issued for consideration and in discharge of any debt or liability
etc. The Hon’ble Apex Court in Kumar Exports v. Sharma Carpets [(2009) 2 SCC 513],
has laid down the benchmark for the burden of proof that the accused has to raise a doubt
as to the presumption under Section 139, NI Act.
“The accused in a trial under Section 138 of the Act has
two options. He can either show that consideration and
debt did not exist or that under the particular
circumstances of the case the non-existence ofCt. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 13
consideration and debt is so probable that a prudent man
ought to suppose that no consideration and debt existed.
To rebut the statutory presumptions, an accused is not
expected to prove his defence beyond 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 mayCt. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 14
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. The accused has also
an option to prove the non-existence of consideration
and debt or liability either by letting in evidence or in
some clear and exceptional cases, from the case set out
by the complainant, that is, the averments in the
complaint, the case set out in the statutory notice and
evidence adduced by the complainant during the trial.
Once such rebuttal evidence is adduced and accepted by
the court, having regard to all the circumstances of the
case and the preponderance of probabilities, the
evidential burden shifts back to the complainant and,
thereafter, the presumptions under Sections 118 and 139
of the Act will not again come to the complainant’s
rescue.”
To put in a nutshell, the intent behind the NI Act is to prevent financial frauds and affect
the socio-economic well-being of the country. If the burden is placed on the complainant
to prove the existence of liability against the accused, that would be too heavy a burden
as most of these transactions are in the nature of “friendly loan” and the accused would,
in a normal circumstance, always deny the liability. Therefore, the legislation is drafted in
a way so as to discharge the complainant from proving the liability and a presumption is
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 15
raised by virtue of Section 139 read with Section 118(a) of the Act that the cheque if
issued by the accused, then the same is deemed to be in discharge of some legally
enforceable debt in favour of the complainant. The presumption is rebuttable and the
accused “may” either prove that no legally enforceable debt existed or punch holes in the
story of the complainant and give rise to a probable defence to rebut the presumption. As
per the law discussed above, the burden of proof on the accused to raise a probable
defence is that of “preponderance of probabilities”, and not “beyond reasonable doubt.”
Once a probable defence is raised, then the onus is shifted to the complainant to establish
that a legally enforceable liability existed in his favour and the burden of proof on
complainant in this case is that of “beyond reasonable doubt.”
27. The accused can rebut the presumption as raised under the NI Act by (a) putting forth
his defence at the time of framing of notice u/s 251 CrPC; (b) cross-examining the
complainant; (c) when statement of accused is recorded u/s 313 CrPC; (d) or by leading
defence evidence, thereby demolishing the case of the complainant. It is amply clear that
the accused does not need to discharge his or her liability beyond the shadow of
reasonable doubt. He just needs to create holes in the case set out by the complainant.
Accused can say that the version brought forth by the complainant is inherently
unbelievable and therefore the prosecution cannot stand.
28. In light of the above discussion, since the accused has admitted to issuance of cheque,
admitted the signatures on the cheque and legal notice has also been deemed to be served,
what is left to be seen is whether the accused has been able to rebut the presumption
against him, i.e., whether the accused is able to raise a probable defence which creates
doubts about the existence of a legally enforceable debt?
29. The case of the complainant is that the accused has borrowed a sum of Rs. 7,00,000/-
from the complainant company for financing of a truck, which has been admitted by the
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 16
accused. Therefore the factum of advancement of loan by the complainant company is
not disputed. At the stage of framing of notice u/s 251 CrPC, the accused had taken the
defence that he had taken a loan of Rs. 7,00,000/- from the complainant in the year 2014
to purchase a second hand truck, out of which the accused had already made the payment
of Rs. 85,000/- in installments and the truck is already in the possession of the
complainant, therefore the accused does not owe any liability to the complainant. The
accused has further stated that at the time of availing of loan from the complainant, the
complainant had issued one blank signed security cheque to the complainant. At the stage
of statement of accused u/s 313 CrPC as well, the accused has stated that the complainant
has issued an inventory check-list through which the complainant has taken the
possession of the truck of the accused and therefore no dues were owed by the accused to
the complainant. Therefore, what remains to be seen is whether the accused owes the
amount as mentioned by the complainant when they presented the cheque in question and
whether the cheque in question is issued for the legally enforceable liability existent
against the accused at the time of the presentation of the cheque.
31. The complainant AR in his cross-examination as CW-1 dated 08.02.2023 has stated:
“It is correct that the company has constructed the yards throughout the country at
different places for parking the vehicles which were seized by the complainant
company.”
The accused in his defence has stated that the complainant company took the possession
of the truck from his driver Virendra Singh and had issued an inventory check-list to the
accused in return, which is Ex. CW1/DX1. The complainant has not admitted to it and
has stated:
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 17
“Q: Isn’t it correct that this inventory check-list Ex. CW1/DX1 was issued by your
company after taking possession of the truck no. HR38P7828 of the accused?
Ans: Complainant company did not issue any inventory check-list and did not take
possession of accused’s truck. In company’s statement of accounts, there is no record of
any truck seized from the accused.”
“…..I do not know whether the company has hired the yard at Muzaffarnagar, UP with the
name of Sri Mahalaxmi Parking Yards, Muzaffarnagar, stamp of which is reflected on
Ex. CW1/DX1.”
However, the complainant has not placed any documentary proof on record to indicate
that the truck is not in possession of the complainant or has produced any witness from
the company to rebut the document Ex. CW1/DX1. The complainant has not even placed
the original loan agreement or the statement of accounts on the record to indicate whether
the truck was seized or not or the amount of liability that the accused owes to the
complainant company. The complainant in his cross-examination has stated:
“It is correct that no statement of account was filed with the complainant. It is also
correct that no calculation regarding the claimed amount is filed with the complaint.”
32. As admitted by the accused, the loan amount obtained from the complainant company
is Rs. 7,00,000/-, out of which Rs. 85,000/- have already been paid by the accused and
the receipts for the same have also been placed on record by the accused as Ex.
CW1/DX2, which have also been admitted by the complainant. Therefore, the relevant
question that falls for consideration of this court is whether the cheque amount, i.e., Rs.
26,80,355/- reflected the legally enforceable liability of the accused as on the date of
presentation, i.e., 08.04.2019 or not?
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 18
33. On asking the complainant about the legally enforceable liability owed by the
accused, the complainant has nowhere indicated by statement of accounts or any oral
evidence the computation of total dues owed by the accused to the complainant.
Furthermore, the legal demand notice placed on record by the complainant also does not
indicate the break-up of the total liability of the accused person by imposing of overhead
charges or arrears etc. In order to determine the legality of the overhead charges such as
arrears and delayed payment interest and the high interest rate which has led to the
accused being liable for more than Rs. 26 lakhs when the original loan obtained from the
complainant was merely Rs. 7 lakhs, we have to delve into Section 74 of The Indian
Contract Act, 1872. The abovesaid provision stipulates that whenever a contract is broken
and the contract contains a stipulation for penalty on account of breach by either party,
the party complaining of the breach is entitled to receive reasonable compensation from
the other party and such reasonable compensation should not exceed the penalty
stipulated in the contract. In the present case, the accused had taken a loan of Rs.
7,00,000/- which must not be fully granted to the accused due to EMI charges and certain
other charges, after which an amount of Rs. 85,000/- has been admitted to be repaid by
the accused to the complainant. Despite the same, the liability of the accused as stated by
the complainant in his complaint is Rs. 26,80,355/-, and the amount claimed by the
complainant company by the cheque in question, is excessive in nature. Moreover, when
the complainant has not placed anything on record to justify how the complainant has
reached the sum mentioned on the cheque in question, which also makes the amount
claimed by the complainant arbitrary in nature. In the considered opinion of this court,
such a high penalty can in no way be regarded as a reasonable penalty and if the
complainant, which is a NBFC, is permitted to recover penalties at such absurd rates
without mentioning the same in the contract or apprising the borrower as to the source of
the amount claimed, then the same would be totally contrary to public policy and would
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 19
go on to set a dangerous precedent (void as per Section 23 read with Section 24 of the
Indian Contract Act).
34. Recently, the Hon’ble Supreme Court in Dashrathbhai Trikambhai Patel v. Hitesh M.
Patel (2023) 1 SCC 578, had observed in Para 34.1 of its judgment that “for the
commission of offence u/s 138 NI Act, the cheque that is dishonoured must represent a
legally enforceable debt on the date of maturity or presentation.”
In the present case, the cheque in question was presented for encashment of a sum of Rs.
26,80,355/-. However, the same cannot be regarded as a legally enforceable liability on
account of being contrary to public policy, as discussed above. Accordingly, the accused
has succeeded in establishing that the amount claimed by the complainant via the cheque
in question was excessive and did not reflect the legally enforceable liability of the
accused.
35. Furthermore, in the case of Suman Sethi v. Ajay K. Churiwal and Another, (2000) 2
SCC 380, the Hon’ble Supreme Court held,
“It is a well settled principle of law that the notice has
to be read as a whole. In the notice, demand has to be
made for the “said amount” i.e. cheque amount. If no
such demand is made the notice no doubt would fall
short of its legal requirement. Where in addition to
“said amount” there is also a claim by way of interest,
cost etc. whether the notice is bad would depend on
the language of the notice. If in a notice while giving
the breakup of the claim the cheque amount, interest,
damages etc. are separately specified, other such
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 20
claims for interest, cost etc. would be superfluous and
these additional claims would be severable- and will
not invalidate the notice. If, however, in the notice an
omnibus demand is made without specifying what
was due under the dishonored cheque, notice might
well fail to meet the legal requirement and may be
regarded as bad.”
In the present case, perusal of legal demand notice indicates that the demand has been
made omnibus for the cheque amount, and not for the “said amount” by indicating the
claim for principal sum, interest, cost etc. The complainant company has nowhere
specified as to how they arrived at the sum of Rs. 26,80,355/-. The legal notice therefore
is bad in law, as per the discussion above.
36. In light of the discussion above, this Court is of the view that the accused has been
able to rebut the presumption against him and therefore ingredient no. II has not been
fulfilled in the present case.
Conclusion:
37. In view of the evidence adduced, documents put forth and arguments advanced by the
parties and further in view of the above discussion, the court is of the considered view
that the complainant has failed in proving that the cheque amount reflects the legally
enforceable liability of the accused and there are other technical defects as well in the
case of the complainant, thereby the conditions u/s 138, NI Act remain unfulfilled.
Accordingly, accused Ranjit Singh is hereby acquitted of the offence punishable under
Section 138 of Negotiable Instruments Act, 1881.
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 21
PRONOUNCED IN THE OPEN COURT Digitally
signed by
AASTHA
AASTHA SHARMA
TODAY ON 25.01.2025. SHARMA Date:
2025.01.25
15:15:59
+0530
(Aastha Sharma)
Judicial Magistrate-Ist Class
(NI Act)-09/South-West,
Dwarka/25.01.2025
This judgment consists of 21 pages and all are duly signed by me.
Ct. Cases No. 17781/2019 M/s Shriram Transport Finance Co. Ltd. v. Ranjit Singh 22
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