The absence of a written agreement and non-disclosure in income tax returns does not negate the existence of a loan. Breach of Section 269SS of the Income Tax Act does not render a loan transaction illegal or unenforceable.

Vipin Sanghi, J.

1. I have heard learned counsel for the petitioner as well as learned counsel for the respondent on the aspect of grant of leave.

2. Leave granted.

Crl. Appeal No. /2016 (to be registered and numbered)

3. Let the appeal be registered and numbered.

4. I have heard learned counsel for the appellant and proceed to dispose of the appeal at this stage itself.

5. The appellant assails the judgment dated 18.05.2015 passed by the learned Metropolitan Magistrate – 03 (East), Karkardooma Courts, in complaint case No. 375/01/2011 whereby the appellant’s aforesaid complaint under Section 138 of the Negotiable Instruments Act was dismissed and the respondents/accused acquitted. The appellant had filed the said complaint on the premise that her late husband and the accused had friendly relations. The accused had approached her husband for a friendly loan of Rs. 10 lakhs in order to purchase a property. The complainant collected the amount of Rs. 10 lakhs from her resources and gave the same to the accused in the first week of October, 2008, for 24 months only. The amount was to be repaid in monthly instalments of Rs. 35000/- on fifth of every English calendar month. The remaining amount of Rs. 1,60,000/- was to be paid by the accused to the complainant on 03.10.2010. The accused, with a view to secure his liability, issued a post-dated cheque bearing No. 159064 dated 21.07.2011 for Rs. 10 lakhs drawn on Axis Bank, Shakti Nagar branch, in favour of the complainant and assured that the said cheque would be honoured on presentation. The accused, however, did not comply with the said agreement. Consequently, the accused was informed that the complainant shall proceed to deposit the cheque for encashment. The same was not objected to by the accused. When the cheque was deposited, the same was returned unpaid for insufficient funds vide cheque returning memo dated 09.08.2011. Consequently, a legal notice dated 23.08.2011 was sent to the accused which was despatched on 01.09.2011, making a demand for payment of the cheque amount within 15 days. The same was sent by registered A.D., UPC and Speed Post. The complainant stated that the accused did not reply to the notice, nor made payment of the cheque amount and, consequently, the complaint was preferred.

6. The Learned Magistrate took cognizance of the offence on 24.09.2011 and issued summons to the accused. Notice under Section 251 Cr.P.C. was framed on 02.11.2011, to which the accused pleaded not guilty and claimed trial. The accused admitted that he had entered into an agreement with the husband of the complainant to seek a loan of Rs. 10 lakhs in October, 2008. However, his defence was that the said transaction did not materialize between the parties. The loan amount, according to the accused, was not disbursed by the husband of the complainant to him. The accused admitted issuance of the cheque in question and that the same was dishonoured upon presentation. He also admitted the receipt of legal notice. He claimed that he had taken a loan from Axis Bank in February, 2009 and he had no pecuniary liability towards the complainant.

7. The complainant examined three witnesses. She examined herself as CW1. She tendered her evidence and exhibited the cheque in question (Ex.CW1/1), cheque returning memo (Ex.CW1/2), legal notice dated 23.08. 2011 (Ex.CW1/3) and the postal receipt dated 01.09.2011 (Ex.CW1/4A to Ex.CW1/4D). CW2 is one Shri Raghubir Singh Chaudhary, an eye witness to the transaction of giving of loan to the accused, and CW3 is the daughter of the complainant, Smt. Sadhna Tiwari. The said witnesses were cross-examined by the accused.

8. The statement of the accused under Section 281 read with Section 313 Cr.P.C. was recorded on 05.02.2014. He reiterated the same stand as taken by him at the time of framing of notice. He also stated that before he could take back the cheque from the husband of the complainant, he expired. The accused, in support of his defence, examined h