Delhi District Court
Cis No. 624585/16 M/S Videon Tv ... vs M/S Malik Electronics on 21 December, 2019
CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics
DL-SE-02-006018-2015
Presented on :10-07-2015
Registered on :14-07-2015
Decided on :21.12.2019
IN THE COURT OF
Metropolitan Magistrate
AT ,SOUTH EAST
(Presided Over by Sh. Kamran Khan)
CT CASES/624585/2016
M/s VIDEON TV MANUFACTURES PVT LTD Through Mr. Harsh
Oberoi, E-45/7, Okhla Industrial Area-II, New Delhi 110020.
VERSUS
M/s MALIK ELECTRONICS Through its Prop. Mr. Kuldeep Malik,
Shop No-4, Balaji Chowk, Mohan Garden, Uttam Nagar, New Delhi.
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Argued by: None for complainant.
Sh. Manoj Kumar, counsel for accused.
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JUDGMENT:-
Complainant has filed the present complaint under Section 138 of Negotiable Instruments Act, 1881 against the accused on the averments that complainant is a registered company engaged in the distribution and supply of various electronics goods. As per the complainant company, accused approached it for purchase of electronics goods in the month of CNR No:DLSE020060182015 Page No. 1 / 15 CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics April, 2014 and on the assurance of the accused that he shall make the payment with a credit of 30 days, complainant sold various electronics goods to the accused and maintained a statement of account for various transaction entered with the accused. However, it is the case of the complainant company that gradually accused became a defaulter resulted in accumulation of outstanding amount of Rs.1,63,912/-. As per the complainant company, to discharge the aforesaid liability, in part, accused gave a cheque bearing no.779777 dated 25.04.2015 of Rs.1,00,000/- drawn on Punjab National Bank, Delhi (hereinafter referred to as "cheque in question"). However, the above cheque, when deposited for encashement, got dishonored with the remarks "Funds Insufficient" vide returning memo dated 06.05.2015. Thereafter, complainant company sent a legal demand notice dated 27.05.2015 by way of registered A.D., which was duly served upon the accused. Despite receipt of the legal demand notice, accused failed to make the requisite payment within the stipulated period and hence the present complaint.
2. After taking pre-summoning evidence, accused was ordered to be summoned in this case for commission of offence under Section 138 of Negotiable Instruments Act, 1881, vide order dated 17.07.2015.
3. Accused appeared and was released on bail on 16.11.2016. On finding a prima facie case, notice U/s 251 Cr.PC CNR No:DLSE020060182015 Page No. 2 / 15 CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics was served upon the accused on 30.08.2017 to which he pleaded not guilty and opted to contest after disclosing the following defence:
"I do not plead guilty and claim trial. The impugned cheque alongwith 2-3 cheques were given to the complainant after only signing the same. The impugned cheque was given as an advance for supply of goods. However, the goods were never supplied by the complainant against the said impugned cheque. I am the proprietor of Malik Electronics. I did not receive the legal notice."
4. An application U/s 145 (2) NI Act was filed by the accused which was allowed. In pre summoning evidence, AR of complainant tendered his affidavit of evidence Ex. CW1/1 and proved following documents.
Ex. CW1/A : Extract of the minutes of the
meeting of the directors held on
05.07.2015.
Ex. CW1/B : Cheque bearing no.779777 dated
25.04.2015 of Rs.1,00,000/-.
Ex. CW1/C : Bank returning memo dated
06.05.2015.
Ex. CW1/D : Legal demand notice dated
26.05.2015.
Ex. CW1/E : Postal receipt dated 27.05.2015.
CW-1/AR of complainant was cross examined and thereafter, AR of complainant closed the evidence vide separate statement dated 24.03.2018.
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5. Thereafter, accused was examined under Section 313 Cr.PC for explaining the circumstances appearing against him in complainant's evidence. He has denied the complainant's case and pleaded false implication and opted to lead evidence in his defence.
6. In defence, accused stepped into the witness box as DW-1 after taking due permission from the court. Defence evidence was closed by the accused on 16.09.2019.
7. I have heard ld. Counsel for the accused. Even after availing opportunity, arguments were not advanced by ld. Counsel for complainant and even written arguments were not filed despite liberty was granted for the same. I have perused the case file carefully and meticulously.
8. Ld. Counsel for the accused argued that to rebut the statutory presumption U/s 139 of the Negotiable Instruments Act, 1881 an accused is not expected to prove his defence beyond reasonable doubt as is expected in a criminal trial and the said presumption can be rebutted by the accused either by adducing direct evidence to prove the non existence of any debt or liability or by indirectly pointing out fallacies in the prosecution version. It was further argued that the complainant has not filed any invoice / bill for the goods allegedly supplied to the accused and in the absence of the bills / invoice it cannot be said that the goods were supplied to the accused. Further, it was contended CNR No:DLSE020060182015 Page No. 4 / 15 CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics that even no receipt with regard to transportation of the goods were filed by the complainant to establish supply of goods to the accused. Accordingly, acquittal of the accused was prayed.
9. After hearing Ld. Counsel for the accused and having perused the case file carefully and meticulously this court is of the opinion that in order to bring home the guilt against the accused, complainant is duty bound to prove the following ingredients:-
a) Drawing of cheque by a person on any account maintained by him with a banker for payment to another person out of that account.
b) The cheque has been issued for the discharge, in whole or in part, of any legal and enforceable debt or other liability.
c) Presentation of the cheque by the payee or the holder in due course to the bank within a period of three months from the date on which it is drawn or within the period of its validity, whichever is earlier.
d) Returning the cheque unpaid by the drawer 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.
e) Giving notice within 30 days of receipt of the information by the payee from the bank regarding the return of the cheque as unpaid, demanding payment of the cheque amount.
f) Failure of the drawer to make payment to the payee or the holder in due course of the amount covered by the cheque within 15 days of the receipt of notice.
10. It goes without saying that it is only when all the CNR No:DLSE020060182015 Page No. 5 / 15 CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence U/s 138 of Negotiable Instruments Act, 1881.
11. In the case in hand, it is not in dispute that the cheque in question is drawn by the accused from his bank account. Further, it is also not in dispute that the accused is the signatory of the cheque in question as, in the defence disclosed by the accused in the notice U/s 251 Cr.PC as well as in the statement of accused recorded U/s 313 Cr.PC accused has duly submitted that he gave the impugned cheque only after signing the same as advance. Presentation of the cheque in question by the complainant is also not in dispute. Returning memo dated 06.05.2015 (Ex. CW1/C) is also undisputed i.e., the cheque in question was returned unpaid for the reason "Funds Insufficient". Complainant sent the legal demand notice, dated 26.05.2015 (Ex.CW1/D) to the accused. In the defence disclosed by the accused, at the time of framing of the notice, he had taken the defence that he has not received the legal demand notice (Ex. CW1/D) but it was never the case of the accused that the legal demand notice was not sent on his correct address. Except for the mere denial regarding non receipt of the legal demand notice no evidence is led by the accused to prove that the legal demand notice was not sent on his correct address. Not even a single suggest was put to the CW-1/AR of complainant that the legal demand notice was sent on the wrong address of the accused. In M/s Darbar Exports and other Vs Bank of India, 2003 (2) SCC CNR No:DLSE020060182015 Page No. 6 / 15 CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics (NI) 132 (Delhi), the Hon'ble High Court of Delhi held that a presumption of service of notice is to be drawn where the notice is sent through registered post as well as UPC on correct address. Further, the Hon'ble Supreme Court in C.C. Alavi Hazi Vs Palapetty Muhammad & Anr, (2007) 6SCC 555 has held that"Any drawer who claims that he did not receive the notice by post, can, within 15 days of receipt of summons from the court in respect of the complaint U/s 138 of the Act, make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the court along with the copy of complaint U/s 138 of the Act, cannot obviously contend that there was no proper service of notice as required U/s 138, by ignoring statutory presumption to the contrary U/s 27 of the General Clauses Act and Section 114 of the Evidence Act.". Thus, the legal demand notice Ex. CW1/D is held to have been duly served upon the accused. Finally, the complaint has been filed within the limitation period. Therefore, essential ingredients mentioned from (a) to (f) [except point b] in para no.9 above have been duly satisfied.
12. The only question remaining for determination is whether legally valid and enforceable debt existed qua the complainant and the cheque in question was issued in discharge of said liability / debt. It is pertinent to note that Section 139 of CNR No:DLSE020060182015 Page No. 7 / 15 CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics Negotiable Instruments Act, 1881 provides a statutory presumption that the cheque was handed over in respect of the debt or other liability. Under Section 118 of the Negotiable Instruments Act, 1881 every negotiable instrument is presumed to have been drawn and accepted for consideration. In the case of K.N. Benna vs Muniyaapan AIR 2001 SC 2895, it was observed as follows:
"Thus in complaints under Section 138, the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused. This Court in the case of Hiten. P. Dalal vs Bratindranath Banarjee reported in (2001) 6 SCC 16 has also taken an identical view."
13. The Hon'ble Supreme Court, in the case of Hiten. P. Dalal vs Bratindranath Banarjee (2001) 6 SCC 16, observed as follows:
"Because both Section 138 and 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras vs. A. Vaidyanatha Iyer, (AIR 1958 SC 61), it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. It introduced an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused" (ibid).
14. Also, in the case of K.Bhaskaran vs Sankaran Vaidhyan Balan 1999 (4) RCR (Criminal) 309, it has been held by the Hon'ble Supreme Court as under:
CNR No:DLSE020060182015 Page No. 8 / 15CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics "As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the court to presume that the holder of the cheque received it for the discharge of any debt or liability."
15. Now, in the case in hand, so far as the question of existence of basic ingredients for drawing of presumption U/s 118 and 139 of Negotiable Instruments Act, 1881 is concerned, from the aforesaid discussion, it is apparent that the accused has not denied his signatures on the cheque in question that has been drawn in favour of the complainant on a bank account maintained by the accused for sum of Rs.1,00,000/-. The said cheque was presented to the bank concerned within the period of its validity and was returned unpaid for the reason mentioned in the bank returning memo. Hence, all the basic ingredients of Section 138 as also of Section 118 and 139 are apparent on the face of record. Therefore, it is required to be presumed that the cheque in question was drawn for consideration and the holder of the cheque i.e., the complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the accused to establish a probable defence so as to rebut such a presumption.
16. It is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". In Rangappa vs. Srimohan (2010) 11 SCC 441, the Hon'ble CNR No:DLSE020060182015 Page No. 9 / 15 CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics Supreme Court has observed:
"Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
17. In another recent judgment passed in the case of Basalingappa V/s Mudibasappa : AIR 2019 SC 1983, the Hon'ble Apex Court has summarized the principle enumerated on Section 139 of the Act, which are as under:
CNR No:DLSE020060182015 Page No. 10 / 15CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics "23. We having noticed the ratio laid down by this court in above cases on Sections 118 (a) and 139, we now summarise the principles enumerated by this court in following manner:-
(i) Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
(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 the parties but also 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 imposed an evidentiary burden and not a persuasive burden.
(v) It is not necessary for the accused to come in the witness box to support his defence."
18. In Rohitbhai Jivanlal Patel Vs. State of Gujarat and Ors. AIR 2019 SC 1876 Hon'ble Supreme Court has held that :
"On the aspects relating to preponderance of probabilities, the accused has to bring on record such CNR No:DLSE020060182015 Page No. 11 / 15 CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics facts and such circumstances which may lead the court to conclude either that the consideration did not exist or that its non existence was so probable that the prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This court has, time and again, emphasized that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the requirements of rebuttal as envisaged U/s 118 and 139 of NI Act." (Emphasis Supplied)
19. Now, in the case in hand the basic question to be answered is whether the accused has been able to rebut the presumption raised U/s 139 R/w Section 118 of Negotiable Instruments Act, 1881.
20. In the case in hand, the primary defence of the accused is that the goods were never supplied to him against the impugned cheque and the cheque was given as an advance for supply of goods. On the other hand, it is the case of the complainant that the various goods were supplied to the accused and in this regard payments were also received from the accused which were duly credited in the ledger account but thereafter, accused defaulted in making the payments which resulted in outstanding liability of Rs.1,63,912/-.
21. Firstly, it is to be noted that initially complainant had not filed the ledger account along with the complaint and the same was only filed by the AR of complainant at the time of his cross examination, when a specific question was put to him by CNR No:DLSE020060182015 Page No. 12 / 15 CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics the ld. defence counsel as to why he has not placed on record statement of accounts and sale invoices. The said ledger account is Ex. CW1/Z. The question arises for consideration is whether only on the basis of ledger account Ex. CW1/Z complainant company has been able to prove outstanding liability of Rs.1,63,912/- towards the accused. In this regard, this court would like to take the aid of Section 34 of Indian Evidence Act, 1872 which deals with the entries in the books of accounts and when the same would be relevant. As per Section 34 of Indian Evidence Act, 1872 it must be shown : (a) that the entries are in books of accounts; (b) the said books of accounts are being regularly kept in the course of business; (c) the said entries alone be not sufficient enough to charge any person with liability. In case titled L. K. Advani Vs Central Bureau of Investigation, 1997 (4) RCR (Criminal) 26 Hon'ble Delhi High Court interpreted the scope of Section 34 of Indian Evidence Act, 1872 and held as follows.
"74. There is another aspect of the matter. It has been observed above that the entires in the books of account by themselves are not sufficient enough to fasten the liability on the head of the person against whom they are produced. They are not a substantive piece of evidence. The said entries in the books of account can be used only by way of corroboration to other pieces of evidence which is led by a party. Admittedly there is no evidence with the prosecution besides the alleged entries in the diaries and in the loose sheets as conceded by the learned counsel for the C.B.I. Thus, the alleged entries in the books of account by themselves are of no avail to the prosecution "CNR No:DLSE020060182015 Page No. 13 / 15
CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics
22. The next important question that needs to be answered is whether ledger account Ex. CW1/Z falls within the category of books of statement of accounts and is covered U/s 34 of Indian Evidence Act, 1872. The answer to the said question was given in case titled Zeena Sorabji Vs Mirabelle Hotel Co. (Pvt) Ltd., AIR 1981 Bombay 446, "....In order that a document could be relied upon as a book of account, it must have the characteristic of being fool-proof. A bundle of sheets detachable and replaceable at a moment's pleasure can hardly be characterized as a book of account regularly maintained in the course of business. A ledger by itself could not be a book of account of the character contemplated by Section 34."[Emphasis Supplied]
23. Hence, from the aforesaid discussions it is clear that ledger account Ex. CW1/Z is not covered U/s 34 of Indian Evidence Act, 1872 and is of no aid to the complainant to prove that goods were supplied to the accused. More so, even if it is assumed for the sake of arguments that the ledger account Ex. CW1/Z is covered U/s 34 of Indian Evidence Act, 1872 then also the same is not a substantive piece of evidence and only has a corroborative value. As it is the case of the complainant that the goods were supplied to the accused then it was the responsibility of the complainant to file the relevant invoices/bills to prove that the goods were supplied to the accused. Not only that no delivery challan/transportation receipt was filed by the complainant to show that the goods were supplied to the accused. No purchase order counter signed by the accused is also brought on record by the accused. Hence, in the absence of any bill / invoice, any CNR No:DLSE020060182015 Page No. 14 / 15 CIS No. 624585/16 M/s Videon TV Manufacture Pvt. Ltd Vs M/s Malik Electronics delivery challan / transportation receipt or any purchase order on record it cannot be said that the complainant has been able to prove that the goods were supplied to the accused merely on the basis that it has the cheques of the accused.
24. Hence, in the considered opinion of this court, accused has been able to set up a probable defence and on the other hand complainant has failed to establish that the cheque in question was issued in discharge of any legal and enforceable or other liability.
25. In view of the above discussion, complaint stands dismissed and the accused stands acquitted of the offence under Section 138 Negotiable Instruments Act,1881.
26. Accused is directed to furnish bail bonds and surety bonds to the tune of Rs.10,000/- U/s 437-A Cr.PC.
ORDER: ACQUITTED
Digitally signed by
KAMRAN KAMRAN KHAN
KHAN Date: 2019.12.23
17:23:27 +0530
Announced in Open Court (Kamran Khan)
21.12.2019 MM (NI-Act 02), South East
Saket Court, New Delhi
Note: This judgment contains 15 pages and each page has been signed by me.
(Kamran Khan) MM (NI-Act 02), South East Saket Court, New Delhi CNR No:DLSE020060182015 Page No. 15 / 15