Delhi District Court
Ms Dellhi Timber Store vs Ms Yadav Cement Store on 21 August, 2024
CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store
Date of pronouncement 21.08.2024
IN THE COURT OF MS SHRUTI SHARMA-II JUDICIAL
MAGISTRATE FIRST CLASS (NI ACT) DIGITAL COURT-
01, NORTH WEST, ROHINI COURTS, NEW DELHI
CC NI ACT/968/2021
M/S Delhi Timber Store
Through Its Proprietor Sh. Shiv Kumar Tayal
R/O Kh. No. 103/2/1 Ground Floor,
Plot No. 2/Ii, Block-G,
Rajeev Nagar,
Begumpur, Delhi
110086.
....Complainant
Versus
M/S Yadav Cement Store
Through Its Proprietor Sh. Harkesh Yadav
S/O Sh. Khubi Ram,
R/O House No. 194, Near Transformer No.2
Begumpur Village,
New Delhi-110086.
...Accused
PS. North Rohini
Digitally signed
by SHRUTI
SHARMA
SHRUTI Date:
SHARMA 2024.08.21
15:48:24
+0530
Page 1 of 25
CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store
Date of pronouncement 21.08.2024
Complaint case no CC NI ACT/968/2021
CNR No. DLNW020053532021
Title M/s Delhi Timber &
Plywood Vs. M/s Yadav
Cement Store
Name of complainant M/s Delhi Timber Store &
Plywood Through Proprietor Sh.
Shiv Kumar Tayal
Name of accused M/s Yadav Cement Store Through
Proprietor Sh. Harkesh Yadav
Date of institution of complainant 04.03.2021
Date of final arguments 29.06.2024
Date of pronouncement 21.08.2024
Offence complained of Under section 138 NI Act
Offence charged with Under section 138 NI Act
Plea of accused Pleaded not guilty and claimed
trial
Final Order Acquittal
Page 2 of 25
Digitally signed by
SHRUTI SHRUTI SHARMA
SHARMA Date: 2024.08.21
15:48:28 +0530
CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store
Date of pronouncement 21.08.2024
JUDGMENT
Vide this Judgement I shall dispose of the present complaint under Section 138 Negotiable Instruments Act, 1881 (hereinafter referred to as NI Act) filed by the complainant against the accused on account of dishonour of cheque bearing no.031361, dated 08.09.2020, for a sum of Rs. 18,00,000/-, drawn on State Bank of Patiala, allegedly issued by the accused in favour of the complainant (hereinafter referred to as the cheque in question).
FACTS AS PER COMPLAINT
1.The present complaint has been filed by Sh. Shiv Kumar Tayal, proprietor of M/s Delhi Timber & Plywood against M/s Yadav Cement Store through its proprietor Sh. Harkesh Yadav. Briefly stated, the case of the complainant is that the complainant firm is engaged in business of various kind of goods and merchandise of wood, timber and other kind of construction related material. Complainant firm and the accused firm had business relationship and the complainant used to maintain a running account in the name of accused. In the due course of business, the accused purchased goods worth Rs. 19,31,488/- on credit from the complainant and also tendered Rs. 1,31,488/- in cash. Thereafter the accused in discharge of his legal liability of paying for the goods taken on credit from the complainant issued a cheque bearing no. 031361 dated 08.09.2020 drawn on State Bank of Patiala in the name of the complainant's proprietorship firm (Cheque in question). The Cheque in question was presented by the complainant with its banker, and the same returned unpaid with the remarks "Funds Insufficient" vide returning memo dated 08.12.2020. Thereafter, the complainant sent a legal notice dated 05.01.2021 through speed post to the accused demanding the amount of the cheque in question from him. The said legal notice as per the complainant was duly delivered to the accused on 07.01.2021. However, despite service of the legal demand notice, the accused failed to pay the said amount within the stipulated period of 15 days. Hence, the present complaint under Section 138 of NI Act has been filed.
Digitally signedSHRUTI by SHRUTI SHARMA SHARMA Date: 2024.08.21 Page 3 of 25 15:48:30 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 APPEARANCE OF ACCUSED AND TRIAL
2. The cognizance of the present complaint was taken by Ld. predecessor of this court on 03.08.2021 and the accused was summoned. Upon service of summons, accused had entered his appearance for the first time and was admitted to bail on 28.09.2021. Notice under Section 251 Cr. PC was framed upon the accused on 17.01.2022, in reply to which he pleaded not guilty and claimed trial, thus, his plea of defence was recorded.
In response to notice u/s 251, CrPC, the accused had denied the allegations of the complainant in toto and submitted that he does not know the complainant in person. He submitted that the Cheque in question was given as a blank signed security cheque to one Sh. Pawan Kumar against a friendly loan of Rs. 6,00,000/-. As per the accused, Pawan Kumar works as a property dealer and has an office in name and style of M/s AK Properties which is located in the neighbourhood of the complainant. The loan that was due to Pawan Kumar was duly paid off by the accused in cash in instalments however despite clearing off his dues, Pawan Kumar refused to return back the security cheque back to the accused despite his repeated requests. The accused has also submitted that the complainant in collusion with Pawan Kumar has misused the cheque in question and filed a false complaint against him. It was further submitted by the accused that the complainant is not a distributor of cement (goods in question) and deals only in Timber and Plywood from past several years at his official address. The accused had however admitted his signature on the cheque in question but denied that he had filled particulars on the same. Accused further had denied the receipt of legal demand notice from the complainant but agreed that the address on which the legal demand notice is stated to have been sent is his correct address.
3. Thereafter, on 16.03.2022 the complainant had moved an application seeking payment of interim compensation under Section 143A NI Act. The said application was allowed in favour of the complainant vide order of the Ld. Predecessor of this Court dated 05.09.2022. Vide the same order the interim compensation was granted in Digitally signed by SHRUTI SHRUTI SHARMA Page 4 of 25 SHARMA Date: 2024.08.21 15:48:34 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 favour of the complainant to the extent of 20% of the Cheque amount, amounting to Rs. 3,60,000/-. The said amount was duly paid to the complainant by the accused on 24.08.2023 and a statement of the complainant to this effect was also recorded on oath before the Court. Thereafter Ld. Predecessor of this court observed that the accused should be given the right to cross-examine the complainant as he had denied his liability in toto towards the complainant and qua cheque in question in notice so framed u/s 251 Cr. PC. Accordingly, vide order dated 17.10.2022 after giving due opportunity to the accused to cross examine the complainant witness, the complainant evidence was closed.
4. After closing of complainant evidence, matter was fixed for recording statement of accused under section 313 Cr. PC and the same was recorded on 12.12.2022 wherein the incriminating evidence were put to the accused and the accused again reiterated his previous stand and stated that the cheque in question was given as security to one Pawan Kumar and the same was never given to the complainant. He also stated that the cheque in question has been misused by the complainant to file the present case against him.
Thereafter, vide order dated 15.05.2023, accused was allowed to lead DE. The accused had opted to examine himself as a defence witness under Section 315 CrPC. The application of the accused to examine himself as a defence witness was allowed by the Court on 24.06.2023 and thereafter the accused was examined, cross-examined and discharged as DW-1 on 06.07.2023. As no other defence witnesses were examined by the accused to support his case, the DE was closed on 23.12.2023 and the matter was put up for final arguments. The final arguments were heard on both the sides in length on 29.06.2024 and the matter was reserved for judgement on 21.08.2024.
EVIDENCE ON BEHALF OF THE COMPLAINANT
5. To support its case, the complainant has led oral as well as documentary evidences. Firstly, complainant himself had stepped into witness box and had examined himself Digitally signed by SHRUTI SHRUTI SHARMA SHARMA Date: 2024.08.21 15:48:36 +0530 Page 5 of 25 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 as CW-1. In his examination in chief, he had adopted his pre-summoning evidence by way of affidavit. Complainant as CW-1 relied on the following documents: -
(i) Ex. CW1/A: Evidence by way of Affidavit.
(ii) Ex.CW1/1: Copy of Invoices/Bills (De-exhibited as Mark C)
(iii) Ex.CW1/2: Original Cheque
(iv) Ex.CW1/3: Cheque returning Memo
(v) Ex.CW1/4: Legal Demand Notice
(vi) Ex.CW1/5: Copy of courier receipt of Legal Demand Notice (De-exhibited as
Mark A)
(vi) Ex.CW1/6: Copt of Delivery Report (De-exhibited as Mark B)
Thereafter CW1 i.e., the complainant himself was duly cross examined by the Ld. Counsel for the accused and was discharged on 17.10.2022. The complainant had not opted to bring any other witnesses to support its case. Accordingly, CE was closed by recording a separate statement on 17.10.2022.
EVIDENCE ON BEHALF OF THE ACCUSED
6. The accused has examined himself as a witness under Section 315 CrPC as DW-1 however apart from his own examination no oral or documentary evidences were led by the accused. Accordingly, after recording a separate statement DE was closed on 23.12.2023.
FINAL ARGUMENTS
7. Final arguments have been heard at length on 29.06.2024 from both the sides. Ld. Counsel for complainant had vehemently argued that the accused has failed to rebut the statutory presumptions envisaged under Section 118 read with Section 139 of the NI Act and therefore, he is liable to be convicted for the commission of offence under section 138 of the Negotiable Instruments Act, 1881. Per contra, Ld. Counsel for Digitally signed by SHRUTI Page 6 of 25 SHRUTI SHARMA SHARMA Date:
2024.08.21 15:48:42 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 accused had vehemently argued that the accused has never admitted his liability qua the complainant or qua the cheque in question and submitted that the case of the complainant is false and lacks merit therefore, the accused is not liable under Section 138 NI Act. Ld. Counsel for the accused had also argued on the point that the complainant had failed to prove that he is the proprietor of the complainant firm and the bills that are relied upon by the complainant are only photocopies and not the original. It was also submitted that no there is no proof on record that the legal demand notice was served upon the accused as the tracking reports annexed with the complaint are mere photocopies and lack credibility. Furthermore Ld. Counsel for the accused has also argued on the point that the legal demand notice was never sent to the accused as there is no appropriate Section 65B, Evidence Act certificate that has been annexed with the complainant to substantiate the electronically generated courier receipts of the legal demand notice allegedly served upon the accused. Lastly it was argued on behalf of the accused that the cheque in question was not a valid cheque as it was issued from the State bank of Patiala who later merged with State Bank of India in the year 2017. The last date of the validity of the cheque in question was 31.03.2018 and the date upon which it was presented was of year 2020. Therefore, the cheque in question was an outdated and expired cheque on account of the merger of the banks.
Per contra in the rebuttal, Ld. Counsel for the complainant had submitted that the complainant is not required to prove the fact that he is a proprietor of a firm as he stands benefited with the presumption under section 139 of the NI Act. It was also argued that Section 65B affidavit/Certificate is not a piece of evidence in itself therefore there is no requirement of the same. It was also submitted that the complainant is an unpaid seller therefore there are no proof of the bills maintained by him in original. Lastly it was argued from the side of the complainant that merger between the banks has no effect on the return of the cheques and the return memo of the cheque in question clearly suggests the reason for return because of the remarks Digitally signed by SHRUTI SHRUTI SHARMA SHARMA Date: 2024.08.21 15:48:39 +0530 Page 7 of 25 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 "Funds insufficient". Therefore, no plausible defence is taken by the accused and he is liable to be convicted in the present complaint.
DISCUSSION, ANALYSIS AND OBSERVATIONS
8. For the offences under Section 138 of the NI Act, there are following three ingredients as held by the Hon'ble Supreme court of India in Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54: -
I. That there should be a legally enforceable debt;
II. That the cheque is drawn up from the account of bank for discharge in whole or in part of any debt or other liability which pre-supposes a legally enforceable debt; and III. That the cheque so issued had been returned due to insufficiency of funds.
9. The proviso appended to Section 138 of the Act provides for compliance of legal requirements before the complaint petition could be acted upon by a Court of Law.
10. Section 139 of the NI Act reads as under:
"139. Presumption in favour of holder- It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."
11. It is well-settled law that section 139 of the NI Act merely raises a presumption in favour of the holder of a cheque that the same has been issued for discharge of any debt or other liability. The existence of a legally recoverable debt is not presumed under Section 139 of the Act.
12. The three -Judge Bench of Hon'ble Supreme Court in Rangappa Vs. Sri Mohan, (2010) 11 SCC 441 has held that where the fact of signature on the cheque is acknowledged, a presumption has to be raised that the cheque pertains to a legally Digitally signed by SHRUTI SHRUTI SHARMA Page 8 of 25 SHARMA Date: 2024.08.21 15:48:45 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 enforceable debt or liability, however, this presumption is of a rebuttal nature and the onus is then on the accused to raise a probable defence.
13. Coming to the facts of the present case, it is not in dispute that the original cheque in question was drawn on an account maintained by the accused. The signature on the cheque in question are also not disputed as a specific question was put to the accused at the stage of framing of notice under Section 251 CrPC, wherein the accused had stated that the cheque in question bears his signature. The factum of dishonour of the cheque in question for the reason "Funds Insufficient" can be seen from the returning memo i.e., Ex.CW1/3 issued by the complainant bank. The Ld. Counsel for the accused, in his written arguments has taken a defence that the cheque in question is an invalid/outdated cheque on account of merger between the State bank of Patiala and State bank of India (w.e.f 31.03.2018), as the cheque is dated as 08.09.2020. However, no evidence is led by the accused to prove this factum. The accused had an opportunity to call the bank witness from the Drawee Bank to prove the said alleged factum however the right was not exercised by him. Therefore, in absence of any evidence to rebut the same, the returning memo exhibited as CW1/3 will be taken as a valid returning memo on the face of it as the same also bears the stamp of the drawee bank as well. Therefore, in absence of any independent evidence the factum of existence of returning memo dated 08.12.2020 can also be said to be not in dispute and be considered as admitted by the accused. The accused however has expressly denied the receipt of legal demand notice from the complainant in his notice framed under Section 251 CrPC. The complainant has annexed the photocopy of the courier receipt and tracking report (Mark A and Mark B) to show that the legal demand notice dated 05.01.2021 was duly delivered upon the accused on 07.01.2021 by way of speed post. The accused has however denied ever receiving the legal demand notice from the complainant in his notice framed under Section 251 CrPC as well as in his examination in chief dated 23.12.2023. Nevertheless, in the Notice framed under Section 251 CrPC to Que.6 the accused had stated as follows:
Digitally signed bySHRUTI SHRUTI SHARMA SHARMA Date: 2024.08.21 15:48:48 +0530 Page 9 of 25 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 "Q6. Is the address mentioned on the legal demand notice correct? Did you receive the legal notice?
Ans. Address is correct but I didn't receive any legal notice."
Here it is admitted by the accused that the address on which the legal demand notice is stated to have been served is a correct address. Now it has to be seen how much reliance can be given upon the photocopy of the courier and postal receipts submitted by the complainant to show that the legal demand notice was served upon the accused on 07.01.2021. The proof in support of the delivery of the legal demand notice that is submitted is all in photocopies and the original is not submitted by the complainant. No explanation is also given as to why the original is not annexed with the complainant. Further tracking report annexed as Mark B generated from the DTDC website also does not bear the certificate under Section 65B of the Evidence Act. Therefore, in the considerate opinion of this Court, not much reliance can be placed upon the photocopies submitted by the complainant to prove the factum of service of legal demand notice to the accused. Now it has to be seen whether the any adverse inference can be drawn towards the case of the complainant for not serving the legal demand notice to the accused or not? And whether the accused is entitled to be acquitted solely on the ground that the factum of receipt of legal demand notice was not proved by the complainant before the Court?
In the case of Central Bank of India vs. Saxons Farms (1999) 8 SCC 221 It was held that the object of serving the notice is to give a chance to the drawer of the cheque to rectify his omission and also to protect an honest drawer. Therefore service of notice of demand in clause (b) of the proviso to Section 138 is a condition precedent for filing complaint under Section 138 of the Act.
In the case of Bhavna vs. State and Anr. DHC Crl. A 707/2017 it was held that "18. In the present case, during the trial, the drawer has not disputed the fact that the address affixed on the legal demand notice dated 28.05.2011 at Ex. CW 1/6 is not his address or it is incorrect. Both proof of service, the postal receipt and courier receipt, Digitally signed SHRUTI by SHRUTI SHARMA Page 10 of 25 SHARMA Date: 2024.08.21 15:48:53 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 of this notice relied on by the appellant (Mark A) are photocopies of the original.
However, no explanation has been given as to why the originals have not been placed on record either in the complaint or in the examination-in-chief by the appellant. It is further noted that the contents of the postal receipt placed on record are not visible at all.
19. Since the appellant has tendered the photocopies of the proof of service the same are required to be proved as per the provisions of Sections 63 and 65 of the Indian Evidence Act, 1872 so as to be admitted as evidence. There is nothing on record to show whether the originals of these documents have been lost or destroyed or in whose power and possession they had been kept. The appellant has also not given any explanation regarding the non- production of the original service proofs and the same are therefore, not in consonance with the provisions providing for the admissibility of the secondary evidence. The reliance placed by learned counsel for the appellant on paragraph 17 of C.C. Alavi Haji (supra) is misplaced as the observations made therein were made in circumstances where the presumption under Section 27 of the General Clauses Act and Section 114 of the Indian Evidence Act should be attracted. However, in the present case, the said presumption is not attracted as the foundational facts have not been proved. The presumption as per Section 27 of the General Clauses Act, 1897 and illustration (f) to Section 114 of the Indian Evidence Act, 1872 can be raised if the foundational facts regarding the dispatch of notice have been proved in accordance with law. The appellant could have led evidence from the concerned post office and the concerned agency to show that the notice was sent to the drawer.
20. Hence, on the basis of photocopies, it cannot be concluded that the notice has been dispatched to the drawer. Therefore, in view of the settled position of law as discussed above, this Court is of the view that the requirement of the service of notice has not been complied with by the appellant, and the requisite conditions to file a complaint under Section 138 of the NI Act are not fulfilled in this case."
Digitally signed bySHRUTI SHRUTI SHARMA SHARMA Date: 2024.08.21 15:48:51 +0530 Page 11 of 25 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 Considering the above said observations of the Hon'ble Delhi High Court, in absence of any explanation regarding not depositing the original of the Postal receipts and tracking reports of service of legal demand notice to the accused and in absence of appropriate affidavit under Section 65B Evidence Act, the complainant cannot be benefited with the presumption of the Section 27 of the general clause Act. Therefore, it cannot be said that the fact of non-payment, as asked for in the statutory notice of demand, within 15 days of its receipt is also not a disputed fact. Nevertheless, the requirement of giving of notice is clearly to protect an honest drawer and therefore, in case any drawer who claims that he did not receive the notice sent by post by the complainant, still has an option to pay the cheque amount upon his first or second appearance before the Court. Despite no service of the legal demand notice to him, the drawer still has an opportunity and option to make the 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 the summons). A person who does not pay the cheque amount 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. Therefore, the factum of non-receiving of the legal demand notice cannot be, in the considered opinion of this Court can be sole ground of acquittal of the accused.
It is not out of place to mention that as the signatures on the cheque in question are already admitted by the accused, in view of section 139, NI Act and decision of the Hon'ble Supreme Court in Rangappa (supra), the presumption under Section. 139 of the NI Act for legally enforceable debt can be very well raised and the burden now shifts upon the accused to rebut the said presumption by raising probable defence in his favour.
14. It is pertinent to mention here that Section 139 NI Act only raises the presumption on fulfilment of its conditions that the cheque was issued for discharge of in whole or SHRUTI Digitally signed by SHRUTI SHARMA Page 12 of 25 SHARMA 15:48:56 +0530 Date: 2024.08.21 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 in part any debt or other liability but there is no presumption as to the existence of the legally enforceable debt or liability as such. In Rangappa (supra), it has been held that:
"Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability."
15.The Hon'ble Apex Court after analysing various judicial pronouncements in Basalingappa v. Mudibasappa, AIR 2019 SC 1983, summarized the principles as follows: -
"(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 imposes an evidentiary burden and not a persuasive burden.Page 13 of 25
SHRUTI Digitally signed by SHRUTI SHARMA SHARMA Date: 2024.08.21 15:48:59 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 POINT FOR DETERMINATION
16. Applying the preposition of law as noted above, in facts of the present case, the signature on the cheque having been admitted, a presumption shall be raised under Section 139 NI Act that the cheque was issued in discharge of a valid debt or liability. The question now to be examined as to whether any probable defence was raised by the accused by way of which the existence of a legally enforceable debt or liability has been made doubtful from the standard of preponderance of probabilities. Therefore, the point of determination shall be limited to existence of legally enforceable debt or liability on the part of the accused exclusively, as the other ingredients of the Section 138 NI Act are not in dispute.
CONTENTIONS OF THE PARTIES
17. The accused has to prove his case on the basis of 'preponderance of probabilities' and the defence should not only be a 'possible' defence but also be probable in nature, which should lead the court to conclude that the defence for the issuance of the dishonoured cheque is a probable one.
The primary defence taken by the accused in this case is that there is no legally enforceable debt or liability in favour of the complainant as no transaction as stated in the complaint has ever taken place between the accused and the complainant. He has further taken a defence that the complainant has not locus to file the present complaint as no proof or document is submitted to prove that the complainant is the sole proprietor of M/s Delhi Timber & Plywood hence the accused has challenged the validity of the proprietorship of the complainant firm. Further the accused has also raised questions on the invoices produced by the complainant stating the same as invalid on account of being a photocopy. The accused has also raised questions with regards to the delivery of the alleged goods as claimed by the complainant as there is no mentioning of the transport mode or vehicle number which was used for transporting the cement to the accused by the complainant. As per the accused the cheque in question was issued to some other person namely Pawan Kumar for the SHRUTI Digitally signed by SHRUTI SHARMA SHARMA Date: 2024.08.21 15:49:03 +0530 Page 14 of 25 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 security purposes against a loan which as per the accused was fully paid back. The accused has denied knowing the complainant and has stated his apprehension that the complainant in collusion with Pawan Kumar has misused his security cheque to file the present complaint against him.
18. Per Contra, Ld. Counsel for the complainant has submitted that the accused has not led any evidence in his favour to prove his abovesaid defence. Therefore, the complainant has a presumption of Section 139 NI Act with him and the burden of proof to rebut the same has not been sufficiently discharged by the accused. Further she has contended that the burden of proof is upon the accused and not upon the complainant to prove the factum of his proprietorship.
APPRECIATION OF THE EVIDENCE
19. The case of the complainant is that on account of business relations goods (cement) worth Rs. 19,32,488/- was supplied to the accused firm against which a payment of Rs. 1,31,488/- was already made by the accused in cash and the cheque in question was issued for the remaining sum of Rs. 18,00,000/- to the complainant by the accused. To support his case the complainant has annexed the copy of invoices issued qua the accused which are on record as Mark C. Per contra the accused has challenged the sanctity of the proprietorship of the complainant per se and has raised a defence that the proprietorship of the complainant has not legal validity and the invoices presented along with the complaint are not authentic as the same are photocopies. The accused has also alleged the fact that the complainant does not deal in the goods in question i.e., cement and only deals in Timber and Plywood. The accused has also denied ever making payment of Rs. 1,31,488/- in cash in favour of the complainant and has raised a question as to why the complainant firm has not produced the ledger account to substantiate its claim against the accused. To further its defence the accused has relied upon the judgement of the Hon'ble Supreme Court in the case of Milind Shripad Chandurkar vs. Kalim M. Khan and Anr (2011) 4 SCC 275 in which the Hon'ble Supreme Court has held that if the sole proprietor fails to Digitally signed by SHRUTI SHRUTI SHARMA Page 15 of 25 SHARMA Date: 2024.08.21 15:49:06 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 establish that he is the proprietor of the firm concerned, he is stated to have no locus standi to file a complaint under Section 138 NI Act. The accused has also submitted that the invoices annexed by the complainant cannot be taken into as substantial piece of evidence as they are not submitted in the originals and no explanation is given by the complainant as to why originals are not produced before the Court.
20. As the case of the complainant mainly rests upon the invoices annexed with the complaint, it becomes imperative to closely peruse the copy of the invoices and analyse the law with regards to admissibility of photocopies in place of the originals.
63. Secondary evidence. -- Secondary evidence means and includes --
(1) certified copies given under the provisions hereinafter contained;
(2) copies made from the original by mechanical processes which in themselves insure the accuracy of the copy, and copies compared with such copies;
(3) copies made from or compared with the original;
(4) counterparts of documents as against the parties who did not execute them;
(5) oral accounts of the contents of a document given by some person who has himself seen it.
64. Proof of documents by primary evidence--Documents must be proved by primary evidence except in the cases hereinafter mentioned.
65. Cases in which secondary evidence relating to documents may be given--Secondary evidence may be given of the existence, condition, or contents of a document in the following cases: --
(a) when the original is shown or appears to be in the possession or power of the person against whom the document is sought to be proved, or of any person out of reach of, or not subject to, the process of the Court, or of any person legally bound to produce it, and when, after the notice mentioned in section 66, such person does not produce it;
Digitally signed SHRUTI by SHRUTI Page 16 of 25SHARMA SHARMA Date: 2024.08.21 15:49:10 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024
(b) when the existence, condition or contents of the original have been proved to be admitted in writing by the person against whom it is proved or by his representative in interest;
(c) when the original has been destroyed or lost, or when the party offering evidence of its contents cannot, for any other reason not arising from his own default or neglect, produce it in reasonable time;
(d) when the original is of such a nature as not to be easily movable;
(e) when the original is a public document within the meaning of section 74;
(f) when the original is a document of which a certified copy is permitted by this Act, or by any other law in force in [India] to be given in evidence;
(g) when the originals consist of numerous accounts or other documents which cannot conveniently be examined in Court, and the fact to be proved is the general result of the whole collection. In cases (a), (c) and (d), any secondary evidence of the contents of the document is admissible.
In case (b), the written admission is admissible.
In case (e) or (f), a certified copy of the document, but no other kind of secondary evidence, is admissible.
In case (g), evidence may be given as to the general result of the documents by any person who has examined them, and who is skilled in the examination of such documents.
From the abovesaid it is clear that the copy of the invoices submitted by the complainant falls within the ambit of the secondary evidence. Section 64 of the Evidence Act clearly states that the documents have to be proved by way of primary evidence and only in cases covered under Section 65 Evidence Act that secondary evidence will be admissible to be read as evidence. In the present complaint, the complainant has nowhere mentioned or explained as to why the originals are not submitted along with the complaint. In the considered opinion of this Court, the burden of proof clearly lies upon the complainant to show that the copies of the invoices submitted by it are admissible under Section 65 of the Evidence Act however SHRUTI Digitally signed by SHRUTI SHARMA Page 17 of 25 SHARMA Date: 2024.08.21 15:49:12 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 it has failed to discharge the said onus despite the same being challenged by the accused. As the statutory law is very clear with regards to the admissibility, no reliance can be placed upon the copy of the invoices submitted by the complainant. Furthermore, in its cross examination dated 17.10.2022 the complainant himself had stated that "It is correct that I have annexed my ledger account (confronted of the compliant, it is found that there is no ledger account of the complainant firm. My dealings with the accused person was commenced from August, 2020, it is correct that there is no certificate u/s 65B Indian Evidence Act, in respect all invoices mentioned in the complaint." thereafter upon the suggestion of the Ld. Counsel of the accused, the complainant had also stated that "It is wrong to suggest that I have not annexed statement of account alongwith my complaint because no such transaction was ever happened." It is clear that the complainant himself is not consistent with his case and lacks the information about his own case.
The complainant in its para 3 of the complaint has stated that he had business relationship with the accused and it used to maintain a running account in the accused's name. Interestingly, no bank statement or ledger account was produced by the complainant despite the same being challenged by the accused. It is very unreasonable and hard to believe that the complainant which is a sole proprietary concern allegedly having a GST number as well (as mentioned in the copy of invoices) did not have a ledger account to show the transaction with the accused firm. It is also pertinent to note that as per the invoices submitted by the complainant only it suggests that the complainant firm deals in "All kinds of timber and Plywood"
whereas in the para 1 of its complaint it has stated that it deals in various kinds of goods and merchandise of wood, timber and other kinds of construction related material. The complainant in its cross examination has also stated that "It is correct that there is no purchase order. It is correct that no vehicle number is mentioned in the complaint nor there is any builty of any transport". The accused has denied having any sort of transaction with the complainant and has also denied receiving the goods (cement) from the complainant. Here again, if we will look at the copy of invoices SHRUTI Digitally signed by SHRUTI SHARMA Page 18 of 25 SHARMA Date: 2024.08.21 15:49:16 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 submitted by the complainant itself, there is a separate section mentioned on the invoice which is for filling of the details regarding the transportation, however the same is left as blank and no details are mentioned on it. Even if for once the contention of the complainant that the accused himself had taken the delivery of the goods is taken as true, still no it seems very suspicious upon the complainant that it chose not to mention anything regarding the transportation on its invoices. The copy of the bill also suggest that duplicate of this Invoice is given to the transporter. Therefore, failing to mention the details of the transporter, mode of transport further makes the case of complainant suspectable and raises doubt about its storyline.
It will further be not out of place to mention that on copy of the bills submitted by the complainant only in support of its case, signatures below the "For Delhi Timber & Plywood" are done by a person namely Deepak Tayal (as authorised signatory) whereas the sole proprietor of the complainant firm as per the complaint is Shiv Kumar Tayal.
In its cross examination the complainant has stated that "It is correct that I have not annexed any proof regarding my proprietorship firm". Clearly a question was raised by the Ld. Counsel of the accused regarding the validity of the sole proprietary concern of the complainant. No GST document or any other proof were submitted by the complainant in rebuttal of the said question. Interestingly, the copy of bills submitted by the complainant himself also nowhere mentions the name of the complainant as the proprietor of the firm Delhi Timber & Plywood.
In the case relied upon by the accused Milind Shripad Chandurkar vs. Kalim M. Khan and Anr (2011) 4 SCC 275, the Hon'ble Apex Court has held that "16. Thus, from the above, it is evident that the appellant/complainant could not produce any document to show that he was the proprietor of Vijaya Automobiles in spite of the fact that the issue had been agitated by the respondent no.1/accused at every stage. It is also evident from the SHRUTI Digitally signed by SHRUTI SHARMA Page 19 of 25 SHARMA Date: 2024.08.21 15:49:19 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 documents on record that in the list of witnesses the complainant had mentioned the name of his banker as a witness, however, the said banker was not examined.
17. It may also be pertinent to mention here that appellant did not make any attempt to adduce additional evidence at the appellate stage also. No document has ever been filed to substantiate his averment in this regard.
18. Section 7 of the Act 1881 defines "Payee" as the person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid. Section 8 defines "the holder of the cheque" as any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. Section 9 defines "holder in due course" as any person who for consideration became the possessor of a cheque if payable to a bearer or the payee or endorsee thereof.
Section 138 provides for penalties in case of dishonour of certain cheques for insufficiency of funds in the accounts. However, exception contained in clause (c) thereof reads as under:
"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." (Emphasis added)
19. Section 142 provides for taking cognizance of the offence notwithstanding anything contained in Cr.P.C. which reads as under:
"(a) no court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque." (Emphasis added)
20. This Court in Shankar Finance and Investments v. State of Andhra Pradesh & Ors., (2008) 8 SCC 536, dealt with the issue involved herein elaborately and held that where the "payee" is a proprietary concern the complaint can be filed (i) by the Digitally signed SHRUTI by SHRUTI SHARMA Page 20 of 25 SHARMA 15:49:23 Date: 2024.08.21 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 proprietor of the proprietary concern describing himself as the sole proprietor of the "payee"; (ii) the proprietary concern describing itself as the sole proprietary concern represented by its proprietor; and (iii) the proprietor or the proprietary concern represented by the Attorney Holder under the power of attorney executed by the sole proprietor.
However, it shall not be permissible for an Attorney Holder to file the complaint in his own name as if he was the complainant. He can initiate criminal proceedings on behalf of the principal.
In the same Judgement it was further held that:
23.The Court placing reliance on earlier judgments, particularly, in Janki Vashdeo Bhojwani v. Indusind Bank Ltd., (2005) 2 SCC 217, held that the general principles of company law or civil law would apply for maintaining the complaint under Section 138 of the Act 1881.
24. In National small Industries Corporation Ltd. v. State (NCT of Delhi) & Ors., (2009) 1 SCC 407, this Court held as under:
14. "The term "complainant" is not defined under the Code. Section 142 of the NI Act requires a complaint under Section 138 of that Act to be made by the payee (or by the holder in due course)..."
25. Thus, in view of the above, the law stands crystallised to the effect that a person can maintain a complaint provided he is either a "payee" or "holder in due course"
of the cheque.
26. In the instant case, it is evident that the firm, namely, Vijaya Automobiles, has been the payee and the appellant cannot claim to be the payee of the cheque, nor can he be the holder in due course, unless he establishes that the cheques had been issued to him or in his favour or that he is the sole proprietor of the concern and being so, he could also be the payee himself and thus, entitled to make the complaint. the appellant miserably failed to prove any nexus or connection by adducing any evidence, Digitally signed by SHRUTI SHRUTI SHARMA Page 21 of 25 SHARMA Date: 2024.08.21 15:49:26 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 whatsoever, worth the name with the said firm, namely, Vijay Automobiles. Mere statement in the affidavit in this regard, is not sufficient to meet the requirement of law. The appellant failed to produce any documentary evidence to connect himself with the said firm.
27. It is evident that the Firm and a substantial amount of business as in one month it sold the diesel to Respondent 1 - a single party, for a sum of Rs. 7 lakhs. The appellant would, in addition, have also been carrying out business with other persons. Thus, a person with such a big business must have had transactions with the bank and must have been a payee of Income tax, sales tax, etc. Thus, in such a fact situation, there would be no dearth of material which could have been produced by the appellant to show that he was the sole proprietor of the said firm. The appellant failed to adduce any evidence in this regard, nor made any attempt to adduce any additional evidence at the appellate stage, in spite of the fact that the respondent is raising this issue from the initiation of the proceedings."
The above said Judgement of the Hon'ble Supreme Courts fits well with the facts of the present complaint. The cheque in question is for an amount of Rs. 18 lacs and it is quiet unreasonable and hard to believe that the complainant firm dealing with such a huge amount did not have any proof to substantiate its claims in the form of ledger account statement, bank account statement, ITR returns or GST record.
21. In the case of Kulvinder Singh vs. Kafeel Ahmed, 2013 SCC OnLine Del 32 the Hon'ble High Court of Delhi had clearly laid down that "The basic principle in criminal law is that the guilt of the respondent/accused must be proved beyond reasonable doubt and if there is a slightest doubt about the commission of an offence then the benefit has to accrue to him."
In the case of Ashok Baugh vs. Kamal Baugh and Anr, 2015 SCC OnLine Del 12577 Hon'ble High Court of Delhi has held that:
"25. Section 138 of the NI Act provides for speedy remedy in a criminal forum, in relation to dishonour of cheques. Nonetheless, Page 22 of 25 SHRUTI Digitally signed by SHRUTI SHARMA SHARMA 15:49:30 +0530 Date: 2024.08.21 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 the Supreme Court cautions that the offence under Section 138 of the NI Act is at best a regulatory offence and largely 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. A reverse onus clause requires the accused to raise a 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".
22. The phase "Preponderance of probabilities" in the case of Charles R. Cooper v. F.W. Slade (1857-59) was held to mean "more probable and rational view of the case"
and this definition has stood the test of time, having been quoted with approval several times by Indian Courts, including recently as in 2022 in Ramanand v. State of U.P. 2022 SCC OnLine SC 1396 para 100. Therefore, it is also imperative to understand that in order to pronounce a conviction in a criminal case, the accused "must be"
guilty. And for an accused to be guilty, guilt should not be based on mere surmises and conjectures but it should be based on cogent evidences.
23. In the above conspectus, accused has successfully rebutted the presumption under Section 118 r/w. Section 139 NI Act and the complainant has failed to prove its case beyond reasonable doubt qua the accused in respect of the cheque in question. Even though the accused has not led any independent evidence to prove his defence but it has successfully created holes and punches in the case of the complainant, which the complainant in rebuttal has miserably failed to justify. Henceforth, the legally enforceable debt, which is the only ingredient of Section 138 NI Act up for consideration as noted above, not having been sufficiently established, the offence under Section 138 NI Act is not made out and the prosecution fails.
Digitally signed bySHRUTI SHRUTI SHARMA SHARMA Date: 2024.08.21 15:49:33 +0530 Page 23 of 25 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024
24. In view of the aforesaid accused Sh. Harkesh Yadav Proprietor of M/s Yadav Cement Store is hereby acquitted of the offence under Section 138 NI Act.
25. As the accused has been acquitted of the offence under Section 138 NI Act. The complainant is liable to return the amount of interim compensation granted to it by the order of the ld. Predecessor of this Court dated 05.09.2022 amounting to Rs. 3,60,000/- (20% of the Cheque amount) back to the accused.
Section 143A clause (4) of the NI Act clearly state that:
143A(4)- If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.
In the case of Rakesh Ranjan Shrivastava vs. State of Jharkhand and Anr. Criminal Appeal No. 741 of 2024 it was clearly held by the Hon'ble Supreme Court that "12..... Though, the N.I. Act does not prescribe any mode of recovery of the compensation amount from the complainant together with interest as provided in sub-section (4) of Section 143A, as subsection (4) provides for refund of interim compensation by the complainant to the accused and as sub-section (5) provides for mode of recovery of the interim compensation, obviously for recovery of interim compensation from the complainant, the mode of recovery will be as provided in Section 421 of the CrPC."
By way of this Judgment the complainant is directed to return back a sum of Rs. 3,60,000/- along with interest @ 6.5 % pa (Interest starting from 05.09.2022 to Digitally signed by SHRUTI SHRUTI SHARMA Page 24 of 25 SHARMA Date: 2024.08.21 15:49:38 +0530 CC No. 968/2021 M/s Delhi Timber & Plywood vs. M/s Yadav Cement Store Date of pronouncement 21.08.2024 21.08.2024) back to the accused by way of demand draft in the name of the accused within a period of 60 days from the date of this Judgement. It is further made clear that any failure on the part of the complainant to make the payment as aforesaid shall result in initiation of attachment proceedings against him under the relevant provision of the law and the accused shall be at liberty to file the appropriate application before the Court for the recovery of the same by way of attachment under Section 461 r/w 471 of the Bharatiya Nagarik Suraksha Sanhita, 2023 herein after BNSS.
Note: This judgement contains 25 signed pages and 25 paragraphs and each page of this judgement has been digitally signed by the undersigned.
Announced in the open court on 21.08.2024 Digitally signed SHRUTI by SHRUTI SHARMA SHARMA Date: 2024.08.21 15:49:48 +0530 (SHRUTI SHARMA II) Judicial Magistrate First Class (NI Act) Digital Court-01, North West, Rohini Courts, Delhi/21.08.2024 Page 25 of 25