Delhi District Court
Cc No.541211/2016 German Homeopathic ... vs Shree Durga Homeo Pharmacy Page 1 Of 23 on 6 March, 2021
CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 1 of 23
CNR. DLCT020133242016
IN THE COURT OF SH. VISVESH, METROPOLITAN
MAGISTRATE, N.I. ACT-06, CENTRAL, TIS
HAZARI COURTS, DELHI
DLCT020133242016
CC No. 541211/2016
German Homeopathic Distributors Pvt. Ltd.
Through its Authorized Representative
Having Regd. Office At
56, Dayanand Road, Daryaganj
New Delhi -110002
...... Complainant
Vs.
Shree Durga Homeo Pharmacy
Through its Proprietor
Sh. Dharmender
R/o Near Arya Kanya Inter College
Station Road, Budh Bazar
Muradabad, U.P.
Pin-244001
Mobile No. - 9997755788
TIN No. - 09658911861-S ...... Accused
Date of Institution : 27.07.2016
Offence complained of : s.138 of The Negotiable Instruments
Act,1881
Plea of the Accused : Not Guilty
Final Order : Convicted
Date of Decision : 06.03.2021
JUDGEMENT
CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 1 of 23
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1. The present complaint has been filed by the Complainant against the Accused under section 138 Negotiable Instruments Act, 1881.
Factual Matrix
2. The brief facts as alleged by the Complainant in the complaint are that the Complainant is dealing in the business of all kinds of homeopathic medicine. It has been stated that the Complainant and Accused were having business relations with each other and the Complainant supplied the homeopathic medicines from time to time as per the order and requirement of the Accused. It has also been stated that the Complainant is maintaining regular books of account as per the accounting standards.
2.1 It has been further stated that the Complainant supplied the medicines worth ₹ 3,81,418 by way of invoice number 420 book number 9 dated 30th of December 2014 and invoice number 564 book number 12 dated 28th of March 2015. It has been stated that the Accused in discharge of his legal liability issued a post-dated cheque bearing number 000088 dated 16th of June 2016 for ₹ 3,81,441 drawn on Bank of India, Moradabad Branch, Bindal Complex, Moradabad, U.P., PIN code - 244001 and assured the Complainant that the cheque would be honoured on its presentation.
2.2 When the Complainant presented the said cheque through his banker HDFC Bank, Ansari Road Branch, the same was returned unpaid by the banker of the Complainant vide returning memo dated 17th of June 2016 with the remarks "Exceeds Arrangement".
CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 2 of 23CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 3 of 23 CNR. DLCT020133242016 2.3 The Complainant thereafter issued a legal demand notice on 27th of June 2016 through counsel calling upon the Accused to pay the said cheque amount within a period of 15 days from receipt thereof. The said notice has been averred to be duly served upon the Accused and the Accused failed to pay the aforesaid cheque amount within the statutory period.
2.4 Hence, the present complaint u/s 138 Negotiable Instruments Act 1881 (hereinafter the NI Act) was filed on 27th of July 2016 by the Complainant, praying for the Accused to be summoned, tried, and punished for commission of the offence u/s 138 of the Negotiable Instruments Act, 1881. The Complainant has averred that the present complaint is within the period of limitation and falls within the territorial limits of this Court's jurisdiction; thus, being tenable at law.
Proceedings before the court
3. Pre-summoning Evidence: To prove a prima-facie case, the Complainant led pre-summoning evidence by way of affidavit Ex. CW-1/A wherein the Complainant has affirmed the facts stated in the instant complaint.
4. Documentary Evidence: To prove the case, the Complainant has relied upon the following documents:
a) Tax invoices & statement of account issued by the Complainant in favour of the Accused, Ex. CW1/B CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 3 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 4 of 23 CNR. DLCT020133242016 (Colly)
b) Original cheque bearing no. 000088 dated 16.06.2016 for a sum of Rs. 3,81,441 drawn on Bank of India Moradabad Branch, Ex. CW1/C.
c) Original cheque return memo dated 17.06.2016 Ex. CW-
1/D.
d) Office Copy of legal notice dated 27.06.2016 Ex. CW1/E.
e) Postal receipt Ex. CW1/F.
f) Returned envelop Ex. CW1/G.
g) The instant complaint, Ex. CW1/H.
h) Authority letter in favour of Sh. R.K. Mangla, AR of the Complainant Ex.CW1/I.
5. Summoning of the Accused: On finding of a prima-facie case against the Accused, the Accused was summoned on 22.10.2016 where the Accused appeared before the court on 08.08.2017.
6. Framing of notice & plea of defence: Notice u/s 251 Cr.P.C. was framed against the Accused on 20.11.2017 to which he pleaded not guilty and claimed trial. The plea of defence of the Accused was recorded where the Accused had stated that the signature on the cheque in question was his. He also admitted receiving the legal demand notice. He further stated that he had issued 4 - 5 cheques including the present one to the Complainant as security for the CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 4 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 5 of 23 CNR. DLCT020133242016 business transactions between him and the Complainant. He further stated that his cheques have been misused.
7. Evidence of the Complainant: After the framing of notice, the Accused was granted permission to cross-examine the Complainant. Thereafter, the Complainant was examined as CW1, adopting the pre-summoning evidence as post-summoning evidence and was cross examined and discharged. No other witnesses were examined by the Complainant. Thereafter, Complainant evidence was closed, and the matter was listed for statement of the Accused u/s 313 Cr.P.C. r/w Section 281 Cr.P.C.
8. Statement of the Accused: Statement of the Accused was recorded u/s 313 Cr.P.C. r/w Section 281 Cr.P.C on 8th of January 2020 wherein all the incriminating circumstances appearing in evidence against the Accused were put to him to which the Accused stated that he had issued the cheque in question as blank signed cheque for the purposes of security for some business deals with the Complainant. He also stated that he came to know about the dishonour of the cheque in question through the bank. He further stated that he was not sure whether he had received any legal demand notice. However, he admitted that the address mentioned in the legal demand notice is the correct address of his shop. He further stated that the was the proprietor of Sri Durga Homeo Pharmacy. He stated that he did not owe any money to the Complainant. He also stated that the Complainant owed him around ₹ 90,000 as bonus. He then stated that he had some business deal with the Complainant and that CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 5 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 6 of 23 CNR. DLCT020133242016 he had issued around 5 - 6 blank signed cheques to the Complainant in this regard. He further stated that he was not aware about the Tax invoices as well as the statement of account exhibit CW - 1/B.
9. Defence Evidence: The Accused has not examined any defence witness in his favour. A separate statement of the Accused to that effect was recorded and defence evidence was closed. The matter was then fixed for final arguments on 08.04.2020. Final arguments were heard by the Court on 04.02.2021 and thereafter the matter was fixed for judgement.
10. I have heard the submissions of the Ld. Counsel for the Complainant as well as the Accused. I have also perused the record.
Appreciation of evidence
11. Before embarking upon a journey of appreciation of evidence, it would be fruitful to examine the statutory contours of the offence u/s 138 of the Negotiable Instruments Act, 1881 and the conspectus of cases which have served to explicate them.
12. For the application of s.138 of the Negotiable Instruments Act, 1881, the following legal requirements must be satisfied from the averments in the complaint as well as the evidence of the Complainant: -
(a) That a person has drawn a cheque, 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 CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 6 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 7 of 23 CNR. DLCT020133242016 part, of any legally enforceable debt or other liability;
(b) That the cheque has been presented 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;
(c) That the cheque has been returned by the drawee bank unpaid, for the reason that 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 agreement made with that bank;
(d) That the payee or holder in due course has made a demand for payment of the said amount of money by giving a notice in writing to the drawer of the cheque within 30 days of receipt of information from the bank regarding the return of the cheque as unpaid;
(e) That the drawer of the cheque fails to make the payment of the said amount of money to the payee or holder in due course within 15 days of receipt of the said notice;
13. The aforesaid legal requirements are cumulative in nature, i.e. only when all of the aforementioned ingredients are duly proved is the drawer of the cheque deemed to have committed an offence under s. 138 of the Negotiable Instruments Act.
14. The provision of s.138 is buttressed by s.139 and s.118 of the Act. s. 139 of the Act provides that the court shall presume, that the holder of a cheque received the cheque for the discharge, wholly or in part of any debt or other liability. s.118 of the Act provides inter alia that CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 7 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 8 of 23 CNR. DLCT020133242016 the court shall presume, until the contrary is proved, that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.
15. What follows from the aforesaid is that the offence u/s 138 of the Negotiable Instruments Act operates on reverse onus of proof theory. The presumptions u/s 139 and s. 118 of the Act mandate the court to draw them, when a given set of facts are shown to exist. The same is evident by the peremptory language "Shall Presume" used. However, the said presumptions are rebuttable in nature, i.e. it is open for the defence to disprove the same by establishing facts to the contrary.
16. In the case of Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 the Hon'ble Supreme Court had occasion to examine the confines of the presumption u/s 139 of the Act, wherein it held as follows:
"22. Because both Sections 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 (..) 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 introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the Accused."
(Ibid. at p. 65, para 14.) (...) The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the Accused adduces CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 8 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 9 of 23 CNR. DLCT020133242016 evidence showing the reasonable possibility of the non- existence of the presumed fact.
Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man".
(...) in the case of a mandatory presumption, the burden resting on the Accused person in such a case would not be as light as it is where a presumption is raised under Section 114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the Accused is reasonable and probable. It must further be shown that the explanation is a true one. The words 'unless the contrary is proved' which occur in this provision make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted". (emphasis supplied).
17. Also, in the case of Rangappa v. Sri Mohan, (2010) 11 SCC 441 it was held that "(..)we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. (..)
27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 9 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 10 of 23 CNR. DLCT020133242016 legislative objective of improving the credibility of negotiable instruments. While Section 138 of 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. (..)the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-Accused cannot be expected to discharge an unduly high standard or proof.
28. 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". (...)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(...)since the Accused did admit that the signature on the cheque was his, the statutory presumption comes into play(...)"(emphasis supplied)
18. With regard to the factors taken into account for rebutting the presumption u/s 139 read with s.118 of the Act, the judgement of Hon'ble Delhi High Court in V.S. Yadav v. Reena CRL. A. No. 1136 Of 2010 assumes importance, wherein it was held that:
"Mere pleading not guilty and stating that the cheques were issued as security, would not give amount to rebutting the presumption raised under Section 139 of N.I. Act. If mere statement under Section 313 Cr. P.C. or under Section 281 Cr. P.C. of Accused of pleading not guilty was sufficient to rebut the entire evidence produced by the Complainant/prosecution, then every Accused has to be acquitted. But it is not CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 10 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 11 of 23 CNR. DLCT020133242016 the law. In order to rebut the presumption under Section 139 of N.I. Act, the Accused, by cogent evidence, has to prove the circumstance under which cheques were issued." (emphasis supplied)
19. Now I shall proceed to deal with the legal ingredients one by one and give my finding on whether the evidence on record satisfies the legal ingredient in question or not.
(a) That a person has drawn a cheque, on an account maintained by him with a banker for payment of any amount of money to another person from out of that account another person from out of that account for the discharge, in whole or in part, of any legally enforceable debt or other liability
20. This condition pertains to the issuance of the cheque itself. It is pertinent to note that the Accused, in his notice of accusation has admitted his signature on the cheque in question. Further, the cheque has been drawn on the account of the Accused. This leads to drawing of an inference u/s 139 read with s.118 of the Act, that the cheque was issued in discharge of a legally recoverable debt or other liability.
21. In the case of Bharat Barrel & Drum Mfg. Co. v. Amin Chand Pyarelal, (1999) 3 SCC 35, it was held "12. (...) the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 11 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 12 of 23 CNR. DLCT020133242016 a consideration by raising a probable defence. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist. (emphasis supplied)"
22. The presumption now having been raised against the Accused, it now falls upon the Accused to lead evidence or establish circumstances to rebut it. The Accused has not preferred to lead any evidence of his own and has relied upon the cross examination of CW-1 to establish his defence.
23. The defence of the Accused, as disclosed from the reply to the notice of accusation, application u/s 145(2) of the NI Act and the statement of Accused u/s 313 r/w 281 Cr.P.C. is that the cheque in question was issued as an undated, blank signed security cheque along with 5-6 other cheques as collateral security at the time of starting the business with the Complainant. The Accused has denied liability towards the Complainant and has, in turn stated that the Complainant is liable to pay around Rs. 90,000/- to him.
24. The Accused remains consistent in his defence throughout, which is CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 12 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 13 of 23 CNR. DLCT020133242016 evident from the cross-examination of CW-1.
25. It has been argued on behalf of the Accused that the cheque in question is a security cheque, which CW-1 has also admitted in his cross-examination. It has also been submitted that CW-1 has also admitted that the cheque in question was issued as blank signed cheque.
26. The law regarding issuance and delivery of blank signed cheques is well settled. In the case of Bir Singh Vs. Mukesh Kumar, 2019 (4) SCC 197 the Hon'ble Supreme Court observed and held:
"37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted."
38. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the Accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence."
27. Hence, the defence that a blank signed cheque was given will not operate to negate the application of s.138 of the Act as against any payee who has filled up the missing details and presented the cheque CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 13 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 14 of 23 CNR. DLCT020133242016 for encashment, unless it is shown by the Accused that the same was not in discharge of a debt or other liability.
28. Now, if we examine the other limb of the defence of the Accused, that the said cheque was given as a security cheque, the same is also without merit considering the judgement of the Hon'ble Supreme Court in ICDS Ltd. Vs. Beena Shabeer, (2002) 6 SCC 426 assumes significance wherein it was held:
"The issue as regards the co-extensive liability of the guarantor and the principal debtor, in our view, is totally out of the purview of Section 138 of the Act.(...) The language of the Statute depicts the intent of the law- makers to the effect that wherever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of the Act: 'Any cheque' and 'other liability' are the two key expressions which stands as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the Statute."
29. In Credential Leasing & Credits Ltd. vs Shruti Investments & Anr. (2015) SCCOnLine Del 10061, Hon'ble Delhi High Court has held that the scope of section 138 NI Act would cover cases where ascertained and crystallized debt or other liability exists on the date when the cheque is presented and not only to the cases where ascertained and crystallized debt or other liability exists on the date on which it was delivered to the seller as a post- dated cheque or as a current cheque with a credit period.
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30. It is pertinent to note that the Accused has merely pleaded the aforesaid defences but has brought nothing on record in proof of his defence.
31. In the cross-examination of CW-1, the witness has admitted certain documents put to him by the defence. It has been vehemently argued on behalf of the Accused that the said documents prove the defence of the Accused. Even this ground agitated by the Accused is not tenable but in fact goes on to further bolster the case of the Complainant.
32. Ex. CW1/D1 & Ex. CW1/D2 are letters dated 03.02.2015 and 31.03.2015 respectively sent by the Complainant to the Accused. Perusal of Ex. CW1/D1 reveals that the Complainant used to offer bonuses at fixed percentage of sales to its resellers. Ex. CW1/D1 mentions that as per the turnover of the Accused, he is eligible for 8% bonus as goodwill gesture provided the Accused meets the sales target of Rs. 12.5 Lakhs by the end of that financial year. It has been categorically mentioned that for this purpose, the Accused has to make up the shortfall of orders for Rs. 3,51,667 "along with payment of overdue bills." The grant of 8% bonus is made conditional on payment of overdue bills as well as achieving the sales target of Rs. 12.5 Lakhs. Ex. CW1/D2 dated 31.03.2015 further clarifies the situation wherein at the end of the same financial year, the Accused is directed "to arrange funds to make payment of outstanding bills of amount Rs. 5,50,841". The bonus due to the Accused is quantified at Rs. 96,485 for which liberty is granted to CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 15 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 16 of 23 CNR. DLCT020133242016 the Accused to set off the bonus amount against the pending balance. Both the aforesaid documents serve only to establish the nature of business relationship between the Complainant and the Accused. The said documents do not operate to negate the liability of the Accused towards the Complainant. In fact, in both the aforesaid documents, the Accused has been shown to be liable towards the Complainant.
33. The next contention on behalf of the Accused is that the Complainant had stopped business with the Accused and the Accused had made a deposit of ₹ 49,000 in the account of the Complainant by the deposit slip Ex. CW1/D3 dated 5th of February 2016 against pending dues. It has been stated that the AR of the Complainant has admitted the said deposit slip as payment against pending balance and hence, the defence of the Accused stands established. The said contention is untenable for the simple reason that the Accused has merely put a suggestion that ₹ 49,000 was deposited in the account of the Complainant against pending balance and not as full and final settlement. Nowhere has CW-1 admitted that the deposit of ₹ 49,000 was towards full and final settlement. Further, a perusal of Ex.CW1/D3 would show that it bears the date of 5th February 2016 whereas the date on the cheque in question is 16th of June 2016. The defence has not led any evidence or established any circumstance to show that the Accused has extinguished his liability or in any case, lessened his liability towards the payment of cheque amount in the intervening period between the payment dated 5th of February 2016 CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 16 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 17 of 23 CNR. DLCT020133242016 and the date of the cheque in question. Suggestions have been put to CW - 1 in his cross-examination to the effect that the supply of medicines to the Accused stopped in the year 2015 and that the Complainant had neither returned the post-dated cheques to the Accused nor paid the bonus due to the Accused. None of the aforesaid suggestions have been admitted by the AR of the Complainant. Thus, the fact remains that even if the cheque in question was issued as security at the time of starting the business, the Accused remained liable to pay the amount to the Complainant on the date of presentation. The defence has brought no evidence or circumstance to dislodge this fact or in any case, probabilise the existence of such circumstances which leads the Court to disbelieve the version of the Complainant.
34. Moreover, the Accused has failed to explain as to why he did not act like a prudent man and issued stop payment instructions to prevent misuse of his cheque or even lodge a complaint with the appropriate authority when it is the case of the Accused that the Complainant had stopped business and that the Accused had cleared the pending balance. It does not stand to reason as to why the Accused did not even make a whisper of a demand to the Complainant to return the alleged security cheques of his.
35. It has been argued, for the first time on behalf of the Accused, in the course of final arguments that the Accused was in fact a middleman and that the Complainant used to supply medicines to him which were in turn taken from the Accused by the agents of the CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 17 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 18 of 23 CNR. DLCT020133242016 Complainant for the purposes of selling in regional markets. It has been argued that the Complainant has already received payment of the goods supplied to the Accused from the aforesaid agents and that the Accused, being a middleman has been made the unfortunate scapegoat. It has also been stated that the Accused refrained from demanding the security cheques back from the Complainant or issuing stop payment instructions/making a complaint as the Accused was interested in the new business with the Complainant and did not want to lose on the goodwill. The aforesaid line of argument seems more to be in line with fantasy rather than reality. One fails to understand as to why the Complainant would first supply goods to the Accused, then take them away through its own agents, then in turn sell them through its own agents and retain the profit for itself. All the while the Accused remaining liable to pay for the orders placed. In the business arrangement suggested by the Accused, the position of the Accused is superfluous. There is little reason for the Complainant to engage the Accused as a middleman if the agents of the Complainant are already in the regional area, selling the goods of the Complainant and remitting the proceeds directly to the Complainant. Even going by the submission made on behalf of the Accused that the ultimate profits were pocketed by the Complainant, it does not stand to reason as to why the Accused would leave his undated, blank signed cheque lying in the custody of the Complainant without demur.
36. Next, certain formal/technical defences have been taken by the CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 18 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 19 of 23 CNR. DLCT020133242016 Accused. It has been argued on behalf of the Accused that the AR of the Complainant who had tendered his affidavit in pre-summoning evidence is different from the AR of the Complainant who had appeared as CW - 1 and offered himself for cross examination. It has also been stated that CW - 1 is incompetent to depose on behalf of the Complainant as he is demonstrably not aware of the transaction which took place between the Complainant and the Accused. It has also been stated that the tax invoices and the ledger account exhibit CW - 1/B (Colly) are unauthenticated documents being not Stamped and signed and hence, not admissible.
37. The aforesaid grounds, though attractive, are untenable for the reason that it is not necessary that the AR who had tendered the pre- summoning evidence should necessarily offer himself for examination at post-summoning stage. Where the Complainant is a corporation, it is at liberty to decide to who shall represent it at appropriate stage of the proceedings, subject only to the person deposing be well aware of the transaction and duly authorized by the company. No provision or precedent has been cited by the side of the Accused to the effect that change of the AR at the post- summoning stage would necessarily vitiate the complaint. On the other hand, there are judgements of the apex court which enable substitution of AR at pre-summoning and post-summoning stage (Vinita S. Rao v. Essen Corporate Services (P) Ltd., (2015) 1 SCC 527 & A.C. Narayanan Vs. State of Maharashtra (2014) 11 SCC 790 relied upon). Further, it cannot be said that the AR of the CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 19 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 20 of 23 CNR. DLCT020133242016 Complainant who had offered himself as CW - 1 is so unaware of the transaction as to be incompetent to depose on behalf of the Complainant. A perusal of the testimony of CW - 1 would reveal that barring minor inconsistencies, he is aware of the transaction with the Accused. He is able to recollect and correctly identify the documents issued by the Complainant company and also the scheme of bonus which was offered by the Complainant company to the Accused. He is also able to correctly depose as to the deposit of ₹ 49,000 made by the Accused in the account of the Complainant. Seen in this backdrop, it cannot be said that the AR of the Complainant is incompetent to appear as witness on behalf of the Complainant. Further, as has been already held by the Hon'ble Apex Court in DK Chandel Vs. Wockhardt Ltd, Crl. A No. 132/2020, the production of account books/cash book etc. may be relevant in a Civil Suit but the same is not relevant in a case filed under section 138 of the Negotiable Instruments Act, 1881. In any case, mere entries statement of accounts would not be sufficient to fasten liability upon the Accused (S.34 of the Indian Evidence Act, 1872 relied upon). The liability of the Accused in the instant case stems primarily from the issuance of the cheque in question and not from the statement of accounts maintained by the Complainant. The Complainant has relied and rightly so on the presumptions envisaged against the Accused under section 139 r/w s.118 of the Negotiable Instruments Act, 1881 which the Accused has not been able to rebut.
38. On a consideration of the totality of factors pleaded by the Accused CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 20 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 21 of 23 CNR. DLCT020133242016 in his defence, it becomes clear that the Accused has merely paid lip service to his defence and has not led any cogent evidence to establish it or draw any circumstance the case of the Complainant which probabilizes his defence. Mere bald denial of the absence of consideration or pleading that the cheques in question were issued as security would not operate to absolve the Accused of his liability.
39. Hence, this ingredient stands fulfilled as against the Accused.
(b) That the cheque has been presented 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;
40. This requirement is satisfied on a perusal of the cheque in question Ex. CW1/C which bears date of 16.06.2016 and the return memo Ex. CW1/D which bears the date of 17.06.2016. The defence has led no evidence to controvert the same.
41. Hence, this ingredient stands fulfilled as against the Accused.
(c) That the cheque has been returned by the drawee bank unpaid, for the reason that 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 agreement made with that bank
42. s. 146 of the Negotiable Instruments Act, 1881 provides that the court shall, on production of bank's slip or memo having therein the official mark denoting that the cheque has been dishonored, presume CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 21 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 22 of 23 CNR. DLCT020133242016 the fact of dishonour of such cheque, unless and until such fact is disproved. The bank return memo Ex. CW1/D dated 17.06.2016 on record states that the cheque in question has been returned dishonoured for the reason "Exceeds Arrangement". The defence has led no evidence to controvert the same.
43. Hence, this ingredient is also fulfilled as against the Accused.
(d) That the payee or holder in due course has made a demand for payment of the said amount of money by giving a notice in writing to the drawer of the cheque within 30 days of receipt of information from the bank regarding the return of the cheque as unpaid
44. As regards the service of legal demand notice, the Complainant has sent the same, Ex. CW1/E to the Accused. The original postal receipts in respect of the same are already on record as Ex. CW1/ F. The Accused has admitted receiving legal demand notice, in the notice of accusation u/s 251 Cr.P.C. and also admitted the address appearing on the legal demand notice to be the correct address of his shop in the statement of the Accused u/s 313 read with s.281 Cr.P.C. The said ingredient is, therefore, not in dispute between the parties.
45. Resultantly, this ingredient is fulfilled as against the Accused.
(e) That the drawer of the cheque fails to make the payment of the said amount of money to the payee or holder in due course within 15 days of receipt of the said notice CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 22 of 23 CNR. DLCT020133242016 Visit ecourts.gov.in for updates or download mobile app "eCourts Services" from Android or iOS CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 23 of 23 CNR. DLCT020133242016
46. In the instant case, the Accused has admitted receiving legal demand notice, in the notice of accusation u/s 251 Cr.P.C. and also the address appearing on the legal demand notice to be the correct address of his shop in the statement of the Accused u/s 313 read with s.281 Cr.P.C. However, the Accused has failed to pay within the statutory period from the date of receipt of the legal demand notice, on the ground that he does not owe any liability. The said ingredient is not in dispute between the parties.
47. Hence, this ingredient stands fulfilled as against the Accused.
Decision
48. As all the ingredients of the offence stand satisfied against the Accused, the Accused Dharmender stands convicted of the offence u/s 138 of the Negotiable Instruments Act, 1881.
49. Let he be heard on point of sentence separately.
VISVESH Digitally signed by VISVESH Date: 2021.03.06 15:36:12 +05'30' ANNOUNCED IN THE OPEN (VISVESH) COURT ON 06.03.2021 MM, NI ACT-06, CENTRAL TIS HAZARI COURTS, DELHI CC No.541211/2016 German Homeopathic Distributors V/s Shree Durga Homeo Pharmacy Page 23 of 23 CNR. DLCT020133242016
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