Delhi District Court
M/S Pee Sabharwal Traders vs . M/S Jain Hosiery Industries on 22 September, 2020
1
IN THE COURT OF SH. GAURAV SHARMA : MM : NI ACT-03
(CENTRAL) : TIS HAZARI COURTS : DELHI.
CC No.518647/16
DATE OF INSTITUTION : 14.12.2015
DATE RESERVED FOR JUDGMENT : 05.03.2020
DATE OF JUDGMENT : 22.09.2020
(Regular court functioning was suspended on account of COVID PANDEMIC since 25th
March, 2020 and when presence of both the parties was secured, matter was taken up
for pronouncing order/judgment)
IN THE MATTER OF:
M/s PEE Sabharwal Traders
4193-4194/6, Gali Ahiran,
Pahari Dhiraj, Dadar Bazar,
Delhi-110006.
Through its Proprietor
Sh. Sanjeev Sabharwal
........Complainant
VERSUS
M/s Jain Hosiery Industries
T-385, Chamelian Road,
Ahata Kedara, Near Filmistan Cinema,
Delhi-110006
Through its Proprietor
Sh. Anuj Jain
Also At :
Block No.A-1, Flat no.70,
First Floor, Keshavpuram,
Lawrance Road, Delhi -110035.
............Accused
JUDGMENT :-
a) Srl. No. of the case & Date of institution :180/08 & 08.07.2008
b) Date of commission of offence : after the 15th day of receiving of legal demand notice CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 2
c) Name of the complainant : Sh. M/s PEE Sabharwal Traders
d) Name of the accused : M/s Jain Hosiery Industries
e) Nature of offence complained of : S. 138 NI Act
f) Plea of the accused person : Accused pleaded not guilty
h) Final Order : Convicted
i) Date of order : 22.09.2020 COMPLAINT UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT, 1881 JUDGMENT 22.09.2020
1. The accused is hereby Convicted of the offence u/s 138 of the Negotiable Instruments Act, 1881.
2. Any defence put forward in a court of law has to be a legal defence which is admissible. Mere verbal assertions about a certain state of things that could have been, unsubstantiated and unsupported by some sort of credible proof, do not further the case of any defending litigant.
Brief facts
3. The brief facts of the present complaint filed U/s. 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "NI Act") are that M/s PEE Sabharwal Traders ('complainant') deals in raw material of all kinds of knitted fabrics, narrow wove n fabrics, embroidery clothes, fancy net clothes etc and M/s Jain Hosieries, represented by Sh. Anuj Jain, its proprietor, ('accused') is dealing in CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 3 manufacturing / supplying of undergarments / lingerie through different fabricators besides the complainant and there are good business relations between the complainant and accused. It is stated that the accused had been issuing slips for placement of orders with the complainant through his fabricators who used to take deliveries of the raw materials for the manufacturing of garments in the unit of the accused firm on his instructions. Further, it is also reiterated that the complainant on the instructions of accused had been supplying raw material through his fabricator. It is also claimed by the complainant that in order to pay the consideration amount of the raw material, the accused issued cheques amounting to Rs.7,00,000/- i.e. Rs.1,00,000/- each ('cheques in question') in the name of the complainant's firm. The detail of the cheques issued by the accused to pay the legal debt to the complainant may be noted as below:
S. No. Cheque no. Dated Dishonoured Amount
on
1. 157226 30.06.2015 21.09.2015 Rs.1,00,000/-
2. 157227 15.07.2015 23.09.2015 Rs.1,00,000/-
3. 157228 31.07.2015 30.09.2015 Rs.1,00,000/-
4. 157229 15.08.2015 14.10.2015 Rs.1,00,000/-
5. 157230 31.08.2015 14.10.2015 Rs.1,00,000/-
6. 157231 15.09.2015 14.10.2015 Rs.1,00,000/-
7. 157232 30.09.2015 14.10.2015 Rs.1,00,000/-
All the cheques issued in the name of the complainant's firm by the accused, as above, were drawn on Punjab National Bank, Bara Hindu Rao, Delhi-110006 and were deposited at its bank, Canara Bank, Sadar Bazar, Delhi on 19.09.2015, 21.09.2015, 29.09.2015 and four cheques on 13.10.2015. All the cheques were returned by the complainant's banker as dishonoured with remarks CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 4 "insufficient funds" vide return memos dated 21.09.2015, 23.09.2015, 30.09.2015 and 14.10.2015 respectively. Thereafter, the complainant issued a legal notice dated 19.10.2015 through its advocate to the accused, upon which the accused contacted it and requested him that he was ready to pay Rs.2 Lacs immediately and asked the complainant to present two cheques for a sum of Rs.1,00,000/- each. The complainant considering the business transaction relations for the last many years with the accused, accepted the representation of the accused and accordingly, represented the two cheques bearing no.157229 dt.15.07.2015 & 157230 dt.31.07.2015 but again, they were also dishonoured vide return memos dated 05.11.2015. In such circumstances, the present complaint came to filed under section 138 of NI Act.
Proceedings Before Court
4. In the present complaint, upon the accused entering an appearance, notice of accusation was framed against him u/s 251 CrPC on 06.06.2017 to which he pleaded not guilty and claimed trial. In the defence recorded on same date the accused admitted that he had issued the cheques in question and his signatures upon them. However, he also stated that no other particulars were filled by him on the cheques in question. He denied having received the legal demand notice. He went on to explain that the complainant used to supply material to him and he had issued the cheques in question as blank security cheques against the said material. He further stated that he had made entire payment to the complainant for the material supplied to him and that he did not have any liability towards the complainant, who as per him, had misused the cheques in question.
5. In support of his case the complainant examined itself as CW-1 and he proved his affidavit in evidence as Ex.CW1/A; the slips CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 5 issued by the accused as ExCW1/1(Colly); the invoices raised by the complainant's firm dated 04.12.2014 to 03.03.2015 as ExCW1/2(colly); Cheque bearing no.157226, dt.30.06.2015, for Rs.1,00,000/- drawn on Punjab National Bank, Bara Hindu Rao, Delhi-110006 as ExCw1/3; Cheque bearing no.157227, dt.15.07.2015, for Rs.1,00,000/- drawn on Punjab National Bank, Bara Hindu Rao, Delhi-110006 as ExCw1/4; Cheque bearing no.157228, dt.31.07.2015, for Rs.1,00,000/- drawn on Punjab National Bank, Bara Hindu Rao, Delhi-110006 as ExCw1/5; Cheque bearing no.157229, dt.15.08.2015, for Rs.1,00,000/- drawn on Punjab National Bank, Bara Hindu Rao, Delhi-110006 as ExCw1/6; Cheque bearing no.157230, dt.31.08.2015, for Rs.1,00,000/- drawn on Punjab National Bank, Bara Hindu Rao, Delhi-110006 as ExCw1/7; Cheque bearing no.157231, dt.15.09.2015, for Rs.1,00,000/- drawn on Punjab National Bank, Bara Hindu Rao, Delhi-110006 as ExCw1/8; Cheque bearing no.157232, dt.30.09.2015, for Rs.1,00,000/- drawn on Punjab National Bank, Bara Hindu Rao, Delhi-110006 as ExCw1/9; deposited slips of cheques on 19.09.2015, 21.09.2015, 29.09.2015 and 13.10.2015 are ExCW1/10; return memos dt.21.09.2015, 23.09.2015, 30.09.2015 and 14.10.2015 respectively as ExCW1/11(colly); legal notice dated 19.10.2015 as ExCW1/12; Postal receipts as well as tracking report as ExCW1/13(colly); return memo dt.05.11.2015 as ExCW1/14. Complainant was there after cross examined as well. Complainant further examined another witness Parvinder Sabharwal as CW2, who proved the ITR of the financial year 2017-2018 as ExCW2/1 (running into 7 pages) and he was also cross examined. CE was thus closed on 22.10.2018.
6. Statement of accused u/s 313 CrPC. was recorded on 22.11.2018 wherein the accused stated on lines of is his previous version and CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 6 submitted that the complainant used to supply material to him for which he had issued the cheques in question as blank security cheques. He further stated that he had made entire payment to the complainant for the material supplied to him and he did not have any outstanding liability towards the complainant. He further added that the complainant had misused the cheques in question. He admitted his signatures on the cheques in question and curiously this time, also admitted receiving of legal demand notice.
7. Thereafter, accused Anuj Jain examined himself as DW1 and he proved copy of another complaint case between the parties titled M/s Pee Sabharwal Traders vs M/s Jain Hosiery Industries as ExDW1/A (colly) and copy of a civil suit bearing no. CS (comm) 284/18 case titled M/s Pee Sabharwal Traders vs M/s Jain Hosiery Industries & Anr. As ExDW1/B(colly). He was duly cross-examined and DE was closed on 21.08.2019. Final arguments were also advanced from the sides.
8. I have heard counsel for the parties, perused the record and have gone through the relevant provisions of the law.
Findings
9. The constituent elements for an offence u/s 138 NI Act are well laid out, in the section itself as well as through various pronouncements of the superior courts. The Hon'ble Apex Court summed them up in Himanshu v. B. Shivamurthy, (2019) 3 SCC 797 as below:
"The first condition is that the cheque ought to have been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. The second condition is that the payee or the holder in due course of the cheque, as the case may be, ought to make a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of in- formation by him from the bank regarding the CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 7 return of the cheque as unpaid. The third condi- tion is that the drawer of such a cheque should have failed to make 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. It is only upon the satisfaction of all the three condi- tions mentioned above and enumerated under the proviso to Section 138 as clauses (a), (b) and (c) thereof that an offence under Section 138 can be said to have been committed by the person issuing the cheque."
(emphasis supplied) As can be seen, the law is fairly straightforward to comprehend with regards the ingredients of section 138 NI Act.
10.At the outset, the defence raised by the accused in the present case is that the cheques in question were issued as blank signed for security purposes and other details therein were not filled by them. (Curiously however, at the cross examination stage, the ac- cused admitted of having issued cheques after signing and filling amounts involved therein, both numerically and alphabetically as well - this shall be adverted to later as well) In this regard, it would be apposite to note S. 20 and S. 118 of the NI Act, which provide as under:
20.Inchoate stamped instruments.-
Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in [India], and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as then case may be, upon it a negotiable instrument, instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount, provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder.
CC No. 518647/16M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 8
118. Presumptions as to negotiable instruments of consideration Until the contrary is proved, the following presumptions shall be made:-
(a) of consideration-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;
(b) as to date- that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance- that every accepted bill of exchange was accepted within a reasonable time after its date its date and before its maturity;
(d) as to time of transfer.- that every transfer of a negotiable instrument was made before its maturity;
(e) as to order of endorsements - that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stamps-that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course - that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument has been contained from its lawful owner, or form any person in lawful custody thereof, by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
11.In this regard, it will be useful to note the judgment in Mojj Engineering Systems Limited & Ors. Vs. A.B. Sugars Ltd. 154 (2008) Delhi Law Times 579, where the Hon'ble Delhi High Court had observed as under:-
"7. Even otherwise, prima facie, it was the petitioners who had handed over the undated cheque for a certain amount to the respondent in terms of a contract between the parties. Since an undated cheque cannot be encashed, it can only mean that the petitioners had authorized the complainant to enter an appropriate date on it. In Young Vs. Grote (1827) 4 Bing. 253 it was held that when a blank cheque is signed and handed over, it means the person signing it has given an implied authority to any subsequent holder to fill it up. Similarly, in Scholfield Vs. Lord Londesborough (1895- 1899) All ER Rep 282 it was held that whoever CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 9 signs a cheque or accepts a bill in blank, and then puts it into circulation, must necessarily intend that either the person to whom he gives it, or some future holder, shall fill up the blank which he has left. This common law doctrine was also affirmed by Justice Macnaghten in Griffiths Vs. Dalton [1940] 2 KB 264 where it was held that the drawer of an undated cheque gives a prima facie authority to fill in the date.
This aspect has also been incorporated in Section 20 of the Negotiable Instruments Act, which deals with Inchoate Stamped Instruments.
The Supreme Court in T.Nagappa Vs. Y.R.Murlidhar, (2008) 5 SCC 633 while discussing the scope of Section 20 held that by reason of this provision, a right has been created in the holder of the cheque. Prima facie, the holder thereof is authorized to complete the incomplete negotiable instrument. In that view of the matter, all further issues that may be raised by the petitioners regarding the nature and scope of the authority of the respondent to put any particular date on the cheque in question, are all matters for trial.
8. It is not as if the cheque came to be issued without any consideration whatsoever in the first place or that there was such a glaring defect in the complaint that the decision of the Trial Court to issue summons has ex facie resulted in miscarriage of justice or an abuse of the process of Court, and therefore interference under Section 482 Cr.P.C. to quash the proceedings is warranted in the interest of justice. The question whether the consideration for which the cheque was issued was ultimately satisfied or whether the cheque was wrongly sought to be encashed, are all issues that must also be decided at the trial. The Supreme Court in the case of M.M.T.C. Ltd. and Another Vs. MEDCHL Chemicals and Pharma (P) Ltd. and Another,(2002) 1 SCC 234 held as follows:
"13.....the well-settled law that the power of quashing criminal proceedings should be exercised very stringently and with circumspection. It is settled law that at this stage the Court is not justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the complaint. The inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice. At this stage the Court could not have gone into merits and/or come to a conclusion that there was no existing debt or liability."
The Court further held that:
"17. There is therefore no requirement that the complainant must specifically allege in the CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 10 complaint that there was a subsisting liability.
The burden of proving that there was no existing debt or liability was on the respondents. This they have to discharge in the trial. At this stage, merely on the basis of averments in the petitions filed by them the High Court could not have concluded that there was no existing debt or liability."
(emphasis supplied)
12.From the aforesaid discussion, it is manifest that by reason of the provision under S. 20 NI Act, a right has been created in the holder of the cheque being prima facie authorized to complete the incomplete negotiable instrument. Mere averment to the effect that the accused/drawer of the cheque did not fill in the details on the cheque except for signing on the cheque is not sufficient. Thus, merely the allegation of issuance of incomplete negotiable instrument does not create absolute defence in favour of the accused unless corroborative evidence exists to show that by threat or fraud, a cheque was taken. There is no law that a person drawing the cheque has to necessarily fill it up in his own handwriting. Accused has not denied its signatures on the cheques. Once signatures on the cheques are admitted, the accused cannot escape its liability on the ground that the same were not filled in by im. When a blank cheque is signed and handed over, it means that the person signing it has given implied authority to the holder of the cheque, to fill up the blank which he has left. A person issuing a blank cheque is supposed to understand the consequences of doing so. He cannot escape his liability on the ground that blank cheque had been issued by him. Thus, this defence is of no assistance to the accused in the present case also.
13.With regards receipt of legal demand notice, the accused has taken conflicting stands. At the time of framing of notice u/s 251 CrPC, the accused denied having received the legal demand notice but at CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 11 the stage of recording statement u/s 313 CrPC, he accepted receiving the same. Because of such admission, though later, it can be safely presumed that the legal demand notice was indeed received by him. Moreso because at the time of accepting the same, he even admitted to the fact that the address stated in the legal notice was correct.
14.In addition to the above, even if the defence of the accused that legal demand notice was not received is to be given consideration for arguments sake, even then it would be found to be devoid of merit in view of the decision of the Hon'ble Apex Court in C.C. Alavi Haji v Palapetty Muhammad & Anr. (2007) 6 SCC 555, which states that in case, drawer of the cheque raises an objection that he never received Legal Notice U/s 138 of N.I. Act, he can within 15 days of the receipt of summons make payment of the cheque amount and in case, he does not do so, he cannot complain that there was no proper service of Legal Notice U/s 138 of N.I. Act. Hence, in view of the Judgment in C.C. Alavi Haji (supra) also, the presumption of service of valid Legal Demand Notice arises against the accused persons, if not of the legal notice sent vide registered post, then through issuance of summons by the court.
15.Having noted as above therefore, since it is admitted that the cheques in question bear the signatures of the accused, presumption shall be raised under section 139 read with sections 118/20 of the NI Act, that cheques in question were issued in discharge of valid debt or liability. Analysing all the concerned provisions of law and various pronouncements in this regard, the Hon'ble Apex Court in Basalingappa v. Mudibasappa, (2019) 5 SCC 418 noted at para 25 as follows:
CC No. 518647/16M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 12 '25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner :
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presump-
tion that the cheque was for the discharge of any debt or other liability.
25.2. 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 presump-
tion is that of preponderance of probabilities. 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponder-
ance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circum-
stances upon which they rely 25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his de-
fence.' (emphasis supplied)
16.To put it succinctly therefore, once presumption u/s.139 read with Section 118 of the NI Act are raised against the accused on account of its admission of the issuance of the cheques in question, it is thereafter upon him, to rebut such presumptions by adducing cogent evidence. If that is done so on the scale of preponderance of probabilities, the accused is said to have made out a case in its favour, and the onus once again shifts back on the complainant to prove its case beyond reasonable doubt. If the accused is unable to make out a probable defence however in such a manner, the complainant is entitled for a decision in his favour.
CC No. 518647/16M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 13
17.Having noted so as above, it is pertinent to note that mere denial regarding existence of a valid debt shall not serve any purpose as far as the accused is concerned. It has been so held in Kishan Rao v. Shankargouda, (2018) 8 SCC 165,. Quoting Sharma Carpets case [Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513, the Hon'ble Apex Court had held at para 20 therein :
'The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non- existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist.' (emphasis supplied)
18.Considering the above, what is observed that the accused has to offer something that visibly makes his version look palatable & probable. Without that, just by putting before the court some different version without any supporting proof, he will not have discharged the burden of proof placed upon him. In such a background, when the contentions raised by the accused as against those raised by the complainant are weighed under the facts and circumstances of the present case, they don't appear to favour the accused. Agreed, that the accused can rebut the CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 14 presumptions raised against by showing gaps in the complainant's version also, but nevertheless, credible defence must be raised that can cast a doubt on the narrative of the complainant. Mere verbal formality is not what the law demands. There should be something ascertainable which clearly shows the case of the complainant to be improbable so as to rebut the presumptions of law. Such opportunity arose on four occasions when the accused put forth its case, one, during the time of recording of the plea of defence of the accused when notice of accusation u/s 251 CrPC was framed, two, when the accused cross examined the complainant witnesses pursuant to the application made u/s 145(2) of the NI Act, three, when the statement of the accused was recorded u/s 313 CrPC and four, when defence witness was examined. Let us take them one by one to see if any probable defence was made out in favour of the accused on the touchstone of the ratio laid down in Kishan Rao (supra) as noted above.
19.At the time of framing of notice u/s 251 CrPC, the accused admitted to having dealings with the complainant, in as much as that he stated that complainant used to supply material to him. In fact, he has never denied this fact throughout the trial. He also admitted that for such supply of goods/material, the cheques in question were given as blank signed for security purposes. He followed these submissions by stating that he had made the entire payment to the complainant and had no subsisting liability towards the complainant. This line of defence, brief yet noteworthy, forms the bedrock of the accused's version throughout the trail. Though he has maintained the same consistently but has offered no details whatsoever to back the same. As against the claim of the cheque amount by the complainant, the accused has offered no amount/figure as to what was the amount due that was already paid by him. No documentary or any kind of proof whatsoever was CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 15 brought to the notice of the court in this regard, as to what was the amount, as per him, which he had owed the complainant to show the version of the complainant to be unbelievable. As has already been noted above, that since the presumptions of law are already raised against the accused, him having admitted the issuance of the cheques in question, he can't just discard that burden by indulging in presenting bald reasons for dispelling the same. The explanation offered has to be supported by some sort of proof. In this regard, it shall be useful to note that in Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 : 2001 SCC (Cri) 960 also, the Hon'ble Apex Court has stated in clear terms as to what kind of rebuttal evidence is required for the accused to negate the presumptions raised against him under the NI Act. It was opined that mere reasonable and probable explanation will not suffice. The same must be supported by proof. Relevant portion from para 24 of the said judgment may be reproduced herein :
' ........ In the case of a discretionary presumption the presumption if drawn may be rebutted by an explanation which "might reasonably be true and which is consistent with the innocence" of the accused. On the other hand 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 (AIR p.CC No. 518647/16
M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 16 580, para 12)' (emphasis supplied) What can be seen from the above therefore, is that for the accused to discharge his burden of proof, he has to submit before the court something credible which can probabalise a defence in his favour. However, the accused has offered absolutely nothing in his support, other than unsubstantiated claims which do not help his case.
20.Adverting our attention now to the cross examination of the complainant, one is constrained to note that nothing so disparaging was exhumed out of it by the accused that could be said to have probabalised a defence in his favour, At the beginning, the accused sought to establish that the complainant is not the competent person to file the present case as not having filed any documents of his proprietorship. This line of argument however was completely misplaced, as the accused has himself never denied having transactions with the complainant. He has all the way everywhere stated and admitted to the business transactions between him and the complainant and hence the questioning with regards the complainant not being the proprietor or not having the competence to file the present case does not arise.
21.Then the accused questioned the complainant about the income tax returns as to whether they had been filed or not with respect to the transactions in question. This line of argument again does not hold much water since the complainant did eventually end up examining CW2 Sh. Parvinder Sabarwal, who did submit the tax returns as solicited by the accused, their veracity or otherwise shall be dealt with when the testimony of the CW2 is appreciated later. Having noted as such however, one has to also keep in mind that CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 17 the requirement of producing tax returns and other such documents can only arise when the accused has discharged his burden of proof in view of the statutory presumptions already raised against him. Without doing so, raising questions on the fact that a certain document has not been filed does not go a long way for the accused to show or prove his defence. Unless the picture created by the accused showing the circumstances of transactions is such that a serious doubt is created via a vis the version of the complainant, additional documents cannot be demanded from the complainant at the outset.
22.Subsequently the complainant was asked about Ex CW1/1 (Colly) and Ex CW1/2 (Colly), the main plank of the case, upon which the complainant's case rests. The complainant explained that these set of documents contained the name /signatures of the fabricator regarding material that used to be procured by the accused. This is the nub of the issue in as far as the case is concerned. The complainant was put suggestions that all these documents are forged and fabricated which he denied. The accused even suggested that no such transactions used to happen through any fabricator which the complainant again denied. Basically, the complainant's case was that orders used to be placed by the accused through these very fabricators and then, as in, the fabricators used to be issued slips w.r.t material to be procured, which used to be given to the complainant against which the material used to be supplied by issuing invoices. Now having a closer look at the slips and the invoices Ex CW1/1 (Colly) and Ex CW1/2(Colly), several things can be noted. First of all, almost every invoice being Ex CW1/2 (Colly) has the names of persons written upon them, which according to the complainant are those that of the fabricators. For example, at p 13 it is 'akram', at page no 16 it is 'yamen', at page no 17, it is 'akram bhai' at page 21 it is CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 18 'munir alam' and so on and so forth. There is a pattern which looks to validate the story of the complainant, that against the slips, wen the invoices used to be issues against supply, the signatures of fabricators used to be obtained. The accused denies so, but he does not offer anything further than mere denying. He does not in any way counter this narrative to show to the court that if such initials do not represent the fabricators, then what it is ? No plausible explanation is given by the accused. In fact, even with regards the contents of the invoices, the accused hasn't cared even once to show if he received or did not receive the goods so mentioned in any of them. This becomes important since the defence of the accused has been that he received goods from the complainant but had already made all payment for the same. Considering the same, he could have produced before the court such similar invoices to show as to what were the goods that he had ordered for which he had already made payment. But nothing came out from his side. Further, on a careful scrutiny of these slips and the invoices Ex CW1/1 (Colly) and Ex CW1/2 (Colly) it is also noted that at two places, even the stamp bearing word 'Jain Hosiery' is displayed, say for example on p 44 Ex CW1/1 (Colly) and p 48 Ex CW1/1 (Colly). The accused has offered no explanation whatsoever with regards these as well. Further, the slips Ex CW1/1 (Colly) have the name of the fabricator and the complainant at the top and invoices Ex CW1/2 (Colly) all have the name of the complainant (being shown to be issued from its bill book) and the name of the accused. As opposed to all this, the accused has not offered any clarification/explanation, meaning to say, with regards the correctness or otherwise of all of these, being the mainstay of the complainant's case. Surely the accused could have and should have brought before the court any sort of proof to show to the contrary to suggest that his liability toward the complainant already stood extinguished or what he was claiming CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 19 through Ex CW1/1 (Colly) and Ex CW1/2 (Colly) was totally false. However, not even a shred of evidence was brought forth. It is true that the accused may also rebut the presumptions raised against him by showing gaps in the narrative of the complainant, but even on that count, the accused has not been able to show as to how these documents are fabricated, Just to make a claim in thin air, unsupported by any means, any alternative documents does not help the accused. All in all therefore, what comes out from all of this is that the story of the complainant and the documentation seems more credible than the unsupported claims of the accused. This is to say that all the slips and the invoices being Ex CW1/1 (Colly) and Ex CW1/2 (Colly) contain the names/signatures of fabricators, the description of goods and correspondingly the invoices contain such similar details as well. As opposed to these, the accused has only averred that all of these are false and fabricated, but to buttress such a claim, has shown noting to the court to breathe life into such claims. In this scenario, when the burden is on the accused to rebut the presumptions raised against him, such total lack of any sort of evidence to the contrary does not take the defence of the accused any further and he has been totally unable to probabalise a defence in is favour on this count.
23. Other than the above, only suggestions were given to the complainant regarding falsity of his case, which were all denied. The cross examination of the complainant therefore, does not in any way dents the case of the complainant which can be said to have resulted in probabalising a defence in favour of the accused. There is absolutely noting on record brought out by the accused to merit any sort of favourable conclusion.
24.Next, we come to CW2, the brother of the complainant who stated to be carrying on the business of the complainant alongside. He CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 20 further added that slips Ex CW1/1 (Colly) used to be sent by the accused against which challan/bills/invoices Ex CW1/2 (Colly) used to be issued by him, both having details viz. fabricator sign/name of accused firm/complainant firm. All this has been noted in the foregoing discussion as well by reference to the documents on record themselves. CW2 also went on to add that credit period of up to 45-60 days used to be granted to the accused for making payment against PDCs, but gradually the accused started defaulting on his payments. Finally, with regards the amounts owed by the accused, CW2 stated that they were shown in income tax records as well, for which tax returns for AY 2017-18 Ex CW2/1 (7 pages) were also filed. The accused objected to these documents being read in evidence on the ground of not being proved by proper mode of proof. Meaning thereby, it was claimed that the returns placed on record were not originals. Ex CW2/1 contains at the first page the Acknowledgement of the return filed in the name of the complainant for the A/Y 2017-18, commonly known as ITR V. It is followed by six other pages showing computation of income and balance of the accused being shown as Rs 10,68,571/. Out of these, as is well known, the acknowledgement document is generated electronically upon successful filing of income tax return online. It also bears the acknowledgment unique no apart from being marked as 'original' return. This being the position, the accused has not cared to explain as to how the said acknowledgment document at least is fabricated. Even with regards the objection as to the mode of proof, one may note that an income tax return is a public document as per section 74 Indian Evidence Act, 1872 ('IEA') (Pragati Green Meadows and Resorts Ltd. Vs M. Praneetha (Telangana High Court) Civil Revision Petition No. 3087 of 2019 decided on 14/02/2020) admissible in evidence without formal proof through certified copies (section 77 IEA). It is true, that certified copies have not been filed. But one CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 21 may note that the said acknowledgment document can be stated to be at least a relevant document for the purposes of Section 35 of (IEA), as the document is generated and stored by the server/system maintained by the income tax department. Considering the same, even if we were to disregard the return documents on the basis that certified copies have not been filed and the computation part is also not produced in originals, the fact of the return being filed in first place as shown by the acknowledgement can still be considered relevant within the meaning of section 35 IEA. What is more important though, is that accused, apart from challenging the veracity of the figures mentioned in Ex CW2/1, hasn't on his part placed before the court any alternative one from his side. Section 103 IEA states that the person claiming a certain fact not to be, is to be proved by that very person as to wy such a fact is not to be. But here, accused has not offered any evidence with regards his version as to what was the amount that was due to the complainant which he had already paid. In such a scenario, this doesn't constitute a circumstance of the case that can be said to have probabalised a defence in favour of the accused. The objection of the accused w.r.t Ex CW2/1 (Colly) is thus decided accordingly.
25.In the above background it shall also be important to note that the Hon'ble SC as upheld in D.K. Chandel vs. Wockhardt Ltd. and Another 2020 SCC OnLine SC 265 that production of the account books/cash book may be relevant in a civil court; but may not be so in a criminal case filed under Section 138 of the N.I. Act because of the presumption raised in favour of the holder of the cheque. Meaning thereby, once the issuance of the cheques in question is admitted, the complainant is not obliged to produce documents such as income tax returns, books of accounts, statements of accounts etc to prove its credentials till until the time the accused CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 22 discharges his burden of proof. The accused is, in fact, required to furnish evidence before the court that punctures the complainant's version. Only if the accused succeeds in doing so, will the complainant then be asked to produce further evidence in his support. In such a scenario, the accuracy or otherwise of the income tax returns produced by the complainant is not totally destructive of its case, to give any sort of advantage of the accused, if he has not otherwise been successful in rebutting the presumptions raised against him.
26.Apart from the above, the cross examination of CW2 does not yield anything to the benefit of the accused. Rather, the witness explained that receipts Ex CW1/1 (Colly) & invoices Ex CW1/2 (Colly) contained signatures of the accused. On carefully examining Ex CW1/1 (Colly) also, it can be seen that there are initials of a certain letter 'A' on them, which are strikingly similar to the 'A' as contained in full signatures of the accused. Even on some Ex CW1/2 (Colly), there are such initials present, viz p 19 and 28 (copy). With regards even these, the accused has not shown, if such signatures belong to him or not, or in the alternative, if he had any receipts with him which could signify any other mode of transaction between the parties. In absence of any evidence on this point, CW2's claim seems to gel well with the overall story of the complainant. Other ta than this, only suggestions were put to the accused on various aspects of the case which were all denied. Looked at in totality, the testimony of CW2, if not adding anything dramatically to the complainant's version, then equally, it did not even subtract anything substantial too, from it, that is to say , that nothing was extracted out from his deposition that can be said to have fractured the complainant version and probabalised a defence in favour of the accused.
CC No. 518647/16M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 23
27.Another damning piece of contradiction in the version of the accused can be seen in the application u/s 145(2) NI Act dated 06.06.2018. In it, at point no. 3 and 4, it is averred that complainant had undertaken to supply goods/materials to the accused, but those were never supplied and hence, the complainant did not fulfil his obligation. This line of defence is completely novel and alien to the stand which the accused has been taking otherwise, that the complainant was already paid against whatever liability there was. This duplicity of stand exposes the make-believe story of the accused quite starkly. There is no explanation given by the accused on these differing positions, thereby impeding his chances of probabalising a defence in is favour.
28.Next, the statement of the accused u/s 313 CrPC was recorded, where similar submissions were made by the accused that he had no subsisting liability towards the complainant and everything was already paid. No new information was provided by the accused and no concrete facts were put before the court to make which could make his version believable. The claims of the accused were therefore found deficient of any supported facts which could be said to have provided a credible alternative, running opposite to that of the complainants'.
29.Finally, the accused thereafter examined himself as a witness. The whole exercise instead, ended up damaging further his own version, and rolled it into more depths of uncertainties. In his examination in chief, the accused stated that his business was closed in 2013 and consequently, dealings with the complainant too, had ceased to exist in 2013 itself. Noting however was placed before the court to give roots to this claim. No bank account statements, no entries of dealings with the complainant, no proof of any payment made to the complainant or any such similar detail CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 24 was brought to the notice of the court. Considering the same, as has been the case throughout, the accused failed to provide any sort of teeth of reality to his version.
30.The accused further stated that he had demanded back on several occasions from the complainant his security cheques, but the request was never heeded to. At the cost of repetition, one is constrained to note that this again was just a claim, with no corroborative material. Lastly, the accused also filed Ex DW1/A (Colly) and Ex DW1/B (Colly) - copies of another case u/s 138 NI Act and a civil suit filed by the complainant respectively, against the accused and his wife. These proceedings undertaken by the complainant against the accused however, strengthen the argument of the complainant that being a vigilant litigant, he has undertaken timely proceedings against the accused at all levels. How has filing of such cases prejudiced the case of the complainant here, was not shown by the accused in any manner and hence, Ex DW1/A and Ex DW1/B do not alter anything with regards the merits of the present matter.
31.The accused was thereafter cross examined at length by the Ld. Counsel of the complainant. At every instance however, the accused had only words to offer and no belief-worthy evidence. The accused stated that he used to place orders with the complainant telephonically and not through any fabricators. This is despite the fact that complainant has placed on record slips and invoices Ex CW1/1 (Colly) and Ex CW1/2 (Colly). Instead of contradicting these documents by something tangible, the accused made an uncorroborated claim only. Interestingly thereafter, the accused admitted to his dealings with the brother of the complainant, Parvinder Sabarwal. This becomes important as CW2 Parvinder Sabarwal also deposed on similar lines of having CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 25 dealings with the accused. More importantly, the accused further stated that a signed copy of invoice used to be returned and another one used to be kept by him for any orders that used to be placed with the complainant. No such copy as been produced by the accused that he would have had in his possession. The accused, to show his bonafides could have at least shown something, some invoice, some copy that could have given the court an idea as to what sort of an invoice that the accused is claiming, which used to be issued. That could have enabled the court to compare the documents produced by both the parties to arrive at some sort of opinion, other than what is being professed by the complainant now. All this would have ensured the benefit of the accused only and could have gone a long way in probabalising a defence in his favour to rebut the presumptions of law raised against him. But not to be, and nothing was ever produced by him.
32.Subsequent to the above, the accused described in much detail the modes of payment by which the payment used to be made to the complainant, i.e. at times 3rd party payments made to complainant directly, at times by cash, at times instant against cheques and so on. None of these modes, however is supported by any sort of statement of account, any sort of ledger entry or for that matter any sort of document from which such payments could be verified, even if not in full, but at least partially. But nothing came to be shown by the accused. When the complainant asked of the accused to furnish details in this regard, he merely stated that since all such transactions were trust based, therefore he had no documentary proof for that. Even with regards payment made via 3rd parties, the accused excused himself by stating that since in 2015 he had already wound up his business, there was no documentation available with him regarding that. This is so hard to believe that person who's running a business, even if he were to CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 26 discontinue the same, would have not even a single document with him to show in its support of that business ? Is anyone so naïve ? Seen from a reasonable person's point of view, this does not seem to be the conduct in usual course of things expected out of a reasonable man. In this manner therefore, nothing is there before the court to validate any of the claims of the accused, short of which there is totally no circumstance which can be said to have probabalised a defence in his favour.
33.Even with regards the bank accounts used to be maintained by the accused, he stated that since the complainant did not wish to subject the goods/material sold to its proper rate of taxation, the account in the name of accused firm Jain Hosiery was not used to be made the medium of payment and instead his own account, jointly in name of his wife was utilized. He also mentioned, that at times his account at ICICI Bank for also used for these purposes. Again however, nothing related to any of these accounts has been produced by the accused on the ground that since his business already stood wound up previously, so he did not have any details with regards any of these. Law favours the vigilant and not the indolent. If the accused is not even able to furnish any sort of information about any of his bank accounts also, then one cannot expect to believe his version for the asking of it. No bank branch details, no account details, no transaction details, absolutely noting. Bereft of any accompanying documents or evidence that could throw some ray of light on his totally unsupported version, the accused has been unsuccessful in putting forth any defence to rebut the presumptions of law raised against him.
34.One more important point to note with regards cross examination of the accused was that he admitted therein that PDC cheques used to be handed over after signing and also after filling in them the CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 27 amounts, both alphabetically and numerically. On the contrary, during the entire trial, accused has taken up the plea that he had given the cheques in question to the complainant after signing them only and nothing more. Clearly, there are contradictions in these stands and it is unclear as to under what circumstances were the cheques used to be given after filling in the amount as well and how does therefore it square up with the claim of the accused that the cheques in question were given after signing only. Such contrary statements of the accused do not inspire confidence and on the other hand indicates there being something fishy.
35.Apart from the above, all other suggestions of the complainant were denied by the accused, but just that. Noting was explained beyond the proverbial denial, & that did not move the defence of the accused even one step ahead of the starting line, as it were.
36.Having looked at the totality of the evidence of the accused, one can conclude that there are only assertions, and no cushions to support such assertions. In such a scenario, it is quite clear that the accused has not been able to discharge the burden of proof placed upon him on the touchtone of Kishan Rao (supra) and Hiten P. Dalal (supra). In such circumstances, it won't be out of place to say that he has fallen short of probabalising a defence in his favour to pass muster on the scale of preponderance of probability.
37.Lastly, one would like to deal with some of the submissions made by the Ld. Counsel of the accused at the stage of final arguments, which one must hasten to add, were not impressed upon during the cross examination of the complainant witnesses or complainant himself to extract out contradictions. That would have been the more appropriate stage to out them across, but not to be. Be that as it may, they may be discussed irrespective. The Ld. Counsel CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 28 points out that the complainant has not furnished any proper statement of account showing the total balance outstanding against the accused. One may disagree with such a contention by noting that the accused was duty bound instead to rebut the rebuttable presumption u/s 118 NI Act of there being a valid legal debt. The complainant has based its case upon slips and invoices Ex CW1/1 (Colly) and Ex CW1/2 (Colly), which have largely remained unrebutted or challenged insufficiently, as is evident from the foregoing discussion. In such circumstances, the accused has failed to show the non-existence of a subsisting liability qua him. Also, as noted above already in D.K. Chandel (supra), the complainant is not required to prove his case as in a civil litigation by brining books of accounts. Once the issuance of the cheques in question is accepted by the accused, he has to negate the presumptions of law raised against him as to show, that under what circumstances the said cheques came in the possession of the complainant. If he is able to put forward a trustworthy case, only then will the complainant be required to prove his case beyond reasonable doubt, and not before. In the facts and circumstances of the case at hand, the accused as been unable to do so.
38.Next, the Ld. Counsel for the accused pointed out that all the cheques in question pertain to a continuous time period with 15 days gap in between and that too for an amount of Rs. 1 Lakh each, whereas the invoices filed by the complainant are mostly in thousands. Both of these submissions do not however, go very far. Nowhere has the complainant stated that he has claimed payment on matching basis with the invoices. As per him, there was a certain amount due against the accused, out of which the cheques in question were given for making payment. The complainant has also pointed out that the cumulative amount of all the invoices Ex CW1/2 (Colly) is much more than Rs 7 Lakh, and hence payment CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 29 can very well be understood to mean part of that whole amount due. With respect to the cheques bearing dates with a 15 day gap, it is to be noted that there is no abnormality specifically with regards such being the position. The version of the complainant otherwise, does not look to be entirely unbelievable that the said cheques were given for payment for the outstanding amount. Also, nothing explicitly contrary has been highlighted or proved by the accused also vis-à-vis this. For lack of contrary proof on this aspect, the complainant's version cannot be found fault with. Moreover, the complainant's view is also fortified by another fact, that 2 out of the 7 cheques in question, were in fact presented again for payment, after informing the accused that they had been dishonoured on the assurances of the accused, but when they were presented again for encashment, they were dishonoured for the second time as well. This is proved by two separate return memos filed being Ex CW1/14 (colly). Again, nothing impugning this submission of the complainant also has been pointed out by the accused as to how and what circumstances, the said two cheques were presented again for encashment. Even on this count therefore, there is no convincing explanation against the complainant to discredit his version.
39.Lastly, the Ld. Counsel also pointed out invoice at page 19 Ex CW1/2 (Colly) to assert that the said bill mentions so many previous bills and states the amount well in excess of Rs 6 Lakh in one go. He submits that the said bill looks completely fabricated. As has already been mentioned several times above, in view of the presumptions raised against the accused u/s 139 r/w 118 NI Act, it was upon the accused to rebut the claim of the complainant by way of leading credible evidence. More so, in view of Sections 101-103 IEA, it was upon the accused to discard the burden of proof with respect to any fact in issue that he so wished to contest. Having CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 30 not done do, just by pointing at certain document and doubting the same does not serve any purpose in as far as the accused is concerned. In fact, all these points, flagged by the Ld. Counsel should have been put to the complainant and CW2 specifically during their respective cross examinations to bring out contradictions and inconsistencies, if any. Having not done so specifically, or not having extracted out circumstances of case that could have helped the accused in building up a credible defence, at the final arguments stage now, just by pointing them out, with no proof to back such claims, does not help the accused. Since his version does not gets sufficiently probabalised, there is no occasion now to merely point out these issues at such belated stage. Evidence was required to be led on these points, which was never done.
40.As can be seen from the foregoing discussion, as prolix as it as been, the accused has remained woefully short in rebutting the presumptions raised against him.
41.In view of the aforesaid reasons, this court finds that the accused persons have not been able to prove any probable defence and have failed to rebut the presumptions raised u/s 118/139 of the NI Act.
42.The complainant has been able to prove that the cheques in question were issued in discharge of a valid legally recoverable liability owed to the complainant with the aid of presumptions of law raised in his favour.
43.The accused is hence Convicted for the offence punishable U/s.
CC No. 518647/16M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries 31 138 of the Negotiable Instruments Act in respect of the cheques in question. Digitally signed GAURAV by GAURAV SHARMA (Announced in open SHARMA Date: 2020.09.23 14:13:22 +05'30' Court in 22.09.2020) (Gaurav Sharma) MM/NI Act-03/Central.
22.09.2020 Judge Code: DL00855 CC No. 518647/16 M/s PEE Sabharwal Traders Vs. M/s Jain Hosiery Industries