Delhi District Court
Case Titled As 'C.C Alavi Haji vs . Palalpetty Muhammed & Anr.', Reported on 2 September, 2020
IN THE COURT OF MS. AKRITI MAHENDRU, MM04 (NI ACT)
CENTRAL DISTRICT, TIS HAZARI COURTS, DELHI
CC No. : 511309/16
U/s : 138 NI Act
JUDGMENT
a The Sl. No. of the case : 511309/16
b The date of Institution of the case : 23.05.2016
c The name of complainant : M/s. Mukat Lal Naresh
Kumar, Through Prop.
Sh. Naresh Kr. Gupta,
5074, Rui Mandi,
Sadar Bazar, Delhi.
d The name of accused : M/s. Goyal Sugar Co.
Through Prop. Sh.
Mool Chand Goyal
B2, North Chajjupur,
Shahdara, 100 Ft.
Road, Delhi.
Also at, C425 100 Ft.
Road, Chajjupur,
Shahdara, Delhi.
e The offence complained of : 138 NI Act
f The plea of accused : Pleaded not guilty
g The final order : Convicted
h The date of judgment : 02.09.2020
JUDGMENT
1. Vide this judgment and final order, this Court shall dispose of the present complaint case instituted by the Complainant invoking the provisions of Section 138 of the Negotiable Instruments Act, 1881 (as amended to date).
C.C. No. 511309/16 Page 1 of 152. Succinctly speaking, the facts giving rise to the instant complaint case may be enumerated as hereafter: Complainant, qua the proprietor of M/s. Mukat Lal Naresh Kumar, is engaged in the business of wholesale supply of sugar procured from different sugar mills on commission basis; whereas, the Accused, being engaged in the same trade, had allegedly purchased goods from the former on 29.02.2016 vide Bill No.SU004261 and issued the cheque bearing no.717810 dated 03.03.2016 in the sum of Rs.5,27,200 / (rupees five lacs twenty seven thousand two hundred only) drawn on Delhi State Cooperative Bank Ltd., Durgapuri Chowk, Chajjupur, Delhi Branch (hereinafter referred to as the "impugned cheque" for the sake of brevity) towards partial discharge of the aforementioned liability. Reportedly, upon presentation, the impugned cheque was returned dishonored owing to the reason "Funds Insufficient" vide bank return memo dated 10.03.2016. Thereafter, the statutory demand notice dated 30.03.2016 issued to the Accused at the behest of the Complainant fell on deaf ears inasmuch as evoked neither reply nor compliance. The Complainant was thereby, constrained to institute the present complaint case.
3. The Complainant tendered his pre summoning evidence by way of affidavit Ex.CW1/1 ; and relied upon documents, to wit -Copy of Invoice (Mark B), Cheque (Ex.CW1/C), Bank Returning Memo (Ex.CW1/D), Legal Demand Notice (Ex.CW1/E), Postal/Delivery Receipt (Ex.CW1/F & G (Colly)) and undelivered legal notice (Ex.CW1/H). Thereupon, the Accused was summoned vide summoning order dated 23.05.2016.
4. Upon appearance, notice under Section 251 of the Code of Criminal Procedure, 1973 was framed against the Accused during the course of C.C. No. 511309/16 Page 2 of 15 proceeding dated 23.09.2017 to which the Accused, inter alia, pleaded not guilty and claimed that the impugned cheque had been stolen from his shop in the year 2015 itself which fact was duly reported to the police. Accordingly, the Accused denied the liability for the amount entailed in the impugned cheque.
5. Thereafter, application filed by the Accused under Section 145 (2) of the Negotiable Instruments Act, 1881 (as amended to date), seeking opportunity to cross examine the Complainant and his witness(es) was dismissed / disallowed vide order dated 03.11.2017.
6. Thereafter, the Accused was examined in the exercise of power under Section 313 of the Code of Criminal Procedure, 1973 wherein, he took a complete volteface inasmuch as averred that the impugned cheque was issued by him as security to the Complainant for purchase of sugar, however, since the goods, i.e. sugar, turned out to be of substandard quality, the Complainant refused to return the impugned cheque despite return of goods to him and instead, threatened to implicate the Accused in a cheque dishonour case, i.e. instant CC. In this backdrop, the Accused expressed his willingness to lead defence evidence.
7. The Accused adduced three defence witnesses, namely - himself qua DW1, Sh. Rohit Aggarwal qua DW2 and Sh. Saleem qua DW3.
8. DW1 tendered his evidence by way of Affidavit (Ex.DW1/1) wherein, he deposed that he had good business relations with the Complainant and as a matter of trade practice, he used to give cheques to the C.C. No. 511309/16 Page 3 of 15 Complainant for security of the goods purchased. The former claimed that, on 29.02.2016, he had received substandard quality sugar from the former which was returned to the godown of the Complainant, however, this led to an altercation between them whereby the Complainant allegedly threatened to falsely implicate the Accused in a cheque dishonor case. The witness deposed that it was in pursuance of the threat that the Complainant presented the impugned cheque for encashment. DW1, in his affidavit, rendered an explanation as to the stand taken by him in the notice framed under Section 251 of the Code of Criminal Procedure, 1973 and claimed that the statement was made by him as he was under the impression that the impugned cheque was the one that got stolen from his shop and not the one given by him as security to the Complainant. During the course of his crossexamination, DW1 reiterated that he had purchased sugar from the Complainant which was returned by him due to quality issues, nonetheless, conceded that no receipt / acknowledgement was taken from the Complainant which could evidence their return to him. DW1 admitted the Invoice (Mark B), however, pointed out the variance between the amount borne on the Invoice (Mark B) (i.e. Rs.5,24,000/) and the amount entailed in the impugned cheque (i.e. Rs.5,27,200/). He further conceded that no mail / correspondence was sent by him to either M/s. Modi Sugar Mills or to the Complainant apprising it / him about the substandard quality of sugar purportedly received by the Accused. The witness however claimed to have brought the fact to the notice of the Complainant over the telephone. The witness testified that the impugned cheque was given by him as security to the Complainant 1/3 years before the date of the transaction but denied that the issue regarding quality of sugar was required to be communicated to the sugar mill so as to enable them send a quality surveyor.
C.C. No. 511309/16 Page 4 of 159. DW2 (Sh. Rohit Aggarwal) is the Manager of the Accused firm. He tendered his evidence by way of Affidavit (Ex.DW2/A) wherein, he reiterated the version put forth by DW1 in his testimony. During the course of his crossexamination however, DW2 deposed that he has been working with the Accused firm for the last 10/12 years as a Manager and is the nephew of the Accused.
10. DW3 (Sh. Saleem) tendered his evidence by way of Affidavit (Ex.DW3/A) and he too reiterated the version put forth by DW1, though added that he is privy to the altercation that occurred between the Accused and the Complainant over the telephone. DW3 deposed that he was the driver of the truck bearing No. DL1GC1509 in which he had brought the sugar from Modi Sugar Mills at the instance of DW2 and that the goods were returned at the godown of the Complainant situated at Anaj Mandi, Shahdara, Delhi as per the instructions of DW2. The witness however failed to recall the exact address of the godown, albeit claimed that a person called Mukesh was present in the godown at the time.
11. Final arguments were advanced with equal vehemence on behalf of either parties hereto. While it was contended on behalf of the Complainant that the Accused has failed to displace the statutory presumptions envisaged under Section 118 read with Section 139 of the Negotiable Instruments Act, 1881 (as amended todate) and therefore, liable to be convicted for the commission of offence under Section 138 of the Negotiable Instruments Act, 1881 (as amended todate); the Accused, per contra, argued that the foregoing statutory presumptions have been cogently rebutted inasmuch as the Complainant has himself failed to establish the existence of any legally C.C. No. 511309/16 Page 5 of 15 enforceable debt thereby, failed to satisfy the most essential requirements to constitute commission of an offence under section 138 of the Negotiable Instruments Act,1881.
12. This Court shall now proceed to examine the position of law governing the facts peculiar to the instant CC.
13. Law is rather trite on the subject that following ingredients must be satisfied in order to bring home the guilt of a person accused for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881. This position of law has been observed by the Hon'ble Supreme Court of India in the matter of 'Jugesh Sehgal v. Shamsher Singh Gogi', reported as (2009) 14 SCC 683:
"9. It is manifest that to constitute an offence under Section 138 of the Act, the following ingredients are required to be fulfilled:
(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;
(ii) The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
(iii) that cheque has 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;
(iv) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;C.C. No. 511309/16 Page 6 of 15
(v) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(vi) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice."
The abovementioned proposition of law was reiterated by the Hon'ble Supreme Court in the matter of 'Aparna A. Shah v. M/s Sheth Developers P. Ltd & Anr.', reported as (2013) 8 SCC 71.
14. Admittedly, apart from disputing his liability owing to return of the alleged substandard quality of goods, no other ingredient enumerated hereto fore has been contested by the Accused during the course of the trial of the instant CC. Legally speaking, and taking into account the statutory presumptions leaning in favor of the Complainant and against the Accused, the onus is on the latter to rebut them, not to mention discharge the burden of proving that he is not indebted to the former in the tune of the amount entailed in the impugned cheque.
15. At this stage, it is deemed germane to reproduce the statutory presumptions applicable to the facts entailed in the instant CC, namely - those envisaged under Section 20, Section 118 and Section 139 of the Negotiable Instruments Act, 1881 (as amended todate).
C.C. No. 511309/16 Page 7 of 15(Section 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 the case may be, upon it a negotiable 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.
(Section 118) Presumptions as to negotiable instruments: Until the contrary is provided, 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 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 indorsements - that the indorsements 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;
C.C. No. 511309/16 Page 8 of 15(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 obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor 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.
(Section 139) Presumption in favor of holder - It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
Applying the foregoing legal exposition to the facts of the instant case, this Court shall now proceed to examine the competing pleas raised by the parties hereto.
16. The first plea raised on behalf of the Accused is regarding the non receipt of the legal demand notice on the strength of which the Ld. Counsel of the Accused has argued that the instant CC is liable to be dismissed as the ingredients constituting an offence under Section 138 of the Negotiable Instruments Act, 1881 are not attracted until service of the statutory notice is established on record; and since the Complainant has tendered no cogent proof therefor, the Accused is entitled to be acquitted.
17. Perusal of the record however reveals that the legal demand notice dated 30.03.2016 was returned undelivered and yet, it is nobody's case that C.C. No. 511309/16 Page 9 of 15 the Accused tendered the amount entailed in the impugned cheque presently (or within 15 days) upon entering appearance either, in spite of receipt of summons issued by this Court in the instant CC. At this stage, the observations made by the Hon'ble Supreme Court of India in the celebrated case titled as 'C.C Alavi haji Vs. Palalpetty Muhammed & Anr.', reported as (2007) 6 SCC 555 spring to mind which reads as under:
"It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation."
In this backdrop, the plea seeking acquittal of the Accused on account of nonreceipt of the statutory demand notice is liable to rejected as being as much specious as legally inconsequential.
18. The second plea raised on behalf of the Accused is that the impugned cheque was a security cheque, not issued toward discharge of any legally C.C. No. 511309/16 Page 10 of 15 enforceable debt or liability. After many flipflops, it is the defense of the Accused that the impugned cheque was handed over by him to the Complainant around 1/3 years before the date of the transaction in question in accordance with the customary trade practices between the parties hereto. Admittedly, the parties have had longstanding business dealings which warranted maintenance of a running account hence, the praxis of security cheques as much to guarantee timely payments of goods traded in the past as also to evoke confidence visàvis future transactions. Apropos of this plea, i.e. regarding the impugned cheque being limited for the purpose of security, it is profitable to recount the observations of the Hon'ble High Court of Delhi rendered vide judgment dated 14.05.2015 in the case of 'Suresh Chandra Goyal v. Amit Singhal' bearing Crl. L.P. No. 706/2014 "...It makes no difference whether, or not, there is an express understanding between the parties that the security may be enforced in the event of failure of the debtor to pay the debt or discharge other liability on the due date. Even if there is no such express agreement, the mere fact that the debtor has given a security in the form of a post dated cheque or a current cheque with the agreement that it is a security for fulfillment of an obligation to be discharged on a future date itself, is sufficient to read into the arrangement, an agreement that in case of failure of the debtor to make payment on the due date, the security cheque may be presented for payment, i.e. for recovery of the due debt. If that were not so, there would be no purpose of obtaining a security cheque from the debtor. A security cheque is issued by the debtor so that the same may be presented for payment. ..."
In view of the aforementioned observations the plea of the Accused is rejected as being frivolous and devoid of any merit.
19. The third and final plea raised by the Accused is twofold, namely -
C.C. No. 511309/16 Page 11 of 15one, that since the goods received by the Accused were of inferior quality which were returned to the Complainant, the liability against the Invoice (Mark B) no longer stands; and secondly, that fact that there is an apparent variance between the amount due in terms of the aforesaid Invoice, on the one hand, and the amount entailed in the impugned cheque, on the other, is rather conclusive not only of the fact that the impugned cheque was not issued toward discharge of the aforesaid Invoice but also that the ingredient as regards presumption of liability stood disproved.
20. Insofar as the second limb of the aforesaid argument is concerned, the Ld. Counsel for the Complainant has explained that the variation is actuated by the fact that the amount entailed in the impugned cheque is inclusive of not only of the amount involved in the Invoice (Mark B) but also that which was already due from the Accused before the date borne on the said Invoice. And since the Accused already forfeited his opportunity to crossexamine the Complainant vide order dated 03.11.2017, the Complainant had no occasion to explain the variance on record. Furthermore, running accounts were admittedly in vogue between the parties; neither the Accused filed his running statement on record nor approached this Court seeking direction against the Complainant for production of running account statement maintained by the latter visàvis the former likewise in order to displace the statutory presumptions envisaged under Section 118 read with Section 139 of the Negotiable Instruments Act, 1881. As a matter of fact, the Accused has nowhere asserted that he had discharged every liability toward the Complainant but the one entailed in the Invoice (Mark B) so as to render the variance of consequence. Au contraire, the fact that the impugned cheque was allegedly lying with the Complainant for the last 1/3 years before the C.C. No. 511309/16 Page 12 of 15 date borne on Invoice (Mark B) is a testament of a subsisting and ongoing dues, for else what prevented the Accused to seek its return if all past dues had been discharged. Having failed to do either, this Court is not inclined to return a finding that the Accused has displaced the presumption as regards the quantum of liability, more so when clearly the statutory burden is cast upon him to be discharged. Apropos thereof, in addition to the Sections 118 and 139 of the Negotiable Instruments Act, 1881, it is deemed germane to recount the provisions of Sections 102, 103 and 106 of the Indian Evidence Act, 1872 which read as infra:
"102. On whom burden of proof lies The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.
103. Burden of proof as to particular fact The burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.
106. Burden of proving fact especially within knowledge When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him"
21. And insofar as the first limb of the third plea is concerned, admittedly, apart from adducing interested witnesses, namely - DW2 and DW3, the Accused had failed to reinforce his pleas - either with respect to alleged goods being substandard or that he returned them as imputed, for admittedly, no receipt / acknowledgement has come on record which could manifest / corroborate the return of goods received by the Accused vide Invoice (Mark B). Not only this, all this time, it did not even once occur to the Accused to either seek return of the impugned cheque or issue stop C.C. No. 511309/16 Page 13 of 15 payment instructions to his banker thereagainst, not to mention that no notice was ever sent in spite of the fact the return of goods remained unacknowledged all along. Having said that, the overall conduct of the Accused in the entire transaction defies all that is expected from a reasonable prudent man, for it is difficult to fathom that why would, after accepting delivery of goods, a person would send them back without taking any written acknowledgement whatsoever, more particularly in the wake of the fact that both the parties had an altercation over the phone whereby the Complainant allegedly intimidated the Accused to implicate him in a dishonor of cheque case. Having said that, once the receipt of goods stood admitted by the Accused, the burden, inter alia by dint of Sections 102, 103 and 106 of the Indian Evidence Act, 1872, was cast on him to demonstrate that the same were duly returned as alleged to avoid the liability thereagainst.
22. The Accused has therefore, failed to prove not only that the goods received by him vide Invoice (Mark B) were ever returned as alleged but also that he is not indebted to the Complainant in the tune of the amount entailed in the impugned cheque. The pleas stand decided accordingly.
23. All in all, the collective import of the forgoing exposition lends an irresistible inference that the entire defence of the Accused is disingenuous and feigned, not to mention incredulous. Therefore, this Court has no hesitation in holding that the Accused has miserably failed to displace the statutory presumptions envisaged in the Negotiable Instruments Act, 1881 (as amended to date) leaning in favor of the Complainant in accordance with law, that is to say, on the touchstone of preponderance of probabilities, and therefore, the Complainant is entitled to derive the benefit of the same C.C. No. 511309/16 Page 14 of 15 inasmuch has proved his version in the light of the dicta rendered by the Hon'ble Supreme Court of India in the matter of 'Laxmi Dyechem v. State of Gujarat' reported as (2012) 13 SCC 375 wherein, it has been held as infra:
"...If however, the accused/drawer of a cheque in question neither raises a probable defence nor able to contest existence of a legally enforceable debt or liability, obviously statutory presumption under Section 139 of the NI Act regarding commission of the offence comes into play if the same is not rebutted with regard to the materials submitted by the complainant...."
24. Upon due circumspection of the totality of foregoing facts and circumstances, including but not limited to scrutiny of material available on record in the adumbral of the legal position governing the field, this Court is of the considered opinion that the Accused has not been able to sufficiently rebut as much the statutory presumptions leaning against him as the version put forth by the Complainant vide his complaint. This Court hereby, convicts the Accused for the commission of offence under Section 138 of the Negotiable Instruments Act, 1881 complained of by the Complainant in the instant CC. Digitally signed by AKRITI AKRITI MAHENDRU MAHENDRU Date: 2020.09.02 14:24:22 +0530 Announced in the open (AKRITI MAHENDRU) Court on 02.09.2020 MM04 (NI Act) Central, THC, Delhi.
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