Delhi District Court
Ms R. Sethi And Sons vs Ms Aman Deep Trading Co. And Anr on 6 March, 2024
IN THE COURT OF MS. DIVYA GUPTA, MM-05
(NI ACT)/ CENTRAL/THC/DELHI
In case of:-
M/s R. Sethi & Sons
Proprietor of Sh. Hemant Sethi
At-695/2, IInd Floor,
Bagh Deewar, Katra Neel,
Chandni Chowk, Delhi ...... Complainant
Versus
1. M/s Aman Deep Trading Co.
Authorized Signatory
Sh. Surjit Singh
At: Bazar Peer Bodla,
Jalandhar City, Punjab
2. Surjit Singh
Authorized Signatory
M/s Aman Deep Trading Co.
At: Bazar Peer Bodla,
Jalandhar City, Punjab ......Accused
JUDGMENT
a) Sl. No. of the case : 514816/2016
b) CNR no. : DLCT02-002884-2016
CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 1/14
c) Date of institution of the case: 30/01/2016
d) Offence complained of : 138 NI Act
e) Plea of the accused : Pleaded not guilty
f) Arguments heard on : 01.02.2024
g) Final order : Convicted
h) Date of Judgment : 06.03.2024
BRIEF STATEMENT OF REASONS FOR DECISION OF THE CASE:-
FACTUAL MATRIX-
1. This is a complaint case filed under Section 138 of Negotiable Instrument Act, 1881 (hereinafter referred to as "NI Act") by M/s R. Sethi & Sons through its proprietor namely Sh. Hemant Sethi (complainant) against M/s Aman Deep Trading Co. through authorized signatory Sh. Surjit Singh (accused) in respect of one cheque bearing no.
161105 dated 02/12/2015, amounting to Rs. 1,57,151/-, drawn on Bank of India, Adda Bastian Branch, 22, Shakti Nagar, Basti Road, Punjab-144001 (hereinafter called "the cheque in question"). The facts of the case, as alleged by the complainant, are as follows:
a. That the complainant is a manufacturer and wholesaler of unstitched suits fancy materials and accused had purchased fabrics, salwar-kurta suits etc. from the complainant on several dates and invoices were raised by complainant. Further that accused had made part payment against the invoices and amount of Rs. 1, 57,151/- as per ledger of complainant was outstanding against CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 2/14 the accused. When complainant asked the accused to pay the remaining outstanding amount, the accused issued the cheque in question against the said outstanding amount in favour of the complainant. However, same was dishonoured on presentation for reasons "insufficient funds" via returning memo dated 17/12/2015.
c. Thereafter, legal demand notice dated 13/01/2016 was sent to the accused through speed post. That despite due service of notice, the accused failed to make the payment and hence, the present complaint.
PROCEEDINGS BEFORE THE COURT-
2. Pre-summoning evidence was led by the complainant. On prima facie case being made out against the accused, cognizance was taken and accused was summoned for an offence punishable under Section 138 of the Act.
3. Accused entered appearance. The particulars of the offence and substance of accusation as per provisions of Section 251 Cr.P.C. was explained to accused on 08.08.2017 to which accused pleaded not guilty and claimed trial. In his defence recorded on the same day, accused stated "I have not given any cheque to the complainant. I have given the cheque in question to one agent Mr. Vinod Jain. The cheque in question was blank signed cheque. I have no concern with the complainant"
CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 3/14
4. Thereafter, complainant led his evidence and adopted his pre-summoning evidence by way of an affidavit which is Ex. CW1/A. He relied upon the following documents: -
Ex. CW1/1 (colly): Original invoices Ex. CW1/2: Copy of ledger account Ex. CW1/3: Original cheque no. 161105 Ex. CW1/4: Return memo dated 17/12/2015 Ex. CW1/5: Legal Notice dated 13/01/2016 Ex.CW1/6: postal receipt Ex. CW1/7 (colly): tracking report CW1 in his affidavit reiterated the contents of the complaint. CW1 was cross-examined by Ld. Counsel for accused on 09/09/2019 and discharged. Thereafter, CE was closed on the same day.
5. Thereafter statement of accused was recorded U/s 313 Cr.P.C. on 21/10/2019 wherein accused denied issuing the cheque in question to the complainant. Further in his defence the accused stated "the cheque in question was given to one Mr. Vinod Kumar Jain as I used to deal with him. I do not know how the impugned cheque got into the possession of the complainant. I do not have any connection with Amandeep Trading Co. The cheque in question bears my signature only. I did not filled the rest of the details".
6. Thereafter matter was fixed for defence evidence.
The accused got Sh. Pradeep Arora examined as DW1. DW1 was discharged and DE was closed on 10/05/2023.
INGREDIENTS OF THE OFFENCE AND DISCUSSION-
7. At this stage, it would be apposite to discuss the relevant provisions of law in order to ascertain the legal CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 4/14 standard required to be met by both the parties. In order to establish an offence under Section 138 of Negotiable Instrument Act, the complainant must prove the following ingredients:-
First Ingredient: The cheque was drawn by a person on an account maintained by him for payment of money and the same is presented for payment within a period of 3 months from the date on which it is drawn or within the period of its validity;
Second Ingredient: The cheque was drawn by the drawer for discharge of any legally enforceable debt or other liability;
Third Ingredient: The cheque was returned unpaid by the bank due to either insufficiency of funds in the account to honour the cheque or that it exceeds the amount arranged to be paid from that account on an agreement made with that bank;
Fourth Ingredient: A demand of the said amount has been made by the payee or holder in due course of the cheque by a notice in writing given to the drawer within thirty days of the receipt of information of the dishonour of cheque from the bank;
Fifth Ingredient: The drawer fails to make payment of the said amount of money within fifteen days from the date of receipt of notice.
CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 5/14 APPRECIATION OF EVIDENCE-
8. The accused can only be held guilty of the offence under Section 138 NI Act if all of the above-mentioned ingredients are proved by the complainant-
(i) There is no dispute qua the fact that the cheque in question (Ex. CW1/3) was drawn by the accused on the account maintained by him and the same was presented for encashment within its validity period. Thus, first ingredient stands proved.
(ii) It is also not disputed that the cheque in question was dishonoured due to "funds insufficient". Thus, third ingredient stands proved.
(iii) With respect to the fourth ingredient, the accused has not denied receiving of the legal demand notice. Thus, the fourth ingredient also stands proved.
(iv) There is no dispute either with respect to fifth ingredient. As such, the first, third, fourth and fifth ingredients of the offence under section 138 NI Act stands proved against the accused.
9. Thus, the only remaining ingredient of the offence under Section 138 NI Act and which is the main bone of contention between both the parties is that whether there was any legally enforceable debt or liability of the accused towards the complainant. In the present case, the issuance of the cheque in question is not denied and the accused has admitted his signature on the cheque. As per the scheme of the NI Act, once the accused admits signature on the cheque in question, certain presumptions are drawn in favour of the complainant, which result in shifting of onus.
CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 6/14 Section 118(a) of the NI Act lays down the presumption that every negotiable instrument was made or drawn for consideration. Another presumption is enumerated in Section 139 of NI Act. This provision lays down the presumption that the holder of the cheque received it for the discharge, in whole or part, of any debt or other liability.
10. The combined effect of these two provisions is a presumption that the cheque was drawn for consideration and given by the accused for the discharge of debt or other liability. Both the sections use the expression "shall", which makes it imperative for the court to raise the presumptions, once the foundational facts required for the same are proved. Reliance is placed upon the judgment of the Hon'ble Supreme Court, Hiten P. Dalal vs. Bratindranath Banerjee (2001) 6 SCC 16.
11. Further, it has been held by a three-judge bench of the Hon'ble Apex Court in the case of Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The principles pertaining to the presumptions and the onus of proof were recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC418 as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 7/14 summarize the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption 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 preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
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 defence."
12. Section 139 NI Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. The reverse onus clauses usually CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 8/14 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 NI Act, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. 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.
13. As discussed herein above, under Section 139 NI Act strong rebuttable presumptions in favor of the complainant arises but same can be rebutted by the accused by way of credible defense.
DEFENCE OF THE ACCUSED:-
14.In the present matter the accused has raised defence that he had given the blank signed cheque in question to one person named Mr. Vinod Kumar Jain with whom accused had business dealings and that accused has no connection with M/s Amandeep Trading Company and that he is not the proprietor of the said firm.
ARGUMENTS BY BOTH THE PARTIES:-
15. It was argued by the Ld. Counsel for complainant that accused has admitted his signatures on the cheque in question and he has failed to explain how the said cheque CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 9/14 came into the possession of the complainant. Further that accused did not come into the witness box to get himself examined nor was Mr. Vinod Kumar Jain summoned for examination by the accused to prove his defence. It is further argued by the Ld. Counsel for the complainant that there is nothing on record to rebut the presumption raised against the accused and prayed for conviction.
16. Per contra argued by the Ld. Counsel for accused that the complainant has failed to prove that the accused is the sole proprietor of M/s Amandeep Trading Company. Hence accused is not liable for the dealings of M/s Amandeep Trading Company with the complainant and prayed for acquittal.
COURT'S OBSERVATION AND DECISION OF THE CASE:
17. In the present matter, the case of complainant is that accused had purchased fabrics, salwar-kurta suits etc. from the complainant on several dates and invoices were raised by complainant. Further that accused had made part payment against the invoices and amount of Rs. 1, 57,151/- as per ledger of complainant was outstanding against the accused and cheque in question (Ex. CW1/3) was issued in discharge of that liability. To prove his case, the complainant got himself examined as CW1 and same fact was reiterated by the complainant in the evidence filed by way of an affidavit which is Ex. CW1/A. Further complainant has filed on record original invoices which are Ex. CW1/1(colly) and ledger account for period 01.04.2013 to 02.01.2016, which is Ex. CW1/2, showing CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 10/14 outstanding liability of accused towards complainant of Rs. 1,57,151/-.
18. On the other hand, accused has admitted his signature on the cheque in question (Ex. CW1/3). The NI Act provides for two presumptions, one under Section 118 of the Act, which directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Further, under Section 139, which stipulates that unless the contrary is proved, it shall be presumed that the holder of the cheque received the cheque for the discharge of, whole or part of any debt or liability. It is a settled law that once accused admits his signatures on the cheque, the above-mentioned presumptions are raised in favor of the complainant and burden falls on the accused to rebut the said presumptions.
19. In the present case, the accused has taken a defence that he had given the blank signed cheque in question to one person named Mr. Vinod Kumar Jain with whom accused had business dealings. Further during cross- examination of CW1/complainant recorded on 09.09.2019, complainant/CW1 has admitted that one person named Sh. Vinod Jain, who is a broker/agent, used to deal with him regarding dealing with other parties. Further perusal of original invoices, which is Ex. CW1/1(colly), shows that in broker details, name "Vinod Jain MR" is written on the invoices.
20. Further accused has taken a defence that he is not the proprietor of the accused firm. To prove this accused summoned Sh. Pradeep Arora as DW1 who deposed that CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 11/14 accused is a proprietor of M/s New Amar Trading Company. In considered view of the court the said witness DW1 is not an independent witness and decision of the case cannot solely rely on his evidence. Accused failed to prove the same by any documentary evidence. Though accused has filed on record a certificate of CA namely, Honey Vig certifying that Mrs. Harpreet Kaur is the proprietor of the M/s Aman Deep Trading Co. However accused failed to summon on record CA who certified it, to prove the document as per law. Accused did not enter the witness box to prove his innocence. Accused has failed to show how his cheque came into the possession of the complainant. Accused has failed to prove that he was not the authorized signatory of the accused firm. The statute mandates that once signature(s) of an accused on cheque are established, then there is 'reverse onus' on the accused. In the present case accused has failed to prove his defense.
21. One more factor which goes against the accused in this case that Mr. Vinod Jain, despite being an important link in the chain of events in this case, was not produced by the accused as a witness to depose in his favour.
22. Here, it would be apposite to refer to the judgment of Hon'ble Supreme Court in Kumar Exports vs. Sharma Carpets - (2009) 2 SCC 513, wherein it was held 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 must be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 12/14 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.
23. In the present case, apart from bald assertions, there is nothing on record to show that the accused is not liable to pay the cheque amount as alleged by the complainant. In a case titled as Sumeti Vij v. M/s Paramount Tech Fab Industries Criminal Appeal No. 292 of 2021, the Hon'ble Division Bench of Apex Court has observed that "mere statement under Section 313 Code of Criminal Procedure, 1973, without any additional evidence to rebut the statutory presumption under Section 139 Negotiable Instruments Act, 1881, cannot absolve the accused of the charges under Section 138 of the Act. The statement of the accused recorded under Section 313 of the Code is not substantive evidence of defence, but only an opportunity to the accused to explain the incriminating circumstances appearing in the prosecution case of the accused."
24. Hence, from the foregoing discussions, the accused has not led any such cogent evidence to rebut presumption of existence of a legally enforceable debt in favor of the complainant. There is nothing coming out in the cross- examination of the complainant that would support the case of the accused. As such, the court finds that the accused has not been able to prove any probable defence and has failed to rebut the presumption raised under Section 118/139 of the NI Act, and thus, the second CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 13/14 ingredient of the offence under Section 138 NI Act stands proved.
25. Therefore, the complainant has been able to prove all the ingredients of the offence under Section 138 NI Act beyond reasonable doubt. It is evident that the complainant has been able to prove that the cheque in question, i.e cheque bearing no. 161105 dated 02/12/2015, amounting to Rs. 1, 57,151/-, drawn on Bank of India, Adda Bastian Branch, 22, Shakti Nagar, Basti Road, Punjab-144001 which is Ex. CW1/3 was issued in discharge of legally recoverable liability owed to the complainant by the accused. The complainant has been able to prove his case beyond reasonable doubt.
26. Thus, Accused Sh. Surjit Singh, authorized signatory of M/s Aman Deep Trading Co., is convicted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. Let the accused be heard separately on quantum of sentence. A copy of the judgment be given free of cost to the convict.
DIVYA Digitally signed by
DIVYA GUPTA
GUPTA Date: 2024.03.06
15:42:38 +0530
Announced in open court (Divya Gupta)
in the presence of accused MM-05(NIAct),(C)/THC/
on 02.03.2024 DELHI / 02.03.2024
CC No. 514816/2016 M/s R. Sethi & Sons Vs M/s Aman Deep Trading Co. 14/14