Delhi District Court
Sripati Singh vs . State Of Jharkhand (Sc) 2021 Air(Sc) ... on 16 March, 2022
IN THE COURT OF METROPOLITAN MAGISTRATE (NI-03),
CENTRAL, TIS HAZARI COURTS, DELHI
Presided over by: Ms. Isha Singh
Case no. : 519887/16
Unique Case ID no. : DLCT020012372012
In the matter of :
Manish Gupta
S/o Mr. Manoj Gupta
Prop. of M/S B.R. Gopal & Sons
Having Office At:
Y-41, LohaMandi, Naraina, New Delhi.
Also at:
Resident of 1957, Gali NeelaWali,
Bazar Sita Ram, Delhi-110006
Through Attorney Mr. Manoj Gupta ...................COMPLAINANT
Versus
1. Ganpati Buildtech Pvt. Ltd.
Through its Director/Authorised Signatory/Auth. Representative
Mr. Abhishek Gupta/Mr. Ajay Gupta/Any other Authorised Person
C/o 6, Alipur Road, Ganpati Aparatments
Civil Lines, Delhi-110054
Also at:
35, Rajpur Road, Shobha Niwas
Civil Lines, Delhi-110054.
Also at:
C/o Hotel D'Aqua
Shastri Park, Near Police Station New UsmanPur
North East District, Delhi.
2. Mr. Abhishek Gupta
Being Director/Authorised Signatory
of M/S Ganpati Builtech Pvt. Ltd.
35, Rajpur Road, Shobha Niwas
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 1 of 25
Civil Lines, Delhi-110054.
Also at:
M/S Ganpati Builtech Pvt. Ltd.
C/o Hotel D'Aqua
Shastri Park, Near Police Station New Usmanpur
North East District, Delhi.
3. Mr. Ajay Gupta
Being Authorised Representative of
M/S Ganpati Builtech Pvt. Ltd.
35, Rajpur Road, Shobha Niwas
Civil Lines, Delhi-110054.
Also at:
C/o Hotel D'Aqua
Shastri park, Near Police Statin, New Usmanpur
North East District, Delhi. ....................ACCUSED PERSONS
1. Name of the Complainant : Mr. Manish Gupta
2. Name of the Accused : (1) Ganpati Buildtech Private
Limited
(2) Mr. Abhishek Gupta
(3) Mr. Ajay Gupta
3. Offence complained of or proved : Section 138, Negotiable Instruments
Act, 1881
4. Plea of the Accused : Not Guilty
5. Date of Filing : 14.12.2012
6. Date of Reserving Order : 10.03.2022
7. Date of Pronouncement : 16.03.2022
8. Final Order : CONVICTED
BRIEF STATEMENT OF REASONS OF DECISION
FACTUAL MATRIX
1. The present complaint has been filed by Mr. Manish Gupta, proprietor of B R Gopal &
Sons (hereinafter "complainant") through its Power of Attorney holder Mr. Manoj
Gupta on the strength of power of attorney dated 13.12.2012 against Ganpati Buildtech
Pvt. Ltd. (Accused no.1); Mr. Abhishek Gupta (Accused no.2); Mr. Ajay Gupta
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 2 of 25
(Accused no. 3) (hereinafter collectively referred to as "accused") under Section 138 of
the Negotiable Instruments Act, 1881 (hereinafter "NI Act").
2. The substance of allegations, as contained in the complaint, are as follows:
(a) That the complainant, being the proprietor of B R Gopal & Sons, is running the
business of iron and steel. That the accused no.2 and 3 being directors/authorized
representatives of accused no.1 body corporate, approached the complainant and
purchased goods on behalf of accused no. 1 through the following invoices:
Date Invoice No. Amount (Rs.)
31.08.2012 97 3,10,145.00
05.09.2012 98 3,65,486.00
07.09.2012 99 8,04,191.00
10.09.2012 100 8,15,026.00
15.09.2012 101 1,02,631.00
15.09.2012 103 2,65,785.00
(b) It is further the case of the complainant that in discharge of the legal liability of
accused no. 1, accused no.2 and 3 issued the following six cheques all drawn on
Current Account bearing no. 0115002100055253, Punjab National Bank, Civil
Lines, Delhi-110054 in favour of the complainant with the assurance that the said
cheques will be encashed on its presentation.
Date Cheque No. Amount (Rs.)
20.09.2012 424842 3,10,145.00
21.09.2012 424843 3,65,486.00
22.09.2012 424844 8,04,191.00
23.09.2012 424845 8,15,026.00
24.09.2012 424846 1,02,631.00
25.09.2012 424847 2,65,785.00
TOTAL 26,63,264.00
(c) The aforesaid cheques were signed by accused no.3 and were handed over by
accused no. 2 for and on behalf of accused no. 1 being its authorized representative
and the person in charge of control and management of its day-to-day affairs.
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 3 of 25
(d) That upon presentation, the aforesaid cheques were returned by the banker of the
complainant vide separate return memos all dated 01.11.2012 and all for the reason
"Payment Stopped by drawer".
(e) Thereafter, the complainant sent a legal notice dated 03.11.2012 by way of
registered AD and courier. It is the case of the complainant that despite
service/deemed service of legal notice dated 03.11.2012, the accused failed to repay
the cheque amount within the stipulated period and hence, the present complaint
was filed on 14.12.2012 under section 138 of the NI Act.
APPEARANCE OF THE ACCUSED
3. Pre-summoning evidence was led by the complainant and upon finding a prima facie
case against the accused, they were summoned to face trial vide order dated 03.01.2013,
and after their appearance, notice of accusation under Sec. 251, The Code of Criminal
Procedure, 1973 (hereinafter "CrPC") was served upon all three accused on 02.04.2014
to which they pleaded not guilty and claimed trial. After perusal of the cheque, the
accused stated that the cheques in question were issued to the complainant as security
cheques in the course of business. The accused denied the receipt of legal notice. At the
time of framing of notice under Sec. 251 CrPC, the accused took the following plea of
defence:
"The cheques in question were issued as advance for supply of material
(saria) but the complainant did not supply material to us"
4. Considering the plea of defence raised and in view of the application filed by the accused
under Sec.145(2), NI Act, accused was allowed the opportunity under Sec. 145(2) NI
Act, to cross-examine the complainant vide order dated 09.02.2015.
5. During the course of trial, the complainant led the following oral and documentary
evidence in order to prove his case beyond reasonable doubt:
Oral Evidence
CW1 Mr. Manoj Gupta (Power of
Attorney Holder of the
complainant)
Documentary Evidence
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 4 of 25
Ex. CW 1/2 Power of Attorney in original
executed by the complainant in
favour of Mr. Manoj Gupta dated
13.12.2012.
Ex. CW 1/3 Copy of Invoice vide bill no. 97 of
bill book no. 2 dated 31.08.2012
drawn by BR Gopal & Sons in the
name of Ganpati Buildtech Pvt.
Ltd. in the sum of Rs. 3,10,145/-
Ex. CW 1/4 Copy of Invoice vide bill no. 98 of
bill book no. 2 dated 05.09.2012
drawn by BR Gopal & Sons in the
name of Ganpati Buildtech Pvt.
Ltd. in the sum of Rs. 3,65,486/-
Ex. CW 1/5 Copy of Invoice vide bill no. 99 of
bill book no. 2 dated 07.09.2012
drawn by BR Gopal & Sons in the
name of Ganpati Buildtech Pvt.
Ltd. in the sum of Rs. 8,04,191/-
Ex. CW 1/6 Copy of Invoice vide bill no. 100 of
bill book no. 2 dated 10.09.2012
drawn by BR Gopal & Sons in the
name of Ganpati Buildtech Pvt.
Ltd. in the sum of Rs. 8,15,026/-
Ex. CW 1/7 Copy of Invoice vide bill no. 101 of
bill book no. 3 dated 15.09.2012
drawn by BR Gopal & Sons in the
name of Ganpati Buildtech Pvt.
Ltd. in the sum of Rs. 1,02,631/-
Ex. CW1/8 Copy of Invoice vide bill no. 103 of
bill book no. 3 dated 15.09.2012
drawn by BR Gopal & Sons in the
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 5 of 25
name of Ganpati Buildtech Pvt.
Ltd. in the sum of Rs. 2,65,785/-
Ex. CW1/9 Cheque bearing no. 424842 dated
20.09.2012 in the sum of Rs.
3,10,145/-
Ex. CW1/10 Cheque bearing no. 424843 dated
21.09.2012 in the sum of Rs.
3,65,486/-
Ex. CW1/11 Cheque bearing no. 424844 dated
22.09.2012 in the sum of Rs.
8,04,191/-
Ex. CW1/12 Cheque bearing no. 424845 dated
23.09.2012 in the sum of Rs.
8,15,026/-
Ex. CW1/13 Cheque bearing no. 424846 dated
24.09.2012 in the sum of Rs.
1,02,631/-
Ex. CW1/14 Cheque bearing no. 424847 dated
25.09.2012 in the sum of Rs.
2,65,785/-
Ex. CW 1/15 Return Memo dated 01.11.2012
with the remarks "payment stopped
by drawer" qua cheque bearing no.
424842.
Ex. CW1/16 Return Memo dated 01.11.2012
with the remarks "payment stopped
by drawer" qua cheque bearing no.
424843.
Ex. CW1/17 Return Memo dated 01.11.2012
with the remarks "payment stopped
by drawer" qua cheque bearing no.
424844.
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 6 of 25
Ex. CW1/18 Return Memo dated 01.11.2012
with the remarks "payment stopped
by drawer" qua cheque bearing no.
424845.
Ex. CW1/19 Return Memo dated 01.11.2012
with the remarks "payment stopped
by drawer" qua cheque bearing no.
424846.
Ex. CW1/20 Return Memo dated 01.11.2012
with the remarks "payment stopped
by drawer" qua cheque bearing no.
424847.
Ex. CW1/21 Legal Demand Notice dated
03.11.2012.
Ex. CW1/22 (Colly.) Postal Receipts
Ex. CW1/23 (Colly.) Courier Receipts
Ex.CW1/24 Returned AD Card with
endorsement/signature
Ex. CW1/25 Returned AD Card with
endorsement/signature
Ex.CW1/26 Returned AD Card with
endorsement/signature
Ex.CW1/27 Returned AD Card with
endorsement/signature
Ex. CW1/28 (Colly.) Internet Generated Tracking
Report
Ex.CW1/D1 (Colly.) VAT Records of the complainant
alongwith certificate under
Sec.65B, Indian Evidence Act.
Ex. CW1/D2 ITR for the complainant firm for
the AY 2012-13 alongwith
certificate under Sec.65B, Indian
Evidence Act.
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 7 of 25
Ex. CW1/D3 ITR for the complainant firm for
the AY 2013-14 alongwith
certificate under Sec.65B, Indian
Evidence Act.
Once the aforesaid evidence was led, thereafter cross-examination was closed vide a
separate statement of the complainant recorded to that effect.
STATEMENT OF THE ACCUSED
6. After the completion of complainant evidence and before the start of defence evidence,
in order to enable the accused to personally explain the circumstances appearing in
evidence against them, their statement under Sec. 313, CrPC was recorded without oath.
In the statement under Sec. 313 CrPC, accused no.3 admitted having signed the cheques
however all the accused cumulatively denied having received any goods from the
complainant. As regards the legal demand notice, they denied the receipt thereof. The
statement under Section 313 CrPC reads as follows:
"The cheques in question were issued as security cheques to the
complainant for the goods to be supplied by the complainant. However, the
complainant did not supply the goods despite receiving the cheques in
question in advance. The complainant has not placed on record any
gatepass to show that the goods were supplied to us. The cheques in question
were presented after two months i.e. after delay. When we came to know
that the goods have not been supplied by the complainant to us then we
issued stop payment instructions to our banker. We do not have any liability
towards the complainant qua cheques in question."
7. Pursuant thereto, the accused led the following oral and documentary evidence in their
defence.
Oral Evidence
DW1 Mr. Abhishek Gupta, Director of Ganpati Buildtech
Pvt. Ltd.
8. Thereafter, final arguments were heard in the present case, I have heard the learned
counsels on both sides and given my thoughtful consideration to the material appearing
on record.
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 8 of 25
ARGUMENTS
9. It has been argued by the Ld. Counsel for the complainant that all ingredients of Sec.
138 NI Act, have been fulfilled in the present case and that the complainant has duly
proved his case. It was argued that the signatures on the cheques in question are
admitted giving rise to presumptions under Sec.118 and Sec.139, NI Act in favour of
the complainant. It was argued that the complainant, in order to prove the sale of
material to the accused, placed on record invoices/bills Ex.CW1/3 to Ex.CW1/8 which
were duly corroborated by VAT records Ex.CW1/D1 (Colly.) and Income Tax Returns
of the relevant year. Further, he argued that the name of the firm of the accused has
been duly reflected in the list of "sundry debtors" under balance sheet of the
complainant firm as on 31.03.2013, filed as an annexure to Income Tax Return of the
complainant firm which is Ex. CW1/D3. He pointed out that the entry against the name
of the accused firm under the head of sundry debtors is in the sum of Rs. 2663264/-
which tallies with the cheque amount. He further argued that the accused failed to bring
any material on record to suggest that no delivery of material was made to him by the
complainant or that the same material was procured from elsewhere for the construction
of the Hotel. He contended that there is no written communication/correspondence or
document produced by the accused to suggest that the fact of non- supply of goods was
communicated to the complainant or in the alternative, the return of advance security
cheques was requested for. He contended that if the version of the accused is to be
believed, then there is no plausible reason as to why the accused did not take any action
against the complainant or pursue another criminal complaint against him for not
having returned the cheques in question. He argued that the accused failed to raise the
probable defence to disprove the case of complainant and to rebut the presumptions
under Section 118 and Section 139 NI Act. Ld. Counsel for the complainant relied upon
Sripati Singh Vs. State of Jharkhand (SC) 2021 AIR(SC) 5632: 2021(6) SLT 406;
Triyambak S. Hegde Vs. Sripad (SC) 2021(5) SLT 633; Barun Kumar Vs. State of
NCT of Delhi (Del), 2021(281) DLT 463; Manpreet Kaur Vs. Vinod Bansal (Del),
2021 LAWPACK(Del) 83785; Sumeti Vij Vs. Paramount Tech Fab Industries (SC)
2021 AIR(SC) 1281: 2021(4) SLT 868; Kalamani Tex Vs. P.Balasubramanian (SC),
2021 (5) SCC 283: 2021(2) SLT 405; APS Forex Services Pvt. Ltd. Vs. Shakti
International Fashion Linkers (SC), 2020 LAWPACK (SC) 63897; Makwana
Mangaldas Tulsidas Vs. State of Gujarat (SC), 2020; D.K. Chandel Vs. Wockhardt
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 9 of 25
Ltd., 2020 LAWPACK (SC) 64452; N.E.P.C. Micon Ltd. Vs. Magma Leasing Ltd.,
1999 LAWPACK (SC) 28596; Vinita S. Rao Vs. Essen Corporate Services Pvt. Ltd.
2015 AIR (SC) 882: 2014 (12) JT 366: 2014 (8) SLT 166; Padam Vathy & Anr. Vs.
State of NCT of Delhi: 2017(3) JCC 181 (NI). As such, it is prayed that the accused
be punished for the said offence.
10. Per contra, Ld. Counsel for the accused has argued that the complainant has failed to
establish his case beyond reasonable doubt. The Counsel for the accused has argued
that the cheques in question were issued by way of security to the complainant in the
course of business with him, which have been misused by him. He has argued that the
invoices/bills are false and have been fabricated by the complainant. He argued that the
invoices/bills are silent as to the transportation details or the delivery of the alleged
goods, for which reason also their credibility is doubtful. As regards the Income Tax
Return of the complainant firm for the AY 2012-13 (Ex. CW1/D2) and for the AY
2013-14 (Ex.CW1/D3), the counsel argued that the same should not be relied upon as
the same are also false and fabricated. As regards the VAT documents ExCW1/D1
produced on record by the complainant, he argued that the same does not conclusively
establish that the VAT was infact paid qua the same invoices as those in question or
qua the sales made to the accused as was the case of the complainant. He has contended
that the service of the legal notice was manipulated and since the notice was never
received to the accused, therefore ingredients of Sec.138, NI Act are not made out. He
has argued that the complainant ought to prove his case beyond reasonable doubt for
securing conviction in the present case and the case of the complainant must stand on
its own legs. In order to buttress his submissions, ld. Counsel for the accused has relied
upon S.P. Sampathy Vs. Smt. Manju Gupta & Anr. 2002 111 CompCase 492 AP;
U.C. Saxena Vs. Sh. Madan Mohan, (1993) 104 PLR 161; Kumar Exports Vs.
Sharma Carpets, (2009) 2 SCC 513.As such, it is prayed that the accused be acquitted.
INGREDIENTS OF THE OFFENCE
11. Before dwelling into the facts of the present case, it would be apposite to discuss the
legal standards required to be met by both sides. In order to establish the offence under
Section 138 of NI Act, the prosecution must fulfil all the essential ingredients of the
offence. Perusal of the bare provision reveals the following necessary ingredients of the
offence: -
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 10 of 25
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.
12. The accused can only be held guilty of the offence under Section 138 NI Act if the
above-mentioned ingredients are proved by the complainant co-extensively.
Additionally, the conditions stipulated under Section 142 NI Act have to be fulfilled.
13. Notably, the first, third, fourth and fifth ingredient have been duly proved without
there being any real controversy regarding the same.
(a) The complainant has proved the original cheques, Ex. CW1/9, Ex. CW1/10, Ex.
CW1/11, Ex. CW1/12, Ex. CW1/13 and Ex. CW1/14, which the which the accused
no.2 and 3 have not disputed as being drawn on the account of the accused no.1
company. It is not disputed that the cheques in question was presented within their
validity period.
(b) The cheques in question were returned unpaid vide return memos all dated
01.11.2012 which are Ex. CW1/15, Ex. CW1/16, Ex. CW1/17, Ex. CW1/18, Ex.
CW1/19 and Ex. CW1/20 due to the reason, "Payment stopped by drawer".
(c) The complainant has proved on record the Legal notice dated 03.11.2012 vide Ex.
CW1/21 in respect of all cheques in question; Postal receipts and courier receipts
for legal demand notice Ex.CW1/22(colly.), Ex.CW1/23(colly.); returned AD cards
with endorsement which are Ex.CW1/24, Ex.CW1/25, Ex.CW1/26 and Ex.CW1/27
and internet generated tracking report which is Ex. CW1/28(Colly.) to prove the fact
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 11 of 25
of sending legal notice. However, in the notice under Sec.251, CrPC as well as in
the statement recorded under Sec.313, CrPC, and even in the evidence tendered on
behalf of the accused, the accused have denied the receipt of legal demand notice. It
has also been contended by the accused that the endorsement on the returned AD
card is not his own or that any such person by the same name is also not known to
have been an employee of the accused.
This assertion of non-receipt of legal notice cannot help the accused in
escaping liability under section 138 NI Act, especially keeping in mind that firstly,
the tracking report on record clearly establishes delivery of legal notice upon the
accused Ganpati Buildtech Pvt. Ltd., Mr. Abhishek Gupta and Mr. Ajay Gupta in
person, secondly, it is relevant to note that barring one address at H.no.35, Rajpur
Road, Shobha Niwas, Civil Lines, Delhi-110054, which the accused termed as
"incorrect", rest all other addresses on legal demand notice as well as returned AD
card have been admitted to be correct addresses, and thirdly, that the accused entered
appearance in the court pursuant to service upon the same address as was mentioned
in the legal demand notice. It has been settled by the Hon'ble Apex Court in the
judgement reported as, C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555
that an accused who claims that he did not receive the legal notice, can, within 15
days of receipt of summons from the court, make payment of the cheque amount,
and an accused who does not make such payment cannot 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 General Clauses Act and Section
114 of the Evidence Act.
14. On analysis of the facts and legal position stated above, the Court finds the parties to be
at variance on the primary issue i.e. whether the cheque in question were issued in
favour of the complainant in order to discharge the legal liability of the accused which
forms the second ingredient in the Section 138, NI Act.
15. As regards the second ingredient, it has to be proved that the cheques in question were
drawn by the drawer for discharging a legally enforceable debt. In the present case, the
signatures of the accused on the cheques in question are not denied. Under the NI Act,
once the accused admits his signatures on the cheque, certain presumptions are drawn,
which result in shifting of onus. Section 118(a) of the NI Act lays down the presumption
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 12 of 25
that every negotiable instrument was made or drawn for consideration. The second
presumption is contained under Section 139 of NI Act. The 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. 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 word "shall", which
makes raising the presumption imperative for the court, once the foundational facts
required to raise the presumption are proved {Reliance is placed upon Hiten P. Dalal
vs. Bratindranath Banerjee (2001) 6 SCC 16}.
16. 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 SCC 418 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 summarise the principles enumerated by this Court
in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of theAct 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.
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 13 of 25
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."
17. The presumptions raised under Section 118(b) and Section 139 are rebuttable
presumptions. A reverse onus is cast on the accused, who has to establish a probable
defence on the standard of preponderance of probabilities to prove that either there was
no legally enforceable debt or other liability. In the present case, ld. counsel for the
accused has raised many defences to rebut the presumption, which are discussed
hereinbelow:
THAT THE GOODS WERE NOT SUPPLIED BY THE COMPLAINANT TO THE
ACCUSED
18. The accused has submitted the complainant did not supply any iron material and the
impugned cheques were given as advance for the supply of the said material for the
construction of the hotel. The learned counsel for accused has relied upon Kumar
Exports Vs. Sharma Carpets, (2009) 2 SCC 513 to contend that since the invoices /
bills drawn in the name of accused company i.e. Ex.CW1/3 to Ex.CW1/8 do not contain
endorsement / receiving of the accused therefore, delivery has not been proved by the
complainant. Per contra, the counsel for the complainant relied upon D.K. Chandel Vs.
Wockhardt Ltd. (SC), 2020 LAWPACK (SC) 64452 to contend that the once
presumption is raised in favour of the holder of the cheque, then the production of
account books/cash books is not as much relevant in a criminal trial as much in a civil
court.
19. At the stage of cross-examination, the POA of the complainant was enquired as to
whether he has paid the Value Added Tax (VAT) for the sales of goods in question to
the accused vide Invoices Ex. CW1/3 to Ex.CW1/8. To prove his case, the complainant
produced on record copy of Form DVAT 16, Delhi Value Added Tax Return under Rule
28 and 29 of Delhi Value Added Tax Rules, 2005, vide Ex. CW1/D1 (Colly). Under
Section 26 of the Delhi Value Added Tax Act (DVAT Act) read with Rule 28 of the
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 14 of 25
Delhi Value Added Tax Rules, 2005 (DVAT Rules), a registered dealer is required to
submit a return for each tax period. The complainant brought before the court VAT
returns filed by the complainant firm for the period from 01.04.2010 to 30.06.2010;
from 01.07.2010 to 30.09.2010; from 01.10.2010 to 31.12.2010; from 01.01.2011 to
31.03.2011; from 01.04.2011 to 30.06.2011; from 01.07.2011 to 30.09.2011; from
01.10.2011 to 31.12.2011; from 01.01.2012 to 31.03.2012; from 01.04.2012 to
30.06.2012; from 01.07.2012 to 30.09.2012; from 01.10.2012 to 31.12.2012; from
01.01.2013 to 31.03.2013 all of which is Ex.CW1/D1 (Colly) (running into 33 pages)
alongwith Certificate under Sec.65B, Indian Evidence Act.
20. The counsel for the accused raised two arguments qua the VAT returns filed on record,
firstly, that the VAT shown to be paid by the complainant as per the invoices on record
does not match up with the total VAT paid for the relevant quarter, and secondly, that
the payments allegedly made by the complainant towards VAT in respect of the
transactions with the accused are not shown in the said VAT documents.
21. Since the invoices on record vide Ex.CW1/3 to Ex.CW1/8 are for the period August-
September 2012, therefore the relevant VAT return under consideration is from
01.07.2012 to 30.09.2012. A careful perusal of the invoices on record reveals that on
the bill Ex.CW1/3 dated 31.08.2012 in the sum of Rs.3,10,145/-, VAT amounting to Rs.
14769/- has been calculated; similarly, on the bill Ex.CW1/4 dated 05.09.2012 in the
sum of Rs. 3,65,486/-, VAT amounting to Rs. 17405/- has been calculated; for the bill
Ex.CW1/5 dated 7.09.2012 in the sum of Rs. 804191/-, VAT amounting to Rs. 38295/-
has been calculated; for the bill Ex. CW1/6 dated 10.09.2012 in the sum of Rs. 815026/-
,VAT amounting to Rs.38811 has been calculated; for the bill Ex.CW1/7 dated
15.09.2012 in the sum of Rs. 102631/-, VAT amounting to Rs. 4887/- has been
calculated and lastly, for another bill Ex.CW1/8 dated 15.09.2012 in the sum of
Rs.2,65,785/-, VAT amounting to Rs. 12657/- has been calculated. An aggregate of all
the VAT amounts as above makes it a total of Rs. 1,26,824/-. At this point, the Ld.
Counsel for the accused contended that since the VAT return actually paid by the
complainant for the relevant quarter of July to September 2012 is Rs. 1,46,924/- and
does not match with the VAT amount as calculated above i.e., Rs. 1,26,824/-, therefore
the VAT return cannot be relied upon. This argument of the accused lacks merit. If the
accused were to say that actually VAT return filed by the complainant is lower than the
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 15 of 25
VAT calculated on the invoices on record, then it may have proven fatal to the case of
the complainant. However, here the VAT return filed for the quarter of July to
September 2012 is Rs. 1,46,924/- which is more than the VAT calculated for the sales
on the bills on record, i.e., Rs. 1,26,824/-. It is relevant to note that neither it is the case
of the complainant that he was only supplying his goods to the accused nor has he
alleged that no sales apart from the present invoices in question were made in the
relevant quarter. Therefore, the probability of other sales of the complainant in the same
quarter cannot be denied.
22. Further, the accused contended that the POA of the complainant himself admitted during
his cross-examination that the payments made by the complainant towards VAT in
respect of the transactions with the accused are not shown in the said VAT documents
and for the same reason, it is contended that the VAT returns do not help the complainant
in proving his liability. In this regard, Ld. Counsel for the accused has also argued that
the VAT return has not been filed for the invoices allegedly raised upon the accused as
the invoices are false and fabricated.
23. It is a settled law that Presumption under Section 139 of the N.I. Act, is in the nature of
a 'rebuttable' presumption and it is open to the accused to raise a defence wherein the
existence of a legally enforceable debt or liability can be contested, therefore Section
139 of the N.I. Act is an example of a reverse onus clause (Rangappa v. Sri Mohan,
2010 (11) SCC 441).Even Section 102, Indian Evidence Act explains that onus of proof
would lie upon the accused, in a situation where presumptions already stand in favour
of the complainant and against the accused.
24. While it is true that the VAT returns do not conclusively state that the return was filed
in respect of transactions with the accused but at the same time, it at least establishes
the fact that VAT return was filed for the relevant quarter. At this stage, if the accused
were to say that the invoices are forged and no sales were ever made to him as alleged
via bills on record, then the accused could have summoned the relevant official from
the DVAT office to bring the necessary records. However, no such official was even
cited as defence witness, let alone being examined.
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 16 of 25
25. Moving forth, the POA holder of the complainant was enquired if the amount
recoverable from the accused was shown in the income tax return (ITR) of the
complainant firm. To prove his case, the POA holder filed ITR of the complainant firm
for the AY 2012-13 Ex. CW1/D2 alongwith balance sheet as on 31.03.2012 and ITR
for the AY 2013-14 Ex. CW1/D3 alongwith balance sheet as on 31.03.2013. In addition
to the same, certificate under Sec.65B, IEA was filed in respect to the printouts of ITR
filed certifying that the computer-generated copies of the ITR for AY 2012-13 and AY
2013-14 are true and have not been tampered at all.
26. It is the case of the complainant that the accused in discharge of its liability, issued six
cheques in question in the sum total of Rs.2663264/- which was also the sum total of all
the invoices on record. To prove the legal liability of the accused, the POA holder of
the complainant has pointed out that the accused no.1 M/s Ganpati Buildtech Pvt. Ltd..
has been described as "sundry debtor" for Rs. 2663264 i.e., the sum total of the cheque
amount in the instant case, in the balance sheet of the complainant firm as on
31.03.2013, which is appended to the ITR for the AY 2013-14 Ex.CW1/D3 produced
on record.
27. As regards the ITR, it has been argued that the same is also false and fabricated. Apart
from the very and only suggestion given at the stage of cross-examination, no other
proof has been led by the accused to show how the ITR including the balance sheets for
the AY 2013-14 brought on record were false and fabricated. To prove his case, the
accused could have summoned officials from the Income Tax department to prove that
the ITR filed by the complainant is tampered with and fabricated, however neither any
such official was cited as a witness nor was he examined. The law is settled that bare
denial and storytelling will not help the accused in rebutting the presumptions raised
against him in law. The defence must be probable enough and sufficiently supported by
proof with reasonable evidence.
28. In the absence of independent proof on record, a mere suggestion of the counsel for the
accused as to falsity and fabrication of the ITR is not sufficient to reject the ITR which
shows the accused as sundry debtor for the amount of the cheques in question.
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 17 of 25
29. It was also argued that the ITR be brought on record/proved by the accountant who had
filed the same and since the POA holder of the complainant had brought the same on
record, therefore the same could not be said to have been proved. This argument of the
Ld. Counsel of the accused does not inspire confidence of the court. It is immaterial as
to who has produced the ITR-whether the complainant, his POA holder or the
accountant, especially when Certificate under Sec.65B, IEA has been filed by the POA
of the complainant. Further, POA holder derives his authority from the power of
Attorney Ex. CW1/2 which is already on record, giving the authority to the POA of the
complainant to lead evidence in the present complaint and bring on record the ITR along
with balance sheets.
30. Ld. Counsel for the accused has pointed out that no delivery receipt was produced on
record by the complainant to prove the delivery of goods and neither was any
endorsement on behalf of the accused, proved on either of the invoices to show that
goods were actually delivered to the accused. Per contra, the Ld. Counsel for the
complainant has argued that apart from denying the case of the complainant simpliciter,
the accused has not brought any evidence on record to suggest that the material was not
supplied to them as alleged.
31. It is the defence of the accused that the material was not supplied by the complainant.
DW-1, the accused no. 2, Mr. Abhishek Gupta, in his examination-in-chief has stated
that the complainant firm was to supply iron rods to Uday Estate Pvt. Ltd (sister concern
of the accused no.1 company in the present case) for construction of a hotel belonging
to Uday Estate Pvt. Ltd at 1, Shastri Park, District Centre, Delhi and that, no material
was supplied either to Ganpati Buildtech Pvt. Ltd. or to Uday Estate Pvt. Ltd. Thus, the
factum of there being in existence a contract or an arrangement whereby it was agreed
between the parties that the material was to be supplied by the complainant to the
accused company for the purposes of construction of a hotel belonging to a sister-
concern of the accused company, i.e., Uday Estates Private Limited has remained
undisputed and has not been denied. Additionally, it was also admitted by DW-1 in his
cross-examination that the construction of the hotel for which material was to be
supplied, was completed in 2014.
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 18 of 25
32. Since it is the case of the accused that the material was not supplied by the complainant
and nevertheless, the construction of the hotel got completed, therefore there is only one
way that makes it possible and that is, by way of procurement of supply of the same
material from another vendor. However, when it was enquired from the accused if he
had purchased the said material from some other vendor, the accused replied evasively
stating that he will have to check his records and no name of any vendor was disclosed.
33. It is a settled position of law that it is the duty of the party to lead the best evidence in
his/ her possession, which could throw light on the issue in controversy and in case such
material evidence is withheld, the court may draw adverse inference under Section
114(g) of the Evidence Act. (Musauddin Ahmed v. State of Assam, (2009) 14 SCC 541
: AIR 2010 SC 3813; and Khatri Hotels Pvt. Ltd. v. Union of India, (2011) 9 SCC
126). In order to prove that no material was supplied, the accused could have examined
in his defence any person/employee to prove that no delivery of material was received
from the complainant or he could have examined the alleged vendor who actually
supplied the iron rods required by the accused once the delivery was defaulted by the
complainant. However, neither was any such person cited as a witness nor were they
examined.
34. Ld. Counsel for the accused has relied upon Kumar Exports (supra) to contend that the
finding of acquittal given by the Hon'ble Apex Court was premised on the fact that the
bills on record did not bear any endorsement by the accused accepting the correctness
of the bill and that the bills produced on record by the complainant to prove the liability
of the accused, were not signed by the accused either. Ld. Counsel for the accused
highlighted that applying the same reasoning to the facts in issue, the present complaint
must also fail as the invoices brought on record by the complainant do not bear any
endorsement/receiving of the accused.
35. The judgement in Kumar Exports (supra) relied upon by the Counsel for the accused
can be distinguished on its facts. The finding of acquittal arrived at by the Hon'ble Apex
Court in the case of Kumar Exports (supra) was premised upon the fact that no sale of
carpets could be proved by the complainant for the very year when he had claimed to
have sold carpets to the accused, in discharge of which, cheques in question were issued.
In that case, the accused had examined one official from the Sales Tax Department who
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 19 of 25
had asserted before the Court that the complainant itself had filed sales tax return for
the Assessment year 1994-1995 indicating that no sale of woollen carpets had taken
place during the said assessment year and therefore, sales tax was not paid. In addition
to the above, it was also observed by the Court that the bills placed on record were
without endorsement. Thus, the finding of acquittal was not premised solely upon the
want of receiving of purchaser upon the invoices raised but also upon the factum that
no sale of carpets could be proved on record otherwise as well.
36. In the present case, it is proved on record that Value Added tax was paid by the
complainant for the relevant quarter when the goods are stated to have been sold by the
complainant to the accused. Further, what also remains unrebutted is the fact that the
accused were reflected as "Sundry debtor" in the Income Tax Return of the complainant
firm for an amount that equals the cheque amount. At the same time, the accused have
also failed to bring any evidence on record to suggest that the material was taken from
elsewhere once the complainant had defaulted in supplying the same. In view of such
circumstances on record, this Court believes that the case of the complainant cannot be
thrown out only for the want of receiving/acknowledgement signatures from the accused
on the bills on record.
37. The Hon'ble Supreme Court of India was also face with a similar situation in the case
of B.M. Basavaraj v. Srinivas S. Datta [IV (2016) SLT 155], where the Hon'ble Apex
Court set aside the order of Learned Trial Court and the Hon'ble High Court that had
dismissed the complaint primarily on the ground that the complainant had not furnished
any document to prove that it had actually supplied the material to the accused as per
the agreement. It was held by the Apex Court that
"...it is not even necessary for the appellant / complainant to produce any
document to the effect that it had fulfilled the obligation under the agreement
which was entered into between the parties. The case was founded on the
dishonour of two cheques and not on the basis of the said agreement. Further,
it was not a civil suit which was filed on the basis of said agreement or any
demand was raised for money on the ground that the agreement had been
fulfilled. The case is that the payment was not released.... In the legal notice,
specific averment made by the complainant that complainant had discharged
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 20 of 25
his obligation under the contract and only thereupon the cheque was issued
and the respondent / accused had not even replied to the said notice...."
38. In this instant complaint also, the complainant company has averred in its complaint
that goods were supplied to the accused and duplicate of the bills which were raised on
the accused company have also been filed. The onus is not on the complainant to prove
supply as the presumption is automatically triggered in favour of the complainant under
the NI Act. Apart from bare averments during the proceedings, accused has not led any
cogent evidence in support of its defence. Therefore, accused has not been able to
dislodge the presumption which is raised in favour of the complainant firm.
THAT POWER OF ATTORNEY HOLDER IS NOT COMPETENT TO FILE THE
PRESENT COMPLAINT
39. Ld. Counsel for accused has relied upon S.P. Sampathy Vs. Smt. Manju Gupta & Anr.
2002 111 CompCase 492 AP; U.C. Saxena Vs. Sh. Madan Mohan, (1993) 104 PLR
161 to contend that under the mandate of Section 142, NI Act, a complaint under
Sec.138 NI Act can only be filed either by a payee or a holder in due course and since
Mr. Manoj Gupta was neither of the two qua the cheques in question, therefore the
present complaint warrants dismissal. Per contra, the counsel for the complainant has
contended that the filing of the complaint by a power of attorney is completely valid in
view of the pronouncement in the case of Vinita S. Rao Vs. Essen Corporate Services
Pvt. Ltd. 2015 AIR (SC) 882: 2014 (12) JT 366.
40. This court is unable to accept the argument of the accused as the law has been settled
by the Hon'ble Supreme Court of India in the judgement of AC Narayanan v. State of
Maharashtra 2014 11 SCC 709 where it has been held that filing of a complaint under
Sec.138, NI Act through a power of attorney holder is perfectly legal and competent.
The Hon'ble Apex Court has further clarified that the power of attorney holder, in order
to prove the contents of the complaint, is also competent to depose on oath, if he has
witnessed the transaction as an agent or he possesses requisite/necessary knowledge
about the facts of the present case.
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 21 of 25
41. In the present case, the power of attorney holder is Mr. Manoj Gupta. The factum of
him being conversant with the facts of the present case has been mentioned both in the
complaint as well as the evidence affidavit. In addition to the above, the transactions in
question have been witnesses by the power of attorney holder himself which is duly
corroborated by the signatures of Power of Attorney holder upon the invoices on record.
42. It has been further contended that since the power of Attorney holder could not tell as
to whether or not executant, Mr. Manish Gupta was present in the office of the advocate
at the time of signing of the power of attorney, therefore it cannot be said that he was
aware of the facts of the present case. The court is unable to accept the contention of the
accused. The knowledge of power of attorney qua facts of the case has to be viewed
holistically. The power of attorney holder has brought on record evidence as highlighted
in the preceding paragraphs to prove his case which has remained unrebutted by the
accused and in the given circumstances, it cannot be said that the power of attorney does
not have personal knowledge of the transaction.
THAT THE CHEQUES IN QUESTION WERE ISSUED AS SECURITY CHEQUES
43. DW-1, the accused has stated in his examination-in-chief that the cheques in question
were issued as blank signed security cheques to the complainant for the supply of iron
rods to Uday Estate Pvt. Ltd. (sister concern of the accused company), however no
material was supplied either to Ganpati Buildtech private ltd. or Uday Estate Pvt. Ltd.
The defence of the accused is pivoted around the contention that the complainant
misused the cheques that the accused had given to him earlier as security for the supply
of material.
44. This defence of the accused is nothing more than a bald assertion. At nowhere has the
accused produced anything on record to back this claim. The accused could have
produced proof of any written correspondence to the complainant stating that no
material was supplied. However, when he was enquired about the same, he stated that
only verbal information was given by him to the complainant.
45. Even if for the sake of arguments, it is believed that the complainant did not supply the
iron rods to the accused, the conduct of the accused is not justifiable as he did not send
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 22 of 25
a notice to the complainant for return of the impugned cheques or did not lodge any
criminal complaint against the complainant either. Further, he has not even examined
any person who was privy to the transaction who could have deposed that supply was
not made by the complainant. These lapses on part of the accused makes their version
unbelievable.
46. Further, Ld. Counsel for the accused has pointed out that the series of the cheques would
show that the cheques were given consecutively w.e.f. 20.09.2012 till 25.09.2012 for a
total amount of Rs.26,63,264/-. He has contended that the cheques in question have been
misused by the complainant as in normal circumstances, the accused would have given
post-dated cheques instead of giving 6 security cheques of consecutive dates. This
argument of the accused lacks merit and is rejected. The signatures on the cheques in
question are admittedly of the accused and the handing over of the cheques in question
as advance security cheques to the complainant for the supply of iron rods is also not
denied. The law on inchoate instruments is trite as Section 20 of the NI Act states that
when the drawer of a cheque hands over an inchoate cheque to a payee, prima facie an
authority is given to the payee to complete the instrument. It has also been held in Bir
Singh v. Mukesh Kumar (2019) 4 SCC 197 that, a blank signed cheque leaf, voluntarily
signed and handed over by the accused to the complainant, which is towards some
payment, would attract presumption under Section 139 of the NI Act, in the absence of
any cogent evidence to show that the cheque was not issued in discharge of a debt.
47. Moving on, the next argument of the counsel for the accused is that no explanation has
been tendered by the complainant on record as to why the cheques in question were
presented for encashment after a period of almost 40 days from their date of issuance.
It has been contended that the version of the complainant is concocted as despite having
received the cheques in question 5 days after the alleged supply of goods, he waited
until 40 days to present the same for encashment. This argument also lacks merit and
hereby rejected. The validity of any cheque is three months from the date of its issuance
as per the RBI Circular bearing no. RBI/2011-12/251 DBOD.AML
BC.No.47/14.01.001/2011-12 dated November 4, 2011. The law on presentation of
cheques has been succinctly laid down in the judgement of MSR Leathers v.
S.Palaniappan, (2013) 1 SCC 177 which states that every cheque presented within its
stipulated time would give rise to a fresh cause of action on its dishonour, meaning
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 23 of 25
thereby that a cheque may be presented as many times within its period of validity. This
leads us to the conclusion that once a cheque has been issued then it may be presented
any time during its validity and that there is no requirement for it to be presented
forthwith after being issued.
48. Hence, in view of the discussion in the foregoing paragraphs, the inevitable conclusion
is that the accused has failed to rebut the onus put on him by virtue of the presumptions
enshrined in Section 118 and 139 of the NI Act. Therefore, the second ingredient also
stands proved against the accused.
CONCLUSION
49. The present complaint case has been prosecuted against accused no. 1 M/s Ganpati
Buildtech Pvt. Ltd., accused no.2 Mr. Abhishek Gupta and accused no.3 Mr. Ajay
Gupta. Section 141 of the NI Act lays down that when the person committing an offence
under section 138 is a company, then every person who, at the time the offence was
committed, was in charge of, and was responsible to the company for the conduct of the
business of the company, as well as the company, shall be deemed to be guilty of the
offence and shall be liable to be proceeded against and punished accordingly.
50. In the present case, the cheque has been drawn by accused no.1 company upon its
account and accused no. 3 has signed the cheque in question for and on behalf of accused
no. 1 company as has been admitted by accused no.3 in his statement recorded under
Sec.313, CrPC and as was also deposed by DW1(accused no.2) in his examination-in-
chief. In addition to the same, DW1(accused no.2) has expressly admitted that he has
been a director of M/s Ganpati Buildtech Pvt. Ltd. since 2006. Even otherwise, it has
not been stated, whether expressly or impliedly by either accused no.2 or 3 that they
were not in charge of day-to-day affairs of the company. Thus, in view of the discussion
above, accused no.2 and 3 are prima facie vicariously liable in the capacity of being
directors of accused no.1 company for the offence committed by accused no.1 company
under Sec.138, NI Act, in view of the law laid down in National Small Industries Corp.
Ltd. v. Harmeet Singh Paintal, 2010 (2) SCALE 372.
51. Resultantly, the complaint of the complainant Manish Gupta through its power of
attorney holder is allowed and the accused no. 1 M/s Ganpati Buildtech Pvt. Ltd.,
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 24 of 25
accused no.2 Mr. Abhishek Gupta and accused no.3 Mr. Ajay Gupta are hereby
convicted of the offence under Section 138 of the Negotiable Instruments Act, 1881.
Let the convict be heard separately on quantum of sentence.
52. A copy of this judgment be given free of cost to the convict.
ISHA Digitally signed
by ISHA SINGH
SINGH 17:11:04 +05'30'
Date: 2022.03.16
ORDER:CONVICTED (Isha Singh) Announced in open court MM / NI Act -03 / Central on 16.03.2022 Delhi /16.03.2022 Note: This judgement contains 25 pages and each page has been signed by me.
CC No. 519887/16 Manish Gupta v. Ganpati Buildtech Pvt. Ltd. Page 25 of 25