Delhi District Court
CT CASES/629330/2016 on 7 November, 2022
Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises
CC No. 629330/2016
IN THE COURT OF MS. TWINKLE CHAWLA: MM, NI ACT-02, SOUTH-
EAST DISTRICT, SAKET COURTS COMPLEX: NEW DELHI
Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises
CC No. 629330/2016
U/s 138 Negotiable Instruments Act, 1881
1. CIS number :
DLSE020102432015
2. Name of the Complainant : M/s Sheel Biotech Ltd.
3. Name of the Accused, : Sh. Om Prakash Singh, Proprietor, M/s
parentage & residential Maa Ambey Enterprises, Maheshiya
address Bazar, Station Shital Pur, P.O. Patti Shital,
Tehsil-Parsa, Dist.- Saran, Bihar-841222.
4. Offence complained of or : U/s 138 of Negotiable Instruments Act,
proved 1881
5. Plea of the Accused : Pleaded not guilty and claimed trial
6. Final Judgment/order : ACQUITTAL
7. Date of judgment/order : 07.11.2022.
JUDGMENT
1. The Complainant has filed the present complaint under Section 138/142 of Negotiable Instruments Act, 1881 ("NI Act") against the Accused on the averments that the Accused firm had business transactions with the Complainant and the Page 1 of 18 Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 Complainant had supplied agricultural products to the Accused. As per the Complainant, the Accused had to pay a sum of Rs. 4,32,714/- to the Complainant against supply of agricultural products by the Complainant.
2. As per the Complainant, the Accused in discharge of his liability, issued a cheque bearing No. 031997, drawn on State Bank of India, Sutihar Branch, Bihar of Rs.4,32,714/-, dt. 13.10.2015, in favour of the Complainant ("Cheque in question"). The Cheque in question was dishonored on grounds of funds insufficient, by way of return memo dt. 20.10.2015.
3. The Complainant sent the legal demand notice dated 05.11.2015 through speed post on 07.11.2015 at address of the Accused. Hence, despite the service of the legal demand notice, the Accused failed to make the payment within the stipulated period and the Complainant filed the present complaint.
4. After taking pre-summoning evidence, Accused was ordered to be summoned in this case for commission of offence under Section 138 NI Act, vide order dated 19.12.2015.
5. Accused appeared and was released on bail on 03.10.2016. On finding a prima facie case, notice U/s 251 of the Criminal Procedure Code, 1973 ("CrPC") was served upon the Accused on 05.12.2016 to which he pleaded not guilty and opted to contest after disclosing the following defence:
"I do not plead guilty and claim trial. Complainant company appointed Page 2 of 18 Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 my proprietorship concern as retail distributor at Saran, Bihar. As per ordinary trade practice, I gave one blank unsigned cheque to the Complainant for security purpose. I did not receive legal notice. "
6. Vide order dated 01.08.2017, opportunity was granted to the Accused to cross examine the Complainant. The Complainant examined its AR Sh. Rishabh Bhutra as CW2, who tendered his post-summoning evidence affidavit, Ex. CW2/A and also proved following documents:
Ex. CW1/2: Original Cheque bearing no. 031997 dt.
13.10.2015 amounting to Rs. 4,32,714/-.
Ex. CW1/3: Original Cheque Return Memo dated 20.10.2015.
Ex. CW1/4: Copy of legal demand notice dated 05.11.2015.
Ex. CW1/5: Original Postal Receipt in respect of the legal demand notice.
Ex. CW1/6: Original Postal Receipt in respect of the legal demand notice.
Ex. CW1/7: Return Envelope along with AD.
Ex. CW1/8: Return Envelope along with AD.
Ex. CW1/9: Complaint U/s. 138 NI Act.
Ex. CW2/1: Extract of the Board Resolution dt.
24.10.2018, in favour of the AR, Rishabh Butra.
Ex. CW2/2: True copy of the Statement of Account.
Ex. CW2/3: Letter in the name of the Accused firm dt.
11.09.2014.
Ex. CW2/4 to Copies of the invoices raised towards the Ex. CW2/16: supplies, made to the Accused by the Complainant.
Ex. CW2/17 Copies of the challans issued by the
to Ex. Complainant towards the supplies, made to
Page 3 of 18
Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises
CC No. 629330/2016
CW2/28: the Accused.
Ex. CW2/29: Agreement to appoint Accused as a
distributor of the Complainant dt.
15.07.2013.
Ex. CW2/30: Certificate u/s 65 (b) of the Indian Evidence
Act, 1872.
7. Complainant Evidence was closed vide separate statement of AR of the Complainant on 20.12.2021.
8. Thereafter, Accused was examined under Section 313 of CrPC on 26.02.2022 for explaining the circumstances appearing against him in the Complainant's evidence. He denied the Complainant's case and pleaded false implication in the present case and opted to lead evidence in his defence. The Accused examined himself as DW1, and DE was closed vide separate statement of the Accused on 06.07.2022.
9. I have heard Ld. Counsel for the parties and have perused the case file along with the written submissions filed by the parties carefully and meticulously. Submissions of the Complainant and Accused
10.The Ld. Counsel for the Complainant has submitted that all ingredients of Section 138 NI Act are fulfilled in the present case and hence, the presumption under Section 139 NI Act arises in the favour of the Complainant, which has not been successfully rebutted by the Accused.
11.Per contra, Ld. Counsel for the Accused has submitted that the Accused deserves Page 4 of 18 Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 to be acquitted as the Complainant has failed to prove the liability of the Accused to the tune of Rs. 4,32,714/- and by way of the settlement letter, the Complainant itself has shown the liability of the Accused to be less than the amount of the cheque in question. Hence, as per the Ld. Counsel for the Accused, the Accused has rebutted the presumption by way of preponderance of probabilities. Legal Framework Ingredients of Section 138 NI Act:
12.The Hon'ble Supreme Court of India in Kusum Ingots & Alloys Ltd and Ors v. K Pennar Peterson Securities Ltd and Ors., (2000) 2 SCC 745 ("Kusum Ingots Case"), has clearly stipulated that "the ingredients which are to be satisfied for making out a case under the provision are:
(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 for the discharge of any debt or other liability; 1
(ii) 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;
(iii) that cheque is returned by the bank unpaid, either because of the amount of 1 Reduced to three months vide RBI circular dated 4.11.2011. Page 5 of 18
Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 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;
(iv) 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 2 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
(v) 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;
If the aforementioned ingredients are satisfied then the person who has drawn the cheque shall be deemed to have committed an offence."
13.Therefore, if the aforesaid ingredients are made out, the Accused is deemed to have committed an offence under Section 138 NI Act.
Presumption under Section 139 NI Act/Section 118 NI Act:
14.Section 139 NI Act states that:
"Presumption in favour 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 2 The same is now enhanced to 30 days.Page 6 of 18
Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 in section 138 for the discharge, in whole or in part, of any debt or other liability"
15.Section 139 NI Act is a type of reverse onus clause, which stipulates a presumption in the favour of the Complainant as to fact of a cheque being received in discharge of a legal debt or liability.
16.Further, Section 118(a) of the NI Act, states as follows:
"Presumptions as to negotiable instruments. -- Until the contrary is proved, the following presumptions shall be made:
(a) of consideration --that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;"
17.The Hon'ble Supreme Court of India has in a number of judgments dealt with the combined effect of the presumptions raised under Section 139 and Section 118(a) NI Act.
18.The following proposition can be summarized on a perusal of the judgments of the Hon'ble Supreme Court of India in Sunil Todi & Ors v. State of Gujarat, LL 2021 SC 706, Kalamani Tex v. P. Balasubramanian, 2021 SCC OnLine SC 75; APS Forex Services Pvt. Ltd. v. Shakti International Fashion Linkers and Ors., AIR 2020 SC 945; Rohitbhai Jivanlal Patel v. State of Gujarat and Ors., AIR 2019 SC Page 7 of 18 Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 1876; Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513; K.N. Beena v. Muniyappan and Anr., (2001) 8 SCC 458; and Dhanvantrai Balwantrai Desai v. State of Maharashtra, 1964 Cri. LJ 437:
(i) Once the execution of cheque is admitted; Section 139 of the NI Act mandates a presumption that the cheque was for the discharge of legally enforceable debt or liability;
(ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the Accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities;
(iii) Something which is probable has to be brought on record by the Accused for getting the burden of proof shifted to the Complainant. To disprove the presumptions, the Accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist;
(iv) The words "unless the contrary is proved" which occur in Section 139, make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the Page 8 of 18 Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by Section 139 NI Act cannot be said to be rebutted;
(v) 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;
(vi) 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.
Analysis
19.In the case at hand, it is not in dispute that the cheque in question was drawn by the Accused from the bank account of his proprietorship concern. The Accused has submitted that he has not signed the cheque in question. He has taken the same defence at the time of framing of notice, statement u/s. 313 CrPC as well as defence evidence. He has stated that he had given the cheque as an unsigned blank cheque to the Complainant for security. No evidence has been led by either side, by the Complainant, to prove the signature, or by the Accused to disprove the signature. However, it is noteworthy to mention that the cheque in question was dishonored Page 9 of 18 Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 on grounds of funds insufficient and not drawers signature differs. Further, even the Accused has in his statement u/s. 313 CrPC admitted that the cheque in question was dishonored on grounds of funds insufficient. Hence, it is taken that the cheque in question was signed by the Accused. No evidence has been led by the Accused to contradict the fact of his signature. Presentation of the cheque in question by the Complainant is also not in dispute, the dishonor of the cheque in question on grounds of funds insufficient is also not in dispute, having been admitted by the Accused in statement U/s. 313 CrPC.
20.While the receipt of the legal demand notice has been denied by the Accused, it is seen that the said notice was returned on account of refusal, which is evident from the endorsement on Ex. CW1/7 and Ex. CW1/8. It is trite law that refusal is deemed service. Further, in any event, it is seen that the address mentioned on the legal demand notice is the same address as mentioned by the Accused in his bail bonds. Accordingly, a presumption of due service is drawn U/s. 27 of the General Clauses Act.
21.Thus, the legal demand notice Ex. CW1/4 is held to have been duly served upon the Accused. Finally, the complaint has been filed within the limitation period. Therefore, essential ingredients (i) to (v) as stipulated by the Hon'ble SC in Kusum Ingots Case (supra), have been duly satisfied.
22. Further, as noted above, once the execution of the cheque by the Accused is proved/admitted, the presumption of the same being drawn for consideration stands Page 10 of 18 Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 attracted in terms of Section 139 NI Act. The Ld. Counsel for the Accused has stated that such inference cannot be drawn as the cheque in question was given as a blank cheque and the particulars on the same have been filled by or at the instance of the Complainant. At this stage, reliance can be laid on the observations of the Hon'ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197; wherein it has been held that:
"It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted...
38. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the Accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence...
40. Even a blank cheque leaf voluntarily signed and handed over by the Accused, which is towards some payment, would attract presumption Under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
(emphasis supplied) Page 11 of 18 Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016
23.The same view has been endorsed by the Hon'ble High Court of Delhi in Ravi Chopra v. State, CRL.M.C. 5211/2006.
24.Hence, in view of such clear stipulation by the Hon'ble Supreme Court and Hon'ble Delhi High Court, it is immaterial whether or not the particulars on the cheque have been filled by the Accused or not, to the extent the Accused has appended his signatures on the cheque in question. Accordingly, the applicability of the presumption under Section 139 NI Act is not dependent upon the Accused filling the particulars on the cheque. Accordingly, it is required to be presumed that the cheque in question was drawn for consideration and the holder of the cheque i.e., the Complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the Accused to establish a probable defence so as to rebut such a presumption.
25.In the segment on legal framework, set out above, the legal proposition with respect to the burden of proof upon the Accused has already been discussed. Hence, it is now to be examined as to whether the Accused brought any material on record or pointed out glaring discrepancies in the material produced by the Complainant for dislodging the presumption which meets the standard of preponderance of probabilities.
26.The Accused in the present case, has taken the following line of defence with a view to rebut the presumption:
Page 12 of 18
Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016
a) Cheque in question were issued as security cheques:
27.The Accused in his defence u/s 251 CrPC as well examination u/s 315 CrPC has submitted that the cheque in question was given as a security cheque and hence, the provisions of Section 138 NI Act do not apply. In this regard, it is noted that the Hon'ble High Court of Delhi in Suresh Chandra Goyal v. Amit Singhal, Crl. L.P, 706/2014 has succinctly observed that:
"Section 138 of NI Act does not distinguish between a cheque issued by the debtor in discharge of an existing debt or other liability, or a cheque issued as a security cheque on the premise that on the due future date the debt which shall have crystallized by then, shall be paid. So long as there is a debt existing, in respect whereof the cheque in question is issued, in my view, the same would attract Section 138 of NI Act in case of its dishonour."
28.Therefore, the defence of the cheque being a security cheque does not by itself rebut the presumption, as it appears that if on the date of presentment of cheque, liability of the Accused existed towards the Complainant, the same would fall under Section 138 NI Act, even if the same was issued as a security cheque; and hence, it is not relevant if the cheque in question was issued with the intent of being a security cheque. In fact, the Hon'ble Supreme Court in a recent judgment of the Sunil Todi Case (supra), has held that the provisions of Section 138 NI Act apply to cheques issued on advance basis as well, if at the time of presentation of the same, liability exists. It was observed that:
Page 13 of 18
Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 "The object of the NI Act is to enhance the acceptability of cheques and inculcate faith in the efficiency of negotiable instruments for transaction of business. The purpose of the provision would become otiose if the provision is interpreted to exclude cases where debt is incurred after the drawing of the cheque but before its encashment. In Indus Airways, advance payments were made but since the purchase agreement was cancelled, there was no occasion of incurring any debt. The true purpose of Section 138 would not be fulfilled, if 'debt or other liability' is interpreted to include only a debt that exists as on the date of drawing of the cheque."
29.Hence, unless it is shown that no liability existed on the date of presentation, either because no goods were supplied or that the payment was already made by other modes; provision of Section 138 NI Act would apply to cheques issued on an advance basis as well. Accordingly, this argument/defence of the Accused, by itself, does not rebut the presumption u/s 139 NI Act.
b) The liability of the Accused is not of the amount of the cheque in question:
30.It is the case of the Complainant that the Accused had taken goods on credit from the Complainant, from time to time and was liable to pay an amount of Rs.
4,32,714/- as on 31.03.2015. However, perusal of Ex. CW2/3, which has been filed by the Complainant itself, shows that the said document is a request sent by the Accused for full and final settlement of account and it has an endorsement by one Page 14 of 18 Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 Sh. Ajit Kumar, ASM (Bihar), of the Complainant Company. It has been stated in Ex. CW2/3 by ASM (Bihar), that after the clearance of outstanding amount of Rs. 2,39,846/- by the Accused, there would be no amount left due from the Accused. While in the course of final arguments, Ld. Counsel for the Complainant has submitted that the said letter was endorsed by the employee of the Complainant company only as one time settlement and was a reduction of the total liability, otherwise due from the Accused, the said understanding is not reflected in Ex. CW2/3 and it only appears that as per Ex. CW2/3, the total outstanding liability of the Accused was Rs. 2,39,846/-. Further perusal of the cross-examination of the AR of the Complainant conducted on 20.12.2021 shows that AR of the Complainant has stated that he knows Sh. Ajit Kumar Singh, who was the ASM of the Complainant Company and has also accepted that Ex. CW2/3 was executed between Accused and the Complainant company, on instructions. He has further admitted that the liability ascertained in Ex. CW2/3 was with the consent of the officials of the Complainant Company. It is pertinent to note that the AR of the Complainant as part of his cross-examination, has not clarified that Ex. CW2/3 was only a one-time settlement between the Complainant and the Accused. Even in paragraph 09 of the evidence affidavit filed by CW2, i.e., Ex. CW2/A, the letter has been described as acknowledgment by the Accused as part of the liability, and it has not been stated that the said letter was a one-time settlement. As discussed above, in Ex. CW2/3, the official of the Complainant Company has categorically noted that after payment of Rs. 2,39,846/-, no other amount would be due from the Page 15 of 18 Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 Accused. Additionally, the said document was executed on 11.09.2014 and in the cross-examination of the AR of the Complainant, the AR has stated that he does not know whether any goods were supplied to the Accused after 11.09.2014. However, he has admitted that on the perusal of the documents on record, no supply of goods or material to the Accused, is shown after 11.09.2014. Hence, it is the case of the Accused that the Accused does not have the liability of the cheque amount, even as per the case filed by the Complainant. A perusal of Ex. CW2/2, which is the statement of account filed by the Complainant, also shows that after 31.03.2014, there was no sale made to the Accused. In addition to this, the Accused has stated that the Complainant Company had taken away stock from the market directly and without notice to him and hence he could not pay the amount of Rs. 2,39,846/- to the Complainant. He has further stated that after some time, i.e., after 2013, the Complainant started providing him goods of inferior quality. AR of the Complainant has pleaded ignorance with respect to the said facts. He has also admitted that some of the delivery challans/ invoices filed by the Complainant do not bear the signature of the Accused and has stated that the same is due to the mistake of the officials of the Complainant Company.
31.On the other hand, the Accused has denied the receipt of goods pursuant to the challans and has stated that he has only signed two challans, i.e., Ex. CW2/27 and Ex. CW2/28. He has also raised a dispute to the genuineness of the invoices filed by the Complainant, i.e., Ex. CW2/4 to Ex. CW2/16, except the invoices Ex. CW2/4, Ex. CW2/6, Ex. CW2/8, Ex. CW2/12 and Ex. CW2/14. The cumulative Page 16 of 18 Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 value of the admitted invoices is about Rs. 1,66,245/-, which is also less than the cheque amount. Further, even the AR of the Complainant has admitted that some of the delivery challans/ invoices filed by the Complainant do not bear the signature of the Accused and has stated that the same is due to the mistake of the officials of the Complainant Company. In fact, the Accused has stated that he received the goods only under two delivery challans, i.e., Ex. CW2/27 and Ex. CW2/28; and not under the others. A perusal of Ex. CW2/27 and Ex. CW2/28, shows that the said challans have been signed and stamped by the Accused; but the other challans, i.e., Ex. CW2/17, Ex. CW2/18, Ex. CW2/19, Ex. CW2/20, Ex. CW2/21, Ex. CW2/24, Ex. CW2/25, Ex. CW2/26 bear the name of the Accused in English and not his signature; and Ex. CW2/22, Ex. CW2/23 do not bear any acknowledgment at all. This discrepancy also raises a doubt as to the supply of the goods.
32.In light of the aforesaid discussion, it appears that the Accused has by way of cross- examination and defence evidence raised a probable doubt as to the non-existence of the liability of the complete cheque amount towards the Complainant. It is settled law that while the Accused has to prove his defence by the standard of preponderance of liability, the Complainant is required to prove the case beyond all reasonable doubt. In the present case, the Accused has successfully rebutted the presumption u/s. 139 NI Act by the standard of preponderance of probabilities, but the Complainant has failed to prove the case beyond all reasonable doubt. Page 17 of 18
Sheel Biotech Ltd. v. M/s Maa Ambey Enterprises CC No. 629330/2016 Conclusion:
33.In these circumstances and in view of the above detailed discussion, this court is of the considered opinion that the Accused has successfully rebutted the presumption under Section 139 of Negotiable Instruments Act, 1881 and ingredients of Section 138 of Negotiable Instruments Act, 1881 have not been fully proved. Therefore, Accused is held not guilty and is acquitted for commission of offence punishable under Section 138 of the Negotiable Instrument Act, 1881.
ORDER: ACQUITTAL
Announced in Open Court (Twinkle Chawla)
MM (NI-Act 02), South East
Saket Court, New Delhi
Note: This judgment contains 18 pages and each page has been signed by me.
(Twinkle Chawla) MM (NI-Act 02), South East Saket Court, New Delhi Page 18 of 18