Delhi District Court
The Judgement Titled As K. Bhaskaran vs . Sanakaran Vaidhyan on 15 April, 2014
IN THE COURT OF SH. ASHU GARG,
Judge, Small Causes Court -cum- Addl. Senior Civil Judge -cum-
Guardian Judge -cum- Metropolitan Magistrate (New Delhi),
Patiala House Courts, New Delhi
CC No. 47/13
Unique Case ID No. 02403R0396372008
Date of Institution: 07.04.2008
Date of reserving judgement: 18.03.2014
Date of pronouncement: 15.04.2014
In re:
M/s. Indo Asian Fusegear Ltd.
207-208, Hemkunt Tower,
98, Nehru Place, New Delhi-110001 ... Complainant
versus
Sh. Rajiv Aggarwal
Proprietor, M/s. R. S. Distributors
Shop No. 7, Sitapur Road, Purania,
Lucknow-226021, UP ... Accused
JUDGMENT:
1.The present complaint under section 138 of the Negotiable Instruments Act, 1881 (NI Act) has been filed with respect to dishonour of a cheque issued in favour of the complainant company by the accused. The complainant is a Limited Company engaged in manufacturing and marketing of electrical protection devices including switchgear, fusegear, CFLs, etc. This case pertains to non CC No. 47/13 Page 1 of 18 payment of the amount despite expiry of 15 days from the service of a demand notice with respect to dishonour of a cheque bearing no. 003888 dated 21.01.2008 for Rs. 4,28,523.77/- drawn on Allahabad Bank, Daliganj, Lucknow.
2.Briefly stated, the case of the complainant is that it had supplied various materials to the accused based at Lucknow. Towards payment of his outstanding dues qua the said material so supplied, the cheque in question was issued. However, when the said cheque was presented, the same was returned unpaid with the reasons "funds insufficient" vide memos dated 09.02.2008 and 13.02.2008. The complainant then sent a legal notice dated 29.02.2008 to the accused that was dispatched on 04.03.2008. A corrigendum of the same with respect to the error in the name of the proprietorship concern was issued on 07.03.2008. Both the said letters were received back undelivered. When no payment was made by the accused despite deemed service of the demand notice, the present complaint was filed in the court.
3.Pre-summoning evidence was lead by the complainant, on the basis of which the accused was summoned vide order dated 07.04.2008. The accused appeared and notice under section 251 CrPC for the offence under section 138 NI Act was framed against him on 15.01.2009, to which he pleaded not guilty and claimed trial.
CC No. 47/13 Page 2 of 184.At the trial, the complainant examined its AR Sh. Puneet Sharma as the sole witness. He filed his affidavit and reiterated the contents of the complaint and proved the necessary documents including the Board Resolution Ex. CW-1 whereby he was authorized to depose on behalf of the complainant company. He proved the cheque in question Ex. CW-1/A, cheque returning memos Ex. CW-1/2, Ex. CW-1/3 and Ex. CW-1/4, legal notice Ex. CW-1/5 with postal receipts Ex. CW-1/6 and Ex. CW-1/7, corrigendum Ex. CW-1/8 with postal receipt Ex. CW-1/9 and the undelivered envelopes Ex. CW-1/10 and Ex. CW-1/11. The witness was duly cross examined by the defence wherein he admitted that no statement of account or balance sheet reflecting outstanding amount against the accused has been filed by them. He denied that the cheque was issued blank, only as security, or that nothing was due on the part of the accused towards the complainant.
5.Statement of the accused under section 313 CrPC was recorded on 02.03.2013 wherein he denied the allegations and pleaded innocence, claiming that the cheque was given blank as security and its contents were not filled by him. He took defence that his claims qua rejection of some goods was pending against the complainant company which was yet to be settled and since the claim was not settled, he gave stop payment instructions to his bank. He denied any liability to pay the cheque amount and also pleaded that the transactions took place in Lucknow and not in Delhi.
CC No. 47/13 Page 3 of 186.The accused chose to lead evidence in defence and examined himself as DW-1. He filed his affidavit Ex. DW-1/A and claimed that several defective goods were returned to the complainant by him which were never credited to him despite his requests. He reiterated that the cheque was given blank as security which was misused by the complainant after filling it with an arbitrary amount. It is submitted that after the settlement of claims, it is he who is entitled to recovery of Rs. 4,45,674.58/- from the complainant, for which a civil suit for recovery has also been filed at Lucknow. He also proved a letter Ex. PW-1/10 whereby stop payment instructions was given by him to his bank. He also proved the letter written to the complainant in this regard Ex. AW-1/11. He was duly cross-examined by the Ld. Counsel for complainant, wherein he admitted that the credit notes were to be issued to him in case of any adjustment. He denied that goods sent back by him were beyond the warranty period and were not acceptable. Though he admitted his signatures on the cheque, yet denied his liability to pay the amount mentioned therein.
7.It is in these circumstances, Ld. Counsel for Complainant has argued that the complainant has been able to prove its case beyond reasonable doubt as all the ingredients have been established by the AR of the complainant and his testimony is duly supported by the presumptions of law in his favour.
8.On the other hand, Ld. Defence Counsel has argued that the present complaint is liable to fail, primarily because the complaint has failed CC No. 47/13 Page 4 of 18 to bring on record any documentary evidence to show as to how much amount was due and what was the extent of liability of the accused. It is submitted that a bare perusal of the cheque would show that its contents were filled by the complainant. Receipt of the legal notice has been denied by relying on unserved envelopes and it is submitted that no cause of action took place in Delhi.
9.I have heard the arguments advanced by both the sides and have carefully perused the material available on record.
10.Before proceeding to the merits of the case, it is pertinent to note that in this case, the evidence of the defence witness was given on the affidavits by the accused, though the Hon'ble Supreme Court in Mandvi Co-operative Bank Ltd. v. Nimesh B. Thakore [(2010) 3 SCC 83] has held that the evidence on behalf of the accused cannot be by way of affidavit. However, no such objection had been by any of the sides at the time of evidence. No such objection has been taken even during the course of the arguments. As such, the court is considering the said evidence accordingly.
11.The law with respect to offences punishable under section 138 of the Act is well settled. The law has been laid down by the Hon'ble Supreme Court of India, in the precedent titled as M/s. Kumar Exports v. M/s. Sharma Carpets [2009(2) SCC 513], wherein it has been held that:
CC No. 47/13 Page 5 of 18"The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by CC No. 47/13 Page 6 of 18 consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act. The accused has also an option to prove the non-existence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue".
12.The Hon'ble Court had reiterated its earlier view so laid down in case titled as M. S. Narayana Menon v. State of Kerala [AIR 2006 SC 3366].
13.Coming to the jurisdiction aspect of this court, it is clear that the cheque in question had been deposited by the complainant at Delhi. In CC No. 47/13 Page 7 of 18 the judgement titled as K. Bhaskaran Vs. Sanakaran Vaidhyan Balan [(1999) 7 SCC 510 ], it has been held that such a case under section 138 NI Act can be filed at various places including where the cheque has been drawn, where it is presented, where it is returned, where there is failure to make payment. Though the point of sending notice has been clarified by the Hon'ble Supreme Court of India in judgement titled as Harman Electronics (P) Ltd. v. National Panasonic India Ltd. [(2009) 1 SCC 720], yet the other points still hold the ground. In the case in hand, the complainant is based at Delhi, and the cheque was presented to a bank at Delhi. Such presentation of a cheque would give the Delhi courts jurisdiction to deal with the matter as part of cause of action arose at Delhi as well. In view of this position, it cannot be said that the Delhi courts would not have jurisdiction to deal with the matter.
14.Moving ahead, it is seen that the factum of the cheque in question to have been issued by the accused and drawn on a bank account maintained by him or the cheque bearing his signatures, has not been denied by the accused. It is not his defence that the cheque does not bear his signatures, or that his signatures was forged, or that it was not drawn on his bank account.
15.The accused has however, denied the contents on the same to have been filled by him. In this regard, Ld. Counsel for complainant as argued that merely because the contents of the cheques have been filled by a person other than the signatory accused, that would not CC No. 47/13 Page 8 of 18 render the cheque invalid and the same has to be honoured if there existed a debt or liability as on the date of cheque. It is submitted that once the signatory hands over a signed cheque to any person with some of its columns left blank, he gives an implied authority to the said other person to fill the blank columns. It is submitted that merely because the contents of the cheque appear in different inks or handwritings, that would not invalidate the cheque.
16.I find myself in agreement with the said argument as the same is now well recognised and settled proposition of law. It is well settled that a cheque would not be rendered invalid just because its contents appear in different inks or handwritings. There is no rule of law that requires all the contents of the cheque to be filled by the drawer/signatory only. If a cheque is signed by the drawer and handed over to another, he gives an implied authority to the said other person to fill the contents of the persons. However, this would in no manner mean that the contents of a blank cheque can be filled up by another person by anything as per his whims or fancies. In my considered view, such filling the contents of a blank cheque can be only up to the extent of 'implied authority' and not beyond the same. Such a person cannot exceed his implied authority given by the drawer. For example, if an employer gives a blank cheque to his employee with instructions to withdraw a sum of Rs. 10,000/- from his bank account, the employee gets implied authority to fill the cheque only for Rs. 10,000/- and nothing beyond it. He cannot fill the amount of Rs. 1,00,000/- or any other amount, on the ground that by giving the blank CC No. 47/13 Page 9 of 18 cheque, he had implied authority to fill any amount which he wished. The contents of a blank cheque can be filled only within the four corners of the implied authority given by the drawer. It cannot be stretched to the extent that a holder may fill it with anything and everything as per his own free will. And if the blank cheque is filled beyond such authority, it would mean material alteration and such a cheque shall be rendered invalid. Thus, the court has to see if there was existing debt or liability qua which the cheque had been issued.
17.In Krishna Janardhan Bhat v. Dattatraya G. Hegde [2008(1) RCR (Criminal) 695] is clear, as also relied upon by the accused, it has been laid down that though there is a presumption under section 139 NI Act that the cheque had been issued towards the discharge of a debt or liability, yet the existence of a legally enforceable debt is not a matter of presumption and this burden has to be necessarily discharged by the complainant himself. The courts cannot presume existence of such debt just on the strength of an issued cheque.
18.In the present case, it is seen that the complainant has not placed on record any material whatsoever to show and justify the amount mentioned in the cheque in question. No statement of account, ledger/accounts, bills/invoices, purchase orders, delivery challans, estimates, etc. have been placed on record by the complainant, so as to give any basis as to how the amount of the cheque was arrived at. The accused has disputed this amount and the correctness of this value. In such a position, it was the responsibility of the complainant to have CC No. 47/13 Page 10 of 18 established by leading positive evidence to explain as to how this amount was arrived at for which the cheque was issued or filled. Perusal of the cheque would show that its contents were not filled by the accused at the time it was signed. Had it been so, there was no reason for the signatory for not filling up the amount immediately in his own hand, particularly if the exact amount had been quantified and ascertained. Ordinarily in such a position, when the amount to be filed in a cheque is known, every drawer prefers to fill the same immediately. If the amount was not filled immediately by the drawer, he gave an implied authority to the other person to fill the same.
19.The amount filled in the cheque is apparently not an on-account or part payment. In such a case, the amount in all probabilities would have been in round figures. But the amount of the cheque to be 4,28,523.77/- would show that this figure must have been arrived at on some basis. Either it was the outstanding amount as per the account books of the complainant or the aggregate amount of some specific bills raised. However, no such material has been brought on record which could enable the court to ascertain if the said amount was actually due and legally recoverable, so as to satisfy the requirement of law qua issuance of the cheque. In the absence of any such record, it cannot be ascertained as to how this amount was calculated, on what basis, whether it was correct, whether it was legally enforceable, etc. The accused did not get any opportunity to question the CW-1 as to the correctness of the entries made in their statement of the accounts, as per which this amount was calculated and filled. As such, in the CC No. 47/13 Page 11 of 18 absence of any material whatsoever to show this amount to be outstanding and legally recoverable, the case of the complainant suffers from an inherent defect.
20.Evidence of the accused would show that the accused had returned certain goods to the complainant on the ground that they were defective. He also placed on record the documents pertaining to returning of goods which were duly accepted by the complainant, the letter written by him to his bank to stop the payment of the cheques as well as a letter written by him to the complainant raising said issues. The original documents were seen by the court when produced. The correctness and genuineness of these documents has never been questioned by the complainant at any stage of the case and it is nit its case that the said documents were fabricated or forged.
21.The examination of DW-1 would show that several goods were returned to the complainant for adjustment in his account. The complainant merely claimed that no such material was to be adjusted as his claim was beyond the warranty period. In this regard, it would be sufficient to note that by taking such a stand, the complainant has admitted the factum of the receipt of the goods, though taken a stand that his claim for the same was beyond the warranty period and was not acceptable.
22.Be that as it may, there is nothing on record to show that the said claim of the accused was ever rejected by the complainant. This is CC No. 47/13 Page 12 of 18 despite the fact that a letter Ex. AW-1/11 was written to the complainant by the accused, the receipt of which has never been denied by the complainant. It is thus clear that even till 31.07.2008, the accused has questioned the correctness of his liability and had been requesting the complainant to settle his accounts by adjusting his claims. It is nowhere on record to show that any such claims stood adjusted or considered or rejected, so as to give an authority to the complainant to fill the cheque with entire outstanding amount as reflected in their accounts, which have not even been produced in court. Thus, it is clear that the accounts had not been settled between the two sides and unless the accounts were settled, no outstanding liability could have been ascertained by any side unilaterally. The position would have been different in case it was established that the amount was filled by the accused himself, as in that case, the accused would have the burden to explain as to why he filled that particular amount. But when it is clear that when the amount was not filled by the accused, as he was actually disputing the accounts and requesting the complainant to settle the accounts, the matter becomes quite different.
23.The accused has also proved a letter Ex. AW-1/10 written by him to his banker for stop payment of three cheques, including the cheque in question. I do not find force in the submissions of the Ld. Counsel for the complainant that the accused has not proved this letter as per law as no bank witness has been examined in this regard. It is further pointed out that the cheque returning memo mentions te only reason of CC No. 47/13 Page 13 of 18 dishonour of a cheque as "funds insufficient" and not that the payment had been stopped by the drawer.
24.In this regard, it is to be seen that the document Ex. AW-1/10 was duly signed by the accused himself and proved to be so by the accused by examining himself as DW-1. Since the letter, receipt of which was duly acknowledged by the bank by putting its stamp, was proved by the accused, and no objection as to the mode of proof was taken by the complainant at that time, the same has to be taken as proved as per law. Bare perusal of the said letter would show that the accused had given stop payment instructions to this bank, specifically stating that the cheque was given blank under his signatures only as security and there were some disputes between the complainant and the accused with respect to the outstanding amount. The said conduct of the accused at the relevant time also gives force to his stand, as any prudent person would do the same.
25.There is again no force in the submission of the Ld. Counsel for the complainant that the stop payment instructions cannot be assumed as no such remark is there on the cheque returning memo. It is well settled that a cheque returning memo is not the sole and conclusive evidence to ascertain the correctness of the reasons mentioned therein. Though there is presumption of evidence about dishonour of cheque on the basis of bank memo, yet the said is a rebuttable presumption and there is no presumption that remark mentioned by the bank cannot be ever questioned. There have been many instances where various CC No. 47/13 Page 14 of 18 reasons are mentioned in the cheque returning memo and insufficiency of funds is not clearly mentioned, primarily because that affects the credibility of the bank with its customers. Similarly, a bank might report only one of several reasons for dishonour of the cheque and just because it has omitted or neglected to mention all the reasons, that would not preclude the accused from proving the other reasons by leading suitable evidence. By proving on record the letter Ex. AW-1/10, the accused had established that he had given the stop payment instructions to his bank, though at the same time, he admits that the amount in his bank was not sufficient to honour the cheque amount.
26.In the present case, the cheque would have been held to be valid if the complainant had brought on record the basis on which this amount was arrived at. However, by concealing the statement of the accounts, ledgers/accounts, bills/invoices, etc. ever issued by it, its case has suffered a major dent. Once it is established that in all probabilities, the cheque amount was not filled by the accused but by the complainant as per its own accounts, production of such account books was necessary to establish the genuineness of the value therein. It was necessary on the part of the complainant to place on record all the necessary material under which the amount in the cheque was quantified and filled and to ascertain whether the same was legally recoverable. In the absence of any such material whatsoever, the court has nothing to ascertain the correctness of the statement of the account or to see if the account was ever settled and to arrive at a conclusion CC No. 47/13 Page 15 of 18 that the accounts were legally correct and not false. Failure of the complainant to produce any such record would be a missing link in the present case, the benefit of which has to go to the accused.
27.I also do not find much force in the submissions of the Ld. Counsel for the complainant that failure of the accused to reply to the legal notice should also be taken against the accused, and further that no letter was written to the complainant to the effect that the cheque had been issued as security. The court cannot ignore the fact that no such legal notice was actually served upon the accused and the complainant is only relying upon the provisions relating to the deemed service. It is clear that the legal notice was issued at the address, that is, Shop No. 7, Purania, Sita Pur Road, Lucknow. As per the statement of the postal department, the same returned undelivered as the address could not be found. Again, for presumption under section 27 of the General Clauses Act to apply, the correctness of this address is an issue which has to be proved by the complainant itself, as it has to be proved that the letter was properly and correctly addressed. As per the certificate Ex. CW-1/D1 and Ex. AW-1/2 (admitted and never denied by the CW01), address of the accused on their records was HIG 831, Sector - F, Sitapur Road Scheme, Lucknow. Admittedly, no letter was sent at this address. When the accused appeared in the witness box, his address was the same as mentioned in the said certificate Ex. CW-1/D1. The bail bond of the accused shows his address as 2/675, Vikas Nagar, Lucknow, U.P. The address of the accused in bank statement Ex. AW-1/9 shows the same to be 499/139, Gorakan Nath CC No. 47/13 Page 16 of 18 Road, Near Misra Park, Daliganj, Lucknow. The summons sent to the accused at this address were never received back. Then, the complainant had filed proof of delivery of summons given to it for dasti service, which showed delivery and the on its basis, coercive measures were taken by the court. The said receipts would show that the process was sent by the complainant at two addresses, one at Shop No. 7, Purania, Sita Pur Road, Lucknow (as per the address mentioned on legal notice) and the other at HIG 831, Sector - F, Sitapur Road Scheme, Lucknow (as per address available in its records). Though both the letters were duly delivered, yet it is to be noticed that signatures of one S. Yadav are appearing at the address Shop No. 7, Purania, Sita Pur Road, Lucknow. There is nothing to show that the process at this address was ever received by the accused. In such a case, there is also a serious doubt about the correctness of the address at which the legal notice was sent so as to draw a presumption of valid service.
28.As laid down in various precedents, in such cases, the accused is not required to prove his case beyond reasonable doubt but is only required to raise a probable defence so as to rebut the presumptions of law in favour of the complainant. The burden is still upon the complainant to establish its case beyond the shadow of reasonable doubt.
29.In the present case, above discussed missing links, defects and depositions are sufficient to doubt the stand of the complainant and are CC No. 47/13 Page 17 of 18 sufficient to raise a probable defence on the part of the accused. Once it is so held, the case of the complainant suffers a dent and is liable to fail. The complainant has not been able to establish that the cheque in question for Rs. 4,28,523.77/- was towards discharge of legally enforceable debt or liability of the accused. The existence of debt or liability to this extent has not been established. In view of the above discussion, it can be said that the complainant has not been able to establish its case against the accused.
30.Accused is given the benefit of doubt and is therefore acquitted of the charges. However, his bail bond shall remain in force for the next six months in terms of section 437-A, CrPC.
31.File be consigned to the record room.
Announced in the open court this 15th day of April 2014 ASHU GARG JSCC/ASCJ/GJ/MM (New Delhi), PHC CC No. 47/13 Page 18 of 18