Delhi District Court
Madras vs . A. Vaidyanatha Iyer Air 1958 Sc 61, It Is ... on 5 August, 2022
IN THE COURT OF SH. KAPIL GUPTA,
METROPOLITAN MAGISTRATE, (NI ACT)-07
SOUTH-WEST DISTRICT, DWARKA COURTS, NEW DELHI
Ct. Case No. 4991177 of 2016
CNR No. DLSW02-001717-2016
Dharam Pal Sharma ............Complainant
Versus
Pooja Sharma & Anr. .............Accused
JUDGEMENT
(1) Name of the complainant Sh. Dharam Pal Sharma
(2) Name of the accused 1. Smt. Pooja Sharma
2. Sh. Rakesh Sharma
(3) Offence complained of or U/s 138 NI Act
proved
(4) Plea of accused Pleaded not guilty
(5) Date of institution of case 02.02.2016
(6) Date of Final Order 05.08.2022
(7) Final Order Accused no. 1 is acquitted.
Accused no. 2 not summoned.
Ct. Case No. 4991177/2016 Page 1 of 19
1. The complainant, Sh. Dharam Pal Sharma had filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the 'Act') against the accused no. 1 Smt. Pooja Sharma and accused no. 2 Sh. Rakesh Sharma.
2. As per complainant, he is engaged in supplying wooden material after purchasing the same from market and had supplied wooden material to the accused for renovation of their shop as per the request and specification of material given by contractor namely Mr. Kapil Kumar Jangid who was hired by the accused persons for carrying out work and in lieu thereto, an amount of Rs. 95,000/- became due upon the accused persons. It is alleged that in discharge of liability, the accused no. 1 in conspiracy with accused no. 2 issued cheque bearing no. 598552 dated 10.10.2015 for an amount of Rs. 95,000/- drawn on Syndicate Bank, Dwarka, New Delhi in favor of the complainant and the cheque upon presentment was returned dishonored with remarks "Payment stopped by drawer" vide return memo dated 17.12.2015. It is further alleged that the complainant thereby sent a legal notice dated 07.01.2016 to the accused, despite which the accused failed to repay the amount and thereafter the present complaint was filed.
3. In his pre-summoning evidence, the complainant examined himself as CW1 vide his affidavit Ex.CW1/A. He reiterated the contents of the complaint and placed on record, cheque bearing no. 598552 dated 10.10.2015 for an amount of Rs. 95,000/- drawn on Syndicate Bank, Dwarka, New Delhi as Ex. CW1/1, bank returning memo dated 17.12.2015 Ct. Case No. 4991177/2016 Page 2 of 19 as Ex.CW1/2, copy of legal demand notice dated 07.01.2016 as Ex.CW1/3, postal receipts as Ex.CW1/4 and computer generated tracking report as Ex. CW1/5 (colly).
4. The accused no. 1 was only summoned and notice under Section 251 of Code of Criminal Procedure, 1973 (hereinafter referred to as 'CrPC') was served upon her on 02.02.2017, to which she pleaded not guilty and claimed trial. She stated that the cheque in issue bears her signature and the same was misplaced by her. She further stated that she does not know the complainant and had not given the cheque in issue to the complainant. She also stated that she did not owe the cheque amount to the complainant. She admitted receiving the legal demand notice.
5. Thereafter, the complainant examined himself as CW-1, wherein he adopted his version as recorded in pre summoning evidence, in the post summoning evidence as well.
6. In his cross examination, he stated that he does not remember the exact date, month or year when the transaction between him and the accused took place, however stated, that it took place around two years back. He further stated that the accused had telephonically requested him to send the material and in lieu of the same, the cheque in issue was issued to him. He also stated that he had sent the material through rickshaw pullers namely Mr. Parmeshwar and Mr. Raja and the cheque in issue was also sent by the accused through the said rickshaw pullers. He admitted not placing on record any bill and delivery challan in respect of the Ct. Case No. 4991177/2016 Page 3 of 19 material/goods supplied to the accused and voluntarily stated that he does not issue pakka bills and has a kacha bill for the same. He further admitted not placing on record any bill of the goods/material purchased by him for selling it to the accused. He stated that he had sent a kachi parchi to the accused along with the material through rickshaw puller Mr. Parmeshwar. He stated that he can bring the kachi parchi to the court, if so required. He admitted that the rickshaw puller had not obtained any receiving from the accused in respect of goods/material supplied by him and voluntarily stated that receiving is taken only when an outstanding remains from the customer and in the present case, he had received cheque from the accused and thus there was no requirement of receiving on kachi parchi. He stated that he does not maintain any ledger account or any record regarding sale of goods/material and admitted that he is not having any written record in respect of the transaction between him and the accused. He admitted knowing Mr. Kapil Kumar Jangid as he is his cousin brother and stated that the transaction has no relation with Mr. Kapil Kumar Jangid. He stated that he had supplied the material/items/goods to the accused on assurance of Mr. Kapil Kumar Jangid.
7. Statement of the accused under Section 313 CrPC was recorded on 27.08.2018, wherein all the incriminating evidence was put to her and she stated that she had not purchased any material from the complainant, however, admitted employing Mr. Kapil Kumar Jangid for carrying out renovation work. She stated that the cheque in issue was misplaced in the month of October, 2015 and she had issued stop payment instructions to her bank in the same month. She also stated that she has no acquaintance Ct. Case No. 4991177/2016 Page 4 of 19 with the complainant and does not owe any money to him. She preferred to lead defence evidence.
8. The accused in her defence evidence examined herself as DW1 and deposed that she met the complainant for the first time in court and Mr. Kapil Sharma, carpenter was employed by her for renovation of her shop during the months of August, 2015 to September, 2015 and the cheque in issue was misplaced during the said period. She further deposed that the cheque in issue has been misused by the complainant at the instance of Mr. Kapil Sharma. She placed on record a register/day book maintaining account with Mr. Kapil Sharma as DW1/1 and stated that she had issued stop payment instructions in respect of the cheque in issue and certificate issued by Syndicate Bank, Dwarka, New Delhi was exhibited as DW1/2. She also deposed that Mr. Kapil Sharma left the remaining work and never came back to finish after the cheque in issue was stolen from her shop.
9. The accused/DW1 was cross examined on behalf of the complainant wherein she stated that she had got carried out wood work by Mr. Kapil. She further stated that the cheque in issue was misplaced in the month of October 2015 when the work was being carried on and she gave stop payment instruction to bank in the month of October, 2015. She admitted not filing any complaint for misplacing the cheque.
10. Ms. Abha Kapoor, Branch Manager, Canara Bank, Sector - 23, Dwarka was examined as DW2 and placed on record the statement of account as Ex.DW2/1, copy of application for stop payment as Ex.DW2/2, Ct. Case No. 4991177/2016 Page 5 of 19 application for overdraft facility as Ex.DW2/3 and documents pertaining to the overdraft facility as Ex.DW2/4. In her cross examination she stated that there was over draft facility in the account of the accused when the cheque Ex.CW1/1 was presented.
11. I have heard the final arguments as advanced by Ld counsel for the parties at length and have given my thoughtful consideration to rival submissions made by them. I have also gone through the material placed on record.
12. During the course of final arguments, Ld. counsel for the complainant submitted that the accused has admitted her signature on the cheque in issue. It was argued that the accused did not lodge any complaint when the cheque in issue got misplaced and hence the defence taken by the accused is liable to be rejected. It was argued that all ingredients under Section 138 NI Act have been proved by the complainant and hence the accused must be convicted.
13. Per contra, it was contended on behalf of the accused that the accused had never purchased any material from the complainant. It was argued that cheque in issue had been misplaced and stop payment instructions qua the cheque in issue was given by the accused to bank and the accused also had an overdraft facility in her bank account. It was prayed that the accused be acquitted of the offence u/s 138 NI Act.
Ct. Case No. 4991177/2016 Page 6 of 1914. Before proceeding further, it would be appropriate to discuss, that as per Section 138 of the NI Act, following ingredients have to be proved by the complainant:
1. The accused issued a cheque on account maintained by him with a bank.
2. The said cheque has been issued in discharge, in whole or in part, of any legal debt or other liability.
3. The said cheque has been presented to the bank within a period of three months from the date of cheque or within the period of its validity.
4. The aforesaid cheque, when presented for encashment, was returned unpaid/dishonoured.
5. The payee of the cheque issued a legal notice of demand to the drawer within 30 days from the receipt of information by him from the bank regarding the return of the cheque.
6. The drawer of the cheque failed to make the payment within
15 days of the receipt of aforesaid legal notice of demand.
15. It is also apt to discuss that a negotiable instrument including a cheque carries following presumptions in terms of Section 118(a) and Section 139 of the NI Act:
(i) Section 118 of the NI Act provides: "Presumptions as to negotiable instruments: Until the contrary is proved, the following presumptions shall be made:Ct. Case No. 4991177/2016 Page 7 of 19
(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;"
(ii) Section 139 of the N.I Act further provides as follows:
"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 in Section 138 for the discharge, in whole or in part, of any debt or other liability".
Thus, the combined effect of Section 118 (a) and Section 139 of NI Act raises a presumption in favour of the holder of the cheque that he has received the same for discharge, in whole or in part of any debt or other liability.
16. For appreciating such legal position, reliance is placed on the judgement of the Hon'ble Supreme Court in the case of Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16 wherein it was held that:
"22. Because both Sections 138 and 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras vs. A. Vaidyanatha Iyer AIR 1958 SC 61, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. "It introduces an exception to the general rule as to Ct. Case No. 4991177/2016 Page 8 of 19 the burden of proof in criminal cases and shifts the onus on to the accused" (ibid). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the nonexistence of the presumed fact."
Similar view has been taken by the Hon'ble Supreme Court in the cases titled as K.N. Beena vs. Munyappan and Ors., AIR 2001 SC 289.
17. Further, recently the Hon'ble Supreme Court in the case titled as Kalamani Tex & Anr. v. P. Balasubramanian, 2021 SCC Online SC 75 held that:
"14. Adverting to the case in hand, we find on a plain reading of its judgment that the trial Court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NIA. The Statute mandates that once the signature(s) of an accused on the cheque/negotiableinstrument are established, then these 'reverse onus' clauses become operative. In such a situation, the Ct. Case No. 4991177/2016 Page 9 of 19 obligation shifts upon the accused to discharge the presumption imposed upon him."
18. From the ratio decidendi laid down in the aforesaid judgements, it is clear that for the offence under Section 138 of the Act, the presumptions under Section 118 (a) and Section 139 of NI Act have to be compulsory raised as soon as execution of cheque by accused is admitted or proved by the complainant and thereafter, burden is shifted upon the accused to prove otherwise.
A presumption is not in itself evidence but only makes a prima facie case for a party for whose benefit it exists. Presumptions, both under Sections 118 and 139 of NI Act are rebuttable in nature.
19. In the present case, the accused has admitted her signature on the cheque in issue.
20. It is pertinent to refer to the judgment of the Hon'ble Apex Court in the case of M/s Kumar Exports Vs. Sharma Carpets, (2009) 2 SCC 513 at this juncture, wherein it was held that:
"20. 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 Ct. Case No. 4991177/2016 Page 10 of 19 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 nonexistence 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 nonexistence 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 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 the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Ct. Case No. 4991177/2016 Page 11 of 19 Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act."
21. Further, the above said principles have also been recently crystallized by Hon'ble Supreme Court in the case of Basalingappa vs Mudibasappa, (2019) 5 SCC 418, which is as follows:
"25. We having noticed the ratio laid down by this Court in above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner:
(i) Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
(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) To rebut the presumption, it is open for the accused to rely on evidence led by him or 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.Ct. Case No. 4991177/2016 Page 12 of 19
(iv) 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.
(v) It is not necessary for the accused to come in the witness box to support his defence."
22. As noted earlier, the accused has admitted her signature on the cheque in issue and hence, in the present case, a presumption under Section 139 NI Act has to be compulsorily raised in favour of the complainant. In view of the same, the burden of proof shifts upon the accused to rebut the presumption that such liability does not exist. The presumption raised under Section 139 of NI Act is that of legally enforceable debt or liability and it is for the accused to raise a probable defence to rebut the said presumption. Further, it is open for the accused to rely on evidence led by her or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. It has been held in the case titled K. Prakashan vs P. K. Surenderan, (2008) 1 SCC 258, decided by the Hon'ble Supreme Court of India, that the accused has to discharge such burden by showing preponderance of probabilities.
23. The court has to now consider whether the accused has been successful in discharging the burden of proof. It was argued on behalf of the accused that she had never purchased any material from the complainant. In the present case, the consistent defence taken by the accused during the whole trial was that no material was purchased by her from the complainant and the cheque in issue was misplaced. Admittedly, Ct. Case No. 4991177/2016 Page 13 of 19 the complainant has not placed on record any bill, invoice, delivery challan or any document of whatsoever nature to prove that he had sold material to the accused. It has been stated by the complainant in the complaint that the goods are supplied by him after purchasing from the market, however, the complainant has admittedly not placing on record any bill of the goods/material purchased by him for selling it to the accused either. Pertinently, it has been stated by the complainant that he has a kacha bill for the alleged transaction, however, to utter shock and surprise, the complainant has failed to bring on record such document which may have proved the alleged sale of goods. The complainant has even failed to bring on record any delivery receipt for supplying the goods. The complainant has not brought on record any evidence which shows as to what orders were placed by the accused, when were those orders placed and whether the goods against those orders were duly delivered to the accused. It is hard to believe that a non friendly business transaction with a customer, in regular course of business, would be carried out without documentation of any kind. It is trite that normal prudent business conduct of sale of goods should be vide raising of a bill, reflecting the same in statement of account, having some evidence of delivery of goods etc. Further, it is beyond the prudence of a reasonable person to believe that the mere allegations of sale of goods without any proof of the same will create any liablity on the party against whom the alleged goods have been sold. Thus, the complainant has miserably failed to prove that any goods were sold by him to the accused.
24. Further, it has been stated in the complaint that goods were supplied to the accused as per request and specification of material given by Mr. Ct. Case No. 4991177/2016 Page 14 of 19 Kapil Kumar Jangid and it has also been stated in the complaint that the cheque in issue was given to the complainant in presence of Mr. Kapil Kumar Jangid. Furthermore, it has been stated by the complainant in his cross examination that he had sent the material through rickshaw pullers namely Mr. Parmeshwar and Mr. Raja and the cheque in issue was also sent by the accused through the said rickshaw pullers. It is worthy to note that despite such averments being made by the complainant, he has not bothered to examine his own cousin brother Mr. Kapil Kumar Jangid and the rickshaw pullers as witnesses. The examination of such witnesses may have proved the contentions of the complainant. However, to utter shock and surprise, the complainant chose to not examine such persons as witness who would have been star witnesses in support of his claim. Moreover, there is a glaring contradiction in the case set up by the complainant as in the complaint it has been stated that the cheque in issue was issued in presence of Mr. Kapil Kumar Jangid, however, in his cross examination the complainant states that the cheque in issue was given to rickshaw pullers and such contradiction makes the testimony of the complainant unreliable. Thus, in the totality of facts and circumstances of the present case, complainant has failed to prove that he had ever sold goods to the accused and it is observed that the complainant has not placed on record any document to prove that any material was ever purchased by the accused from the complainant.
25. It has been contended on behalf of the accused that cheque in issue had been misplaced and stop payment instructions qua the cheque in issue was given by the accused to the bank and the accused had an overdraft Ct. Case No. 4991177/2016 Page 15 of 19 facility in her bank account. Per contra, it was argued on behalf of the complainant that the accused did not lodge any complaint when the cheque in issue got misplaced and hence the defence taken by the accused is liable to be rejected.
26. Admittedly, the cheque in issue has been dishonoured for reason "Payment stopped by drawer". Further, neither the testimony of DW 2 nor document Ex. DW1/2 or document Ex.DW2/2 could be successfully challenged by the complainant either by controverting in cross examination or by leading evidence to disprove the same. Moreover, it is case of the accused that she issued instructions to her bank in the month of October, 2015 i.e much before the dishonour of the cheque for stopping the payment since no goods/material was ever sold to her. Further, the Supreme Court in the case titled as M/S M. M. T. C. Ltd. & Anr vs M/S Medchl Chemicals & Pharma (2002) 1 SCC 234 has observed thus:
"19. Just such a contention has been negatived by this Court has, in the case of Modi Cements Ltd. v. Kuchil Kumar Nandi reported in (1998) 3 SCC 249. It has been held that even though the cheque is dishonoured by reason of 'stop payment' instruction an offence under Section 138 could still be made out. It is held that the presumption under Section 139 is attracted in such a case also. The authority shows that even when the cheuqe is dishonoured by reason of stop payment instructions by virtue of Section 139 the Court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Of course this is a rebuttable presumption.Ct. Case No. 4991177/2016 Page 16 of 19
The accused can thus show that the "stop payment" instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there was sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then an offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused. Thus a Court cannot quash a complaint on this ground."
27. It is also worthy to note that the accused has lead evidence to establish that at the time of dishonour of the cheque in issue, she was having an overdraft facility in her bank account vide Ex DW2/3 and Ex DW2/4 and thus the cheque in issue would have been honoured if the accused had not given stop payment instructions to her bank and thus, the accused has been able to establish that the stop payment instructions were given because there was no existing debt or liability at the time of presentation of the cheque. Moreover, accused has consistently taken defence that she had never issued the cheque in issue to the complainant and the same was misplaced. It is trite that the case of the complainant has to stand on its own legs and cannot rely on the weakness of the defence of the accused. In view of the above discussion and facts and circumstances of the present case, merely because the accused did not lodge any complaint when the cheque in issue got misplaced, the defence taken by the Ct. Case No. 4991177/2016 Page 17 of 19 accused is not liable to be rejected as the complainant has failed to prove his own case.
28. In light of the aforesaid discussion, accused has raised a probable doubt on the case set up by the complainant of sale of goods by him as the accused could not have been expected to lead negative evidence of the said fact and moreover, complainant has failed to bring evidence in support of his claim and thus, the case set up by the complainant has been put into doubt by the accused. Accused has further successfully rebutted the presumption under Section 139 NI Act on the scale of preponderance of probability. Hence, the burden of proof shifts upon the complainant to prove his case beyond reasonable doubt and to show the existence of legally enforceable debt in the present case and to prove the liability of the accused beyond all reasonable doubt. The complainant has miserably failed to prove the same and discharge the burden as no evidence in support of purported transaction has been placed on record by the complainant. In fact, the version of the complainant is marred by his own inconsistencies regarding transaction in question and issuing of the cheque in issue. Moreover, the accused, in order to substantiate her defence and negate the existence of a legally enforceable debt, has been able to bring to cogent evidence.
29. In considered opinion of the court, complainant has not been able to prove the transaction with the accused and the accused has been able to rebut the presumption of legally enforceable debt on the basis of the material available on record and by adducing cogent evidence. Per contra, Ct. Case No. 4991177/2016 Page 18 of 19 the case set up by the complainant has been nothing except for bare averments, which were not at all substantiated by any material on record.
30. In view of the evidence adduced, documents put forth and arguments advanced by the parties and further in view of the above discussion, the court is of the considered opinion that the accused no. 1 Smt. Pooja Sharma is not guilty of offence under Section 138 of Negotiable Instruments Act, 1881 and accordingly, is hereby acquitted under Section 138 of Negotiable Instruments Act, 1881.
Announced in the court on 30.07.2022.
(Kapil Gupta) Metropolitan Magistrate(NI Act)-07 South West District, Dwarka Courts, New Delhi Ct. Case No. 4991177/2016 Page 19 of 19