Delhi District Court
Rakesh Chadda vs . Abtoz Traiding (Opc) Pvt. Ltd. & Anr. on 20 December, 2021
IN THE COURT OF MS. AAYUSHI SAXENA
METROPOLITAN MAGISTRATE (SOUTH) 01,
N.I. ACT, SAKET COURTS : NEW DELHI
CC No. 2811/2018
Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr.
1.Complaint Case number : CC No. 2811/2018 2 Name of the complainant : Sh. Rakesh Chadda, S/o Sh. M.K. Chadda, Proprietor of Mahindra Electronics, R/o 13/20, Dakshinpuri, Near Petrol Pump, New Delhi 110062.
3. Name and address of the : 1. Abtoz Traiding (OPC) Pvt.
accused Ltd.,
Having office at:
G187, Madangir, New Delhi.
2. Smt. Kiran Devi,
Director/Authorized Signatory
of Abtoz Traiding (OPC) Pvt.
Ltd.
4. Offence complained of or : Under Section 138 of the Negotiable Instruments Act, proved 1881.
5. Plea of the accused : Pleaded not guilty and claimed trial.
CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 1 of 176. Final Order : Conviction
7. Date of Institution : 05.03.2018
8. Date of Reserving the : 04.12.2021 Judgment
9. Date of pronouncement : 20.12.2021 Judgment:
1. The instant complaint is in respect of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter "the NI Act")
2. Succinctly, the chain of facts leading to filing of the present complaint , as has been averred in the present complaint, are as follows:
The complainant is the proprietor of Mahindra Electronics. Accused no. 2 and the Complainant had friendly relations with each other. In the last week of August, 2017, the accused no. 2 approached the complainant for purchasing electronic articles and she purchased one Voltas Split AC worth Rs. 43,000/ , one stabilizer worth Rs. 3000/ and one smart TV worth Rs. 34,000/ vide bill/serial no. 881 dated 15.09.2017, from the shop of the complainant. It is also CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 2 of 17 claimed that for payment of the same, the accused no. 2 issued a cheque bearing no.558819 dated 18.09.2017 for Rs 80,000/, drawn on IndusInd Bank, Saket Private Bunglows, New Delhi in favour of the complainant which on presentation was returned unpaid by the banker of the complainant vide returning memo dated 12.12.2017, with the remarks 'funds insufficient', the information of which was provided to the complainant on 26.12.2017. Thereafter, he got issued Legal Demand Notice dated 12.01.2018 within the statutory period of time, through his counsel, on the last known address of the accused no.1 and 2 but despite service of the said legal notice he failed to pay the cheque amount and aggrieved by the non receipt of payment, the complainant was constrained to file the present complaint.
3. It is pertinent to note here that the Index annexed with the present complaint mentions at serial no 2. that 'copy of original cheque bearing no. 558819' is at page no 5 of the present complaint. In para 4 last line of the present complaint, it has been averred by the complainant that 'copy of the said cheque' is annexed herewith as Annexure C1.
4. Pursuant to filing of the said complaint, the complainant, tendered his pre summoning evidence by way affidavit Ex CW1/A and has relied upon various documents mentioned therein. On 28.09.2018, statement of Sh. Usman Khan, CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 3 of 17 CSO, HDFC Bank, Saket Branch, New Delhi , was recorded who stated that the return memo for the cheque in question was received by the complainant on 26.12.2017.
5. Ld. Predecessor of this Court took cognizance of the offence under section 138 NI Act vide order dated 28.09.2018 and ordered for issuance of summons for attendance of the accused.
6. Thereafter, the Accused no. 2 entered appearance on 14.01.2019 when she was admitted to bail.
6.1 On that very date, notice under Section 251 Code of Criminal Procedure, 1973 (hereinafter referred to as 'Cr.P.C.') was given to the accused no 1 through accused no. 2 and she was asked whether she pleaded guilty or claimed trial. In reply to this, she pleaded not guilty and claimed trial. In her statement of defence recorded at that very time, she, interalia, stated that the cheque in question was given to the complainant against goods supplied by the complainant, which could not be encashed due to financial distress. She further stated that she was ready and willing to settle the present case. She denied having received the legal demand notice. She further admitted her signatures on the cheque.CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 4 of 17
6.2 As the accused failed to disclose any probable defense, it was observed by Ld. Predecessor of this court that there was no ground for recalling complainant for his cross examination.
7. On 27.04.2019, Ld. Predecessor of this court observed that the original cheque in question was not traceable on record and some time was given to trace the same.
8. Thereafter, on 12.07.2019, it was observed by Ld. Predecessor of this court that the original cheque had not been traced yet and Ahlmad of the court was directed to trace the same. It was further observed that the accused had admitted the issuance of cheque no. 558819 dated 18.09.2017 for Rs. 80,000/ drawn on IndusInd Bank, Saket Private Bunglows, New Delhi in favour of the complainant against goods supplied by the complainant. Further, it was observed that the original cheque in question was shown to the accused at the stage of framing of notice under Section 251 Cr.P.C. Thereafter, in examination in chief the original cheque was exhibited as Ex. CW1/1.
9. On that very date i.e. 12.07.2019, statement of the accused no. 2 under Section 313 Cr.P.C. read with Section 281 Cr.P.C. whereby circumstances appearing against her in evidence were put to her. While reiterating her said defence, CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 5 of 17 additionally it was stated, interalia that she had purchased electronic items worth Rs. 80,000/. On being shown the photocopy of the cheque in question, Annexure C/1, she stated that it was given to the complainant as security as the complainant told her that she should first give the cheque and thereafter the complainant will order the phone for her.
She further stated that she gave the payment in cash on the same date itself.
9.1 So, at the stage of recording of statement of accused under Section 313 Cr.P.C., the secondary evidence i.e. the photocopy of the cheque in question was also admitted by the accused.
9.2 At this juncture, it may be noticed that at the stage of final arguments, statement of complainant was recorded on 13.12.2021 and he had stated that he had filed the original cheque in question alongwith the present complaint. Needless to say, this is not borne out from the index annexed with the complaint and the complaint as it has already been mentioned above. So what had been stated by the complainant in his statement, that original cheque in question was filed along with the present complaint, is not borne out from the record. But in view of the fact that complainant has successfully proved the issuance of CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 6 of 17 the cheque in question by secondary evidence and issuance of the said cheque was also admitted by accused no 2. during the stage of framing of notice under Section 251 Cr.P.C. and recording of statement of accused under Section 313 Cr.P.C. , no further action on the administrative side is called for.
10. Pursuant thereto, the case was fixed for defence evidence. However despite being given opportunities, the accused no. 2 failed to lead DE and on 14.02.2020, DE stood closed.
11. Thereafter arguments were heard at length on behalf of both the parties.
12. Before delving into the facts of the present case, it is necessary to look at the legal framework regarding Section 138 NI Act. The Hon'ble Supreme Court of India in Kusum Inglots & Alloys Ltd and Ors v. K Pennar Peterson Securities Ltd and Ors., (2000) 2 SCC 745 has clearly laid down the ingredients which are to be satisfied for making out a case under Section 138 NI Act, which are being reproduced hereunder:
(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 CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 7 of 17 discharge of any debt or other liability;
(ii) that cheque has been presented to the bank within a period of six months(Reduced to three months vide RBI circular dated 4.11.2011.) 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 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 drawer of the cheque, within 15 days (now 30 days w.e.f. 06.02.2003) of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(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. In the explanation to the section clarification is made that the phrase "debt or other liability" means a legally enforceable debt or other liability.
CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 8 of 1713. Adverting now to the facts of the present case, as it has already been mentioned above, when the accused no 1 (through accused no 2) was given notice under Section 251 Code of Criminal Procedure,1973(hereinafter referred to as Cr.P.C.), she admitted issuance of cheque in question Ex. CW1/1 to the complainant and her signature on the said cheque. Therefore, once the accused has admitted issuance of cheque which bears her signatures, there is a presumption that there exists legally enforceable debt or liability under Section 139 NI Act.
14. Presumption under Section 139 NI Act:
"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 in Section 138 for the discharge, in whole or in part, of any debt or other liability" (emphasis supplied).
14.1 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.
14.2 Further, Section 118 (a) of the NI Act, states as follows:
"Presumptions as to negotiable instruments.Until the CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 9 of 17 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;"
15. The following proposition can be summarized on a perusal of the judgments of the Hon'ble SC in 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 1876] ; Basalingappa v. Mudibasappa, [(2019) 5 SCC 418]; 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 any debt or other liability;
(ii) The presumption under Section 139 NI Act 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;CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 10 of 17
(iii) To rebut the presumption, 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. While direct evidence cannot be insisted upon in any every case; bare denial of the passing of the consideration and existence of debt, would not serve the purpose of the accused;
(iv) 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;
(v) 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 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 CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 11 of 17 rebutted;
(vi) 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;
(vii) That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 NI Act imposed an evidentiary burden and not a persuasive burden.
16. Adverting now to the facts of the present case, it is not in dispute that the cheque in question (Ex. CW1/1) was drawn from the bank account of accused no 1. Further, it is also not in dispute that the accused no.2 is the signatory of the cheque in question as in the defence disclosed by accused no 2 U/s 251 Code of Criminal Procedure,1973(hereinafter referred to as 'Cr.P.C.') and Section 313 Cr.P.C. statement; she has duly admitted the same. Now, once the issuance of cheque and signatures thereon are admitted by the accused, presumption under Section 139 Negotiable Instruments Act,1881 will get attracted. Let us now see whether the accused has been able to raise a probable defence in her favour and has been able to CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 12 of 17 rebut the said presumption.
16.1 As mentioned above, when the accused no 2. was given notice under Section 251 Cr.P.C. , she categorically admitted that the cheque in question Ex. CW1/1 was given to the complainant against goods supplied by him.
16.2 When she was examined under Section 313 Cr.P.C., she stated that the cheque in question Ex. CW1/1 was given to the complainant as security and also that she had given the full payment in cash to the complainant, of the electronic goods bought by her. It is pertinent to note that no proof of repayment of the said amount has been brought on record by the accused. If the accused had made good the payment of electronic goods purchased from the complainant, she should have been diligent in proving the same. Further, merely by saying that the cheque in question Ex. CW1/1 was given as security or that she had given the payment, would not exonerate the accused.
16.3 It is a settled principle of law that the statement of the accused, either under Section 281 Cr.P.C. or under Section 313 Cr.P.C., is not a substantive piece of evidence. In absence of any evidence led by the accused, his/her statement can only be taken to be as explanation CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 13 of 17 of the incriminating evidence that has come against him/her. If the accused wanted to prove her defence that, the cheque was given as security to the complainant or that the payment was made to the complainant, she should have entered the witness box and testified to the said facts. The accused failed to do the same. Therefore, she has failed to dispel the presumption raised against her.
16.4 Now, the receipt of legal demand notice Ex.
CW1/4 has been denied by the accused no 2 under Section 251 Cr.P.C. statement. However, it is not her defence that the address mentioned thereon is wrong. It is noteworthy that when notice under Section 251 Cr.P.C. , she had given the same address as mentioned in the legal demand notice .
16.4.1 At this juncture, it is trite to mention Section 27 of General Clauses Act, 1897 which provides the meaning of the words service by post. It reads as follows: "Section 27Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression "serve" or either of the expressions "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 14 of 17 addressing, prepaying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post."
16.4.2 Hon'ble Supreme Court in C. C. Alavi Hazi Vs. Palapetty Mohd. & Anr." reported in [(2007) 6 Supreme Court Cases 555], has, inter alia, held as follows: "9 . It is, thus, trite to say that where the payee dispatches the notice by registered post with correct address of the drawer of the cheque, the principle incorporated in Section 27 of the G.C. Act would be attracted; the requirement of Clause (b) of proviso to Section 138 of the Act stands complied with and cause of action to file a complaint arises on the expiry of the period prescribed in Clause (c) of the said proviso for payment by the drawer of the cheque. Nevertheless, it would be without prejudice to the right of the drawer to show that he had no knowledge that the notice was brought to his address." It was further held in this case that 'Section 27 General Clauses Act, 1897 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 15 of 17 have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement refused or not available in the house or house locked or shop closed or addressee not in station, due service has to be presumed."
16.4.3 In light of the above discussion as also the fact that the correctness of the address mentioned in CW1/4 has not been disputed by the accused, it stands proved that the legal demand notice (Ex. CW1/4) dated 12.01.2018 was duly served on the accused.
17. At this juncture, now let us now refer to Section 141 of NI Act, which deals with offences by companies. On a reading of the said provision, it is plain as day that if a person who commits offence under Section 138 of the Act is a company, the company as well as every person in charge of and responsible to the company for the conduct of business of the company at the time of commission of offence is deemed to be guilty of the offence. Therefore, in light of the legal provisions discussed above as well as the facts of the present case, Accused No. 2 CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 16 of 17 being the Director of Accused No. 1 Company and being the signatory of the Cheque in question, is vicariously liable for the acts/omissions of Accused No. 1 Company.
Conclusion
18. In view of the above discussion, I am of the considered opinion that all the ingredients of offence punishable u/s 138 NI Act have been fulfilled with respect to the accused and she has been unable to rebut statutory presumptions arising against her. Accused no.1 Abtoz Traiding (OPC) Pvt. Ltd., and Accused no.2 Kiran Devi, Signatory of accused no.1, are hereby convicted for offence punishable under Section 138 NI Act. Let the convict be heard separately on quantum of sentence. Copy of this judgment be given free of cost to the convict.
Announced in the open Court on 20.12.2021 Digitally signed
by AAYUSHI
SAXENA
AAYUSHI Date:
SAXENA 2021.12.20
15:43:48
+0530
(Aayushi Saxena)
Metropolitan Magistrate01 (South), NI Act/Saket/New Delhi/20.12.2021 CC NO. 2811/2018 Rakesh Chadda Vs. Abtoz Traiding (OPC) Pvt. Ltd. & Anr. Page 17 of 17