Delhi District Court
Padam Chand Jain vs . M/S National Sales Corporation on 2 May, 2022
IN THE COURT OF MS. ARUSHI PARWAL, METROPOLITAN
MAGISTRATE (NI ACT)02, CENTRAL DISTRICT, TIS HAZARI COURTS,
DELHI
CNR No. : DLCT020087942015
CC No. : 528859/2016
U/s: 138 N. I. Act
P.S: PS Kotwali
Padam Chand Jain vs. M/s National Sales Corporation
JUDGMENT
1. Sl. No. of the case : 528859/16
2. Date of institution of the case : 25.02.2015
3. Name of complainant : Padam Chand Jain
Prop. of M/s Sunder Vidyut Udyog
R/o H. No. 1862/2A, Mahalaxmi
Market, Bhagirath Place, Delhi
110006.
4. Name of accused, parentage
and address : (1) M/s National Sales Corporation
(2) Sh. Sanjeev Sharma
S/o Late Sh. Panna Lal Sharma
Authorized Signatory of M/s
National Sales Corporation.
R/o H. No. 351C, Ram Nagar
Extn., Krishna Nagar, Delhi
5. Offence complained of : 138 N. I. Act
6. Plea of accused : Accused pleaded not guilty
7. Final order : Convicted
8. Date of pronouncement : 02.05.2022
ARUSHI Digitally
by ARUSHI
signed
PARWA PARWAL
Date:
2022.05.02
L 16:50:54 +05'30'
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BRIEF REASONS FOR THE DECISION OF THE CASE
Factual Background of the case:
1. Briefly stated facts of this case as per complaint are that the complainant was carrying on business of electric cable and allied items under the name and style of M/s Sunder Vidyut Udyog at the above mentioned address of which he was the sole proprietor. Accused no.1 had been making purchase of electric cables and miscellaneous items from the complainant by various bills and in partial discharge of the liability issued five cheques bearing numbers 000253 dated 17.11.2014 for a sum of Rs.2,00,000/, 000468 dated 27.12.2014 for a sum of Rs.2,00,000/, 000470 dated 27.12.2014 for a sum of Rs.2,00,000/, 000472 dated 27.12.2014 for a sum of Rs.2,06,978/ and 000471 dated 27.12.2014 for a sum of Rs.2,00,000/. It has been further stated that all the cheques were signed by the accused no.2 as Authorised Signatory on behalf of the accused no.1. It has been further stated that the aforesaid cheques were presented for encashment through the Bank of complainant i.e. Bank of Maharashtra, Chandni Chowk, Delhi and were returned dishonoured for want of "sufficient funds". The cheques were issued towards discharge of liability and were dishonoured and both the accused were served with notice of demand dated 12.01.2015. It has been further stated that the accused failed to make the payment of the above dishonoured cheques within 15 days. Hence, the present complaint was filed under Section 138 of NI Act, within limitation.
ARUSHI Digitally signed
by ARUSHI
PARWA PARWAL
Date: 2022.05.02
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Proceedings before Court
2. On the basis of presummoning evidence, accused was summoned for the offence under Section 138 of Negotiable Instrument Act, 1881. The accused put in his appearance (through counsel) on 23.09.2015. Thereafter, the present case was transferred to this court on account of change in territorial jurisdiction for cases under Section 138 of NI Act. On 01.05.2017, accused appeared before this court and submitted that he wanted to explore the possibility of settlement. Accordingly, matter was referred before the Mediation Centre. Thereafter, complainant was substituted by his representative vide order dated 04.08.2017 of Ld. Predecessor of this Court. Notice under Section 251 Cr.P.C was also framed upon the accused by Ld. Predecessor of the undersigned, to which accused pleaded not guilty and claimed trial. In his plea of defence, he stated that the cheques in question were handed over to the complainant as security because he had placed some purchase order of some goods but the same were never delivered at any point of time. He also stated that he had never received the legal notice dated 12.01.2015. Considering the plea of defence, opportunity to crossexamine the complainant was granted to the accused and the matter for fixed for crossexamination of the complainant. On the date fixed for the same, it was brought to the knowledge of the court that the complainant had expired. Accordingly, the application moved on behalf of the complainant to substitute the LR was allowed.
3. In support of his case, the substituted complainant examined himself as CW1 and filed a fresh affidavit in evidence (Ex.CW1/A), wherein primarily Digitally signed ARUSHI by ARUSHI PARWAL PARWAL Date: 2022.05.02 16:51:35 +05'30' CC No.: 528859/2016 3/16 Padam Chand Jain vs. M/s National Sales Corporation the contents of the complaint have been reiterated. He has relied upon the documents i.e. original cheques bearing numbers 000253, 000468, 000470, 000472 and 000471 (Ex.CW1/1 to Ex.CW1/5 respectively); original return memos (Ex.CW1/6 to Ex.CW1/10 respectively); copy of legal demand notice dated 12.01.2015 (Ex.CW1/11), original postal receipts (Ex.CW1/12 and Ex.CW1/13), original courier receipts (Ex.CW1/14 and Ex.CW1/15), postal acknowledgment (Ex.CW1/16 and Ex.CW1/17) and proof of delivery (Ex.CW1/18 and Ex.CW1/19).
The substituted complainant was duly crossexamined on behalf of the accused. During cross examination, he deposed that his father Late Sh. Padam Chand Jain was running Sunder Vidyut Udyog which was the sole proprietorship concern of his deceased father. After the death of his father, he is looking after the affairs of the said firm and was now the proprietor of the same. He deposed that he could not tell whether Sanjeev Sharma is proprietor of M/s National Sales Corporation or not, however, it was Sanjeev Sharma, who had been dealing on the behalf of M/s National Sales Corporation and had been issuing cheque on behalf of National Sales Corporation. He further deposed that he knew M/s National Sales Corporation from the market as it is having a shop in Bhagirath Place, Chandni Chowk, Delhi. The payment of account of M/s National Sales Corporation became due in financial year 201314. The said witness had also brought certain bills at the time of crossexamination. He denied the suggestion that goods were never delivered to the accused and that no legal notice was served upon him.
Thereafter, CE was closed on 12.10.2018.
ARUSHI Digitally signed
by ARUSHI
PARWA PARWAL
Date: 2022.05.02
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4. Statement of accused, under section 313 Cr.P.C. r/w section 281 Cr.P.C., was recorded. He stated that he was innocent. He stated that he had issued six cheques including the cheques in question to the complainant in advance for goods to be supplied to him which were never so supplied. He further stated that his cheques had been misused.
5. Accused did not lead any defence evidence despite seeking opportunity for the same. At the stage of DE, he again tried to settle the matter with the complainant. Statement of both the parties to this effect was also recorded by Ld. Predecessor of this Court. On 21.10.2020, it was informed by the counsel for the complainant that the accused had not made complete payment of settlement amount to the complainant as per the settlement. Thereafter, again opportunity to lead DE was granted to the accused. The accused did not lead any DE and accordingly, DE was closed on 20.11.2021.
6. Afterwards, final arguments were heard on behalf of both the parties and after hearing the arguments, trial was concluded. I have heard the counsels for both the parties, perused the record and written submissions and have gone through relevant provisions of the law and the judgments relied upon by both the parties.
Points for determination 7.1. Whether the complainant has been able to establish ingredients of Digitally signed ARUSHI by ARUSHI PARWAL PARWAL Date: 2022.05.02 16:52:11 +05'30' CC No.: 528859/2016 5/16 Padam Chand Jain vs. M/s National Sales Corporation offence punishable under Section 138 of The Negotiable Instruments Act, 1881 beyond shadow of reasonable doubt against the accused or not?
7.2. Final order.
Findings
8. Before appreciating the facts of the case in detail for the purpose of decision, relevant position of law is discussed. It is settled position of law that to constitute an offence under S.138 N.I. Act, the following ingredients are required to be fulfilled:
1) 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;
2) that cheque has been presented to the bank within a period of three months from the date on which it is drawn or within the period of its validity, whichever is earlier;
3) that cheque is returned by the bank unpaid, either because 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;
4) 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 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
5) 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.
ARUSHI Digitally signed
by ARUSHI
PARWA PARWAL
Date: 2022.05.02
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It is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the NI Act.
9. In the present case, the accused had not disputed his signatures on the cheques in question (Ex.CW1/1 to Ex.CW1/5) and the issuance of the same. The cheques in question were dishonoured vide return memos (Ex.CW1/6 to Ex.CW1/10) for reason "funds insufficient". As per the postal receipts and courier receipts filed on record, the legal demand notice, as per Section 138 (b) of NI Act, was sent to the accused within 30 days from date of return memo. The accused has stated that he did not receive the legal demand notice, however, the accused has not disputed the address mentioned on the legal demand notice. He has not stated, at any stage during the trial, that the address mentioned on the legal demand notice was not his address at the relevant time. It has been held by the Hon'ble Supreme Court of India in 'C.C. Alavi Haji v. Palapetty Muhammed & Anr.' [(2007) 6 SCC 555] -
"8. ... It was observed that though Section 138 of the Act does not require that the notice should be given only by "post", yet in a case where the sender has dispatched the notice by post with correct address written on it, the principle incorporated in Section 27 of the General Clauses Act, 1897 (for short "G.C. Act") could profitably be imported in such a case. It was held that in this situation service of notice is deemed to have been effected on the sendee unless he proves that it was not really served and that he was not responsible for such nonservice.Digitally signed
ARUSHI by ARUSHI PARWAL PARWAL Date: 2022.05.02 16:52:52 +05'30' CC No.: 528859/2016 7/16 Padam Chand Jain vs. M/s National Sales Corporation
17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. ..."
10. In the evidence of the complainant, the legal demand notice has been stated to have been served upon the accused on the address mentioned and for the proof of which, postal receipts, courier receipts and delivery proofs have been tendered in evidence on behalf of the complainant. As per the delivery proof (Ex.CW1/18 and Ex.CW1/19) filed on record, the consignment was delivered on 15.01.2015 and was received by 'Sanjiv'. The name of the accused is 'Sanjeev'. Further, perusal of record reveals that summons were issued to the accused on the address given on the legal notice and the complaint and the same were served. Furthermore, the accused had entered appearance in the matter after the service of summons. Hence, the argument on behalf of the accused that he ARUSHI Digitally signed by ARUSHI PARWA PARWAL Date: 2022.05.02 L 16:53:10 +05'30' CC No.: 528859/2016 8/16 Padam Chand Jain vs. M/s National Sales Corporation was never served a legal demand notice is not maintainable as there is presumption of service of legal demand notice upon the accused in favour of the complainant as per Section 27 of the General Clauses Act. The accused has not brought on record any evidence to negate the said presumption and in the absence of the same, the presumption of service of legal notice sustains in favour of the complainant. Payment of total cheque amount was not made by the accused within 15 days of service of legal demand notice. The present complaint was filed within limitation period. Hence, all ingredients of offence and procedural requirements as contemplated under Section 138 of NI Act have been complied with in the present case.
11. On merits, it has been argued on behalf of the complainant that the complainant has been able to establish his case beyond reasonable doubt. Presumptions in law aid the case of the complainant and accused has not been able to rebut the same. The accused did not even lead any evidence in his defence. Further, efforts of the accused to settle the case coupled with part payment made by him should be treated as his admission and he should accordingly be convicted in the present case.
Per contra, it has been argued on behalf of the accused that substituted complainant was aware of the Bhagirath Place address of the accused; yet, no legal demand notice was sent to him on that address. Accused never had any concern with the Laxmi Nagar address, on which the legal demand notice was actually sent. Hence, the ingredients of offence under Section 138 of NI Act are not complete in the present case. Further, the complainant has not brought on ARUSHI Digitally by ARUSHI signed PARWA PARWAL Date: 2022.05.02 L 16:53:33 +05'30' CC No.: 528859/2016 9/16 Padam Chand Jain vs. M/s National Sales Corporation record any bills or account statements to prove the liability of the accused. The facts of the present case are similar to those in the judgment of Hon'ble High Court of Delhi in 'Total Finaelf India Limited v. Smt. Rashmi Parnami (2013)' and reliance has been place upon the same.
12. The Negotiable Instruments Act raises two presumptions in favour of the holder of the cheque i.e. complainant in the present case; firstly, with regard to the passing of consideration as contained in Section 118 (a) therein and, secondly, a presumption under Section 139, that the holder of cheque, has received the same of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability.
It has been held by the Hon'ble Supreme Court in 'Kalamani Tex & Anr. v. P. Balasubramanian [2021 SCC Online SC 75]' -
"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/negotiable instrument are established, then these 'reverse onus' clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him. ..."
The initial onus to prove the issuance of the cheque lies upon the complainant, and the same has to be proved beyond reasonable doubt, unless the accused admits the same. The presumptions under Sections 118(a) and 139 have to be ARUSHI Digitally by ARUSHI signed PARWA PARWAL Date:
2022.05.02 L 16:53:53 +05'30' CC No.: 528859/2016 10/16 Padam Chand Jain vs. M/s National Sales Corporation compulsorily raised as soon as execution of cheque by accused is admitted or proved by the complainant and thereafter onus is shifted upon the accused to prove otherwise. These presumptions shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability, etc.
13. In the present case, the accused has admitted the issuance of the cheques in question to the complainant. He has neither denied his signatures nor has stated that the cheques were issued in blank. The presumption under Section 139 of NI Act, therefore, has arisen in favour of the complainant. Hence, the onus shifted upon the accused to rebut the same. The standard of proof, to be discharged by the accused, is preponderance of probabilities. To rebut the presumption under Section 139 of NI Act, the accused has taken the following defences -
I. Firstly, legal demand notice was not issued to the accused on his Bhagirath Place address and the same was sent on Laxmi Nagar address. It has been argued on behalf of the accused that complainant did not send any legal demand notice to accused at his Bhagirath Place address, despite being aware of the same. Further, accused did not have any concern with the Laxmi Nagar address. As discussed above (see para 9 and 10), there is presumption of service of legal notice upon the accused and the same has not been rebutted by the accused. Further, the complainant is not under any obligation in law to send the legal demand notice to the accused on all his Digitally signed ARUSHI by ARUSHI PARWAL PARWAL Date: 2022.05.02 16:54:12 +05'30' CC No.: 528859/2016 11/16 Padam Chand Jain vs. M/s National Sales Corporation addresses known to the complainant. It is sufficient that the accused was served upon one of his addresses. Hence, such a defence taken by the accused has no merit.
II. Secondly, the cheque in question was issued only for the purpose of security.
It has been stated by the accused in his plea of defence and statement under Section 313 Cr.P.C. that the cheques in question were given as security to the complainant against purchase of goods. It has been held by the Hon'ble Supreme Court of India in 'Sripati Singh v. State of Jharkhand and Anr.' [2021 SCC Online SC 1002] -
"17. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section ARUSHI Digitally signed by ARUSHI PARWA PARWAL Date: 2022.05.02 L 16:54:35 +05'30' CC No.: 528859/2016 12/16 Padam Chand Jain vs. M/s National Sales Corporation 138 and the other provisions of N.I. Act would flow."
Hence, it is clear that simple defence of security cheque will not aid the accused to rebut the presumption under Section 139 of NI Act and accused will have to prove the there was no existence of legally enforceable debt or liability as on date of presentment of the cheques in question.
III. The third defence taken by the accused is that the complainant has not proved his case against the accused and there was no legal liability upon the accused qua the cheques in question.
Foremost, the law is clear. Once the presumption under Section 139 of NI Act is raised, the onus is upon the accused to rebut the presumption of legally enforceable debt qua the cheques in question. The standard to be discharged by the accused is 'preponderance of probabilities'. It has been held by the Hon'ble Supreme Court of India in 'Rohitbhai Jivanlal Patel v. State of Gujarat & Anr. [(2019) 18 SCC 106] -
"17. On the aspects relating to preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead the Court to conclude either that the consideration did not exist or that its non existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This Court has, time and again, emphasized that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the ARUSHI Digitally by ARUSHI signed PARWA PARWAL Date:
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requirements of rebuttal as envisaged under Section
118 and 139 of the NI Act. ..."
In the present case, the complainant has already stated in his evidence that goods were supplied to the accused against various bills and accused made payment against the same by issuing the cheques in question. Accused has admitted issuing the cheques to the complainant. During the cross examination of the substituted complainant, no question was put to him regarding existence of the bills and total outstanding qua them. In fact, the substituted complainant referred to certain bills for answering certain questions during crossexamination. Despite the same, the substituted complainant was not even asked to file the bills on record for cross examination. Total amount of the bills/ cheques in question was not disputed. Even business relations between the parties was also not disputed. Further, if the stand of the accused is to be believed and it has to be believed that the cheques in question were given as security against purchase of goods, while the goods were never supplied by the complainant; it fails to appeal to reason that why five cheques (bearing specific amounts) were given by the accused as security. In that case, why there was more than one security cheque given and why the security cheques bore a specific amount without supply of goods, have not been explained by the accused. Further, the accused has made two attempts before the court to settle the present case and make payment to the complainant. Partpayment of settlement amount has also been made by the accused. Without going into the reasons for entering into settlement, it Digitally signed ARUSHI by ARUSHI PARWAL PARWAL Date: 2022.05.02 16:55:29 +05'30' CC No.: 528859/2016 14/16 Padam Chand Jain vs. M/s National Sales Corporation again does not appeal to reason that the accused would make effort to make payment to the complainant if no goods were actually supplied to him. This defence of the accused appears to be a sham defence and holds no merit in light of facts and circumstances of the case.
Further, reliance placed by the accused on the judgment of Hon'ble High Court of Delhi in 'Total Finaelf India Limited v. Smt. Rashmi Parnami (2013)' does not help the case of the accused. The facts of the said case are distinguishable from the present case, in as much as in that case, certain security cheques were given to the complainant under an agreement, whereby the same were blank and signed and were given as security. The same is not the case in the present matter. The accused has not been able to explain how multiple cheques bearing specific amounts were issued as security to the complainant. There is nothing on record to show that the cheques in question were given as security prior in point of time. Once the issuance of cheques is admitted and no circumstance has been brought by the accused to rebut the presumption of liability qua those cheques, it is not material that the cheques bear the same date and were dishonoured on the same date. Further, there is nothing on record to suggest that the date on the cheques in question was filled by the complainant and the same was done against any agreement arrived at between the parties.
Considering the all of the above, in the considered opinion of this court, the accused has failed to rebut the presumption of legally enforceable debt ARUSHI Digitally by ARUSHI signed PARWA PARWAL Date: 2022.05.02 L 16:56:08 +05'30' CC No.: 528859/2016 15/16 Padam Chand Jain vs. M/s National Sales Corporation and issuance of cheques in question to the complainant for the same.
14. From the foregoing discussion and after considering the above facts and circumstances together, it is clear the accused has not led any cogent evidence to prove his defence(s) and has failed to rebut the presumptions under Sections 118 and 139 of NI Act. On the other hand, the complainant has been able to prove that the five cheques in question were issued by the accused in discharge of a legally recoverable debt towards the complainant, with the aid of presumptions of law. Therefore, in the considered opinion of this Court, the accused(s) is guilty of offence punishable under Section 138 of NI Act and is hereby convicted for the same.
Digitally signed
ARUSHI by ARUSHI
Announced in open court PARWAL
PARWAL Date: 2022.05.02
on 02.05.2022 16:56:29 +05'30'
(ARUSHI PARWAL)
Metropolitan Magistrate (NI Act)02
Central, Tis Hazari Court, Delhi.
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