Delhi District Court
"In Light Of These Extracts vs M/S Spectrapure Fluid Concepts on 25 May, 2023
Date of institution: 17.11.2015
Date of judgment:25.05.2023
Final Decision: Convicted
IN THE COURT OF MS. KATYAYINI SHARMA KANDWAL: MM : NI ACT-03
(CENTRAL) : TIS HAZARI COURTS : DELHI
CT Case No.535524/16
CNR NO. DLCT02-011844-2015
M/S AJAY ENGINEERING WORKS,
B-77, SECTOR-3, DSIIDC INDUSTRIAL AREA,
BAWANA, DELHI-110039
THROUGH ITS PROPRIETOR
SHRI RAHUL BANSAL ............COMPLAINANT
V.
1. M/S SPECTRAPURE FLUID CONCEPTS
1081, AGGARWAL TOWER-II,
NETAJI SUBHASH PALACE,
PITAMPURA, DELHI-110034.
2. SHRI PRAFUL JAIN
PROPRIETOR
M/S SPECTRAPURE FLUID CONCEPTS
1081, AGGARWAL TOWER-II,
NETAJI SUBHASH PALACE,
PITAMPURA, DELHI-110034 .............ACCUSED
COMPLAINT UNDER SECTION 138 NEGOTIABLE INSTRUMENTS ACT, 1881
JUDGMENT
BRIEF STATEMENT OF REASONS FOR THE DECISION FACTUAL MATRIX
1. The present complaint has been filed by the complainant against the accused under section 138 Negotiable Instruments Act, 1881 (hereinafter "NI Act").
2. Briefly stated, the case of the complainant is that the complainant is a proprietorship firm and running its business of sale and supply of machines. That accused being one CC No. 535524/16 M/s Ajay Engineering Works v. M/s Spectrapure Fluid Concepts Page 1 of 13 of its customers was supplied goods as a result of which the accused had a total outstanding of Rs.10,14,750/- which the accused failed to pay. That the accused issued two post-dated cheques bearing number 060564 dated 28.06.2015 for a sum of Rs.3,70,000/- and cheque bearing no.089708 dated 27.08.2015 for Rs.3,00,000/-, drawn on Union Bank of India, and Syndicate Bank respectively in favour of the complainant (hereinafter "cheques in question"). That at the time of issuance of the cheques in question, the accused had assured the complainant that the same would be honoured on presentation.
3. That the cheques in question were presented for encashment by the complainant and the same were returned unpaid with the remarks "drawer signature differs" and "funds insufficient" vide returning memos dated 21.09.2015 and 22.09.2015. That the fact of dishonour of the cheques in question was brought to the notice of the accused but he failed to make the payment of the said cheques in question to the complainant. That the complainant sent a legal notice dated 06.10.2015 to the accused through his lawyer demanding the payment as per the dishonoured cheques. That the accused failed to pay the cheque amount within the prescribed period. Hence the present complaint under section 138 of NI Act.
4. In order to support his case, the complainant was examined as CW-1 and tendered his affidavit as Ex. CW 1/A into evidence wherein averments made in the complaint were reiterated. The complainant also placed reliance on the following documents:
Ex. CW 1/1 Copy of bill no. 109, Book no.3, dated
18.06.2015 for a sum of Rs.4,95,000/-
Ex. CW 1/2 Copy of bill no. 115, Book No. 3 dated
28.08.2015 for Rs.5,19,750/-
Ex. CW 1/3 Cheque bearing no. 089708 dated
27.08.2015 for a sum of Rs.3,00,000/-
Ex. CW 1/4 Cheque bearing no. 060564 dated
28.06.2015 for a sum of Rs.3,70,000/-
CC No. 535524/16 M/s Ajay Engineering Works v. M/s Spectrapure Fluid Concepts Page 2 of 13
Ex. CW 1/5 Return memo dated 22.09.2015
Ex. CW 1/6 Return memo dated 21.09.2015
Ex. CW 1/7 Legal demand notice dated 06.10.2015
Ex. CW 1/8 Postal receipts dated 07.10.2015
Ex. CW 1/9 Regd. AD Cards
5. Upon service of summons, the accused entered an appearance and notice of accusation under Section 251, Code of Criminal Procedure, 1973 (hereinafter referred to as "Cr.P.C.") was served upon the accused on 25.04.2016 to which he pleaded not guilty and claimed trial and his plea of defence was recorded. The plea of defence taken by the accused was as follows:
I have made part payment against invoice dt. 18.06.2015 for Rs.2 lacs. I have not received goods against invoice dt. 28.08.2015. There is no liability towards the complainant with respect to invoice 28.08.2015. There is part liability towards invoice dt. 18.06.2015.
6. Subsequently, an application under section 145(2) NI Act was filed by the accused. Since the counsel for the complainant submitted that he has no objection to the same without prejudice to his case, the accused was granted opportunity to cross examine the complainant vide order dated 29.06.2017.
7. After closing the complainant evidence, statement of accused under section 313 Cr.P.C. was recorded on 28.03.2022 wherein the incriminating evidence were put to the accused. The accused reiterated his defence. He further submitted that the cheques in question were given in the course of business to the complainant for securing future orders with him. He stated as follows:
The material qua bill no. 109 in the sum of Rs.4,95,000/- was received by me. However, the material qua bill no.115 in the sum of Rs.5,19,750/- was never received by me. The bill no. 115 for Rs.5,19,750/- is false and fabricated. As against the liability of bill no. 109 for Rs.4,95,000/-, I have paid Rs.2,00,000/- to the complainant by way of RTGS. I am only liable to CC No. 535524/16 M/s Ajay Engineering Works v. M/s Spectrapure Fluid Concepts Page 3 of 13 pay Rs.2,95,000/- to the complainant, despite the same the complainant has filed the present case for an exaggerated amount and did not return my cheques in question to me and misused the same. I have not issued these cheques in question towards the debt or liability.
8. Matter was thereafter fixed for defence evidence. Vide order dated 28.03.2022, the Court recorded that that the accused does not wish to lead defence evidence in the present matter and in view of the same, the matter was listed for final arguments.
9. The following points of determination arise in the present case:
(i) Whether the complainant is successful in raising the presumptions under Section 118 read with Section 139 of NI Act?
(ii) If yes, whether the accused has been successful in raising a probable defence?
THE LAW APPLICABLE
10. Before appreciation of evidence led on behalf of the parties, at the very outset, I would like to narrate the legal principles, relevant for adjudication of complaint under Section 138 of NI Act.
11. Section 138 of Negotiable Instruments Act, 1881 makes dishonour of cheques an offence. It provides that:
"where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that 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 that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both".CC No. 535524/16 M/s Ajay Engineering Works v. M/s Spectrapure Fluid Concepts Page 4 of 13
12. In order to ascertain whether the accused has committed an offence u/s 138 NI Act, the following ingredients constituting the offence have to be proved:
(i) The drawer of the cheque should have issued the cheque for the discharge, in whole or in part of a legally enforceable debt or other liability.
(ii) The cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of that 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 that bank.
(iii) The drawer of such cheque fails to make the payment of the said amount of money within fifteen days of the receipt of the notice from the payee or the holder in due course demanding the payment of the said amount of money.
It is only when all the above-mentioned ingredients are satisfied that the person who has drawn the cheque can be set to have committed an offence u/s 138 NI Act.
13. It is important to reproduce Sec.118 and Sec.139 of the NI Act here. Section 118 (a) of the NI Act provides that:
until the contrary is proved, it shall be presumed that "that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration."
Further, Section 139 of the NI Act lays down that:
"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.
14. The Hon'ble Supreme Court of India in Basalingappa v. Mudibasappa, (2019) 5 SCC 418 : 2019 SCC OnLine SC 491 at page 422 held as follows:
CC No. 535524/16 M/s Ajay Engineering Works v. M/s Spectrapure Fluid Concepts Page 5 of 13(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.
(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.
15. The three judge bench of the Hon'ble Supreme Court in Rangappa v. S. Mohan, (2010) 11 SCC 441 has ruled that existence of liability itself is a presumption of law. It was held that the presumption mandated by Section 139 of NI Act does include the existence of a legally enforceable debt or liability. This is in the nature of the rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. The rebuttal does not have to be conclusively established but such evidence must be adduced before the court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonable probable, the standard of reasonability being that of the prudent man. It was held as under:
CC No. 535524/16 M/s Ajay Engineering Works v. M/s Spectrapure Fluid Concepts Page 6 of 13"In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability."
ARGUMENTS:
16. Ld. Counsel for complainant has argued that all the ingredients of section 138 NI Act have been fulfilled in the present case and that the complainant has duly proved his case. Hence, the accused be convicted. He further argued that the accused has failed to rebut the presumption that is drawn against him and that the plea of defence raised by the accused is untenable. It is stated that the accused has duly accepted the fact that he issued the cheques in question wherein all particulars have been admitted to have been filled by him and that the complainant in his cross- examination has clearly reiterated the reason behind handover of the cheque in question by the accused to the complainant.
17. Per contra, Ld. Counsel for accused submits as follows:
(i) That the accused has been able to rebut the presumption in favour of the complainant and hence, should be acquitted.
(ii) That the legal demand notice in the present case was not received by the accused and that it is not correctly addressed. That, therefore, offence under section 138 NI Act is not made out.
(iii) That even for the sake of argument and by application of C.C. Alavi Haji v.
Palapetty Muhammed, (2007) 3 SCC (Cri), if it is presumed that the legal demand notice was duly delivered to the accused, the present matter is premature in light of the fact that the complainant has not been able to prove the date of delivery. Relying on judgments of Jharkhand High Court in Rahul Raj@ Rahul v. State of Jharkhand and Anr. Criminal Revision No. 223 of 2012 and Manoj Kumar Nag v. State of Jharkhand & Anr. 2021 SCC OnLine Jhar 458, he submits that in cases where the date of delivery of legal demand notice to the accused cannot be ascertained, the delivery is presumed CC No. 535524/16 M/s Ajay Engineering Works v. M/s Spectrapure Fluid Concepts Page 7 of 13 to be made 30 days after the dispatch of legal demand notice and that in view of the same, the present case has been instituted before expiry of 15 days after the delivery of legal demand notice and hence, is premature.
(iv) That the bill Ex. CW 1/2 is a forged and fabricated document and the accused never ordered any material as mentioned therein. That the accused has already admitted bill Ex. CW 1/1 and the outstanding amount in lieu of the same. That even the address mentioned on Ex. CW 1/2 is incorrect. That the accused never had any employee with the name Suraj who has allegedly received the material on behalf of accused. That the complainant has not been able to prove the delivery of the said material to the accused.
(v) That the complainant has not acted as a prudent man and has concealed the payment of Rs.2,00,000/- received by him from the accused in his complaint while the same was admitted by him during his cross-examination.
(vi) That the present complaint was filed by a proprietorship concern and since proprietorship firm is not a legal entity, the complaint should have been filed by the sole proprietor in his name on behalf of the proprietorship firm and the same could not have been instituted in the name of the proprietorship firm.
(vii) That the complainant has not placed on record VAT return or ledger account with respect to the transactions made by him with the accused and that he has admitted it in his cross-examination that he used to maintain a ledger account but the same was not filed by him.
ANALYSIS/REASONING POINT OF DETERMINATION NO. 1: WHETHER THE COMPLAINANT IS SUCCESSFUL IN RAISING THE PRESUMPTIONS UNDER SECTION 118 READ WITH SECTION 139 OF NI ACT?
18. In this case, issuance of cheque, its presentation and dishonorment are not in dispute, inasmuch as the same have been duly proved on the basis of cogent evidence as well as admitted by the accused.
"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, CC No. 535524/16 M/s Ajay Engineering Works v. M/s Spectrapure Fluid Concepts Page 8 of 13 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 GC Act and Section 114 of the Evidence Act."
19. The signatures on the cheques in question Ex. CW 1/3 and Ex. CW 1/4 are admitted by the accused. The aforesaid cheques in question were returned vide return memo bearing Ex. CW 1/5 and CW 1/6. The legal notice Ex. CW 1/7 was sent to the accused vide postal receipts bearing Ex. CW 1/8 and AD Cards of the legal notice sent through registered AD is Ex. CW 1/9. In this regard, plea of defence of the accused in notice of accusation framed against him under section 251 Cr.P.C. as well his statement recorded under section 313 Cr.P.C., the accused has admitted that the cheques in question were signed by him. As far as the receipt of legal demand notice is concerned, the accused, at the time when notice was framed against him, denied receiving the legal notice but admitted that it was correctly addressed. Therefore, it emerges that the legal demand notice has been properly addressed and posted by the complainant, as also proved by the postal receipts, therefore the same is presumed to have been delivered under section 114 of the Indian Evidence Act, 1872 and Section 27 of General Clauses Act and in view of the law laid down in C.C. Alavi Haji (Supra) wherein the Hon'ble Supreme Court held as follows:
"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 GC Act and Section 114 of the Evidence Act."
20. In view of the abovementioned circumstances, the presumptions under sections 139 and 118 NI Act that the cheque in question was for a legally recoverable debt/liability stand activated.
21. Accordingly, the point of determination no.1 is decided in affirmative.
CC No. 535524/16 M/s Ajay Engineering Works v. M/s Spectrapure Fluid Concepts Page 9 of 13POINT OF DETERMINATION NO. 2: IF YES, WHETHER THE ACCUSED HAS BEEN SUCCESSFUL IN RAISING A PROBABLE DEFENCE?
22. Now it is to be examined whether the accused has been able to rebut the statutory presumptions. It is settled law that the burden to disprove the existence of legal liability is upon the accused and the presumption has to be rebutted by leading cogent evidence, on a preponderance of probabilities.
23. In the opinion of this Court, the complainant has presented a case better than the accused and the presumption as raised in point of determination no. 1 does not stand rebutted for the following reasons:
(i) One of the contentions raised by the Ld. Counsel for accused is that the legal demand notice Ex. CW 1/7 has been wrongly addressed. However, in his notice framed under section 251 Cr.P.C. on 25.04.2016, the accused had stated that he had not received the legal demand notice but the address mentioned therein was his correct address. Though in his statement recorded under section 313 Cr.P.C. as well as in his written arguments, the accused stated that the given address is incorrect as his office is situated in Agarwal Millennium Tower-II which is different from Agarwal Tower-II, he has failed to adduce any independent evidence to show that he was not residing/available at the given address or that the address was incorrect. Further, bailable warrants issued against him vide order dated 12.01.2016 were issued at the same (allegedly incorrect) address which were received back with the report that an employee of the accused stated that the accused was unavailable while bailable warrants issued vide order dated 03.10.2016 on the same address were received back duly executed. The reports received back are not in consonance with the submission of the accused that the address was incorrect. Mere submission that the legal demand notice was incorrectly addressed or stating that he was not available at the said address is insufficient without any independent evidence being led to buttress the contention. In view of the same, the court is not inclined to believe in the submission made by the accused.
(ii) Another argument made by Ld. Counsel for accused is that the complaint is premature. He has stated that even for the sake of argument if the delivery of CC No. 535524/16 M/s Ajay Engineering Works v. M/s Spectrapure Fluid Concepts Page 10 of 13 legal notice is presumed by application of CC Alavi Haji (Supra), the presumption of delivery of the legal demand notice could only have been presumed 30 days after the dispatch of the legal notice. Ld. counsel for accused relied on judgments of Jharkhand High Court in Rahul Raj@ Rahul (Supra) and Manoj Kumar Nag (Supra) in support of his submission.
However, the cases cited on behalf of accused are different from the case at hand in view of the fact that AD Cards of the post sent through Regd. AD were received back by the complainant in the present matter which have also been annexed with the present complaint as exhibit CW 1/9. The cases relied upon by Ld. Counsel for accused have made the finding on the basis of the fact that the complainant did not have anything to prove due delivery of legal demand notice. In view of the fact that AD cards were duly received back by the complainant along with a stamp and signatures, the accused cannot be given benefit of this technicality. Since the accused has been unable to show why the delivery of legal demand notice must be presumed on 30th day after the dispatch of legal demand notice, this submission also doesn't inspire confidence of this Court. Moreover, even the summoning order in the present case was not challenged by the accused which has now attained finality.
(iii) Ld. Counsel for accused has also stated that bill Ex. CW 1/2 is forged and that complainant has failed to prove that goods mentioned therein were delivered to him. Apart from the submission that goods were not delivered to him, the accused has not placed anything on record or examined any witness to prove non-delivery of goods to him. Moreover, in his notice framed under section 251 Cr.P.C., the accused admitted that all particulars on the cheques were filled by him. The accused has also admitted part liability in the present matter towards only bill Ex. CW 1/1. Even for the sake of argument, if the contention of the accused that goods as mentioned in Ex. CW 1/2 were not ordered by him and were not delivered to him is considered, no reasonable man would hand over duly filled cheques of Rs.6,70,000/- to a person from whom he has allegedly purchased goods worth only Rs.4,95,000/-. Moreover, a security cheque given for securing future transactions is generally a blank signed CC No. 535524/16 M/s Ajay Engineering Works v. M/s Spectrapure Fluid Concepts Page 11 of 13 cheque given in the name of the complainant. The accused has been unable to explain why the particulars on the cheques were duly filled by him when the cheques were allegedly given for securing future transactions.
(iv) It has also been argued by Ld. Counsel for accused that the complainant has concealed the payment received by him from the accused before the complaint case was instituted. The date of payment of Rs. 2,00,000/- has nowhere been provided in the complaint or in the cross-examination of complainant. On being asked during the final arguments, complainant brought forward his statement of accounts to show that the payment was made on 21.10.2015 which was not denied by the accused. Legal demand notice exhibit CW 1/7 dated 06.10.2015 was sent to the accused on 07.10.2015 and therefore, the payment as mentioned was made after the legal demand notice was sent to the accused. Even though the payment has not been disclosed by the complainant in the complaint, the same was duly admitted by him in his cross-examination. The payment as received will not have any effect on the merits of this case as the cheques in question were presented for encashment before the said payment was made by the accused and therefore, the complainant could not have endorsed those payments in the cheques in question and the complainant duly admitted the receipt of payment in his cross-examination.
(v) Another contention of Ld. Counsel for accused is that the present complaint was filed by a proprietorship concern and since proprietorship firm is not a legal entity, the complaint should have been filed by the sole proprietor in his name on behalf of the proprietorship firm. In Shankar Finance and Investments v. State of Andhra Pradesh and Others, (2008) 8 SCC 536, the Hon'ble Apex Court has dealt with the issue regarding institution of complaint case under section 138 NI Act by a proprietorship concern wherein it was held that filing of the complaint by a proprietorship concern through its proprietor is one of the valid modes for institution of the complaint case. Hence, the submission of the accused is baseless and devoid of merits.
(vi) Furthermore, Ld. Counsel for accused has argued VAT Return/Ledger account was not filed by the complainant. In his cross-examination, the complainant CC No. 535524/16 M/s Ajay Engineering Works v. M/s Spectrapure Fluid Concepts Page 12 of 13 had admitted that he had filed VAT return of the goods in question and also admitted that he was maintaining a ledger account of the accused. In view of the fact that the presumption is in favour of the complainant, the burden of proving that the offence under section 138 NI Act was not committed was upon the accused who had sufficient opportunity to demand production of VAT return and ledger account from the complainant which was not availed by him. Even for the sake of argument if the contention of the accused is accepted, non-filing of VAT Return or ledger account does not adversely affect the case of the complainant as there is no mandatory requirement of production of these documents in cases instituted under section 138 NI Act. Thus, even this defence of the accused does not inspire confidence of this Court.
24. Having considered the entire evidence, this court is of the opinion that the accused has not been able to prove his defence either by oral or documentary evidence.
25. The Court is of the view that the complainant has successfully proved all the essential ingredients of Sec.138 NI Act.
26. Accordingly, accused Praful Jain is held guilty for committing the offence punishable under section 138 NI Act. The accused is hereby convicted for the offence under section 138 NI Act.
27. Let the convicted accused be heard on the point of sentence separately.
28. A copy of this judgment be placed on the official website of the District Courts.
Digitally signed KATYAYINI by KATYAYINI
SHARMA
SHARMA KANDWAL
KANDWAL Date: 2023.05.25
16:18:39 +0530
ANNOUNCED IN OPEN KATYAYINI SHARMA KANDWAL
COURT ON 25.05.2023 MM-03(NI ACT) CENTRAL
THC, DELHI/25.05.2023
THIS JUDGMENT CONTAINS 13 PAGES AND EACH PAGE HAS BEEN SIGNED BY ME CC No. 535524/16 M/s Ajay Engineering Works v. M/s Spectrapure Fluid Concepts Page 13 of 13