Delhi District Court
M/S. Shandong Chunlong India Private ... vs M/S. Krishna Traders on 30 April, 2024
CC NI ACT 2482/2021
M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
IN THE COURT OF MS. NEHA SHARMA,
METROPOLITAN MAGISTRATE (NI ACT) DIGITAL COURT-02,
SOUTH-EAST DISTRICT, SAKET COURT COMPLEX, NEW DELHI
CRIMINAL COMPLAINT NO: CC NI ACT/2482/2021
M/s SHANDONG CHUNLONG INDIA PVT. LTD ...........COMPLAINANT
VERSUS
M/S KRISHNA TRADERS & ANR. ............ACCUSED
1. Name & address of the complainant: M/s Shandong Chunlong India Pvt.
Ltd.
Having its registered office at
Plot no. 31, Ecotech 1, Site 4,
Greater Noida, Sector -31, Kasana
Road, Gautam Budhnagar,
UP 201310 Through its Authorized
Representative Mr. Vikas Saini
2. Name & address of the accused: Sh. Shiv Pujan Gupta
Plat no. -06, Kalka Appartmnet,
Chhwala, Najafgarh, Delhi-
110071.
Proprietor of M/s Krishna Traders.
3. Offence complained of : U/S 138, The Negotiable
Digitally signed
NEHA by NEHA
SHARMA
SHARMA Date: 2024.04.30
05:26:37 +0530
Page no. 1 of 21 (Neha Sharma)
MM-NI Act-02 (SED)Saket/New Delhi
CC NI ACT 2482/2021
M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
Instruments Act,1881.
4. Plea of accused : Pleaded not guilty.
5. Date of Institution of case : 26.02.2021
6. Date of Final Arguments : 19.04.2024
7. Date of decision of the case : 30.04.2024
JUDGMENT
1. Vide this judgment, this court shall dispose of the aforementioned complaint case filed by the complainant, M/s Shandong Chunlong India Pvt. Ltd. (hereinafter referred to as the 'complainant') against accused, Shiv Pujan Gupta, Proprietor of M/s Krishna Traders (hereinafter referred to as the 'accused') under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act').
CASE OF THE COMPLAINANT
2. The complainant's case is that the complainant is a private limited company engaged in manufacturing, processing and supplying of detergent powder, washing powder, cleansing products etc while the accused is in the business of trading of detergent powder, washing powder, cleansing products etc. The complainant started to supply the said material to accused through running account bills since 10.01.2019 against bonafide invoices and other supporting documents and complainant supplied goods of total value for Rs. 4,74,624/- out of which accused paid Rs. 2,75,000/- and for the balance payment of Rs. 1,99,624/-, accused issued a cheque bearing no 115897 drawn on Corporation Bank Chhawla Branch (hereinafter Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:26:47 +0530 Page no. 2 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
referred to as "cheque in question") in favor of the complainant but when the said cheque was presented, it got dishonoured vide return memo dated 11.01.2021 with the remarks "Drawer Signature Differ".
3. Thereafter, the complainant sent a legal demand notice dated 22.01.2021 U/S 138 of the NI Act asking the accused to make the payment of the cheque amount, which was duly served upon the accused, however, accused failed to make the payment despite delivery of the legal demand notice. Hence, being aggrieved, the complainant has filed the present complaint and prayed that the accused be summoned, tried and punished U/S 138 of the NI Act.
SUMMONING OF ACCUSED
4. After hearing the arguments at the stage of pre-summoning, the accused was summoned vide order dated 08.09.2021, the accused entered appearance in the present case on 18.02.2022 and he was admitted to bail vide same order. NOTICE
5. The court framed notice of accusation under Section 251 of the Criminal Procedure Code, 1973 (hereinafter referred to as 'Cr.P.C.') against accused on 14.03.2022. The substance of accusation was read over and explained to the accused and after being satisfied that the accused comprehended the same, the court recorded his plea. The accused pleaded not guilty and claimed trial. The accused admitted his signatures on the cheque in question however, denied filling particulars in the cheque in question. Upon being questioned regarding the address mentioned on the legal demand notice and receiving the said legal demand notice at the same address, accused admitted the address to be his correct address but denied receiving the legal notice at the said address. In his plea of defence, the accused admitted himself to be the distributor of complainant, a manufacturer of detergent powder. He further admitted giving the cheque in question as security to the complainant but denied any NEHA Digitally signed by NEHA SHARMA SHARMA Date: 2024.04.30 05:26:54 +0530 Page no. 3 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
liability towards the complainant. The accused stated that the cheque has been misused by the complainant.
6. On the same date, the statement of admission and denial was also recorded U/S 294 Cr.P.C. wherein the accused admitted the correctness and genuineness of return memo pursuant to which Bank Witnesses at Sr. No. 2 & 3 of list of witness were dropped. The matter was, thereafter, listed for the evidence of the complainant.
EVIDENCE OF THE COMPLAINANT
7. To prove its case prima facie, the complainant filed the affidavit of evidence of its director Mr. S.M. Kashif under Section 200 of the Cr.P.C. by way of an affidavit i.e. Ex. CW-1/1 wherein he has reiterated the averments made in the complaint. He placed reliance upon the following documents:
(i) Ex. CW1/A is the Master data of complainant company.
(ii) Ex. CW1/B is the copy of board resolution dated 04.01.2021
(iii) Ex. CW1/C (colly) is the ledger of complainant company.
(iv) Ex. CW1/D (colly) is the tax invoice. (v) Ex. CW1/E is the e-way bill. (vi) Ex. CW1/F is the original return memo dated 11.01.2021. (vii) Ex. CW1/G is the original cheque dated 05.01.2021.
(viii) Ex. CW1/H is the original legal demand notice dated 22.01.2021 along with its postal receipt which is Ex. CW1/I and tracking report is Ex. CW1/J along with certificate U/S 65B Indian Evidence Act is Ex. CW1/K
8. CW-1 was not cross examined by Ld. Counsel for accused. Thereafter, the right of the accused to cross examine CW-1 was closed by the Ld. Predecessor of this court vide order dated 18.05.2022. In the revision petition, preferred by the accused against order dated 18.05.2022, accused was granted one opportunity to Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:27:02 +0530 Page no. 4 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
cross examine CW-1. The Ld. Counsel for accused cross examined the other director of complainant company Sh. Mohd. Arif Zafar on 07.12.2022, thereafter, vide separate statement of Sh. Mohd. Arif Zafar recorded on 07.12.2022, complainant closed its evidence. Thereafter, the complainant company filed an application U/S 311 Cr.P.C. to examine S.M. Kashif, the other director of complainant company as CW-2. The said application was allowed on 13.10.2023 and CW-2 was cross examined by the accused on 21.02.2024.
EXAMINATION OF THE ACCUSED UNDER SECTION 313 CR.P.C.
9. The accused was examined under section 313 Cr.P.C. on 23.12.2022 and 20.03.2024 after examination of CW-2, wherein, accused admitted doing business with the complainant company. He admitted to be the distributor of detergent powder but denied receiving any goods from the complainant against the invoices i.e. Ex. CW 1/D and CW1/E. He stated that goods were received from complainant company for display in his distributorship area, Najafgarh for advertisement purposes but denied receiving goods worth Rs. 4,74,624/- from the complainant and making any payment of Rs. 2,75,000/- to the complainant. The accused admitted his signatures on the cheque in question and giving the cheque in question as blank security cheque to the sales supervisor in the complainant company namely Mr. Roshan Jha but denied filling its particulars. He further denied receiving any legal demand notice from the complainant.
10. Upon being questioned as to why the complainant has deposed against him, the accused stated that he used to deal with one person, namely Roshan Jha, employed in the complainant company and he had made complete payment to the complainant company against the goods received and also returned some of their goods. However, the complainant company presented the cheque in question without any information to the accused. He further stated that the payment towards the Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:27:09 +0530 Page no. 5 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
display of product which was to be paid by the complainant company to the concerned shopkeepers is still outstanding and the complainant company is no more operational.
DEFENCE EVIDENCE
11. Pursuant thereto, the accused chose to not lead DE in statement U/S 313 Cr.P.C. and the matter was listed for final arguments.
FINAL ARGUMENTS
12. Both parties addressed their final arguments. Ld. counsel for the complainant, argued that the accused has admitted his signatures on the cheque in question. He failed to rebut the presumption U/S 139 NI Act. Thus, the accused be convicted for the offence U/S 138 NI Act. He relied upon judgments in Rajesh Jain vs. Ajay Singh Crl. Appeal No. 3126 of 2023, Laxmi Dyechem vs. State of Gujarat (2012) 13 SCC 375, Bir Singh vs. Mukesh Kumar (2019) 4 SCC 197.
13. Per contra, Ld. counsel for the accused, argued that the accused owes no legal liability for payment of cheque amount to the complainant as there is no signature of the accused on the invoices, which clearly shows that said goods have not been delivered to the accused and the said invoices are forged and fabricated as it does not contain the signature/receiving of accused or any agent/associate on his behalf. He further argued that no purchase order or communication/e-mail of accused for placing the purchase order with the complainant company has been filed. There is contradiction in the version of the complainant regarding the procurement of the cheque. He further argued that the account statement produced by the accused is not accompanied with any certificate U/S 65B Indian Evidence Act (hereinafter referred to as "IEA"). On these grounds, accused is entitled to be acquitted. Reliance was placed on judgments in M/s Indus Airways Pvt. Ltd. and Ors. vs. M/s Magnum Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:27:14 +0530 Page no. 6 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
Aviation Pvt. Ltd. and Anr., M.S. Narayan Menon vs State of Kerela (2006) 6 SCC 39, Kulvinder Singh vs Kafeel Ahmad 2014 (2) JCC (NI) 100, Krishna Janardhan vs Dattatraya G Hegde AIR 2008 SC 1325.
14. The file and judgments filed by the parties have been carefully and minutely perused and my issue-wise findings with reasons thereof are as under:-
FINDINGS
15. Before appreciating the facts of the case and evidences led by the both the sides for the purpose of decision, let us first discuss the relevant position of law which is embodied in section 138 of NI Act. To bring home a liability under section 138 of the NI Act, following elements must spring out from the averments in the complaint and the evidence adduced by the complainant, viz,
a) A person must have drawn a cheque on an account maintained by him in a bank for payment of a certain sum of money to another person from out of that account for the discharge of any legally enforceable debt or liability;
b) 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;
c) That cheque has been 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;
d) The payee or the holder in due course of the cheque has made 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; and
e) The drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due Digitally signed NEHA by NEHA SHARMA SHARMA Date: 2024.04.30 05:27:19 +0530 Page no. 7 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
course of the cheque within 15 days of the receipt of the said notice.
16. Being cumulative, it goes without saying that 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 Act. Having said that, it becomes imperative to mention section 139 of NI Act which carves out a presumption in favour of the drawee that the cheque was issued to him in discharge of a debt or other liability of a legally enforceable nature. Also, the said provision must be read along with the Section 118 of the same enactment which spells out another presumption in favour of the drawee that every negotiable instrument was 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.
17. Having said that, what follows from the above is that the web of proof in a trial under section 138 NI Act is structured on the premise of the reverse onus of proof theory since the offence is a document based technical one. The journey of evidence in a trial under section 138 NI Act thus, begins not from the home of the prosecution story but from the point of the defence. The presumptions carved out in favour of the complainant are those of law and not those of fact. The court is obligated to draw presumptions and only when the contrary is proved by the defence, the same will be said to be rebutted. Whereas the standard of proof remains the same in such a trial, the reverse onus of proof on the defence is guided by the principle of preponderance of probabilities only.
18. As rebuttal evidence, the accused merely has to prove that the cheque was not given for any consideration or that there was no legal liability in existence against him for which the negotiable instrument was given. In this regard, reliance Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:27:23 +0530 Page no. 8 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
can be placed on Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16 wherein it was held as under:
"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, ..., it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption has been established. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused (...). 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 probability of the nonexistence of the presumed fact.
23. In other words, provided the facts required to form the basis of a presumption of law exists, the discretion is left with the Court to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. Therefore, 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 reasonably probable, the Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:27:27 +0530 Page no. 9 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
standard of reasonability being that of the prudent man."
19. In the backdrop of the factual narrative of the case, following points of determination arise in the present case:
A. Whether the complainant has been successful in raising the presumption under section 118 read with section 139 of the N.I Act, 1881? B. If yes, whether the accused has been successful in raising a probable defence to rebut the presumptions?
20. Since criminal liability can be attached by proving each element of the section under which liability is sought to be enforced, I shall now go on to appreciate the evidence- documentary and oral, in light of how compellingly it satisfies each of such ingredient, if at all. The first condition pertains to the issuance of the cheque in question to make the payment from an account maintained by the drawer of the cheque towards a legally enforceable debt or other liability. In the present case, the complainant has proved the original cheque i.e. Ex. CW1/G which the accused has not disputed as being drawn on the account of the accused.
21. The accused has admitted himself to be the distributor of the complainant company which is a manufacturer of detergent powder. He further admitted the issuance of Ex. CW1/G to the complainant only as a security cheque and his signatures on Ex. CW1/G. To attract liability under section 138 NI Act, the complainant has to prove that the cheque in question was drawn by the drawer for discharging a legally enforceable debt. In the present case, the issuance of the cheque in question is not denied. As per the scheme of the NI Act, once the accused admits signature on the cheque in question, certain presumptions are drawn, which result in shifting of onus. Section 118(a) of the NI Act lays down the presumption that every negotiable instrument was made or drawn for consideration. Another presumption is Digitally signed NEHA by NEHA SHARMA SHARMA Date: 2024.04.30 05:27:32 +0530 Page no. 10 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
enumerated in Section 139 of NI Act which lays down that the holder of the cheque received it for the discharge, in whole or part, of any debt or other liability.
22. The combined effect of these two provisions is a presumption that the cheque was drawn for consideration and given by the accused for the discharge of debt or other liability. Both the sections use the expression "shall", which makes it imperative for the court to raise the presumptions once the foundational facts required for the same are proved. It has been held by a three-judge bench of the Hon'ble Apex Court in the case of Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The principles pertaining to the presumptions and the onus of proof were summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 wherein it was held;
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarise the principles enumerated by this Court in the following manner:
25.1. 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. 25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the 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 Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:27:37 +0530 Page no. 11 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. 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.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
23. Thus, the presumptions raised under Section 118(b) and Section 139 NI Act are rebuttable presumptions. A reverse onus is cast on the accused, who has to establish a probable defence on the standard of preponderance of probabilities to prove that either there was no legally enforceable debt or other liability. Keeping in mind these basic principles, let us now examine if the accused has been able to successfully rebut the presumption under Section 139 NI Act read with Section 118 NI Act.
24. Here, the accused has tried to dispute his liability during his statement U/S 251 Cr.P.C by claiming that accused has no liability towards the complainant, cheque in question was issued as a security cheque and it has been misused by the complainant. At the time of recording of statement U/S 313 Cr.P.C., the accused claimed that Ex. CW1/G was not issued in discharge of any outstanding liability but as a security cheque. He further claimed that he has not received goods worth Rs. 4,74,624/- and he did not make payment of Rs. 2,75,000/- to the complainant company. Since, in the present case, the accused has not led any evidence, it has to be considered by this court whether the accused has been successful in discharging the burden of proof on the basis of material filed by the complainant and during cross- examination of the complainant.
25. In order to prove its case, the complainant has filed the tax invoice, e- way bill and ledger of the complainant company which is Ex. CW1/D, Ex. CW1/E Digitally signed by NEHA NEHA SHARMA Page no. 12 of 21 SHARMA Date: 2024.04.30 05:27:43 +0530 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
and Ex. CW1/C respectively. Ex. CW1/C reflects an amount of Rs. 1,99,624/- to be outstanding against the accused. During cross examination, CW-1 denied that material was given to the accused for display of the product and he voluntarily stated that products were sold to the accused. He further relied upon Ex. CW1/D to state that products were in fact, sold to the accused. CW-1 was not cross examined any further on this point. CW-2 also stated on oath that the invoices in question are for delivery of goods against actual sale. The accused claimed that he has not received any goods from the accused against Ex. CW1/D, however, there is no documentary or oral evidence in support of the contention of the accused. The accused neither filed his statement of account nor stepped into the witness box to state his own case.
26. The Hon'ble Supreme Court in the judgment of Vidhyadhar vs. Manikrao, AIR 1999 SC 1441 has categorically observed that:
"16. Where a party to the suit does not appear into the witness box and states his own case on oath and does not offer himself to be cross examined by the other side, a presumption would arise that the case set up by him is not correct as has been held in a series of decisions passed by various High Courts and the Privy Council beginning from the decision in Sardar Gurbakhsh Singh v. Gurdial Singh and Anr. This was followed by the Lahore High Court in Kirpa Singh v. Ajaipal Singh and Ors. AIR (1930) Lahore 1 and the Bombay High Court in Martand Pandharinath Chaudhari v.
Radhabai Krishnarao Deshmukh AIR (1931) Bombay
97. The Madhya Pradesh High Court in Gulla Kharagjit Carpenter v. Narsingh Nandkishore Rawat also followed the Privy Council decision in Sardar Gurbakhsh Singh's case (supra). The Allahabad High Court in Arjun Singh v. Virender Nath and Anr. held that if a party abstains from entering the witness box, it would give rise to an inference adverse against him. Similarly, a Division Bench of the Punjab & Haryana High Court Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:27:47 +0530 Page no. 13 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
in Bhagwan Dass v. Bhishan Chand and Ors., drew a presumption under Section 114 of the Evidence Act against a party who did not enter into the witness box."
27. Ex. CW1/C i.e. the ledger account of the complainant from 01.04.2018 to 31.03.2019 shows various payments to have been made by the accused. In his statement U/S 313 Cr.P.C., upon being questioned specifically regarding the part payment of Rs. 2,75,000/- to the complainant, the accused denied making any payment to the complainant. Later, in the same statement, the accused stated that he used to deal with one person namely Sh. Roshan Jha, employed in the complainant company. He further stated that complete payment has been made to the complainant company and some goods were also returned to the complainant company, however, no documentary or oral evidence was put forth by the accused. The accused has denied the ledger of the complainant i.e. Ex. CW1/C. Now, when accused has denied the ledger of the complainant, the onus was upon the accused to produce his ledger to rebut Ex. CW1/C, however, no such ledger was filed by the accused.
28. It is settled that it is the duty of the party to lead the best evidence in his possession, which could throw light on the issue in controversy and in case such material evidence is withheld, the Court may draw adverse inference under Section 114(g) of the Evidence Act notwithstanding, that the onus of proof did not lie on such party and it was not called upon to produce the said evidence. Reliance is placed on judgment of Hon'ble Supreme Court in Union of India Vs Ibrahim Uddin (2012) 8 SCC 148.
29. Ld. Counsel for accused has argued that the ledger is not accompanied with any certificate U/S 65B IEA and the certificate i.e. Ex. CW1/K has been filed by SM Kashif when admittedly, the accounts have been prepared by Bizcon Services LLP. He further argued that the invoices i.e. Ex. CW1/D does not have the signatures of accused. Admittedly, cheque has been signed by the accused. Section 139 r/w Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:27:52 +0530 Page no. 14 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
Section 118 NI Act already raises a presumption in favour of the complainant. Moreover, Ex. CW1/D are computer generated invoices which need not have signatures of the accused upon them. The certificate U/S 65B IEA i.e. Ex. CW1/K has been given by Sh. S.M. Kashif, one of the directors of the complainant company, responsible for day-to-day affairs of the company. Thus, Ex. CW1/K is a document admissible in law. Furthermore, even if the ledger of the complainant is not looked at, the accused did not give any oral or documentary evidence to rebut the presumption U/S 139 NI Act.
30. Mere pleading not guilty and stating that the cheque was issued as security, would not amount to rebutting the presumption raised under Section 139 of N.I. Act. It will be in utter disregard to the established principles of evidence, if this court accepts the version of accused devoid of any documentary evidence to concretize the proof. The story of accused, in the absence of any cogent evidence, cannot be taken as a gospel truth, specifically, when the accused has admitted receiving some goods from the complainant in his statement U/S 313 Cr.P.C. Once the complainant has produced its ledger to support its case, it was imperative upon the accused to produce his ledger to rebut the presumption U/S 139 but he failed to discharge his burden.
31. Further, for the sake of argument, even if the version of the accused that cheque in question was issued as security cheque is taken to be true, the said fact cannot extend any help to accused in the present case. The Hon'ble Supreme Court has held in Sripati Singh v. State of Jharkhand and Anr. 2021 SCC OnLine SC 1002.
"16. 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 Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:27:57 +0530 Page no. 15 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
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 time frame 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 138 and the other provisions of N.I. Act would flow."
32. Ld. Counsel for accused has argued that there are contradictions in the testimony of CW-1 and CW-2 regarding the procurement of cheque, however, the issuance of cheque is not disputed by the accused. The liability of accused has been assessed on the record and he has failed to prove that he had no liability at the time of presentation of cheque in question. So, the complainant was having authority to fill and present said Cheque for encashment as per provisions of Section 20 of the NI Act, which says that it is open to a person to sign and deliver blank and incomplete instrument and it is equally open for the holder to fill up blank and specify amount therein. Thus, even if the contention of the accused that he had not filled the particulars in the cheque in question, is assumed to be correct, the complainant was having authority to fill and present said Cheque for encashment as per provisions of Section 20 of the NI Act. The judgments in M.S. Narayan Menon and Krishna Janardhan (supra), relied upon by accused, elucidate the settled proposition of law. The judgment in Kulvinder Singh (supra), is not applicable to the present case as this Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:28:02 +0530 Page no. 16 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
complaint is filed under special provision of Section 138 NI Act where Section 139 NI Act already raises a presumption in favour of the drawer of the cheque while the judgment in M/S Indus Airways (supra) is also not applicable to the facts of the present complaint. Since, in the present case all the defences taken by the accused stand beseeched, therefore, considering the weight of the attending circumstances viz, the consistency in the prosecution story, the compelling documentary evidence adduced by the complainant, the first element of Section 138 NI Act stands assembled.
33. As far as the second ingredient is concerned, it has to be shown 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. The same is satisfied upon the perusal of the cheque in question i.e. Ex. CW1/G dated 05.01.2021 and the return memo i.e. Ex.CW1/F which is dated 11.01.2021, thus, the cheque in question has been presented within prescribed period of limitation of three months. The accused did not adduce any evidence whatsoever to contradict the same. Thus, this element of Section 138 NI Act stands proved.
34. Further, Section 146 of NI Act, in this regard comes into play which raises a presumption that the court shall presume the fact of dishonor of the cheque in case the cheque is returned vide a return memo having thereon the official mark denoting that the cheque has been dishonoured. Such bank slip or memo is a prima facie proof of dishonor and the defence has failed to rebut the presumption U/S 146 of the NI Act. Hence, this condition is fulfilled.
35. Thirdly, is it to be shown that the cheque has been 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 Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:28:07 +0530 Page no. 17 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
from that account by an agreement made with the bank. The return memo i.e. Ex.CW1/F show that cheque in question was dishonoured due to reason 'signature differ'. However, the accused has never denied his signatures on Ex.CW1/G. This fact has not been disputed by the accused throughout the trial. Further, it has also been admitted by accused during his statement U/S 313 Cr.P.C. as well as during NOA recorded U/S 251 Cr.P.C. It settled that if the drawer of the cheque changes his own signatures or closes the account or issues instructions to the bank not to make the payment, so long as the change is brought about with a view to preventing the cheque being honoured the dishonour would become an offence under Section 138 subject to other conditions prescribed being satisfied. I am supported by judgment in Laxmi Dyechem (supra). Thus, this requirement also stands satisfied.
36. Fourthly and lastly, it is required that the payee or the holder in due course of the cheque has made 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 and 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. In the present case, the accused has admitted the address mentioned on the legal demand notice to be his correct address but denied receiving the legal demand notice at the time of framing of notice U/S 251 Cr.P.C. and recording of statement of accused under Section 313 Cr.P.C.
37. In C.C. Alavi Haji Appellant V. Palapetty Muhammed & Anr. Respondents 2007 STPL(DC) 952 SC, it was observed that the service of notice is presumed until such presumption is rebutted by the addressee by proving to the contrary. It was held: Digitally signed by NEHA NEHA SHARMA SHARMA Date:
2024.04.30 05:28:11 +0530 Page no. 18 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
"14. Section 27 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 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. [Vide Jagdish Singh Vs. Natthu Singh, AIR 1992 SC 1604, State of M.P. Vs. Hiralal & Ors. (1996) 7 SCC 523 and V. Raja Kumari Vs. P. Subbarama Naidu & Anr. (2004) 8 SCC 774]. It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play, in the return of the notice unserved."
38. It was further observed that even if the accused claims that he did not receive the legal demand notice, he may have paid the cheque amount within 15 days of receipt of summons from the court but if he fails, he cannot contend that he has not received the legal demand notice. The relevant extract is reproduced below:
"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 Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:28:15 +0530 Page no. 19 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
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. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran's case (supra), if the "giving of notice" in the context of Clause (b) of the proviso was the same as the "receipt of notice" a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act."
39. Thus, from the above observations it is clear that when a registered letter is sent to the correct address, it is deemed to be served upon the addressee in the ordinary course. From perusal of Ex. CW1/H i.e. legal demand notice dated 22.01.2021 alongwith Ex. CW1/I, Ex. CW1/J and Ex. CW1/K i.e. corresponding postal receipt, tracking report and certificate U/S 65B IEA, it is evident that the legal demand notice was delivered upon the accused on 23.01.2021. The burden was on the accused to rebut the said presumption. The accused has not disputed the address mentioned on the legal demand notice nor he has stated that he is not residing at the said address.
40. The perusal of bail bond reveals that the address mentioned therein is the same address as present on the legal demand notice. It is only contended that he has not received the notice but not led any evidence to prove the same. Thus, it can be Digitally signed by NEHA NEHA SHARMA SHARMA Date: 2024.04.30 05:28:20 +0530 Page no. 20 of 21 (Neha Sharma) MM-NI Act-02 (SED)Saket/New Delhi CC NI ACT 2482/2021 M/S SHANDONG CHUNLONG INDIA PVT. LTD. VS. M/S KRISHNA TRADERS & ANR.
safely concluded that the accused has failed to rebut the aforesaid presumption. Therefore, this court holds that the accused was served with the legal demand notice as envisaged by Section 138 NI Act. Thus, the fourth and last limb of what will entail the liability against the accused is also structured.
41. Since in the instant case, the accused has failed to lead any convincing evidence to aid him in discharge of his onus and the presumption of law operates in favour of existence of debt or liability. Thus, having considered the entire evidence, the court is of the opinion that the complainant has successfully proved all the essential ingredients of Section 138 of the Act. Accordingly, this Court finds accused SHIV PUJAN GUPTA guilty and he is hereby convicted for the offence U/S 138 of the NI Act. Let he be heard on the point of sentence separately.
42. Let the copy of this judgment be given to the convict free of cost and the same be also uploaded on CIS and Layers forthwith.
Digitally signed by NEHAAnnounced in the open court on NEHA SHARMA
Date:
on this 30th day of April, 2024 SHARMA 2024.04.30
05:28:24
+0530
(Neha Sharma)
MM (NI Act) Digital Court-02 (SED)
Saket/New Delhi/30.04.2024.
Note :-This judgment contains twenty one pages and all the pages have been checked and signed by me. Digitally signed NEHA by NEHA SHARMA SHARMA Date: 2024.04.30 05:28:29 +0530 (Neha Sharma) MM (NI Act) Digital Court-02 (SED) Saket/New Delhi/30.04.2024.
Digitally signed by NEHA NEHA SHARMA
SHARMA Date:
2024.04.30
05:28:32 +0530
Page no. 21 of 21 (Neha Sharma)
MM-NI Act-02 (SED)Saket/New Delhi