Delhi District Court
Reliant Packaging Film Limited vs Simplex Packaging Limited & Anr. on 30 August, 2019
IN THE COURT OF SHRI AJEET NARAYAN, M.M (CENTRAL): TIS
HAZARI COURTS, DELHI
CC No.: 533446/16
U/s : 138 N. I. Act
P.S :Darya Ganj
Reliant Packaging Film Limited Vs Simplex Packaging Limited & Anr.
JUDGEMENT
1. Sl. No. of the case : 533446/16
2. Date of institution of the case : 05.06.2013
3. Name of complainant :Reliant Packaging Films Ltd.
Through Raj Malhotra Registered Office At:
4855/24, Ansari Road, Darya Ganj, New Delhi-02.
4. Name of accused, parentage & address :Simplex Packaging Ltd.
B 37-39, Sector-6, Noida (U.P.)-201301.
2.Sh. Nawal Kishore (Director), B 37-39, Sector-6, Noida, (U.P.)-201301/ Also at 2C, C-75, Sector-34, Nilgiri-III, Noida-201301.
5. Offence complained of or proved : 138 N. I. Act
6. Plea of accused : Accused pleaded not guilty
7. Final order : Conviction
8. Date on which order was reserved : 31.07.2019.
9. Date of pronouncement : 30.08.2019 CC No. 533446/16 1/14 Reliant Packaging Ltd. Vs. Simplex Packaging Ltd. & Anr.
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 is a Company, registered under company Act having it's registered office at 4855/24, Ansari Road, Daryaganj, New Delhi-110002. (Hereinafter referred to as the "Complainant Company") and complaint is filed by complainant through Mr. Raj Malhotra, who has been duly authorised and empowered to sign, verify and institute the present complaint vide power of attorney dated 31.05.2013. The complainant company is engaged, inter-allia, in the business of manufacturing of paper films/ plastic films/ stretch films and supplies the same to its customer as per their orders. The accused no. 1 is limited company. The accused no. 2 is the Director of accused no. 1 and in-charge of and responsible for the conduct of the day to day business affair of accused no. 1, M/s Simplex Packaging Limited. In accordance with the orders placed by the accused, the complainant company had been supplying the said material to the accused. In accordance with the order placed by accused no. 2, the complainant supplied the material from its factory vide invoice no. 0843 on dated 12.03.2013 for a sum of Rs. 6,01,434. The complainant has submitted that the material supplied by the complainant company has been accepted by the accused unequivocally and the same has been used, utilized and dealt with their business. After some time, in order to liquidate the outstanding liability, the accused no. 2 has issued a cheque on behalf of accused no. 1 for discharging his liability bearing no. 133852 dated 21.03.2013 amounting to Rs. 6,023,75/- was drawn from Union Bank of India, SSI Financial, Branch Noida-201301, with an assurance that the said cheque is good for payment and shall be honoured upon presentation by the complainant. The abovementioned cheque was deposited by the complainant with his banker, namely, Vijaya Bank, CC No. 533446/16 2/14 Reliant Packaging Ltd. Vs. Simplex Packaging Ltd. & Anr.
Branch Ansari Road, New Delhi for the encashment of the same but the same was dishonored by bankers of the accused vide returning memo 29.04.2013 with the endorsement "Insufficient Funds". Thereafter, complainant served a legal demand notice dated 07.05.2013 to the accused through Courier and Speed Post, at his address. The legal notice was duly received but despite that no payment was made. So, present case was filed under Section 138 Negotiable Instruments Act.
Proceedings Before Court
2. On the basis of pre-summoning evidence, accused was summoned for the offence u/s 138 Negotiable Instrument Act vide order dated 03.02.2016. Accused put his appearance on 24.05.2016 through his counsel and thereafter, a notice under Section 251 Cr.P.C was framed against him on 06.05.2017 by Ld. Predecessor to which he pleaded not guilty and claimed trial. In the defence recorded on the same date, the accused stated that accused company had been supplied defective goods regarding which innumerable communications have been made to the complainant. It was also stated that goods are still lying with the accused. Also, accused took the defence that legal demand notice was not served to the accused company.
3. The complainant adopted his pre-summoning evidence. Complainant has relied upon the documents i.e. true copy of Board Resolution as Ex.CW1/1,Original Power of Attorney as Ex.CW1/2, Original Invoice as Ex.CW1/3, Original Cheque as Ex.CW1/4, Returning memo as Ex.CW1/5, Office copy of legal demand notice, original postal receipt, courier receipt & computer generated Postal Reports are marked and Ex. CW1/6 to Ex.CW1/14 (colly.), complaint as Ex.CW1/14.
Despite given opportunity to the accused, cross-examination of CC No. 533446/16 3/14 Reliant Packaging Ltd. Vs. Simplex Packaging Ltd. & Anr.
complainant was not done by accused and matter was put up for statement of accused (Right of accused to cross-examine the witness stands closed vide order dated 10.07.2018 by Ld. Predecessor). In terms of order dated 18.08.2018 of Ld. Sessions Court complainant has been duly cross-examined and discharged. Thereafter, CE was closed.
4. Statement of accused under section 313 Cr.P.C. r/w section 281 Cr.P.C. was recorded in which he replied that he was innocent. As per statement, on 5-6 March 2012, Mr. Praveen Jha marketing executive of Complainant Company came to them. He took specific order for supplying 25 micron metalized CPP from us alongwith cheque in question as security. After 7-8 days, the goods of 22 micron having pin holes were supplied. Same was not proper for packaging the goods. The accused stated that he communicated about the goods to Mr. Jha who promised to take back the goods. The goods were not so taken back and the cheque in question was presented for encashment without intimating them. The goods were later on shown to general manager of the complainant, namely, Raj Malhotra who also agreed to take back the goods and deliver the specific order.
DE stands closed vide order dated 05.02.2019 of Ld. Predecessor, after recording the separate statement of accused no. 2 as defence did not wish to lead defence evidence. Afterwards final arguments were heard and after hearing the arguments trial was concluded.
5. I have heard counsel for the parties, perused the record and have gone through relevant provisions of the law.
Findings
6. Before appreciating the facts of the case in detail for the purpose of decision, let relevant position of law be discussed first. Now, Section 138 CC No. 533446/16 4/14 Reliant Packaging Ltd. Vs. Simplex Packaging Ltd. & Anr.
Negotiable Instrument Act provides as under:
Section 138.- Dishonour of cheque for insufficiency, etc., of funds in the account.- 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:
Provided that nothing contained in this section shall apply unless--
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, 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 thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation -- for the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
It is well settled position of law that to constitute an offence under S.138 N.I. Act, the following ingredients are required to be fulfilled:
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(1) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/part any debt or liability;
(2) cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier; (3) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque, (4) giving notice in writing to the drawer of the cheque within 30 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount, (5) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice.
Being cumulative, 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 N I Act.
7. The Act raises two presumptions in favour of the holder of the cheque i.e. Complainant in the present case; firstly, in 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 receiving the same of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability.
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Analysing all the concerned provisions of law and various pronouncements in this regard, the Hon'ble Apex Court in Basalingappa v. Mudibasappa, AIR 2019 SC 1983, noted at para 23 as follows [Bharat Barrel and Drum Manufacturing Company v. Amin Chand Pyarelal, (1999) 3 SCC 35; M.S. Narayana Menon alias Mani v. State of Kerala and another, (2006) 6 SCC 39; Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54; Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513; Rangappa v. Sri Mohan, (2010) 11 SCC 441 referred]:
(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 CC No. 533446/16 7/14 Reliant Packaging Ltd. Vs. Simplex Packaging Ltd. & Anr.
persuasive burden.
(v) It is not necessary for the accused to come in the witness box to support his defence.
8. To put in nutshell, the law regarding the presumption for the offence under Section 138 N.I. Act, the presumptions under Sections 118(a) and 139 have to be compulsorily raised as soon as execution of cheque by accused is admitted or proved by the complainant and thereafter burden is shifted upon the accused to prove otherwise. 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. The 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. Once the issuance of cheque is established, either by admission or by positive evidence, the presumption under Section 139 of the Negotiable Instruments Act, 1881 arises. We can summarize the general principles in the following way:
Onus of proof: Section 139 of the Negotiable Instruments Act, 1881 states 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. Therefore, here the onus shifts upon the accused to prove the nonexistence of debt or other liability. Section 139 of the Negotiable Instruments Act, 1881 uses the word "shall presume", which means that the presumption under Section 139 is rebuttable.
Standard of proof: The standard of proof required to rebut the presumption under Section 139 is that of "preponderance of CC No. 533446/16 8/14 Reliant Packaging Ltd. Vs. Simplex Packaging Ltd. & Anr.
probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or other liability, the onus shifts back to the complainant to prove by way of evidence, beyond reasonable doubt, that the cheque in question was issued by the accused in discharge, whole or in part, of any debt or other liability, and now the presumptions under Section 118 (a) and Section 139 will not come to the aid of the complainant.
Mode of Proof: The accused may adduce direct evidence to prove that the note/cheque in question was not supported by consideration, and that there was no debt or liability to be discharged by him. However, the Court need not insist in every case that the accused should prove the nonexistence of the consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated.
At the same time, it is clear that a bare denial of passing of consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances upon the consideration of which, the Court may either believe that the consideration and debt did not exist, or their nonexistence was so probable that a prudent man would, under circumstances of the case, act upon the plea that they did not exist.
As discussed above, from the legal provisions and the law laid down in various judgments, it can be safely gathered that it is for the accused to rebut the presumptions. He can do so by cross examining the complainant, leading defence evidence, thereby demolishing the case of the complainant. It is amply clear that the accused does not need to CC No. 533446/16 9/14 Reliant Packaging Ltd. Vs. Simplex Packaging Ltd. & Anr.
discharge his or her liability beyond the shadow of reasonable doubt. He just needs to create holes in the case set out by the complainant. Accused can say that the version brought forth by the complainant is inherently unbelievable and therefore the prosecution cannot stand. In this situation the accused has nothing to do except to point inherent inconsistency in the version of the complainant or the accused can give his version of the story and say that on the basis of his version the story of the complainant cannot be believed.
9. In the present case, the accused in his defence under section 251 Cr.P.C. stated that defective goods have been supplied by the complainant. Although, there has not been any express assertion that accused has drawn the cheque on the bank account maintained in its name and have signed the same. But, since the core defence of accused is only regarding the goods being defective, it is impliedly admitted that cheque has been drawn by accused on a bank account maintained by him. In such a scenario a presumption shall be raised under section 139 r/w section 118 of NI Act, that cheque in question was issued in discharge of valid debt or liability and drawn for goods consideration. Now it is upon accused, to rebut the presumption by adducing evidence.
The defence of accused under section 251 and section 313 of Cr.P.C. is that goods supplied to the accused is defective because accused has placed the order of paper of 25 micron, but it was supplied paper of 22 micron, containing pin holes. Besides, in section 313 Cr.P.C. statement, the accused has also taken stand that cheque was issued as security (this defence was not taken in section 251 Cr.P.C.). Also, in the statement of Section 251 Cr.P.C. the accused submits that he has not received the legal notice.
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10. As regards the defence of accused that cheque in question was security cheque and thus the complaint is not maintainable is without any merits in view of the decision of Hon'ble Apex Court in ICDS Ltd Vs. Beena Shabeer (2002)(2) SCC 426 and of Hon'ble High Court of Delhi in Credential Leasing & Credits Ltd. Vs. Shruti Investments & Anr. 223 (2015) DLT 343, that security cheques fall within the purview of Section 138 NI Act.
11. The contention raised on behalf of accused that legal demand notice dated 07/05/2013 Ex CW1/6 was not served is without any merit as the said legal notice was sent vide speed post and courier at the address of accused. It is not the defence of the accused that he did not reside at the address mentioned on the legal demand notice Ex CW1/6. Therefore, in view of Section 27 of General Clauses Act, legal notice was deemed to be served at the correct address. Also, the said objection cannot be taken at this stage in view of the decision in C.C. Alavi Haji v Palapetty Muhammad & Anr. (2007) 6 SCC 555, which states that in case, drawer of the cheque raises an objection that he never received Legal Notice U/s 138 of N.I. Act, he can within 15 days of the receipt of summons make payment of the cheque amount and in case, he does not do so, he cannot complain that there was no proper service of Legal Notice U/s 138 of N.I. Act.
12. In the present case, there is no dispute that these goods were actually supplied by the complainant to the accused. The accused in his statement recorded under section 251 and Section 313 of Cr.PC had contended that the goods supplied were defective in nature and he had asked the complainant to take back the goods. In such a factual scenario, the onus CC No. 533446/16 11/14 Reliant Packaging Ltd. Vs. Simplex Packaging Ltd. & Anr.
to prove or even to raise a probable defence of the goods supplied being defective is on accused.
The first available opportunity for the accused to have raised the question of goods supplied being defective was at the stage of acceptance. Section 42 of the Sale of Goods Act, 1931 provides that a buyer is deemed to have accepted the goods when he intimates the seller that he has accepted them or when the goods have been delivered to him and he does any act in relation to them inconsistent with the ownership of the seller or when after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them. There is nothing to show that the appellant had raised any objection with the complainant about any defect of the goods at the time of their delivery. There is no written communication produced by the appellant to indicate that the goods supplied were defective. Although, the accused contends that he has made numerous communication to the complainant, but this is only a bald assertion not substantiated by any material on record.
The accused contended that he had asked the complainant to take back the goods. However, there is no written communication produced in this regard by accused. The accused could have made an attempt to return the defective goods but there is nothing on record to indicate that he ever took such step.
It may be noted that the accused could have got the goods supplied examined by some expert to substantiate his contention that the goods were defective. However, no such evidence was produced.
Also, there is no explanation as to why the cheque in question was issued, if the goods were allegedly defective in quality. The goods were delivered on 12-03-2013, but the cheque was issued on 21-03-2013.
Thus no material at all was produced by the accused to show that the goods supplied by the complainant were defective in any manner what so CC No. 533446/16 12/14 Reliant Packaging Ltd. Vs. Simplex Packaging Ltd. & Anr.
ever. In these circumstances, since the accused retained the goods and in fact still has the possession of the same, he is deemed to have accepted the goods supplied by the complainant.
13. As regards the defence of accused, coming in the cross-examination of CW-1 i.e. complainant, that there is a variation in amount of cheque and amount mentioned in cheque Ex.CW1/3, whereas the cheque was issued after the supply of goods, it may be noted that this is not the case of defence that accused does not owe the liability regarding the supply of goods. It is admitted fact that goods have been supplied, the only point of contention is that if goods are defective, the accused is not liable to pay for defective goods. The accused has nowhere denied his liability regarding the invoice amount or liability regarding the value of goods, in Section 251 & 313 Cr.P.C. statement.
The complainant has explained in his cross-examination that there was some previous due against the accused company, that why accused company issued a cheque of Rs. 6,04,375, whereas the amount in invoice of Rs. 6,01,434. Although the complainant has not filed any statement of account showing the previous arrears, but in his cross-examination, he states that he can bring the same. But on the same day, the cross- examination was closed by this Court. After it, accused did not take any efforts to bring this record in his defence also. Accused did not examine any witness in defence evidence.
In view of Court, the accused has failed to create doubts in the version of complainant.
14. From the foregoing discussions, the accused has not led any such cogent evidence to rebut presumptions under S. 118/139 NI Act. In view of the aforesaid discussions, the court finds that the accused has not been CC No. 533446/16 13/14 Reliant Packaging Ltd. Vs. Simplex Packaging Ltd. & Anr.
able to prove any probable defence and has failed to rebut the presumption raised U/s 118/139 of the NI Act.
15. The complainant has been able to prove that the cheque in question i.e. cheque bearing no. 133852 dated 21.03.2013 amounting to Rs. 6,023,75/- was drawn from Union Bank of India, SSI Financial, Branch Noida-201301, was issued in discharge of a valid legally recoverable liability owed to the complainant by the accused, with the aid of presumptions of law raised in his favour.
16. Therefore, the entirety of the evidence hold the accused guilty and the accused Nawal Kishore is convicted for the offence punishable U/s. 138 of the Negotiable Instruments Act in respect of cheque in question.
Digitally
signed by
AJEET
AJEET NARAYAN
NARAYAN Date:
2019.08.30
Announced in the 17:02:30
open Court on 30.08.2019 +0530
(AJEET NARAYAN)
Metropolitan Magistrate
(Central-02), Tis Hazari, Delhi.
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Packaging Ltd. & Anr.