Delhi District Court
In Matter Of "Krishna Janardhan Bhat vs . Dattatraya G. Hegde" on 16 June, 2020
IN THE COURT OF PARAS DALAL,
METROPOLITAN MAGISTRATE - 04, N. I. ACT,
SOUTHEAST DISTRICT, SAKET DISTRICT COURTS, DELHI.
JUDGMENT
R.S. Kandhari ....................Complainant
Versus
M/s. H.S. Embroidery & Ors. ....................Accused
PS - Greater KailashI
Under Section 138 of N. I. Act, 1881
a) Sl. No. of the case : CT No. 11257 of 2018
b) Alleged date of commission of offence : 28.10.2018 Approximately
c) Name of the complainant : Ravinder Singh Kandhari
S/o Pritam Singh Kandhari
R/o 6, South Part Apartments,
B Block, Kalkaji, New Delhi110019
d) Name of the accused no.1 firm : M/s. H.S. Embroidery
through its partners
Name of the accused no.2 Mr. Gaurav Mehra
Name of the accused no.3 Mr. Harbans Lal Mehra
all R/o B43, Sector 57,
Noida, U.P.
e) Offence complained of : Under Section 138 of N. I. Act, 1881
f) Plea of accused : Pleaded not guilty
g) Final order : Acquitted
h) Date of such order : June 16, 2020
BRIEF STATEMENT OF THE REASONS FOR DECISION :
1. Vide this judgment, this Court shall dispose off complaint for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 filed by the complainant Mr. R.S. Kandhari against accused firm M/s. H.S. Embroidery and two of its partners Mr. Gaurav Mehra and Mr. Harbans Lal Mehra. In gist, it is alleged in R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 1 of 14 complaint that complainant was employed in the accused no.1 firm since before and his last drawn salary was Rs.1,00,000/. His services were terminated on 01.08.2018 and towards notice period amount, besides other benefits including severance pay as well as damages for voluntarily termination, leave enchashment the cheque in question Ex.CW1/1 was drawn for Rs.10,00,000/ (Rupees Ten Lakhs only). The said cheque on presentation before the Bank vide deposit slip Ex.CW1/2 was returned dishonour vide memo with courier envelope are Ex.CW1/3 and Ex.CW1/4, respectively, for the reason 'payment stopped by drawer' following which complainant sent a legal demand notice Ex.CW1/5 and the proof of sending and tracking reports are Ex.CW1/6 to Ex.CW1/15 and since no payment was made within statutory period of legal demand notice, hence, this complaint.
PRESUMMONING EVIDENCE & NOTICE
2. Presummoning evidence was led by the complainant side and after hearing complainant side, accused was summoned for offence punishable under Section 138 of The Negotiable Instruments Act, 1881. After appearance of accused, it was ensured that copy of complaint has been supplied. Notice was put to the accused for offence punishable under Section 138 r/w 141 of The Negotiable Instruments Act, 1881 on 12.04.2019 wherein they denied any liability. The accused defended that the complainant settled his account and towards full and final payment the entire sum was paid via Bank transfer and the present cheque was misused by the accused without there being any legally recoverable outstanding liability. Thereafter, matter was fixed for complainant's evidence and accused side was granted opportunity to crossexamine the complainant's evidence.
R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 2 of 14 COMPLAINANT'S POST NOTICE EVIDENCE
3. Complainant stepped in witness box as CW1 adopted his affidavit of pre summoning as his evidence reiterating almost all facts of complaint, stating all exhibits available on record and in gist in his crossexamination he deposed that accused against discharge of their liability towards severance pay, in lieu of notice period, payment of accumulated leave and other benefits drew the cheque in question. The witness deposed that the cheque amount did not include the payment of statutory government dues. The witness admitted that the cheque was in his writing and he had filled the same upon the instruction of the accused themselves as was usually done by him. The witness/ complainant admitted receipt of statutory dues to the tune of Rs.6,92,308/ in his account via NEFT on 21.11.2018 and also admitted that his salary was always credited in his account via NEFT transfer.
4. Complainant closed his postnotice evidence on 25.05.2019 and thereafter, matter was fixed for recording statement of accused. STATEMENT OF ACCUSED
5. The statement of accused was recorded under Section 313 of The Code of Criminal Procedure, 1973 read with Section 281 of The Code of Criminal Procedure, 1973 separately. Incriminating evidence was put to him. Accused denied all the allegations and reiterated his defence.
6. Accused was given opportunity to lead defense evidence and accused no.2 Gaurav Mehra stood in defence as DW1. DW1 deposed that whatever salary was paid to the complainant was through NEFT and even after termination, all the dues R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 3 of 14 were cleared and paid through NEFT to the complainant. DW1 further deposed that the cheque in question was filled by the complainant himself without his knowledge and same was deposited without there being any legally recoverable liability. DW1 further deposed that on deposition, he was informed by his bank about the cheque and thereby he stopped the payment qua the cheque in question. The witness deposed that towards statutory dues the complainant was paid Rs.6,92,308/ via NEFT in his account. The witness was cross examined and he deposed that the accused no.3 who is his father was actually a sleeping partner and had no role in the present transaction. The witness deposed that his father did admit the receipt of demand notice. The witness admitted that he had no rift with his father, the authorised signatory in the bank included both him as well as his father for cheques presented on behalf of the accused no.1 firm. The witness also admitted the address on the demand notice as his correct address. The witness produced partnership deed which is Ex.DW1/C1 (OSR) as per which no where accused no.3 was stated as sleeping partner. The original cheque book counter foil was also produced as Ex.DW1/C2 and the witness identified the handwriting of counter foil entries for cheques bearing number 562676 till 562703, including the present cheque in question bearing number 562699 in the handwriting of the complainant. The witness also produced the ledger account for the complainant which is Ex.DW1/C3 where the last drawn salary of the complainant in July 2018 was Rs.1,00,000/ and the last entry is the NEFT dated 21.11.2018. The witness during his cross examination stated that since he used to travel for business purposes, he used to leave signed cheques with the complainant to be used for payment on behalf of the firm. The defense evidence was closed on 15.01.2020.
7. Final arguments from both sides heard on 24.02.2020. Case file perused.
R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 4 of 14 POINTS FOR DETERMINATION : 8.1 Whether the complainant has been able to establish ingredients of
offence punishable under Section 138 of The Negotiable Instruments Act, 1881 beyond shadow of reasonable doubt against the accused or not?
8.2 Final order.
APPRECIATION OF FACTS/CONTENTIONS/ANALYSIS & FINDINGS
9. To bring home conviction for offence punishable under Section 138 of The Negotiable Instruments Act, 1881, the complainant is obliged to prove :
(a) The cheque(s) was/were drawn/issued by the accused person(s) to the complainant on an account maintained by him/her/them/it with the bank for discharge, in whole or in part, of any debt or liability.
(b) The cheques(s) was/were presented to the bank within a period of six months or within period of its/their validity.
(c) The cheque(s) so presented for encashment was/were
dishonored.
(d) The payee/complainant of the cheque(s) issued a Legal
Demand Notice within 30 days from the receipt of information from the bank regarding dishonourment of the cheque(s).
(e) The drawer of the cheque(s) failed to make the payment within 15 days of receipt of aforesaid Legal Demand Notice.
(f) The complaint was presented within one month after the R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 5 of 14 expiry of above 15 days. UNDISPUTED/UNCONTROVERTED FACTS
10. At the outset, it is pertinent to mention herein that it is not in dispute that cheque in question belong to the accused, it bears her signatures, they were drawn on an account maintained by the accused with a bank and cheque in question was dishonored as alleged. So, there is no need of discussion qua said ingredients and same can be regarded as being duly proved on record and being noncontroverted. The accused no.3 admitted the receipt of the legal demand notice and hence there is no need of discussion of said ingredient in a complaint filed under the section 138 Negotiable Instruments Act.
CONTENTIONS QUA LIABILITY OF ACCUSED NO.3
11. The first contention of the defence is that the accused no.3 was a sleeping partner and had no role in the present transaction in question. The complainant side however has proved on record that the facts were otherwise. The accused no.3 in his defence to notice under section 251 CrPC stated that on receipt of demand notice he held settlement talks with the complainant. Moreover, the DW1 during his cross examination, deposed that accused no.3 was authorised to sign the cheque and he was authorised signatory in the bank records. Moreover, some of the counter foils in Ex.DW1/C2 were in the hand writing of the accused no.3. Ex.DW1/C1 is the partnership deep which no where states that the accused no.3 was a sleeping partner. The above contenion therefore is baseless and without any merits. Via virtue of Section 141 of the Negotiable Instruments Act, 1881 the accused no.3 is vicariously R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 6 of 14 liable for the acts of the firm.
CONTENTION QUA CONSIDERATION 12.1(a) The contentions which have been raised by defense is that the cheque was not towards any liability. The accused side has argued that all the payment towards salary and even towards final dues was paid to the complainant via NEFT. The accused side pleaded that on 21.11.2018, the accounts of the complainant were finally settled and the same was after they came to know that the cheque in question was presented by the complainant without there being liability and therefore the payment qua the cheque was stopped. The accused also defended that the cheque was only signed by the accused no.2 and was in the custody of complainant for business purposes, however, the same was filled and misused by the complainant without any instructions or liability on part of the firm. The accused also argued that they have taken a consistent stand and has been able to prove its case by documentary as well as oral material on record and therefore the accused side has been able to rebut the presumption of consideration available in favour of the complainant as there was no consideration in question. It is contended that accused should be acquitted in this matter.
12.1(b) On the other hand, it is the contention of the complainant side that accused has admitted his signatures on the cheque and the complainant has presumption in his favour as per the law. The complainant argued that the accused firstly tried to unsuccesfully deny receipt of legal demand notice, then denied the role of accused no.3 and the testimony of DW1 regarding instruction for stopping payment qua the cheque was inconsistent, as firstly he stated that he was informed by the bank, R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 7 of 14 later he deposed that the bank informed Mr. Sachin who later informed him. The complainant submitted that since no amount was paid qua the cheque, the accused drew cheques in discharge of the liability, hence, all ingredients of commission of offence punishable under Section 138 of The Negotiable Instruments Act, 1881 stands established on record, therefore, accused should be held guilty in this matter. 12.2 Submissions of both side considered.
Section 118 (a) of The Negotiable Instruments Act, 1881 provides as under : "Section 118. Presumption as to negotiable instruments. Until the contrary is proved, the following presumption shall be made:
(a) of consideration that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, was indorsed, negotiated or transferred for consideration;........."
Section 139 of The Negotiable Instruments Act, 1881 provides as under : "Section 139 Presumption in favour of holder. It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."
In matter of "Krishna Janardhan Bhat Vs. Dattatraya G. Hegde"
(2008) 4 SCC 54, Hon'ble Supreme Court of India has observed : "32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of the accused and that of the prosecution in a criminal case is different."
"34. Furthermore, whereas prosecution must prove the guilty of an accused beyond all reasonable doubt, the standard of proof so as to prove a defense on the part of the accused is 'preponderance of probabilities'. 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 he relies."
In matter of "Mallavarapu Kasivisweswara Rao Vs. Thadikonda Ramulu Firm" (2008) 7 SCC 655, Hon'ble Supreme Court of India (though it was a civil matter related to promissory note, but is relevant to refer herein) has held : "17. Under Section 118 (a) of the Negotiable Instruments Act, the court is obliged to presume, until the contrary is proved, that the promissory note was made for consideration. It is also a settled position that the initial burden in this regard lies on the defendant to prove the nonexistence of consideration by brining on record such facts and circumstances which would lead the court to believe the nonexistence of the consideration either by direct evidence or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal."
In matter of "Bharat Barrel & Drum Mfg. Co. V. Amin Chand R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 8 of 14 Payrelal" (1999) 3 SCC 35, Hon'ble Supreme Court of India (though it was also a civil matter related to promissory note, but is relevant to refer herein) has held : "12. Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118 (a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the nonexistence of a consideration by raising a probable defense. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the nonexistence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under the law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the nonexistence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118 (a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defense. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its nonexistence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist."
In matter of "Rangappa Vs. Sri Mohan" (2010) 11 SCC 441 which is a Full Bench Decision, Hon'ble Supreme Court of India while discussing above said provisions, judgments and other case law on the point has held : "26. 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 . To the extent, the impugned observations in Krishna Janardhan Bhat may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defense 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".
"27. 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. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendantaccused cannot be expected to discharge an unduly high standard or proof."
"28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defense which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defense and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
12.3 So, precisely there is initial presumption of legally enforceable debt or liability against the accused side, but same is rebuttable. The standard of proof for rebuttal is preponderance of probabilities. Accused side can lead evidence in defense, even can rely on materials submitted by complainant and can rely upon circumstances R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 9 of 14 also to show nonexistence of consideration or it being improbable and need not adduce evidence of his own for the same.
12.4 The defense of the accused side considered in view of abovecited case laws. From the facts it is proved that accused no.2 and 3 were active partners and managing the affairs of the accused no.1 firm. The accused no.2 signed the cheque which as regard rest of the particulars is in the handwriting of the complainant. The cheque was dishonoured for reason 'payment stopped by drawer' and only question to be answered is whether the cheque was written by the complainant on the instruction of the accused or not? The complainant in his complaint stated that the cheque was towards notice period amount, besides other benefits including severance pay as well as damages for voluntarily termination of his services and leave enchashment. However, neither any breakup of the amount is stated nor the accounts is produced. The complainant deposed that he did not get any termination letter and neither any leave record nor any other account is produced. The ledger account of complainant is on record as Ex.DW1/C3, however, the same has denied or admitted by the complainant, but during the cross examination of DW1 no question was asked as to the correctness and genuineness of the said document. As per Ex.DW1/C3, the complainant was drawing salary and towards gratuity amount he was last paid on 21.11.2018. The said payment was after the present cheque in question was dishonoured.
12.5 Accused no.3 in his defence to notice under section 251 CrPC categorically stated that on receipt of demand notice, there were settlement talks between the parties and the accounts were finally settled. It is noteworthy that when the parties went for settlement talks after the demand notice, then how can R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 10 of 14 complainant was instructed to fill a cheque of Rs.10,00,000/ towards his benefits. It is unnatural to believe that the accused would instruct the complainant to write a cheque in question without settling the final amount. Also it is noteworthy that the amount of the present cheque in question is no where stated in the ledger account Ex.DW1/C3. 12.6 The counter foil of the cheque book of which the present cheque in question was a part is on record and from the record itself it is seen that the handwriting for cheque bearing number 562676 to 562703 is the same as that of the complainant. The present cheque bears number 562699 and is in the chronological order of dates. If the complainant was instructed to write the cheque on 01.08.2018, then why did he wait till 16.09.2018 to present the said cheque. All the subsequent cheques were drawn and presented much prior to that.
12.7 The accused as DW1 firstly tried to deny the receipt of notice, however he pleaded ignorance if his father/ accused no.3 had received the demand notice or not. Nevertheless, notice to one partner of the firm is notice to the firm as well as to the other partners. DW1 also tried to deny the active role of the accused no.3 in the present transaction, however, the accused no.3 himself stated that on receipt of demand notice there were settlement talks. DW1 also firstly deposed that he was informed by the bank when the cheque was present and thereafter he instructed the bank to stop the payment qua the cheque, however during cross examination, he stated that his office person Mr. Sachin had received the information regarding the presentment of cheque and thereafter he gave instruction to stop the payment. Although the above inconsistencies show that the accused no.2 tried to save his father from any probable liability and changed his stance during deposition. However, not all alteration are material and only inconsistent pleas which go to the merits of the case are relevant.
R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 11 of 14 The partnership deed itself shows the status of accused no.3 as active and it is of no consequence as to who instructed the bank to stop payment qua the cheque, or as to who received the information. The relevant fact is that the cheque was returned unpaid not for insufficient balance, but for stop payment instruction. 12.8 The complainant has not placed on record any leave account or any other account to show that the dues towards him by the firm was to the tune of Rs.10,00,000/. The ledger account Ex.DW1/C3 was made during the course of business and has not been questioned or denied by the complainant. The complainant had received a sum of Rs.6,92,308/ on 21.11.2018, after the present cheque was returned dishonour, that too for reason 'payment stopped by drawer' and not for 'balance insufficient'. The complainant had received all his salary and dues via NEFT and therefore it is unnatural to beleive that only this amount of Rs.10,00,000/ would be paid via cheque. It is also unnatural to believe that the accused would instruct the complainant to fill the amount of Rs.10,00,000/ in the cheque without verifying the accounts and going through the leave accounts.
12.9 From the discussion above, the accused having raised a consistent defence and having been able to point discrepancy and inconsistencies in the case of the complainant has raised a probable defence. The defence raised in the facts and circumstances is sufficient to tilt the scales of balance of probabilities. The onus thus shifts on the complainant and the rebuttable presumption of law under section 139 N.I. Act thus vanishes. The complainant has now to prove the case beyond reasonable doubt. The complainant has not denied the ledger account Ex.DW1/C3 and has even admitted writting the present cheque in question. The complainant has not placed on record or shown any account or document to show that what amount was due towards R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 12 of 14 his outstanding leaves and other benefits. The complainant has to prove the existence of debt from cogent evidence and not just self serving statements which do not possess any evidentiary value.
FINAL CONCLUSION
13. It stands established on record in the form of evidence of the complainant given vide affidavit (which can be read in evidence at all stages as per judgment of "Rajesh Agarwal Vs. State & Anr." 171 (2010) DELHI LAW TIMES
51), documents exhibited in evidence, documents exhibited in evidence, admission of accused during accusations explained to him and statement of accused recorded under Section 313 of The Code of Criminal Procedure, 1973 read with Section 281 of The Code of Criminal Procedure, 1973 that the complainant did not have the instruction to fill the cheque in question for the amount stated therein. The cheque was returned unpaid for the reason 'payment stopped' and not 'insufficient balance'. The complainant has not been able to prove that the cheque in question was for discharge of legally enforceable liability as on the date of the cheque and hence the foremost ingredients of offence punishable under Section 138 of The Negotiable Instruments Act, 1881 is not established.
FINAL ORDER
14. In view of the aforementioned facts and circumstances, this Court is of the conclusion that complainant has not been able to duly prove its case under Section 138 of The Negotiable Instruments Act, 1881 beyond shadow of any reasonable doubt. Accordingly, accused firm M/s. H.S. Embroidery and two of its partner accused Mr. R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 13 of 14 Gaurav Mehra and Mr. Harbans Lal Mehra stands acquitted for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 qua the cheque in question in the present complaint Digitally signed Announced in the open Court PARAS by PARAS DALAL on June 16, 2020. DALAL Date:
2020.06.16 12:35:07 +0530 (PARAS DALAL) M.M.04/N.I.Act/SouthEast, Saket/Delhi/16.06.2020 R.S. Kandhari v. M/s. H.S. Embroidery & Ors. 14 of 14