Delhi District Court
CT CASES/622378/2016 on 5 March, 2022
CC No. 622378/2016
IN THE COURT OF MS. TWINKLE CHAWLA: MM, NI ACT-02, SOUTH-
EAST DISTRICT, SAKET COURTS COMPLEX: NEW DELHI
Penta Freight Pvt. Ltd. v. Linkcare Freight Forwarders
CC No. 622378/2016
U/s 138 Negotiable Instruments Act, 1881
1. CIS number : DLSE020041492014
2. Name of the Complainant : Penta Freight Pvt. Ltd.
3. Name of the Accused, : Sh. Vijay Verma
parentage & residential
address Proprietor, M/s Linkcare Freight
Forwarders
E-2, Tagore Garden Extension, New
Delhi - 110027
4. Offence complained of or : U/s 138 of Negotiable Instruments Act,
proved 1881
5. Plea of the Accused : Pleaded not guilty and claimed trial
6. Final Judgment/order : ACQUITTED
7. Date of judgment/order : 05.03.2022
JUDGMENT
1. Complainant has filed the present complaint under Section 138 /142 of Negotiable Instruments Act, 1881 ("NI Act") on the averments that, the Complainant had business relations with the Accused and had provided freight forwarding services to the Accused from time to time and the liability of the Accused as on 02.04.2013 was Rs. 4,83,609/-.
Page 1 of 14 CC No. 622378/20162. As per the Complainant, the Accused in partial repayment of the said amount issued a cheque bearing No. 186351 dt. 17.05.2013 drawn on Canara Bank, Tagore Garden, New Delhi - 110027, for an amount of Rs. 2,21,868/- in favour of the Complainant (hereinafter referred as "cheque in question"). However, when the Complainant presented the cheque in question; the same was returned unpaid vide return memo dated 22.05.2013, for the reason "insufficient funds". The Complainant sent the legal demand notice dated 30.05.2013 through his counsel by speed post at the registered address of the Accused. Hence, despite the service of the legal demand notice, the Accused failed to make the payment and the Complainant filed the present complaint.
3. After taking pre-summoning evidence, Accused was ordered to be summoned in this case for commission of offence under Section 138 of Negotiable Instruments Act, 1881 ("NI Act"), vide order dated 15.12.2015.
4. Accused appeared on 02.04.2016 and was released on bail on 23.05.2017. On finding a prima facie case, notice U/s 251 of the Criminal Procedure Code, 1973 ("CrPC") was served upon the Accused on 17.08.2017 to which he pleaded not guilty and opted to contest after disclosing the following defence:
"I had given undated cheque to the complainant towards freight in the year 2010-2011. Complainant told me that the cheque has been misplaced. Later I had given cheque of Rs. 2 lacs to the Complainant and Rs. 1,28,000/- which complainant have not disclosed in his complaint. The cheque was misused by the complainant. I have no liability towards the complainant for the cheque amount."
5. Vide order dated 08.05.2018, opportunity was granted to the Accused to cross examine the Complainant. The Complainant/CW1 adopted his pre summoning evidence affidavit Ex. CW1/A and also proved following documents:
Page 2 of 14 CC No. 622378/2016Ex. CW1/1: True copy of the incorporation certificate of the Complainant Company.
Ex CW1/2: Board Resolution in favour of the AR of the
Complainant Company.
Ex. CW1/3: Office copy of the invoices issued by the
Complainant on the Accused.
Ex. CW1/4: Statement of Account of the Complainant
Company qua the Accused.
Ex. CW1/5: Cheque bearing no. 186351 dt. 17.05.2013
for an amount of Rs. 2,21,868/-.
Ex. CW1/6: Return memo dt. 22.05.2013 in respect of
the cheque in question.
Ex. CW1/7: Office copy of the legal demand notice dt.
30.05.2013.
Ex. CW1/8 Postal receipts in respect of the legal demand & Ex. notice.
CW1/9:
Ex. CW1/10 Tracking reports in respect of the legal & Ex. demand notice.
CW1/11:
Complainant Evidence was closed vide separate statement on 15.02.2019.
6. Thereafter, Accused was examined under Section 313 of CrPC for explaining the circumstances appearing against him in the Complainant's evidence. He denied the Complainant's case and pleaded false implication in the present case and opted to lead evidence in his defence.
7. The Accused, as part of defence evidence, examined one Ms. Monika Rani, Officer, Staff No. 115510, Canara Bank, Tagore Garden as DW1, who produced Page 3 of 14 CC No. 622378/2016 and proved the following documents:
Ex. Bank account statement of the Accused from
DW1/A: 24.12.2012 to 02.03.2013.
Ex Letter of authority in favour of DW1 issued
DW1/B: by Canara Bank.
8. Defence evidence was closed vide separate statement of the Accused on 03.02.2020.
9. I have heard Ld. Counsel for the parties and have perused the case file along with the written submissions filed by the parties carefully and meticulously.
Submissions of the Complainant and Accused
10.The Ld. Counsel for the Complainant has submitted that all ingredients of Section 138 NI Act are fulfilled in the present case and hence, the presumption under Section 139 NI Act arises in the favour of the Complainant, which has not been successfully rebutted by the Accused.
11.Per contra, Ld. Counsel for the Accused has submitted that the Accused deserves to be acquitted as the cheque in question was given as a security cheque; and the statement of accounts of the Complainant are manipulated and the Accused does not owe the amount stated therein to the Complainant. Hence, the presumption under Section 139 NI Act stands rebutted.
Legal Framework Ingredients of Section 138 NI Act:
12.The Hon'ble Supreme Court of India in Kusum Ingots & Alloys Ltd and Ors v. K Pennar Peterson Securities Ltd and Ors., (2000) 2 SCC 745 ("Kusum Ingots Case"), has clearly stipulated that "the ingredients which are to be satisfied for making out a case under the provision are:
Page 4 of 14 CC No. 622378/2016(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;
(ii) that cheque has been presented to the bank within a period of six months1 from the date on which it is drawn or within the period of its validity whichever is earlier;
(iii) that cheque is 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;
(iv) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 152 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(v) 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;
If the aforementioned ingredients are satisfied then the person who has drawn the cheque shall be deemed to have committed an offence."
13.Therefore, if the aforesaid ingredients are made out, the Accused is deemed to have committed an offence under Section 138 NI Act.
Presumption under Section 139 NI Act/Section 118 NI Act:
14.Section 139 NI Act states that:
1Reduced to three months vide RBI circular dated 4.11.2011.2
The same is now enhanced to 30 days.Page 5 of 14 CC No. 622378/2016
"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"
15.Section 139 NI Act is a type of reverse onus clause, which stipulates a presumption in the favour of the Complainant as to fact of a cheque being received in discharge of a legal debt or liability.
16.Further, Section 118(a) of the NI Act, states as follows:
"Presumptions as to negotiable instruments. -- Until the contrary is proved, the following presumptions shall be made:
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, indorsed, negotiated or transferred for consideration;"
17.The Hon'ble Supreme Court of India has in a number of judgments dealt with the combined effect of the presumptions raised under Section 139 and Section 118(a) NI Act.
18.The following proposition can be summarized on a perusal of the judgments of the Hon'ble Supreme Court of India in Sunil Todi & Ors v. State of Gujarat, LL 2021 SC 706 ("Sunil Todi Case"); Kalamani Tex v. P. Balasubramanian, 2021 SCC OnLine SC 75; APS Forex Services Pvt. Ltd. v. Shakti International Fashion Linkers and Ors., AIR 2020 SC 945; Rohitbhai Jivanlal Patel v. State of Gujarat and Ors., AIR 2019 SC 1876; Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513; K.N. Beena v. Muniyappan and Anr., (2001) 8 SCC 458; and Dhanvantrai Balwantrai Desai v. State of Maharashtra, 1964 Cri. LJ 437:
Page 6 of 14 CC No. 622378/2016(i) Once the execution of cheque is admitted; Section 139 of the NI Act mandates a presumption that the cheque was for the discharge of legally enforceable debt or 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) Something which is probable has to be brought on record by the Accused 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 consideration of which, the court may either believe that the consideration and debt did not exist or their non-
existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist;
(iv) The words "unless the contrary is proved" which occur in Section 139, make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by Section 139 NI Act cannot be said to be rebutted;
(v) 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;
Page 7 of 14 CC No. 622378/2016(vi) 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.
Analysis
19.In the case at hand, it is not in dispute that the cheque in question was drawn by the Accused from the bank account of his proprietorship concern and that the Accused is the proprietor of the said firm. Further, it is also not in dispute that the Accused is the signatory of the cheque in question as in the defence disclosed by the Accused U/s 251 CrPC and Section 313 CrPC statement; he has duly admitted the same. Presentation of the cheque in question by the Complainant is also not in dispute.
20.The dishonour of the cheque in question by way of the return memo, Ex. CW1/6, on grounds of Funds Insufficient, is also not in dispute. Further, the same has not been disputed by the Accused in his statement u/s 313 CrPC as well.
21.The Complainant sent the legal demand notice, dated 30.05.2013 (Ex. CW1/7) by way of speed post (Ex. CW1/8 & Ex. CW1/9). The service of the legal demand notice has also not been disputed by the Accused and since, the same was sent to the registered address of the Accused, presumption of valid notice u/s 27 of General Clauses Act, 1897, arises.
22.Finally, the complaint has been filed within the limitation period. Therefore, essential ingredients (i) to (v) as stipulated by the Hon'ble SC in Kusum Ingots Case (supra), have been duly satisfied.
23.Further, as noted above, once the execution of the cheque by the Accused is proved/admitted, the presumption of the same being drawn for consideration stands attracted in terms of Section 139 NI Act. Now, in the case at hand, so far as the question of existence of basic ingredients for drawing of presumption U/s 118 (a) and 139 of the NI Act is concerned, from the aforesaid discussion, it is Page 8 of 14 CC No. 622378/2016 apparent that the Accused has not denied his signatures on the cheque in question that has been drawn in favour of the Complainant on a bank account maintained by the Accused; and hence the said presumption can be drawn.
24.Accordingly, it is required to be presumed that the cheque in question was drawn for consideration and the holder of the cheque i.e., the Complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the Accused to establish a probable defence so as to rebut such a presumption.
25.In the segment on legal framework, set out above, the legal proposition with respect to the burden of proof upon the Accused has already been discussed. Hence, it is now to be examined as to whether the Accused brought any material on record or pointed out glaring discrepancies in the material produced by the Complainant for dislodging the presumption which meets the standard of preponderance of probabilities.
26.The accused in the present case has taken the following line of defence with a view to rebut the presumption.
Misuse of cheque in question given as security:
27.The accused has in the present case stated that he had given an undated cheque to the Complainant towards freight in 2010-2011 and later when the Complainant told him that the cheque has been misused, he has made the payment due by way of separate cheque; and hence, the cheque in question was no longer meant for payment.
28.He has further submitted that the cheque in question is not towards any liability as the statement of account of the Complainant, i.e., Ex.CW1/4 is false and fabricated. Ld. Counsel for the Accused has submitted that Ex.CW1/4 was tendered as part of the pre-summoning evidence by the earlier AR of the Complainant Company and being a computer-generated document, a certificate u/s 65B of the Indian Evidence Act, 1872 ("IEA") was required. However, no certificate U/s. 65 B IEA was filed by the earlier AR. It has been further argued Page 9 of 14 CC No. 622378/2016 that the substituted AR of the complainant, i.e., Sh. Gaurav Jain has filed the certificate U/s. 65B IEA in respect of the said document, at a much later stage. It has been stated that certificate given by the substituted AR U/s. 65B IEA, dated as of 13.08.2018, cannot be considered as a valid certificate, as the same is required to be given by the person who has lawful control over the computer/device at the relevant time, in terms of Section 65B IEA. In this regard it is noted that the Hon'ble High Court of Delhi in Samsung India Electronics (Pvt.) Ltd. v. MGR Enterprises and Others, 2019 SCC online DEL 8877, has noted that "legal position on the point is thus well settled that if the document is otherwise inadmissible for the want of a certificate or any other requirement of law, it is exhibited in the course of the trial does not make the document admissible in law.......The objection as to admissibility of the document which goes to the route of the matter can be taken at any stage."
29.The Hon'ble High Court of Delhi in the aforesaid case noted that since the "statement of account which was a computer generated document, and is a secondary evidence of the electronic record of the data stored in the computer of the complainant company and complainant company has not provided a certificate U/s. 65 B of the Evidence Act in respect of the said ledger and hence the ledger was inadmissible". Admittedly, in the present case, Ex.CW1/3 and Ex.CW1/4 have been filed by the earlier AR of the Complainant Company; unaccompanied by the certificate U/s. 65 B IEA. The certificate U/s. 65B IEA has been filed by the substituted AR who was admittedly not in the company at the time of generation of the said documents. Section 65B IEA states that the certificate must be given by "a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate shall be evidence of any matter stated in the certificate)". Accordingly, the certificate cannot be given by a person who was not in the company at the time of the generation of the computer product as he would not have the requisite responsibility/position in relation to the operation of the relevant device at the given time. Hence certificate U/s. 65 Page 10 of 14 CC No. 622378/2016 B IEA provided by the substituted AR cannot be considered to be a certificate in compliance with section 65B (4) of IEA. Accordingly, the Complainant has been unable to prove the statement of account that, i.e., the ledger statement, Ex. CW1/4.
30.Be that as it may, Ld. Counsel for the Accused has in the alternative, further submitted that even if the ledger statement, Ex. CW1/4, was to be considered, the same does not inspire credibility as certain payments made by the accused have not been reflected in the statement of account, Ex. CW1/4. The Accused has deposed DW1, Ms. Monika Rani, Bank Official, Canara Bank; who brought the bank statement of the Accused for the period 24.12.2012 to 02.02.2013, i.e., Ex. DW1/A; wherein a RTGS of Rs. 2,31,000/- has been made by the Accused to the Complainant company on 24.12.2012. Admittedly, the said entry is not reflected in the said ledger statement, Ex. CW1/4. However, there is another entry of Rs. 2,35,723/- of 24.12.2012, which is reflected in the ledger statement. In the course of arguments, Ld. Counsel for the Accused has submitted that the said payment of Rs. 2,35,723/- was also made by the Accused by way of a different mode other than bank transfer. Ld. Counsel for the Complainant has not been able to explain the reason for the discrepancy between the two amounts and in fact, no evidence has also been led by the Complainant to explain the difference. Ld. Counsel for the Complainant has only stated that since an amount greater than the amount stated by the Accused has been reflected in the ledger account, the defence of the accused is not proved. However, in view of the present Court, in the absence of clarification for the discrepancy between the amount reflected in Ex. CW1/4 and the amount transferred, as shown as Ex. DW1/A, the probability of the Accused having made the payment of both Rs. 2,31,000/- and Rs. 2,35,723/- cannot be ruled out; especially because in the other entries of payments, no discrepancy exists between the amounts in Ex. CW1/4 and Ex. DW1/A. Further, in the cross-examination of CW-1, dt. 12.10.2018, CW1 has stated that:
"It is correct that I cannot tell whether general ledger Ex. CW1/4 are Page 11 of 14 CC No. 622378/2016 fabricated or manipulated entries as I was not working with the company at that time."
31.Accordingly, on a specific question on the genuineness of the statement of account of the Complainant being put in the cross-examination, the CW1 has pleaded ignorance.
32.It is trite law that the Accused is required to rebut the presumption u/s 139 NI Act only by the standard of preponderance of probability and not against the standard of beyond reasonable doubt. Accordingly, the Accused has been able to rebut the presumption in the present case as he has raised a reasonable probability of the ledger account statement being manipulated or not reflective of the actual transactions between the parties. Hence, the burden now shifts to the Complainant to prove his case beyond all reasonable doubt (Reliance placed on the judgment of the Hon'ble SC in Rangappa v. Sri Mohan, (2010) 11 SCC
441).
33.A perusal of the complaint as well as the cross-examination of the Complainant reflects that the basis of liability of the Accused qua the cheque in question is the running account between the two parties. Paragraph 4 of the complaint reads as follows:
"That the Accused No. 1, through its proprietor, the Accused no. 2, has availed the services of the Complainant Company, i.e., logistic distribution of its consignments and the Complainant Company has satisfactorily handled its consignments, for which the Complainant Company has raised various invoices, office copies of the said invoices are being enclosed herewith, against which the Accused have been making part payments to the Complainant Company, for which regular debit and credit entries used to be made by the Complainant Company in its account, maintained by the Complainant Company in its account books during the course of its aforesaid business. Thus, as on 2nd April 2013, when the Accused made part payment od Rs. 2,00,000/- to the Complainant Company against the Invoices raised by the Complainant Page 12 of 14 CC No. 622378/2016 Company to Accused, a sum of Rs. 4,83,609/- was/is remained due and payable by the Accused to the Complainant Company as per the accounts maintained by the Complainant Company in its account books."
34.Hence, in the present case, it is the case of the Complainant that the liability of the Accused is based on a running account between the parties and not against the specific bills. This is also evident from the statement of receivables of the Complainant, which is at page 32 of the complaint and a part of Ex.CW1/4 which shows the accounts receivables in the books of account of the complainant as on 12.07.2013 wherein the outstanding amount of Rs. 4,83,609/- is reflected, evinces that the payment due in respect of voucher No. 477 and 497 (i.e., Ex. CW1/3) is in addition to the amount of Rs. 2,21,868/-, which is the cheque amount in the present case. Thereby, giving an indication that the liability alleged in the present case is not towards the vouchers in question; but towards the running account. Against this background, the admissibility of the ledger statement, Ex. CW1/4 becomes germane to the present case. As set out in the discussion above, in the absence of an appropriate certificate u/s 65B IEA, a computer generated statement of account will not be admissible (Reliance placed on Samsung India Electronics (Pvt.) Ltd. v. MGR Enterprises and Others, 2019 SCC online DEL 8877). Further, even if the ledger was to be considered on the basis of the certificate filed by the substituted AR, reasonable doubt as to the correctness of the same has been raised by the Accused by examination of DW1 and production of his bank account statement, Ex. DW1/A, and the subsequent discrepancy between Ex. CW1/4 and Ex. DW1/A. Hence, in the absence of the exact liability amount being admitted by the Accused; and in the absence of proof of liability by way of the ledger account statement, the Complainant has failed to prove the ingredient of "legal debt/liability" against the Accused beyond all reasonable doubt.
Conclusion
35.In these circumstances and in view of the above detailed discussion, this court is Page 13 of 14 CC No. 622378/2016 of the considered opinion that the Accused has successfully rebutted the presumption under Section 139 of Negotiable Instruments Act, 1881 and the Complainant has failed to prove the ingredients of Section 138 of Negotiable Instruments Act, 1881. Therefore, Accused, Vijay Verma, proprietor of M/s Linkcare Freight Forwarders is held not guilty and acquitted of the offence punishable under Section 138 of the Negotiable Instrument Act, 1881.
ORDER: ACQUITTED
Announced in Open Court (Twinkle Chawla)
05.03.2022 MM (NI-Act 02), South East
Saket Court, New Delhi
Note: This judgment contains 14 pages and each page has been signed by me.
(Twinkle Chawla) MM (NI-Act 02), South East Saket Court, New Delhi Page 14 of 14