Delhi District Court
Through: Mr. Vikram Panwar vs M/S Laxmi Flour Mill on 1 November, 2022
IN THE COURT OF MS. AAKANKSHA, METROPOLITAN
MAGISTRATE, (NI ACT)-07
SOUTH-WEST DISTRICT, DWARKA COURTS, NEW
DELHI
Ct. Case No. 27658 of 2018
CNR No. DLSW02-0303472018
M/s Sai Baba Food Products .........Complainant
Through: Mr. Vikram Panwar, Advocate
Versus
1. M/s Laxmi Flour Mill
2. Sh. Arvind Garg ..........Accused
Through: Mr. Jauhar Ali and Sh. M.A. Ansari, Advocates
(1) Name of the M/s Sai Baba Food Products
complainant through its partners Mr.
Manish Bansal at Plot No.
36, A Block, Saraswati
Kunj, Najafgarh, Delhi43.
Ct. Case No. 27658/2018 Page 1 of 53
(2) Name of the accused 1. M/s Laxmi Flour Mill,
Rashivashia Market, Charki
Dadri, District Bhiwani,
Haryana through its
proprietor/partner.
2. Sh. Arvind Garg,
proprietor/partner of M/s
Laxmi Flour Mill,
Rashivashia Market, Charki
Dadri, District Bhiwani,
Haryana
(3) Offence complained of Section 138 Negotiable
or proved Instrument Act, 1881
(4) Plea of accused Pleaded not guilty
(5) Date of institution of 08.08.2018
case
(6) Date of conclusion of 29.10.2022
arguments
(7) Date of Final Order 01.11.2022
(8) Final Order CONVICTION
JUDGMENT
1. The complainant has instituted this complaint u/s 138 Ct. Case No. 27658/2018 Page 2 of 53 Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act') against accused on 07.08.2018.
2. The factual matrix as can be culled out from the complaint is that complainant manufactures refined Palmoline oil and accused used to purchase the same on 18% p.a. interest, Rs. 53,83,048.90/- were outstanding towards accused on 31.03.2018 and in order to make part payment of the same, accused issued a cheque bearing no.000366 dated 08.06.2018 for a sum of Rs. 24,10,643/- drawn on HDFC Bank, Charkhi Dadri Branch in favour of the complainant assuring the encashment upon presentation. However, to the complainant's dismay the said cheque was returned unpaid, when it was presented for encashment through the banker at Najafgarh Delhi, with remarks "Exceed arrangement" vide return memo dated 11.06.2018. The complainant issued a legal notice dated 03.07.2018 calling upon the accused to pay the cheque amount within 15 days from the receipt thereof, the same was duly served upon the accused. But the accused failed to pay the amount due thus constraining the complainant to file this complaint u/s 138 Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act') seeking redress against the dishonor of the cheque in question.
Ct. Case No. 27658/2018 Page 3 of 533. With a view to establish a prima facie case in order to enable the court to summon the accused, complainant led pre- summoning evidence by way of affidavit Ex.CW-1/A. The complainant relied upon following documentary evidence:
(a) Original cheque bearing no. 000366 dated 08.06.2018 for a sum of Rs. 24,10,643/- drawn on HDFC Bank, which is Ex. CW-1/1.
(b) Original cheque return memo dated 11.06.2018, which is Ex.
CW-1/2.
(c) Office copy of legal notice dated 03.07.2018, which is Ex. CW- 1/3.
(d) Postal receipt, which is Ex. CW-1/4.
(e) Reply to the legal notice dated 18.07.2018, which is Ex. CW-1/5.
(f) Original Resolution of Board of Directors, which is Ex.CW-1/6.
Complainant closed its pre-summoning evidence on 08.08.2018.
4. On the basis of above material and finding a prima facie case made out against the accused, the accused was summoned vide order dated 08.08.2018. Accused no.1 being a proprietorship concern, accused no.2 entered his first appearance on the date fixed i.e. 29.11.2018.
Ct. Case No. 27658/2018 Page 4 of 535. Notice u/s 251 Cr.P.C. was framed against accused on 24.01.2019 stating out to him the substance of accusation, to which he pleaded not guilty and claimed trial. His defence was recorded at the stage of framing of notice in compliance of directions passed by Hon'ble High Court of Delhi in Rajesh Aggarwal v. State 171 (2010) DLT 51. The accused took defence that he did not issue the said cheque in question in favour of the complainant but gave entire cheque book after signing all the cheques to the complainant at the time of starting of business in 2016, he also gave documents pertaining to the property of his mother as security to the complainant, that the cheque bears his signature but he did not fill the other particulars and that the complainant told him that he had misplaced the cheque and that the complainant has misused the same.
6. The application u/s 145 (2) NI Act filed by accused was allowed on 24.01.2019 and he was granted right to cross-examine the complainant. The AR of the complainant was examined as CW-1 thereby adopting his pre-summoning evidence as post-summoning evidence and was cross-examined and discharged. Vide separate statement of AR of the complainant, complainant evidence was closed on 07.05.2019.
Ct. Case No. 27658/2018 Page 5 of 537. Statement of accused was recorded u/s 313 Cr.P.C. r/w section 281 Cr.P.C. on 02.07.2019 wherein all the incriminating evidence was put to the accused and he was granted an opportunity to explain the circumstances appearing against him at trial. While explaining the circumstances appearing in evidence against him, accused stated without oath that they used ti purchase refined Palmoline oil from complainant and used to make the payment after selling the goods and receiving payment from buyers but it was never agreed to pay interest @18% p.a. to the complainant, that the liability of the accused as on 31.03.2018 was around Rs.29 lacs, the cheque in question was given to the complainant in the year 2017, it bears his signatures but he did not fill the contents therein, that he gave reply to the legal demand notice, that the status of AR namely Manish Bansal is mentioned as partner in the resolution passed by the Directors whereas he is the director, that accused used to deal with Manish Bansal, that the cheque in question was filled without informing him, the complainant stopped supplying material to him from September 2017, that he had given property papers to the complainant without informing his family, thereafter some material was supplied to him, that after December 2017 there was no business transaction between them. Accused preferred to lead evidence in his defence.
Ct. Case No. 27658/2018 Page 6 of 538. At the stage of defence evidence, accused examined himself as DW-1 and Naresh Bansal as DW-2 and they were duly cross-examined on 03.09.2019. The accused relied upon following documentary evidence:
(a) Ledger account maintained by accused regarding purchase of goods and payment alongwith certificate u/s 65-B Indian Evidence Act, which is Ex. DW-1/1 (colly.).
(b) Statement of bank account of accused w.e.f. 01.06.2016 to 30.06.2018, which is Ex. DW-1/2 (colly.).
Vide separate statement of accused no.2, defence evidence was closed on 03.09.2019 itself.
9. At the stage of final arguments, an application u/s 311 Cr.P.C. was preferred on behalf of complainant for leading additional evidence and reply to the same was also filed on behalf of accused. The said application was allowed vide order dated 06.04.2021. Thereafter, CW-1 was re-examined on 29.09.2021 wherein he relied upon copy of invoice and ledger account of complainant company, which is Mark X1 (colly.) from page no.16 to
129. CW-1 was cross-examined on 29.11.2021. Again statement of accused u/s 313 Cr.P.C. was recorded on 29.11.2021 without oath Ct. Case No. 27658/2018 Page 7 of 53 wherein all the further incriminating material was put to the accused to which he asserted his innocence and admitted receiving of goods of bills running from page no.16 to 124 but denied receiving goods of bills running from page no.125 to 129. Accused did not prefer to lead additional defence evidence.
10. At the stage of final arguments, again an application u/s 311 Cr.P.C. was preferred on behalf of complainant and the same was allowed vide order dated 04.02.2022. CW-1 was again re- examined and cross-examined on 17.02.2022 wherein CW-1 relied upon statement of account w.e.f. 01.04.2018 to 30.06.2018, which is Ex.CW-1/X1, HDFC bank statement w.e.f. 01.04.2018 to 30.06.2018, which is Mark P1 (colly. running into 12 pages) and certificate u/s 65-B Indian Evidence Act, which is Ex.CW-1/X3. Once again statement of accused u/s 313 Cr.P.C. was recorded on 14.03.2022 wherein additional incriminating material was put to the accused wherein the accused stated without oath that the interest charged in statement of account is wrong, he admitted Mark P1 (colly.), but alleged the HDFC bank statement to be forged and fabricated. Accused preferred to lead additional evidence in his defence. In additional defence evidence, DW-1 was re-examined and cross-examined, wherein he relied upon GSTR-I and GSTR-III- B, which is Mark DW-1/Y1 (colly.). Vide separate statement of Ct. Case No. 27658/2018 Page 8 of 53 accused no.2, defence evidence was closed vide order dated 18.08.2022.
11. At the stage of final arguments, Ld. counsel for complainant submitted that accused started business with the complainant and as on 31.03.2018 the total outstanding amount against accused was around Rs. 53 lacs, that two cheques were issued by the accused which got dishonoured, qua which two cases have been filed by complainant including the case at hand, that complainant has filed statement of account from 01.04.2017 till 31.03.2018 but accused also paid the complainant an amount of Rs.6.5 lacs afterwards and therefore an application u/s 311 Cr.P.C. was filed by complainant to bring on record remaining statement of account, that the accused has taken defence that he had no liability of the said amount and that the complainant sold him defective products of Rs.7 lacs, but accused has never sent any notice or communicated with the complainant with respect to the alleged defective products, nor did he file any such complaint before any authority, that accused took defence at the time of framing of notice to the effect that he gave a complete signed cheque book to the complainant as security but he did not file any complaint of loss/misuse of the cheque, that DW-1 deposed that defective goods were supplied in 2017, however the cheque in question pertains to Ct. Case No. 27658/2018 Page 9 of 53 the year 2018 and still no complaint was filed by the accused, no complaint by any customer of defective goods has been placed on record, that there is no videography of the defective goods and no document has been placed on record with respect to the alleged destroying of the defective goods, that accused admits his liability only upto Rs.22 lacs whereas his liability is around Rs. 53 lacs, that DW-2 came up with s new story that complainant settled the account for Rs.20 lacs, DW-2 does not state that accusd gave full cheque book to the complainant rather deposed that the cheque was given as security, that accused had alleged five bills i.e. bill no.282, 283, 290, 294 and 297 to be bogus and the rest have been admitted by him, that the terms and conditions on the said bills mentions interest @ 18% p.a. and prayed to convict the accused.
Per contra, Ld. counsel for accused submitted that the complaint is not maintainable as there is no date on the complaint, in the memo of parties the case is filed by complainant company through its partner but in the accompanying affidavit there is no plea that the complainant is authorised person, till pre-summoning evidence on 08.08.2018 was recorded no board of resolution or power of attorney was filed by complainant but then a board of resolution was filed executed on 02.08.2018 where the word director is mentioned and not partner, however the complaint has been attested on 31.07.2018 and the authority has been given to the complainant on 02.08.2018, that the complainant specifies total Ct. Case No. 27658/2018 Page 10 of 53 outstanding amount to be around Rs. 53 lacs but failed to mention further receipt of Rs.6.5 lacs from accused, such amount was not mentioned either in the legal notice or in the complaint or in evidence before application u/s 311 Cr.P.C. was filed by complainant, at the time of presentation of cheque complainant did not subtract the amount of Rs.6.5 lacs, therefore the cheque in question is more than the liability of the accused, that CW-1 admitted taking property document as security in case of excess payment due and on the basis of the said property document, he also filed a civil suit seeking injunction, accused said he did not fill the particulars of the cheque and complainant has failed to prove who filled the cheque, that complainant has not filed original bills in this case but in the recovery suit, thereafter complainant filed an application u/s 311 Cr.P.C. at the stage of final arguments which was allowed but the last five bills filed by the complainant are forged which were not even filed before the court of Ld. ADJ, that again complainant filed an application u/s 311 Cr.P.C. which was also allowed and he filed ledger account of those five forged bills by manipulating receipt of Rs.6.5 lacs, that during cross-examination CW-1 deposed that accused did not tell him about the defective goods but later also deposes that if the products were defective the tempo used to return the same, then there was no need of accused informing the complainant about the defective goods, tempo driver has not been examined by the complainant, the burden was on the Ct. Case No. 27658/2018 Page 11 of 53 complainant to prove that the tempo driver used to return the defective products, that the point of interest was not mentioned in the legal notice or in the complaint, there was no written agreement about levy of interest except on the bills, that some bills do not even mention the fact of interest, that bills at page no. 52, 53, 54, 55 does not mention fact of interest but the bills at page no. 36, 57, 58 and 59 pertaining to the same period does mention the fact of interest which shows dishonest conduct of complainant, no witness has been examined by complainant to prove levy of interest or to prove transport expenses, no ITR has been exhibited, name and number of transporter has not been mentioned on the five forged bills, there is no stamp on the five forged bills, when CW-1 was asked about the fact that complainant did not supply any product after 17.12.2017 he only said that it is matter of record. It has been further argued that the defence of the accused is that he had liability of Rs.36,43,831 as on 30.03.2018, that an amount of Rs. 7 lacs is liable to the subtracted from the said amount as being defective goods and this the liability of accused is only for an amount of approx. Rs. 29 lacs. It has been contended that the ledger produced by complainant is forged, as CW-1 admitted that the ledger was maintained by him, partner and accountant but did not take permission/authority from the second person to take such document, that certificate u/s 65-B Evidence Act is not proper and does not comply with the provisions of Section 64-B(iv), the particulars of device has not been Ct. Case No. 27658/2018 Page 12 of 53 mentioned, it has been filed after three years in 2021 and thus not admissible in law, that on which amount the interest has bene calculated and for which period has not been specified by complainant, CW-1 merely deposed that computer automatically calculates the same, accountant was not produced in evidence, Mark X1 is the old ledger without any stamp or signature or certificate u/s 65-B Evidence Act, that according to the ledger there is no amount of more than Rs. 5 lacs paid by accused to complainant then how can accused give a cheque of such a huge amount to the complainant, that the ledger produced by complainant merely shows interest of Rs.8,22,404/- but does not reflect the period and the amount on which interest has been levied, that accused has also produced his ledger after deducting Rs. 7 lacs of defective goods and also sent a reply to the legal notice and prayed to acquit the accused.
In rebuttal, Ld. counsel for complainant submitted that the interest is already mentioned on Ex.CW-1/X, the period of interest is mentioned specifically as 01.04.2018-20.06.2018, that he has also filed bank statement reflecting receipt of Rs.6.5 lacs, that vehicle number is mentioned on the objected bills, that accused failed to file any document that he filed complaint of defective goods, that DW-1 failed to file the third GSTR deliberately as a person has to mention the defective goods in it, that once the remaining bills are admitted by accused, their terms and conditions Ct. Case No. 27658/2018 Page 13 of 53 are also admitted, that the ledger filed by accused is computer generated but no certificate u/s 65-B Evidence Act has been filed and the same are not attested by CA or government authority and therefore cannot be read in evidence, they are also not self-attested, that no proof of destruction of alleged defective gods has been filed.
12. After hearing the arguments advanced on behalf of both the parties and perusing the record carefully, the appreciation of evidence and findings of the court are as below.
13. It would be apposite to first consider the legal position serving as base to the offence underlying Section 138 NI Act. The following legal requirements need to be satisfied in order to constitute an offence u/s 138 NI Act, as held by Hon'ble Supreme Court in the case titled as Kusum Ingots & Alloys Ltd. v. M/s Pennar Peterson Securities Ltd.: (2000) 2 SCC 745:
(i) that 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;Ct. Case No. 27658/2018 Page 14 of 53
(ii) that 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;
(iii) that the cheque is returned by the bank unpaid either be-
cause of the amount of money standing to the credit of the ac- count is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agree- ment made with the bank;
(iv) that 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 thirty days of the receipt of information by him from the bank regarding the return of the cheque as un- paid;
(v) that 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;
The above legal requirements are cumulative, meaning thereby that only if all the aforementioned ingredients are satisfied can the per- son who had drawn the cheque be held liable for offence u/s 138 NI Act.
Ct. Case No. 27658/2018 Page 15 of 5314. Burden of proof: The claim based under the provisions of Negotiable Instruments Act is an exception to the general rule of law that burden of proof lies on the prosecution. The two specific provisions viz. Section 118 (a) and 139 of NI Act contemplates that a presumption is attached in regard to each and every negotiable instrument that the same was drawn and issued against due discharge of the liability and thus, whenever any claim is made on the basis of a negotiable instrument, the presumption has to be drawn in favour of the holder of the cheque (drawee) and the law has put the burden to rebut the presumption on the accused that the cheque was not issued by him against discharge of a debt or a liability. In case, the accused is not able to rebut the presumption and fails to prove his defence, the presumption becomes absolute and it has to be assumed that the cheque was issued by the accused in discharge of debt or liability and consequently, accused is assumed guilty of the offence. It was held by Hon'ble Supreme Court in the case of Rangappa v. Mohan: 2010 (11) SCC 441 that presumption of Section 139 of N.I. Act also includes the existence of legally enforceable debt:
14. In light of these extracts, we are in agreement with the respondent claimant that the presumption man-Ct. Case No. 27658/2018 Page 16 of 53
dated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability.
Hon'ble Supreme Court, in the case of Hiten P. Dalal v. Bratindranath Banerjee: 2001 (6) SCC 16 held that the presumption mentioned in the section 139 NI Act is a presumption of law and not a presumption of fact and thus, this presumption has to be drawn in favour of the drawee and the burden to rebut the presumption with the probable defence is on the accused.
This is indeed an instance of the rule of 'reverse onus', where it is incumbent on the accused to lead what can be called 'negative evidence' i.e. to lead evidence to show non-existence of liability. Keeping in view that this is a departure from the cardinal rule of 'presumption of innocence' in favour of the accused and that nega- tive evidence is not easy to be led by its very nature, it is now settled that the accused can displace this presumption on a scale of prepon- derance of probabilities and the lack of consideration or a legally enforceable debt need not be proved to the hilt or beyond all reason- able doubts. The accused can either prove that the liability did not exist or make the non-existence of liability so probable that a rea- sonable person, ought under the circumstances of the case, act on the supposition that it does not exist. He can do so either by leading own evidence in his defence or even by punching holes in the case of the complainant in the testing ordeal of cross-examination. This Ct. Case No. 27658/2018 Page 17 of 53 can be deciphered from relevant para no.21 of Hiten P. Dalal (supra):
21. In other words, provided the facts required to form the ba-
sis of a presumption of law exist, no discretion is left with the Court but 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 ex- ists". 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 be- lieve the defence to exist or consider its existence to be rea- sonably probable, the standard of reasonability being that of the 'prudent man'.
Further, in Bharat Barrel v. Drum Manufacturing: AIR 1999 SC 1008 Hon'ble Supreme Court held that the accused has to rebut the presumption and mere denial of passing of consideration is no de- fence.
Ct. Case No. 27658/2018 Page 18 of 53It is, thus, clear that in cases of Section 138 NI Act, upon proof of foundational facts, law presumes in favour of drawee that the cheque was issued by the accused in discharge, wholly or in part, of legally enforceable debt or liability and the burden to rebut the same is upon the accused. The burden does not have to be con- clusively established but the accused has to prove his defence on preponderance of probability.
15. Now applying the above law to the facts of the present case, it has to be adjudged whether the legal requirements laid down hereinabove have been fulfilled in the instant case.
15.1. The first legal requirement is:
"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."
At the outset, it has to be proved that the accused had issued Ct. Case No. 27658/2018 Page 19 of 53 the cheque in question on his account maintained with a bank for discharge of any debt or other liability. In the instant case, accused no.2 has admitted his signatures on the cheque in question in his statement recorded u/s 313 Cr.P.C. and in notice framed u/s 251 Cr.P.C. The cheque in question has also been drawn on the account maintained by him with HDFC Bank. The said fact has not been denied by accused at any stage of proceeding.
It was held in the case of Kalamani Tex & anr. v. P. Balasubramanian: 2021 SCC Online SC 75 Hon'ble Supreme Court held that:
"14. Adverting to the case in hand, we find on a plain reading of its judgment that the trial court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NI Act. The statute mandates that once the signature(s) of an accused on the cheque/negotiable instrument are established, then these 'reverse onus' clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him."Ct. Case No. 27658/2018 Page 20 of 53
The above said principle has also been crystallized by Hon'ble Supreme Court in the case of Basalingappa v. Mudibasappa:
(2019) 5 SCC 418, by observing that:
"25. We having noticed the ratio laid down by this Court in above cases on Sections 118(a) and 139, we now summarize the principles enumerated by this Court in following manner:
(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.Ct. Case No. 27658/2018 Page 21 of 53
(iv) That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
(v) It is not necessary for the accused to come in the witness box to support his defence."
15.2. In the instant case, the accused having admitted his signatures on the cheque in question and the said cheque being drawn on his bank account, a mandatory presumption automatically arises in favour of complainant by virtue of Section 118(a) r/w 139 NI Act that the cheque in question was issued by accused no.2 in discharge of, whole or part of, legally enforceable debt or liability of accused no.1 proprietorship firm.
15.3. Now the burden shifts upon accused to rebut the above presumption by raising a probable defence, by leading evidence or bringing such facts on record in the cross-examination of the complainant that could make the latter's case improbable. If, in such a case, the accused is proved to have discharged the initial onus of proof placed on him by showing that the existence of consideration was improbable or doubtful or illegal, then the onus will again shift back to the complainant who will then be under an obligation to Ct. Case No. 27658/2018 Page 22 of 53 prove it as a matter of fact and failure to do so will disentitle him to any relief on the basis of the negotiable instrument (as held in Satish Sharma v. State NCT of Delhi & anr.: (2013) 204 DLT
289).
15.4. The accused has examined himself as DW-1 wherein he deposed that he started his business with complainant in the year 2016-17, he used to receive goods from complainant and supply the same to buyers, he received payment from the buyers and then make payment to the complainant, that at the time of business dealing he handed over 20-25 blank signed cheques including the cheque in question and documents of property as security, to the complainant, that the outstanding amount due against him as on 30.03.2018 was Rs.36,43,831/-, he paid a sum of Rs.1,00,000/- to the complainant on 03.04.2018, Rs.50,000/- on 07.04.2018, Rs.5,00,000/- on 05.06.2018 and the remaining balance was Rs. 29,93,831/-, that the complainant supplied expired goods worth Rs.7,00,000/-, he telephonically informed the complainant about the same, he also informed about the same to his brother-in-law/Naresh Bansal/DW-2 who was the mediator and they both went to the office of complainant for settlement of account, it was mutually agreed between them that the liability of accused was Rs.22 lacs but he did not make the payment when complainant misused his cheque, that Ct. Case No. 27658/2018 Page 23 of 53 complainant filed two cases on the basis of two cheques for a total sum of Rs.53 lacs (approx.) and one civil case on the basis of property documents, he further denied his liability to the extent of Rs.53 lacs, he also denied having agreed to make any payment @ 18% p.a. interest, he denied making any payment on bill to bill basis, that only Mannish was doing the business but he alleged that M/s Sai Baba Food Products is a partnership firm in this complaint. In additional evidence, DW-1 deposed that the amount entered in the cheque is more than the liability and the calculation of interest is wrong as it was never agreed, orally or in writing.
15.5. Accused also got examined his brother-in-law namely Naresh Bansal as DW-2 who deposed that he was also doing business with complainant and their relations were cordial but both of them decided to discontinue the business, that accused no.2 used to meet complainant during business transactions between DW-2 and complainant, accused no.2 expressed his interest in doing business, it was decided between them that complainant would supply material to accused who would further supply the same to buyers, accused used to make payment to complainant after receiving money from purchasers, the business between them stopped in November or December 2018 due to some reasons, that accused told him that there was issue with respect to the material Ct. Case No. 27658/2018 Page 24 of 53 supplied by the complainant and that his customers were not purchasing goods supplied by complainant and he was not receiving payments, he also told him that the goods worth Rs.6-7 lacs were defective, that after two months he checked the ledger account of complainant maintained by accused and came to know that Rs.35-36 lacs were due towards complainant, that he suggested accused in December 2018 to meet complainant, they both went to the office of complainant and after 2-3 hours of negotiation Manish agreed to settle the account on Rs.20 lacs if the same was paid within 2-3 days but the next day accused informed him that complainant had refused to settle the account.
15.6. It is undisputed fact that complainant and accused were known to each other as they had business dealings, that the accused used to purchase goods from complainant for further sale and that accused handed over the cheque in question to the complainant. The defence of accused has been that the entire blank signed cheque book alongwith some property papers were handed over to the complainant as security at the time of commencing of their business in the year 2016, that he used to make the payment to the complainant for the purchased goods after receiving payment from his buyers, that no payment of interest was ever decided between them, that the complainant supplied defective goods worth Rs.7 lacs Ct. Case No. 27658/2018 Page 25 of 53 approximately and when he disclosed such fact to the complainant, complainant settled their accounts for Rs.22 lacs but later refused any settlement and misused two of his security cheques, including the cheque in question. The accused admitted his liability only to the extent of Rs. 29,93,831/-.
15.7. During cross-examination CW-1 has admitted supplying of goods to accused on credit basis and that no agreement was executed before commencement of business with accused, he admitted receiving documents of plot as security at the time when excess payment was due against accused but refused taking any cheque as security, he denied accepting any blank signed cheque from accused, that he used to deliver goods to the accused through local tempo, that during their business it had never occurred that the goods were found defective however if the same were defective the tempo driver would return the same, that accused never told them about defective goods, he admitted filing of a civil case for recovery of the said amount and filing of a case before Consumer Forum by brother of accused regarding defective goods. Further, he denied having any written agreement regarding interest with the accused but stated it to be mentioned in the original bill, he denied supplying any defective goods to the accused, he admitted that the invoices/bill no. 282, 283, 290, 294 and 297 (Mark X1) do not bear Ct. Case No. 27658/2018 Page 26 of 53 the stamp of the company and signatures of authorized person as they are computer generated and denied that the goods mentioned in the above bills were not supplied. He further deposed that the computer system/device in which the ledger is maintained is under his control and the control of his partner but that he did not take any permission from his partner to file Ex.CW1/X1, that the interest is automatically calculated by the computer for every financial year, the witness admitted having received the amount shown at points X1, X2 and X3 in Mark P1.
15.8 During cross-examination of DW-1, he deposed that defective items were not returned simultaneously at the time of delivery but they were returned after collection of all defective items, that he used to know about the defective goods when they were returned by his customers/buyers, that he never checked the items supplied by complainant at the time of delivery, that he does not give blank signed cheques in advance to any person while doing business with such person, that he gave blank signed cheques to the complainant since his brother-in-law Naresh knew the complainant and asked him to give cheques to complainant in good faith, that after 05.06.2018 an amount of Rs.29,93,831.14/- was due towards complainant and on 30.03.2018 Rs.36,43,831.14/- was due towards complainant, that he was not maintaining ledger account of the Ct. Case No. 27658/2018 Page 27 of 53 complainant on monthly basis but used to make entries in the computer in the ledger account of complainant as and when goods were supplied and payments made, he did not send any letter to the complainant demanding the cheques, that he alongwith Naresh went to the office of complainant in 2016, he does not remember when he went to the complainant with regard to defective items, that in 2018 he and complainant mutually decided to settle the account for a sum of Rs.22 lacs, that he neither gave stop payment instruction to his banker or lodged any complaint against complainant when dispute occurred between them, he denied payment of Rs.5 lacs in June 2018 towards interest on delayed payment. He further admitted receiving of material as per invoices dated from 06.07.2016 till December 2017, he admitted mentioning of interest on the invoices but denied having discussed any such term with the complainant, that he has not mentioned the fact of return of defective goods worth Rs. 7 lacs in his GST return, he had informed the complainant about defective goods telephonically but not in any other manner, he destroyed the defective goods as the same were rotting, he does not have photographs or any document to show that the goods were destroyed.
15.9. DW-2 during his cross-examination denied giving any security cheques to complainant when they have business dealings Ct. Case No. 27658/2018 Page 28 of 53 in 2015-16, he denied having any dispute with the complainant as reason of ending their business transactions, he came to know about dispute between accused and complainant regarding defective material in 2017, that cheques were given by accused to complainant for security in good faith, that no issue of defective items ever cropped up when he and complainant were doing business.
15.10. Now let us try to examine the defence of accused one at a time.
15.10.1. Whether complaint is liable to dismissed on account of it not being filed by authorized person?
Ld. counsel for accused has contended that at the stage of pre- summoning evidence, there was no board of resolution on record in favour of Manish Bansal, that later board of resolution was filed whereby Manish Bansal was authorized to file this case on 01.08.2018 whereas the affidavit of Manish Bansal has been attested on 31.07.2018 and that complainant does not know whether he is the partner or director of complainant company.
In this regard, it would be apposite to refer to the law laid down by Hon'ble Supreme Court in the case of M.M.T.C. Ltd. & anr. v. M/s Medical Chemicals & Pharma P. Ltd. & anr. Crl Appeal No. 1173- Ct. Case No. 27658/2018 Page 29 of 53 1174 of 2001 dated 19.11.2001, wherein it was held that if a complaint is made in the name of incorporeal person (like a company or a corporation) it is necessary that a natural person represents such juristic person in the court. It has been further held that:
"...there may be occasions when different persons represent the company. It has been held that it is open to the de jure complainant company to seek permission of the court for sending any other person to represent the company in the court. Thus, even presuming, that initially there was no authority, still the company can, at any stage, rectify that defect. At a subsequent stage the company can send a person who is competent to represent the company. The complaints could thus not have been quashed on this ground."
In view of the law laid as aforesaid, the subsequent authorization in favour of Mr. Manish Bansal to represent the complainant company is rectifiable and a curable defect. Also Ex. CW1/6 Board of Resolution mentions the name of Manish Bansal as director, whereas his stamp bears the word 'partner'. The discrepancy in the above cannot be said to be material so as to throw away the case of the complainant. Also CW1 has been cross-examined to the said effect and has deposed that complainant is partnership firm and that he is one of the partners and directors is also called partner and that Ct. Case No. 27658/2018 Page 30 of 53 earlier he was the sole proprietor of the firm and later on it was converted to partnership firm. Accordingly, this defence of accused does not sustain.
15.10.2. The accused has relied upon judgment in the case of Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel & anr. Criminal Appeal No. 1497 of 2022 dated 11.10.2022 to contend that since CW-1 has admitted receipt of Rs.6.5 lacs after 31.03.2018 (when the complainant claims to have outstanding dues against accused as Rs. 53,83,048.90/-), the presentation of cheque in question by complainant without endorsement as to part payment received in terms of Section 56 NI Act, cannot be said to be presented for discharge of legal debt or liability of the accused. In support of his contention, accused has also relied upon the case of M/s Alliance Infrastructure Project Pvt. Ltd. & Anr. v. Sanjeev Kapoor, Crl. M.C. No. 2224/2009 dated 18.01.2010.
In M/s Alliance Infrastructure Project Pvt. Ltd. & Anr. case (supra) Hon'ble High Court of Delhi dealt with the issue of interpretation of expression 'amount of money' appearing in Section 138 NI Act in a case where the admitted liability of the drawer of the cheque gets reduced, on account of part payment made by him, after issuing but before presentation of cheque in question. The court was posed with the question whether the expression 'amount Ct. Case No. 27658/2018 Page 31 of 53 of money' would always mean the amount of cheque, even if the actual liability of the drawer of the cheque has got reduced on account of some payment made by him towards discharge of the debt or liability in consideration of which cheque in question was issued. Answering the said question in negative, it was held that:
"8. ...If it is held that the expression 'amount of money' would necessarily mean the amount of cheque in every case, the drawer of cheque would be required to make arrangement for more than the admitted amount payable by him to the payee of the cheque. In case he is not able to make arrangement for the whole amount of the cheque, he would be guilty of the offence punishable under section 138 of Negotiable Instruments Act. Obviously this could not have been the intention of the legislature to make a person liable to punishment even if he has made arrangements necessary for payment of the amount which is actually payable by him...
9. I am conscious of the implication that the drawer of a cheque may make payment of a part of the amount of the cheque only with a view to circumvent and get out of his liability under section 138 of Negotiable Instrument Act. But, this can easily be avoided, by payee of the cheque, either by taking the cheque of the reduced amount from the drawer or by making an endorsement on the cheque acknowledging the Ct. Case No. 27658/2018 Page 32 of 53 part payment received by him and then presenting the cheque for encashment of only the balance amount due and payable to him..."
To properly adjudicate the above issue, it would also be apposite to understand the law laid down by Hon'ble Supreme Court in Dashrathbhai Trikambhai Patel case (supra). It has been observed as follows:
"30. In view of the discussion above, we summarize our findings below:
For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation;
If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforeceable debt on the date of maturity would to be the sum represented on the cheque;
When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the [NI] Act. The cheque endorsed with the payment made may be used to negotiate the balance, if any. If the cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the Ct. Case No. 27658/2018 Page 33 of 53 offence under section 138 will stand attracted..."
Thus, what has been laid down in the above precedent is that a cheque presented without endorsement of part payment made by drawer after issuance of the said cheque and before its maturity, cannot be considered to be cheque presented in discharge of legally enforceable debt. In the present case, complainant has deposed the outstanding liability of accused as on 31.03.2018 to be Rs.53,83,048.90/- and thereafter CW-1 has admitted receipt of Rs.1,00,000/- on 05.04.2018, Rs.50,000/- on 07.04.2018 and Rs.5,00,000/- on 08.06.2018. The same also stands fortified by the entries in the bank account statements of the complainant Mark P1. The cheque in question is dated 08.06.2018. Now, for the ratio of the Dashrathbhai Trikambhai Patel case (supra) to apply to the present case, it was incumbent upon accused to have proved that the cheque in question was issued to complainant prior to the date mentioned on the cheque i.e. 08.06.2018. It is the defence of the accused that he handed over the entire signed blank cheque book to the complainant at the time of entering into business with the complainant. The same has been denied by CW-1 who has deposed that he only received property documents from accused as security when the excess amount was due against accused but did not take any cheque as security. Complainant has also cross-examined DW-1 and DW-2 to the said effect, whereby DW-1 admitted the fact that he was purchasing goods in wholesale from 3-4 firms during the Ct. Case No. 27658/2018 Page 34 of 53 business transaction with the complainant but he had not given blank signed cheques to the said 3-4 firms. DW-1 further deposed that he does not give blank signed cheques in advance to any person while doing business with such person and that he made an exception of giving blank signed cheques to the complainant only upon asking of his brother-in-law/DW-2 Naresh who also used to do business with the complainant. His brother-in-law was also cross- examined as DW-2 who himself deposed that transactions between him and complainant took place during the year 2015-16 but he did not give any security cheques to complainant during the said business transactions. In view of the testimony of the defence witnesses, the allegation of accused that he gave a whole blank signed cheque book to the complainant at the commencement of business dealings when he himself or his mediator/DW-2 did not give any blank signed cheque either to the complainant or to any other firm he was working with at the relevant time, becomes difficult to believe. Further, the said defence is contrary to the reply to the notice sent by accused to the complainant. A perusal of the reply to the legal demand notice Ex. CW-1/5 transpires that upon serving the notice of demand, accused had merely taken preliminary objection to the effect that when the business dealings commenced between complainant and accused, complainant took two blank signed cheques from the accused and a title deed. This plea juxtaposed with the defence taken by accused during trial that he Ct. Case No. 27658/2018 Page 35 of 53 gave entire blank signed cheque book to the complainant as security at the time of commencement of business between them, further creates doubt in the defence of the accused. Also, there is no complaint on record filed by accused against complainant misusing his cheques. Thus, accused has miserably failed to prove his contention that the cheque in issue was given as a security cheque or prior to the date that finds mention on the said cheque. In view of the above, it is presumed that the cheque in question was issued by accused in favour of complainant on 08.06.2018 i.e. the date specified on the cheque. Since the last part-payment admittedly received by complainant was of Rs.5,00,000/- on 08.06.2018 i.e. on the date of issuance of cheque, the ratio of the Dashrathbhai Trikambhai Patel case (supra) does not apply to the facts of the present case, in as much as admittedly no payment has been received by complainant after issuance of cheque in question and before its presentation. Consequently, this defence of accused that the cheque presented was not pertaining to his liability as the same does not bear endorsement of part payment of Rs.6.5 lacs fails.
15.10.3. Another defence taken by accused is that there was no agreement of levy of interest on delayed payment.
Accused has contended that except for the bills on record, there is no other document or witness verifying the fact of levy of any Ct. Case No. 27658/2018 Page 36 of 53 interest albeit interest @ 18% p.a. on the delayed delivery of goods and the same also does not find mention in the complaint or the legal notice. The accused has also relied upon the case of M/s Alliance Infrastructure Project Pvt. Ltd. & Anr. v. Sanjeev Kapoor, Crl. M.C. No. 2224/2009 dated 18.01.2010, wherein reliance was placed on the case of Suman Sethi v. Ajay K. Churiwala 2000(2) SCC 380.
In Suman Sethi case (supra), Hon'ble Supreme Court held that where the notice also contains a claim by way of cost, interest etc. and gives breakup of the claim of the cheque amount, interest, damages etc., which are separately specified, the claim for interest, cost, etc. would be superfluous and these additional claims being severable would not invalidate the notice. It was further held that if an ominous demand is made in a notice as to what was due against a dishonoured cheque, the notice might fail to meet the legal requirement and may be regarded as bad. Thus, what has been held is that a notice is not bad in law for separately specifying the interest etc charged. Even in the present case, legal notice Ex.CW-1/3 was posted by complainant on 03.07.2018 specifically demanding interest @ 18% p.a. on the principal amount and it does not suffer from any illegality in the above aspect.
Further, the accused, while replying to the said notice vide Ct. Case No. 27658/2018 Page 37 of 53 Ex.CW-1/5, has denied agreement of any payment of interest. The plea of accused has been that there is no agreement or witness to prove the fact of levy of interest on delayed payment, except the bills themselves, that some bills do not even mention the fact of interest, that bills at page no. 52, 53, 54, 55 does not mention fact of interest but the bills at page no. 36, 57, 58 and 59 pertaining to the same period does mention the fact of interest which shows dishonest conduct of complainant. To the contrary, Ld. counsel for complainant has argued that once the accused has admitted the bills except the five disputed bills, he is said to also have admitted the terms and conditions specified in those bills.
A cursory perusal of the said bills would reveal that bills at page no. 52, 53, 54 and 55 are Retail invoice containing delivery notes whereas bills at page no. 36, 57, 58 and 59 pertaining to the same period are Tax Invoice. The two cannot be said to be the same. A Tax invoice is issued by a registered dealer selling goods to another registered dealer and cannot be equated with retail invoice containing delivery note. The Tax invoice in the present case, mentions levy of interest @ 18% p.a. if the payment is not made within stipulated time, as one of its terms and conditions.
Accused has also challenged the ledger account maintained by complainant Mark X1 and corresponding certificate u/s 65-B Indian Evidence Act. He has taken defence that he never received Ct. Case No. 27658/2018 Page 38 of 53 any goods from complainant after December 2017. Both the parties have placed on record their ledger accounts. None of the said ledger accounts bear stamp of accountant or any auditor. Also both the parties have filed certificate u/s 65 B Indian Evidence Act. Contention of Ld counsel for the accused has been that certificate u/s 65 B Indian Evidence Act filed by complainant is not valid as it does not mention the details of the device from which the output has been taken. In such event, certificate u/s 65 B Indian Evidence Act filed by accused also does not mention the details of the device. Merely the fact that complainant filed certificate u/s 65 B Indian Evidence Act after three years, cannot be a material defence at this stage. Thus, the ledger accounts filed by both the parties stand on the same footing. However, a perusal of ledger accounts maintained by complainant Mark X1 and Ex.CW-1/X1 would reveal that the payments were made by accused always after much delay and that no interest of any kind was ever levied by complainant towards delayed payment until 2018. The five disputed bills bearing no. 282, 283, 290, 294 and 297 also pertain to the year 2018. In his statement u/s 313 Cr.P.C. also accused has admitted bills till December 2017 and refused having any business terms with complainant after December 2017. Thus, the defence of accused is that his business dealing stopped with complainant since after December 2017. The interest has been levied for the first time only in 2018, i.e. after the alleged disputes arose between the parties. CW-1 was cross-
Ct. Case No. 27658/2018 Page 39 of 53questioned by accused on the point as to what was the amount on which interest was charged, to which CW-1 failed to give specific answer, vaguely replying that the interest is automatically calculated by the computer. Not to forget, Ex.CW-1/X1 was produced at a much later stage when a second application u/s 311 Cr.P.C. was filed by complainant at the stage of final arguments and accused has specifically disputed its veracity in his statement u/s 313 Cr.P.C. If the statement of CW-1 is to be believed that the computer automatically levies interest on delayed payment, it does not inspire the confidence of the court as to why the computer had not levied the same interest or any interest for that matter, at any preceding time. All this coupled with the fact that CW1, during his cross- examination has admitted the fact that there was no written agreement regarding the interest with the accused, only points out towards the defence of accused being believable that despite the term of interest mentioned on the bill, there was no agreement, orally or in writing, between the parties levying interest on delayed payment. Thus, accused has been able to prove on the basis of preponderance of probability that there was no agreement of levy of interest on delayed payment and now the burden shifts upon complainant to prove, by fact, that there was such an agreement. The tax invoice, not being a contract, the terms and conditions specified therein does not attract application of Section 91 Indian Evidence Act. Thus, it was upon complainant to bring on record the Ct. Case No. 27658/2018 Page 40 of 53 contract of business, if any, executed between the parties or to examine any other witness or to prove by his statement of account or ITR to prove that interest was levied on delayed payment and he has realized such interest prior to stoppage of business dealings between the parties in December 2017.
15.10.4. The accused has raised the defence that out of the total outstanding dues against him, he is liable to deduct an amount of Rs.7,00,000/- worth of defective goods supplied to him by the complainant.
To prove this defence, accused has cross-examined CW-1 but CW-1 has denied selling defective goods and knowledge about the same. CW-1 deposed that during business transaction it never happened that goods were found defective and in case any goods were found defective, the transporter i.e. tempo driver used to return the same, that the accused never told them about the defective goods, admitted the fact that brother of accused has filed a case against complainant in Consumer Forum with regard to defective goods. Ld. counsel for accused took the plea that if the transporter always returned back the defective goods, then there was no need for accused to separately inform the complainant about the defective goods. This plea taken at the stage of final arguments goes contrary to the defence of accused revealed from the cross-examination of CW-1, in as much as during Ct. Case No. 27658/2018 Page 41 of 53 cross-examination suggestion was put to CW-1 that the accused informed him about the defect in goods but complainant refused to take it back from the accused. Further, accused has failed to even plead as to the goods which were allegedly found defective. In the present case, accused has not disputed the bills produced by complainant except five bills. Thus, accused having admitted the remaining bills, was under legal obligation to at least plead as to which goods were found defective, but he failed to do so and only a scarce defence has been taken by him that goods worth Rs.7 lacs were defective.
Interestingly, no such plea was taken by accused in his reply to legal demand notice Ex.CW-1/5. A cursory perusal of the entire reply reveals that the plea taken by accused against the demand notice was that he had paid Rs.6.5 lacs to the complainant, that there was no term of levy of interest agreed between the parties and that he is ready to pay the actual outstanding amount of Rs. 29,93,831.14/- due as on 08.06.2018. Also, no such plea of defect in goods was taken by accused in his plea of defence recorded when he was served notice by the court u/s 251 Cr.P.C.
Further, Section 41 of Sales of Goods Act, 1930 enables buyer's right of examining the goods at the time of delivery and it is enacted that buyer is not deemed to have accepted the goods unless and until he has had a reasonable opportunity of examining them for Ct. Case No. 27658/2018 Page 42 of 53 the purpose of ascertaining whether they are in conformity with the contract.
However, DW-1 has deposed that he used to receive the goods from complainant and further supply the same to his buyers, that he telephonically informed the complainant about defect in goods and also to DW-2. In his cross-examination, DW-1 stated that defective goods were not returned simultaneously when they were delivered but he used to get to know about the defect when the same were returned to him by his buyers, that he never checked the items supplied to him by the complainant by opening the cartons at the time of delivery. Thus, admittedly accused did not avail his right of examining the goods at the time of delivery. Here comes application of principle of Caveat Emptor meaning 'let the buyer beware'. If the buyer fails to examine the goods at the time of delivery, he cannot thereafter take defence that he was supplied with defective goods. And if it was the case, buyer/accused was under obligation to inform the complainant/seller regarding any defect of goods without delay. However, DW-1 has deposed that he only telephonically informed the complainant, which has been categorically denied by the complainant.
DW-1 has also deposed that the dispute between him and the complainant regarding the defective goods arose in September 2017 as there were several complaints from the market regarding the Ct. Case No. 27658/2018 Page 43 of 53 defective goods and that he did not purchase goods from the complainant after December 2017. However, accused failed to bring on record any such complaint from his buyers or any other document even prima facie pointing towards the defect in the goods received from complainant. He also failed to bring on record the alleged complaint filed against complainant before Consumer Forum. Complainant merely admitting the fact of filing of a complaint in Consumer Forum, without accused even pointing towards the date of such complaint, or the goods which were found defective as he had admitted the bills except five bills, does not prove the defence of the accused. He has also failed to examine any of his alleged buyer who had filed complaint with regard to defective goods, despite deposing that there were several complaints in the market of the defective goods.
Also, complainant has cross-examined DW-1 on the GST returns filed for his firm. DW-1 only brought on record GSTR-I and GSTR-IIIB but failed to bring on record GSTR-IIB. A suggestion was put to the accused and he denied withholding GSTR-IIB deliberately as the same reflects the entries and transaction qua the complainant. Further, DW-1 admitted the fact that he failed to mention the fact of return of defective goods worth Rs.7 lacs in his GST return and deposed that he destroyed all the defective goods, but failed to bring on record any proof of the same. Thus, accused has failed to prove his defence on the basis of preponderance of Ct. Case No. 27658/2018 Page 44 of 53 probability that he was supplied with defective goods worth Rs. 7,00,000/- and that he was entitled to deduct the said amount from his total outstanding amount and thus the cheque in question is issued for an amount which is more than his liability.
15.10.5. Another defence taken by accused is that the five bills are forged and fabricated. The said bills bear no. 282, 283, 290, 294 and 297. To challenge the veracity of the said five bills, accused has cross-examined CW-1 wherein CW-1 has admitted that the said five bills do not bear the stamp of the company and signatures of authorized person as they are computer generated and denied that the goods mentioned in the above bills were not supplied. Accused has been able to prove hereinabove, on the basis of preponderance of probabilities, that the ledger account maintained by complainant Ex.CW-1/X1 is not genuine as prior to December 2017, no interest of any sort was ever applied by complainant upon accused for delayed payment. Accused has explained the circumstances appearing against him in his statement u/s 313 Cr.P.C. that he stopped business dealings with complainant since after December 2017 and never received the goods under tax invoice no. 282, 283, 290, 294 and 297. The ledger accounts of both the parties bear the same credit entries of payments made except the aforesaid five disputes bills. All these five disputed bills pertain to Ct. Case No. 27658/2018 Page 45 of 53 the year 2018. A person cannot be expected to prove a fact in negative, as in a person cannot be said to have a proof of the fact that he was not in receipt of certain goods. Thus, the burden was upon complainant to prove the affirmative fact i.e. he actually delivered the goods mentioned in tax invoice no. 282, 283, 290, 294 and 297 to the accused. Although the complainant placed on record the Retail invoices mentioning the delivery dispatch numbers, complainant failed to bring on record any dispatch bill of the disputes goods. These bills were also brought on record only at the stage of final arguments by moving an application u/s 311 Cr.P.C by complainant and he failed to bring the true facts on record at the initial stage. Accused has taken plea that both the applications filed by complainant u/s 311 Cr.P.C. at the stages of final arguments was filed to fill the lacunae and the documents placed on record were forged. Also, the certificate u/s 65-B Indian Evidence Act was produced on record much later than its execution. It also does not comply with all the ingredients of the said section and is thus hit by law. Complainant has also failed to prove the supply of the goods mentioned in five disputed bills by examining its transporter or by any other method. Thus, accused has been successful in proving, on the basis of preponderance of probability, that he did not receive the goods mentioned in bill no. 282, 283, 290, 294 and 297 in 2018. Now the burden to prove the said fact shifted upon complainant. However, complainant has failed to discharge its burden.
Ct. Case No. 27658/2018 Page 46 of 5315.10.6. Whether the cheque in question was issued for an amount in excess of the liability of accused?
The accused has contended that the cheque in question, being in excess of his liability, cannot fasten criminal liability upon accused u/s 138 NI Act. The cheque in question bearing no.000366 dated 08.06.2018 was issued for a sum of Rs. 24,10,643/-. The said cheque was returned dishonoured on 11.06.2018.
The complainant's ledger shows total outstanding amount against accused due as on 31.03.2018 to be Rs.53,83,048.90/-. It is admitted fact that accused made part payment of Rs.6.5 lacs till 08.06.2018 i.e. prior to presentation of the cheque in question and thus, it is not hit by law laid down in the case of Dashrathbhai Trikambhai Patel case (supra) as no payment was made by accused after issuance of cheque on 08.06.2018. Thus, from the complainant's point of view, after having received further amount of Rs.6.5 lacs, the total outstanding balance against accused as on 08.06.2018 was Rs. 47,33,048.90/-. The complainant has not been able to discharge its burden of supply of goods in the disputed five bill no. 282, 283, 290, 294 and 297 worth Rs. 9,72,793.50/-. Complainant has also not been able to prove that there was any agreed stipulation of levying of interest @ 18% p.a. on delayed payment and thus entry of Rs.8,22,404.98/- as interest in March 2018 (in Mark X1) is also Ct. Case No. 27658/2018 Page 47 of 53 liable to be adjusted. Thus, after deducting the interest and the amount of the five disputed bills, the amount due against accused as per the ledger of the complainant is Rs. 29,37,850.42/- as on 08.06.2018 i.e. on the date of issuance of cheque. No payment thereafter has been pleaded by either party.
On the other hand, it is the case of accused that an amount of Rs. 36,43,831.14/- was outstanding towards complainant as on 30.03.2018. The same is reflected also from his ledger Ex.DW-1/1. Further, it is admitted that another amount of Rs.6.5 lacs were paid to the complainant till 08.06.2018 and thus the outstanding amount towards complainant as on 08.06.2018 was Rs. 29,93,831.14/-. Further, accused has failed to prove that he received defective products worth Rs. 7 lacs and thus he is not entitled to deduct the said amount.
Accordingly, as per the ledger of complainant an amount of Rs. 29,37,850.42/- was outstanding against accused as on 08.06.2018, whereas as per the ledger of the accused, the outstanding amount was Rs. 29,93,831.14/-. The difference in the said amounts has not been cleared by either party during the cross- examination. After perusal of both the ledgers it transpires that there are difference in the previous entries of 2016 as well which may have led to the difference in the final outstanding balance to the tune of Rs. 55,980.72/-. Be that as it may, accused has admitted his Ct. Case No. 27658/2018 Page 48 of 53 liability to the tune of Rs. 22 lacs in his statement u/s 313 Cr.P.C, although after deducting Rs.7 lacs worth of allegedly defective goods which he is not entitled to. Thus, it is proved that accused had liability of around Rs.29 lacs on the date of presentation of the cheque in issue i.e.11.06.2018 (as can be culled out from the statement placed on record by complainant). Thus, the cheque in question being presented on 11.06.2018 for an amount of Rs. 24,10,643/- (the liability of accused being to the tune of around Rs.29 lacs) cannot be said to be for an amount in excess of liability of the accused. Thus, accused has not been able to successfully rebut the presumption of law and discharge the burden of proof by raising a probable defence that the cheque in question was issued in excess of his liability.
The first legal requirement is, thus, proved in favour of complainant to the above extent and against accused.
16. The second legal requirement is:
"That 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."Ct. Case No. 27658/2018 Page 49 of 53
The cheque in question Ex. CW-1/1 is dated 08.06.2018. The cheque return memo Ex. CW-1/2 is dated 11.06.2018 and the ledger produced by complainant Ex.CW-1/X1 reflects that the cheque was presented for encashment on 11.06.2018, which proves that the cheque in question was presented within the period of its validity. Further, defence has failed to controvert the said fact.
Thus, the second legal requirement is adjudicated in favour of complainant.
17. The third legal requirement is:
"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 agree- ment made with the bank."
Section 146 NI Act presumes the fact of dishonour of cheque upon production of bank's slip or memo having the official mark denoting that the cheque in question has been dishonoured. This is also a re- buttable presumption and the upon production of such bank memo, the burden shifts upon accused to disprove the same.
Ct. Case No. 27658/2018 Page 50 of 53In the instant case, a presumption has been raised in favour of com- plainant by virtue of Section 146 NI Act that the cheque in question was dishonoured for the reason stated therein viz. Exceeds arrange- ment and therefore, the burden now shifts upon the accused to rebut this presumption by establishing some reasonable justification for the same. But the accused has admitted his signatures on the cheque in question and has also admitted his liability to the extent of Rs.29,93,831.14/- as on 08.06.2018 by way of his ledger Ex.DW-1/1 and the fact of its dishonour.
Thus, the third legal requirement is adjudicated in favour of complainant.
18. The fourth legal requirement is:
"The payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giv- ing 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."
The cheque was dishonoured vide return memo dated 11.06.2018 and the complainant sent a legal notice dated 03.07.2018 (Ex.CW- 1/3) addressed to the accused. Corresponding speed post receipt Ct. Case No. 27658/2018 Page 51 of 53 (Ex.CW-1/4) is also on record. The accused has also sent a reply to the said legal notice vide Ex.CW-1/5. Thus, it is proved that com- plainant made demand of the cheque amount within thirty days of receipt of information by him from the bank.
The fourth legal requirement is, thus, adjudicated in favour of complainant.
19. The fifth legal requirement is:
"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."
It is an undisputed fact and also a matter of record that the accused has received the notice and also sent a reply to the same vide Ex.CW-1/5 but has failed to make the payment till date let alone making payment within 15 days of receipt of notice. The defence taken by accused for not making the payment within the statutory period of 15 days has been that he has no liability to the extent of the amount specified in the cheque.
Thus, the fifth legal requirement is adjudicated in favour of complainant.
Ct. Case No. 27658/2018 Page 52 of 5320. All the legal requirements constituting an offence u/s 138 NI Act have been proved in favour of complainant and against the accused, the court is of the considered opinion that the accused no. 2 Arvind Garg, proprietor of accused no. 1 M/s Laxmi Flour Mill is guilty of offence under Section 138 of Negotiable Instruments Act, 1881 and accordingly, is hereby convicted under Section 138 of Negotiable Instruments Act, 1881.
21. Be put up for arguments on Quantum of sentence today at 03.00 pm. Copy of this judgement be given Dasti to the convict free of cost as per rules.
Announced in the open court on 01.11.2022 (Aakanksha) Metropolitan Magistrate(NI Act)-07 South West District, Dwarka Courts, New Delhi Ct. Case No. 27658/2018 Page 53 of 53