Delhi District Court
In Re: M/S A.A.Traders vs Javed on 10 January, 2023
IN THE COURT OF MS. NIDHI BALA, METROPOLITAN MAGISTRATE, NI ACT
DIGITAL COURT, NORTH EAST DISTRICT,KARKARDOMA COURT, DELHI.
IN RE: M/S A.A.TRADERS VERSUS JAVED
1. Complaint Case no. : 29/2020
2. Date of Institution of case : 21.12.2020
3. Name of the complainant : M/S A.A.Traders
Through its Proprietor
Zillur Rehman
S/O Late Bakhtawar Ullah
Shop at H.No. 236, Gali No. 4, Moonga Nagar,
North East District, delhi-110094
Also at:-
R/O H.No. B-8/1, Gali No. 2, Chandu Nagar,
Karawal Nagar Road, North East District, Delhi-
110094.
4. Name of Accused person : Javed
S/O Late. Alimuddin
Proprietor of M/S Z.S.Hosiery
Shop at property no. 433, Gali No. 6, Near
Masjid, Rajiv Gandhi Nagar, Near Mustafabad,
North East District, Delhi-110094.
5. Offence complained of : Section 138 NI Act
6. Plea of accused : Pleaded not guilty
7. Final Order : CONVICTED
8. Date of judgment : 10.01.2023
JUDGMENT
NIDHI Digitally signed
by NIDHI BALA
BALA Date: 2023.01.10
17:19:40 +05'30'
CC No. 29/2020 M/s. A A Traders Vs. Javed Page no. 1 of 22
1. Vide this judgement the present complaint case for an offence punishable U/Sec.138 of the Negotiable Instruments Act, 1881 (hereinafter "the NI Act") is being decided.
2. Factual matrix of the case:-
2.1 Complainant is a proprietor of M/S A.A.Traders and he is running the business and deals in Elastic, Fabric & Lace etc. In whole sale from the shop situated at H.No. 236, Gali No. 4, Moonga Nagar, North East District, Delhi-110094. It is alleged by the Complainant that on 02.11.2020, accused had purchased 3850 Kg. Elastic material bearing HSN Code No. 5806 @ Rs. 200/- per Kg amounting to Rs. 8,08,500/-( Eight lac Eight thousand and Five hundred) including GST from the complainant. Accused had paid Rs. 1,00,000/-(One lac) in cash against the said purchase and issued a cheque bearing no. 000161 dated 04.11.2020 for a sum of Rs. 7,08,500/-(Seven lac Eight thousand and Five hundred) drawn on ICICI Bank Ltd. Krishna Nagar Branch, Delhi-110051 in favour of the complainant in discharge of his legal liability towards the complainant (hereinafter "the cheque in question") and assured the complainant that the said cheque shall be honoured on its presentation.
2.2 As per the assurance of accused, complainant presented the cheque in question in his bank account being maintained at ICICI Bank Ltd. Bhajanpura Branch, Delhi (within the jurisdiction of this court). However the said cheque in question was returned unpaid / dishonored for the reason "FUNDS INSUFFICIENT" vide cheque return memo dated 04.11.2020.
2.3 Thereafter on 23.11.2020, Complainant sent a legal demand notice to accused through his counsel via speed post and called upon the accused to make the payment of the cheque amount in question within 15 days of receipt of legal notice but accused failed to make the payment of the cheque amount despite service of notice on dated 25.11.2021 and therefore, the present complaint is filed by the Complainant against the accused for the offence under Section 138 of the NI Act.
NIDHI Digitally signed
by NIDHI BALA
BALA
Date: 2023.01.10
17:19:55 +05'30'
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3. On being satisfied of the prima facie ingredients of Section 138 of the NI Act, cognizance was taken and summons were directed to be issued against the accused vide order dtd. 22.12.2020 and accused appeared alongwith counsel accordingly and he was admitted on bail. On 02.02.2021 notice under Section 251 Cr.PC was framed and served upon the accused to which he pleaded not guilty and claimed trial. While putting forth his plea of defence, accused denied his signature upon the cheque in question and also the fact of issuing the same in favour of complainant and also denied having entered into any transaction with the complainant as alleged. Accused further denied the fact of receiving the legal demand notice sent by complainant to him through counsel, however, admitted his address mentioned on the legal demand notice on which the same was allegedly sent by the complainant. The plea of accused is being reproduced hereinafter for ready reference:
"I did not enter into any business transaction with the complainant nor I purchased any goods from the complainant. I did not draw the cheque in question in favour of the complainant."
4. The accused was then granted liberty to move an application under Sec. 145(2) of NI Act to cross examine the complainant and the same was consequently filed which was allowed.
5. EVIDENCE OF COMPLAINANT:
5.1 In Complainant's evidence, the complainant (CW-1) tendered his evidence affidavit in post summoning evidence and he was cross examined on behalf of accused at length and he relied upon the following documents:
i) Ex. CW-1/A : Evidence of complainant by way of affidavit.
ii) Ex. CW-1/1 to Ex. CW-1/10: Copy of Bills (OSR) to show the previous business transactions with the accused. Iii) Ex. CW-1/11: Copy of Bill dated 02.11.2020(OSR) i.e.Bill in question.
NIDHI Digitally signed
by NIDHI BALA
Date:
BALA 2023.01.10
17:20:05 +05'30'
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iv) Ex. CW-1/12 and Ex. CW-1/13: E-way Bill dated 02.11.2020 i.e. bill in question and Certificate Under Section 65(B) of Indian Evidence Act, 1872 qua the E-way Bill.
v) Ex. CW-1/14: Original Cheque bearing no. 000161 dated 04.11.2020 for a sum of Rs. 7,08,500/-(Seven lac Eight thousand and Five hundred) drawn on ICICI Bank Ltd. Krishna Nagar Branch, Delhi-110051.
vi) Ex. CW-1/15: Original Cheque Return Memo dtd. 04.11.2020.
vii) Ex. CW-1/16: Statutory Legal demand notice dtd. 23.11.2020 sent by Complainant to accused through counsel.
viii) Ex. CW-1/17 and Ex.CW-1/18: Postal receipt and courier slip
ix) Mark A (Colly): Tracking report qua legal demand notice sent by complainant to accused through speed post and Copy of Aadhaar Card of complainant.
5.2. Another witness examined on behalf of the complainant is CW-2, Piyush Gupta, Deputy Brach Manager, ICICI Bank, Bhajanpura Branch, Delhi( Complainant's Bank) and the said witness proved the document Ex. CW-2/A(Colly) i.e. bank account statement of complainant from the period 01.02.2019 to 30.12.2020 to show the various transactions made in the account of complainant from the account of accused since the accused has denied of having any business transaction with the complainant at any point of time. The said witness further proved the reason of the dishonour of cheque in question as "Funds Insufficient" vide Ex. CW-2/B and the said witness was cross examined by Ld. Counsel for the accused wherein he tried to rebut the testimony of said witness by extracting that the abovesaid transactions in the account of complainant are made from the account of Z.S.Hosiery and name of accused Javed is not reflecting in the statement. However it is admitted by accused who is examined as DW-1 that he is the proprietor of Z.S.Hosiery.
NIDHI Digitally signed
by NIDHI BALA
BALA
Date: 2023.01.10
17:20:14 +05'30'
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5.3. One more witness examined on behalf of complainant is CW-3, Ms. Shipra, Branch Manager, ICICI Bank, Krishna Nagar Branch, Delhi( Accused's Bank) and she produced the bank account statement pertaining to account in the name of Z.S.Hosiery Ex.3/A and she proved the fact that the account in the name of Z.S.Hosiery is a current account which is a proprietorship firm and its proprietor is Zaved. She further stated that as per the bank records the cheque in question is issued by Zaved, proprietor of Z.S.Hosiery. She also produced the signature card of Zaved, proprietor of Z.S.Hosiery as Ex.CW-3/B. She further produced the account opening form of Z.S.Hosiery having the photograph of its proprietor/account holder namely Zaved and the same is Ex. CW- 3/C(Colly). She further proved that the entry qua the dishonour of cheque in question is not reflected in the account statement of accused since it was within bank transaction as the payee also had the account in the same bank and the account of accused was having NIL balance in his account at the relavant period of presentation of the cheque in question, therefore, the cheque in question was retuned unpaid for the reason "Funds Insufficient" and the charges for the dishonour of the cheque from the account of accused were not deducted since the said account was already marked as lien due to outstanding of the credit card payment due against the accused in the same bank and also his account was not having any balance in it. The said witness was also cross examined on behalf of the accused and nothing could be extracted by Ld. Counsel for the accused except the fact that the signatures of account holder of Z.S.Hosiery are in hindi. It is not denied by the accused that he is not the proprietor of Z.S.Hosiery or that the cheque in question does not bear the signature of accused or that the same is not issued by the accused. Rather it is proved from the testimony of CW-3 that the account of accused was not having the sufficient balance on the date of presentation of cheque in question to honour the same.
5.4. One more witness examined on behalf of the complainant is CW-4, Sh. Vinod Gehlot, Chief Manager, ICICI Bank, Jhandewalan Extension Branch, Delhi. The said NIDHI Digitally signed by NIDHI BALA BALA Date: 2023.01.10 17:20:24 +05'30' CC No. 29/2020 M/s. A A Traders Vs. Javed Page no. 5 of 22 witness was examined to prove the fact of dishonour of the cheque in question for the reason "Funds Insufficient" since the entry regarding the same is reflected in the account statement of the complainant but not in the account statement of the accused and the said fact was duly proved by the said witness with reasons for the same. The said witness further proved that the cheque in question was issued by Zaved, proprietor of Z.S.Hosiery in favour of complainant and they both have accounts in the ICICI bank. The said witness produced Bank statement of Z.S.Hosiery, bank account statement of Z.S.Hosiery(Proprietor/Account holder "Zaved") from 01.10.2020 to 30.11.2020, specimen signature of the accused, certified copy of dishonoured cheque in question and the same are Ex. CW-4/1(Colly). The said witness was cross examined on behalf of the accused, however, his testimony could not be rebutted.
6. The accused was then examined under Section 313 Cr.PC, 1973 wherein all the incriminating evidence were put to the accused and he denied of having any liability towards the complainant and further stated that he did not issue the cheque in question in favour of the complainant and the said cheque is stolen by the complainant and misused thereafter. Accused further denied the alleged business transaction with the complainant and also denied of having any business transaction with the complainant at any point of time. Accused further stated that the bills/invoices relied by the complainant are forged and fabricated. Accused opted to lead defence evidence.
7. EVIDENCE OF ACCUSED:
7.1. In Defence Evidence, accused got himself examined as DW-1 and he was cross examined on behalf of the complainant at length and he relied on the following documents:-
i) Ex. DW-1/A: AADHAR Card of accused.Digitally signed
NIDHI by NIDHI BALA
Date:
BALA
2023.01.10
17:20:43
+05'30'
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ii) Ex. DW-1/B: Record pertaining to cancellation of GST number of accused alongwith certificate Under Section 65B of Indian Evidence Act, 1872.
7.2. One more witness examined on behalf of accused is DW-2 Sh. Samant Trar, Inspector, CGST. The said witness produced the record of cancellation of GST of proprietorship firm of accused M/S Z.S.Hosiery w.e.f 31.01.2020 bearing GST registration no. GSTIN: 0788IPZ2043A1ZK Ex. DW-2/1 (Colly). However, the said witness deposed qua the fact of cancellation of the GST of proprietorship firm of accused M/S Z.S.Hosiery w.e.f 31.01.2020 on the basis of information obtained from the GST Portal. As per the testimony of said witness all business entities are registered with the Central GST, however, the administrative control of any business entity registered is randomly given either to CGST or to SGST and as per the records, the GST of M/S Z.S.Hosiery falls under the administrative control of state GST. The said witness further deposed that the GST of M/S Z.S.Hosiery was cancelled by state authorities due to non-filing of GST Returns for more than six months. The said witness was cross examined on behalf of the complainant at length. During the cross examination DW-2 deposed that he has no personal knowledge as to why the GSTIN registration of Z.S.Hosiery was cancelled by the state authorities. He further conceded that the bill in question bearing invoice no. 185 dated 02.11.2020 for the sum of Rs. 8,08,500/- was raised against Z.S.Hosiery and the deatils of the same are available on the portal of the department. As per document Ex.DW-2/1(Colly) produced by DW-2, M/S Z.S.Hosiery i.e. accused has shown an inward supply for Rs.15,08,483/- involving GST of Rs.71,834/-(CGST and SGST of Rs.35,917/- each) from M/S A.A.Traders i.e. complainant and also M/S Z.S.Hosiery i.e. accused has an inward invoice for Rs. 8,08,500/- (including CGST and SGST of Rs.19,250/-) invoice no. 185 dated 02.11.2020 i.e. bill/invoice in question, in his GSTR 2A. It is pertinent to mention herein that the said document is produced by the witness of accused himself and not questioned or countered by the accused, hence, deemed to be admitted. DW-2 NIDHI Digitally signed by NIDHI BALA Date:
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further stated during his cross examination that M/S Z.S.Hosiery i.e. accused has filed its GST return on 27.12.2020 for the month of January, 2020 i.e. much after the cancellation of its GST number and the said details are available on the GST Portal. The said witness also deposed after the court question that M/S Z.S.Hosiery i.e. accused did not file any annual return as per the record available on GST Portal.
8. Final arguments have been heard at length on behalf of Complainant as well as accused and written arguments were also filed on behalf of both the parties. Complete record has been perused carefully.
9. ARGUMENTS ON BEHALF OF COMPLAINANT:
9.1. During the course of arguments, Ld. Counsel for complainant reiterated the contents of the complaint and the evidence affidavit of the complainant and further argued that the complainant has proved the various previous business transactions between him and the accused regarding which payments were made by accused to complainant through cheques and which have been intentionally denied by the accused to mislead the court and accused has miserably failed to rebut those transactions and payments.
9.2. Ld. Counsel further argued that witness from accused himself DW-2, inspector from the CGST also produced the document showing the transaction in question in the GST portal. Ld. Counsel further argued that the GST registration of any business entity can not be cancelled without following the due process of law such as issuing show cause notice to the business entity concerned and the same does not disentitle any business entity to file his return again which happened in the present case. Ld.counsel further argued that accused delebrately did not examine the state GST in the present case which is actual controlling authority of the GSTIN of accused as per statement of DW-2 to avoid the true facts to be brought before this court that after the cancellation of his GSTIN, accused himself filed his GST return. Ld. Counsel further argued that accused himself filed his GST return on 27.12.2020 i.e. after the transaction in question on 02.11.2020 which shows that the GST NIDHI Digitally signed by NIDHI BALA BALA Date: 2023.01.10 17:21:06 +05'30' CC No. 29/2020 M/s. A A Traders Vs. Javed Page no. 8 of 22 registration of accused was active at the relavant time of the transaction in question. Ld. Counsel further argued that accused was the regular defaulter in filing the GST returns, paying taxes and was also defaulter in paying the credit card payments of its bank i.e. ICICI bank. ld. Counsel further relied on the certified copy of the evidence of State GST witness Sh. Kiran Singh Negi examined in another case between the same parties qua the same transaction in question in the commercial court who deposed that the GST of the accused was cancelled after issuing him show cause notice dated 08.12.2020 and he also produced the notice as well as cancellation order.
9.3. Ld. Counsel further argued that accused with mala fide intention to mislead the court denied his signatures on the cheque in question and also the fact of issuing the same in favour of the complainant which complainant has successfully been able to prove by leading the evidence of concerned bank witnesses such as CW-2, CW-3 and CW-4. Ld. Counsel further argued that accused has taken the false ground of non-delivery of goods in order toavoid his liability anad has been unsuccessful in rebutting the presumption of law in favour of the complainant. Ld. Counsel has further argued that accused has taken false plea of defence to avoid the liability towards the complainant. Ld. Counsel further argued that the legal presumption of Section 118 and 139 of NI Act clearly arise in the favour of the complainant and accused has the reverse onus to prove otherwise and accused has failed to prove that he had not purchased the goods from the complainant or that he did not issue the cheque in question in favour of the complainant. He further argued that holder of the cheque herein i.e. complainant has the legal presumption in his favour that the cheque was issued for the consideration and the burden of proof is not on the complainant to prove the transaction but on the accused to prove otherwise. Ld. Counsel further argued that accused has failed to prove as to how did his cheque i.e. cheque in question came into possession of the complainant and his plea of the stolen cheque has also not been proved by him during the course of the trial since he himself admitted that he has not filed the complaint qua the cheque in question being stolen when he deposed before this court as DW-1.
NIDHI Digitally signed
by NIDHI BALA
Date:
BALA 2023.01.10
17:21:14 +05'30'
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9.4. Ld. Counsel for complainant further argued that the complainant has been able to prove all the ingredients of the offence under Section 138 of the NI Act against the accused and accused has not produced any cogent evidence to prove his plea of defence since burden to prove the same is on him. The Complainant has thus prayed for conviction of the accused for the offence u/s 138 of NI Act.
10. ARGUMENTS ON BEHALF OF ACCUSED:
10.1. Per contra, Ld. Counsel for the accused argued that as per the principle of criminal trial the burden of prove the transaction in question for which the alleged cheque in question was issued, is on the complainant himself and complainant has not proved the fact of delivery of goods by him to the accused as allegedly purchased by the accused from him for which the cheque in question was allegedly issued.
10.2. Ld. Counsel further argued that the GSTIN number of accused mentioned on the alleged invoice was not active at the time of transaction in question since the same was cancelled and accused has poved this fact by leading the evidence of DW-2, the official from CGST department. Hence accused was not doing any business at the relavant time of the transaction. Further the tax invoice in question Ex.CW-1/11 does not even bear the signature of the accused and also the same does not prove the delivery of goods by the complainant to accused and when the delivery of goods is not proved then the question of payment against the same does not arise. During the course of arguments, Ld. Counsel for the accused took us to the relavant provision qua the cancellation of GST number provided in the GST Act, 2017. Ld. Counsel further argued tha as per the GST Act, complainant is mandatorily required to generate the E-Way bill (Both parts i.e.Part "A" and Part "B") since the same shown the delivery of the goods being transported and he further argued that the E- Way bill filed by the complainant Ex. CW-1/12 is incomplete since it is part A only and does not prove the delivery of goods as alleged. The said arguments of Ld. Counsel for the accused have been rebutted by Ld. Counsel for the complainant by contending that generation of Part "B" of E-Way Bill is not manadatory if the delovery of goods is not for NIDHI Digitally signed by NIDHI BALA BALA 17:21:24 +05'30' Date: 2023.01.10 CC No. 29/2020 M/s. A A Traders Vs. Javed Page no. 10 of 22 out of state and in the present case the goods in question have been duly delivered by the complainant to accused through local transport i.e. rickshaw since it was within the same district. The said rebuttal of Ld. Counsel for the complainant was further rebutted by Ld. Counsel for the accused by contending that complainant has not got examined the said rickshaw puller, hence, delivery of goods is not proved.
10.3. Ld. Counsel for accused further argued that the payments made by accused in the account of complainant as shown in his bank account statement does not prove that the said payments were made against some business transaction. He further submitted that complainant used to given cash to the accused which he used to deposite in his account and then complaianant used to take cheque from the accused and the said transactions are those transactions between the omplainant and accused but not the payment qua any business transaction.
10.4. Ld. Counsel for accused further argued that the burden of proof is on the complainant to prove the delivery of goods and complainant has not been able to do dthe same through the entire evidence lead by him. Hence, accused has successfully discharged his burden to rebut the presumption of law in favour of complainant, if any raised.
11. Now, the foremost provision of law to settle the entire dispute/controversy between the parties herein is Sec. 138 of NI Act and the same is being reproduced hereinafter for the ready reference:-
"138. Dishonour of cheque for insufficiency, etc., of funds in the account.-- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a NIDHI Digitally signed by NIDHI BALA BALA Date: 2023.01.10 17:21:33 +05'30' CC No. 29/2020 M/s. A A Traders Vs. Javed Page no. 11 of 22 term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless--
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice; in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation.--For the purposes of this section, "debt of other liability" means a legally enforceable debt or other liability.
11.1. The essential ingredients in order to attract Sec. 138 of NI Act, 1881 are as following:
i) The cheque for an amount is issued by the drawer to the payee/complainant on a bank account being maintained by him.
ii) The said cheque is issued for the discharge, in whole or in part of any debt or liability.
iii) The cheque is returned by the bank unpaid on account of insufficient amount to honour the cheque or it exceeds the amount arranged to be paid from that account by an agreement made with the bank.
iv) The cheque is presented within 3 months from the date on which it is drawn or within the period of its validity.
v) within 30 days a legal demand notice is issued by the payee or the holder in due course to the drawer of the cheque on receipt of information by him from the bank regarding the dishonour of the cheque.
vi) The drawer of the said cheque fails to make payment of the said amount of NIDHI Digitally signed by NIDHI BALA Date: BALA 2023.01.10 17:21:44 +05'30' CC No. 29/2020 M/s. A A Traders Vs. Javed Page no. 12 of 22 the money as demanded in the legal demand notice to the payee or the holder in due course within 15 days of the reciept of said notice.
vii) The debt or other liability against which the cheque was issued is legally enforceable.
12. Now, coming to the facts of the present complaint case keeping in view the essential ingredients of section 138 of NI Act.
12.1. In this case, the essential ingredient (i) and (iii) as discussed in the preceding paragraph has been proved by the complainant by leading evidence of bank witnesses CW- 2, CW-3 and CW-4 and the testimony of the said witnesses remained unrebutted during the cross-examination done on behalf of the accused. Further DW-1 i.e. accused himself did not deny his signatures on the cheque in question and said that he has doubt and he failed to prove that the cheque in question does not bear his signatures. Further Ld. Counsel for the accused has tried to deny the signatures on the ground that the signatures are in hindi and can easily be forged by anyone. However, the said contention of Ld. Counsel for the accused is devoid of any merits since the signatures of the accused are duly brought on record by the bank witnesses examined on behalf of the complainant and the same can be compared by the bare eyes with the admitted signature of accused. Further accused has not questioned the records produced by the bank witnesses qua the signatures of the accused. Further accused did not take any legal action if his signatures are forged. Further the cheque in question has been returned unpaid by the concerned bank for the reason "Funds Insufficient" and not for the reason "Signatures differ". Hon'ble Supreme Court of India in the case of NEPC Micon Ltd. v. Magma Leasing Ltd. AIR 1999 SC 1952, duly observed in paragraph 15 thus:
"In view of the aforesaid discussion we are of the opinion that even though Section 138 is a penal statute, it is the duty of the court to interpret it consistent with the legislative intent and purpose so as to suppress the mischief and advance the remedy. As stated above, Section 138 of the Act has created a contractual breach as an offence and the legislative purpose is to promote efficacy of banking and of ensuring that in commercial or Digitally signed by NIDHI BALA NIDHI BALA Date: 2023.01.10 17:21:54 +05'30' CC No. 29/2020 M/s. A A Traders Vs. Javed Page no. 13 of 22 contractual transactions cheques are not dishonoured and credibility in transacting business through cheques is maintained. The above interpretation would be in accordance with the principle of interpretation quoted above 'brush away the cobweb varnish, and shew the transactions in their true light' (Wilmot C.J.,) or (by Maxwell) 'to carry out effectually the object of a statute, it must be so construed as to defeat all attempts to do, or avoid doing, to an indirect or circuitous manner that which it has prohibited'. Hence, when the cheque is returned by a bank with an endorsement' account closed', it would amount to returning the cheque unpaid because 'the amount of money standing to the credit of that account is insufficient to honour the cheque' as envisaged in Section 138 of the Act."
Further in the case of M/S. Investor Plaza vs Vijay Sachdeva & Ors. 2010 SCC OnLine Del 4097 , Hon'ble High court of Delhi duly observed as under:-
"8. Section 138 of the Negotiable Instruments Act was incorporated with a specific object of enacting a special provision to impose a strict liability so far as the negotiable instruments are concerned. The law relating to negotiable instruments is the law of commercial world legislated to facilitate the activities in trade and commerce making provision of giving sanctity to the instruments of credit which could be deemed to be convertible into money and easily passable from one person to another. In the absence of such instruments, the trade and commerce activities in the present day world are likely to be adversely affected as it is impracticable for the trading community to carry on with the bulk of the currency in force.
12. Coming to the facts of the case at hand, the complaint under Section 138 of the Negotiable Instruments Act was filed by the appellant mainly on the allegation that the respondent had issued a cheque bearing No. 503386 in favour of the appellant and the said cheque on presentation by the appellant was returned by the drawee bank with the reasons "insufficient funds" and "signature differs". The appellant served a legal notice dated 31.7.2001 upon the respondent but despite receipt of the said legal notice, the respondent did not come forward to make payment of the said dishonoured cheque within the stipulated period. The appellant examined three witnesses in support of his complaint case, i.e., PW-1, proprietor of the appellant firm, while PW-2 and PW-3 were the bank witnesses. On the other hand, the respondent examined only one witness in his defense i.e. DW-1 Shri Rakesh Kumar Jain, clerk of Punjab National Bank. The appellant in his evidence duly proved its statement of account as Ex.PW2/A and the bank memo as Ex. PW2/C. Statement of account of the respondent was also proved on record as Ex.DW1/A to DW1/D. The respondent in his statement recorded under Section 313, Code of Criminal Procedure took a stand that the cheque in question had been lost and his wife had sent a request to the bank regarding missing of the said cheque. The learned trial court after taking into consideration the evidence produced on record by both the parties came to the conclusion that the ground of "insufficient funds' on the bank memo was added subsequently by the appellant while the main ground for return of the cheque was difference of signatures. The court thus took the position that Section 138 of the Negotiable Instruments Act will not be attracted in a case where the cheque was returned on account of difference in signatures."
NIDHI Digitally signed by NIDHI BALA BALA 17:22:04 +05'30' Date: 2023.01.10 CC No. 29/2020 M/s. A A Traders Vs. Javed Page no. 14 of 22 Further in Santosh Kumar Gupta Versus State & Anr., 2011 SCC OnLine Del 3953, Hon'ble High Court of Delhi observed as under:-
"As observed by the apex court in the case of NEPC Micon Ltd. v. Magma Leasing Ltd. (1999) 96 Comp Cas 822; AIR 1999 SC 1952, cited supra, it is the duty of the court to interpret Section 138 of the Negotiable Instruments Act consistent with the legislative intent and purpose, so as to suppress the mischief and advance the remedy. Section 138 of the Negotiable Instruments Act has created "contractual breach" as an offence and the legislative purpose is to promote efficacy of banking and for ensuring that in commercial or contractual transaction, cheques are not dishonoured and credibility in transacting business through cheques is maintained. It is no doubt true that Section 138 of the Negotiable Instruments Act, if read plainly, would disclose that the drawer of the cheque would be responsible to be proceeded with for the offence under Section 138 of the Negotiable Instruments Act if the cheque is returned with an endorsement of "insufficient funds" or the amount involved in the cheque exceeds the amount arranged to be paid from that account by an agreement made with that bank. To overcome the said provision in a circuitous way, the drawer of the cheque may find various ways of getting the cheques bounced or returned with the sole purpose of defeating the encashment of the cheques. In such a situation, the question is as to whether the courts can shut their eyes? The answer would be obviously in the "negative". If the drawer intentionally tempers with the cheque or issues the cheque with difference in signature, etc., the cheques will be definitely returned. Even after service of statutory notice, if the amounts involved in the cheque are not paid by the drawer of the cheque, then his intentions are prima facie clear, to the effect that he would be tampering with the cheques only with an oblique motive. If in such case, the person in whose favor the cheques are issued is not allowed to prosecute the matter under Section 138 of the Negotiable Instruments Act, the very purpose of enacting Section 138 of the Negotiable Instruments Act would be frustrated. The drawer of the cheque will have to take abundant precaution while issuing the cheques so that the cheques should be honoured and contractual obligations are fulfilled. In case, the drawer issues cheques as in the case on hand, he will be doing so in a circuitous manner in order to save his skin, only to take advantage of the absence of specific words under Section 138 of the Negotiable Instruments Act.
Even when the cheque is dishonoured by the reason of "alteration in date and drawer's signature differs", the court has to presume by virtue of Section 139 of the Negotiable Instruments Act that the cheques are received by the holder for the discharge, in whole or in part, of any debt or liability. Of course, this is a rebutable presumption. The accused alone can show to the court that the alteration in signature and date were not made becaue of insufficiency or paucity of funds."
NIDHI Digitally signed
by NIDHI BALA
BALA
Date: 2023.01.10
17:22:15 +05'30'
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12.2. Ingredient (iv) also stands fulfilled since the cheque in question is presented within the stipulated period of time.
12.3. And w.r.t essential ingredients (v) and (vi), it is not in dispute that the address of accused provided by Complainant in records on which he had sent the legal demand notice, is correct and keeping in view Sec.27 of the General clauses Act,1897 as well as settled law in this regard in the case of C.C Alavi Haji Versus Palapetty Mudh. & Anr 2007 6 SCC 555 wherein it was categorically held that Section 27 of General Clauses Act gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. Similar view has been taken the Hon'ble Supreme Court in Subodh S. Salaskar Versus Jay Praksh M.Shah & Anr.(2008) 13 SCC 689. And in the case in hand, accused has failed to prove otherwise and vaguely denied the fact of receiving the legal demand notice sent to him by Complainant and Complainant has relied upon the computer generated tracking report for the speed post whcih shows the delivery to accused. Therefore the essential ingredients (v) and (vi) also stand proved.
13. Now coming to the last and the remaining core ingredients (ii) and (vii) of Section 138 of NI Act as discussed in preceding Para 11.1 and the real issue of controversy herein i.e. whether the cheque in question was issued in discharge of any debt or liability, whole or in part and whether the same is a legally enforceable debt. Now in the present case the main leg of arguments of Ld. Counsel for the accused is that the burden of proof qua the delivery of goods allegedly purchased by the accused from the complainant regarding which the cheque in question is allegedly issued, is on the complainant and complainant has failed to prove the same. Now, all the arguments of Ld. Counself or the accused revolves around the fact of purchasing alleged goods by the accused from the complainant and its delivery to him, however, the said contentions raised by him are already settled by the Hon'ble Apex Court as well as different Hon'ble High Courts including the Hon'ble High Court of Delhi NIDHI Digitally signed by NIDHI BALA BALA Date: 2023.01.10 17:22:27 +05'30' CC No. 29/2020 M/s. A A Traders Vs. Javed Page no. 16 of 22 in the catena of judgements that the holder of the cheque has the presumption of law in his favour as per Section 118 of the NI, Act and Section 139 of the NI Act is also germane to this and according to Section 139 of Negotiable Instruments Act, which mandates that unless the contrary is proved, it is to be presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability. In the case in hand presumption of section 139 of NI Act arises in favour of the complainant which is being reproduced hereinafter for ready reference:-
139. Presumption in favour of holder.- It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt, or other liability.
It is explicit in the said provision that the said presumption shall remain untill contrary is proved. In K. Bhaskaran vs Sankaran Vaidhyan Balan And Anr, (1999) 7 SCC 510, the Hon'ble Supreme Court held as hereunder:
"9. As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the court to presume that the holder of the cheque received it for discharge of any debt or liability. The burden was on the accused to rebut the aforesaid presumption..."
Further in Rangappa v. Sri Mohan, (2010) 11 SCC 441, the Hon'ble Supreme Court has held that the presumptions under Sections 118(a) and 139 of the NI Act are rebuttable in nature and for rebuttal of the same accused need not even step into the witness box as he can rebut the same by placing reliance on the material brought on record by the complainant. It is also a well settled legal position that the presumptions can be rebutted even by raising presumptions of fact and law on the basis of material available on record. It is further well settled that the standard required from the accused to prove his defence is preponderance of probabilities and accused need not prove his defence beyond reasonable doubts. Again in NIDHI Digitally signed by NIDHI BALA BALA Date: 2023.01.10 17:22:39 +05'30' CC No. 29/2020 M/s. A A Traders Vs. Javed Page no. 17 of 22 Basalingappa vs Mudibasappa (2019) 5 SCC 418, the Hon'ble Supreme Court categoracally held as under:-
"10. The complainant being holder of cheque and the signature on the cheque having not been denied by the accused, presumption shall be drawn that cheque was issued for the discharge of any debt or other liability. The presumption under Section 139 is a rebuttable presumption. Before we refer to judgments of this Court considering Section 118 and 139, it is relevant to notice the general principles pertaining to burden of proof on an accused especially in a case where some statutory presumption regarding guilt of the accused has to be drawn."
13.1. Needless to mention herein that the presumption contemplated under Section 139 of the Negotiable Instruments Act, is a rebuttable presumption. However, the onus of proving that the cheque was not in discharge of any debt or other liability is on the accused drawer of the cheque. In the present case initial presumptions in terms of Section 118 (a) and 139 of the NI Act duly arise not only regarding existence of legally enforceable liability in favour of the complainant but also regarding issuance of cheque in question by the accused in favour of complainant in discharge of his aforesaid liability. Now, whether or not the accused has been able to rebut the said presumption is a question of fact which needs to be decided after appreciation of entire evidence led on behalf of both the parties in the light of guiding principles laid down by the Hon'ble Supreme Court as mentioned herein above and depends upon the facts and circumstances of each case.
13.2. The primary issue in the case in hand is to determine whether the accused has succeeded in discharging his burden, that whether he has successfully raised a probable defence in order to create a reasonable doubt in the case of complainant to discard the presumption of law in favour of complainant.
13.3. The accused has chosen to examine himself as a witness/DW-1 and also examined one more witness DW-2 i.e. official from CGST Department to prove that he could not enter NIDHI Digitally signed by NIDHI BALA BALA Date: 2023.01.10 17:22:50 +05'30' CC No. 29/2020 M/s. A A Traders Vs. Javed Page no. 18 of 22 into the business transaction in question since his GSTIN was already cancelled. The main defence of accused has revolved around this fact that his GSTIN was already cancelled and he could not enter into the alleged business transaction. However, this court is not convinced by the said leg of arguments/contentions raised on behalf of the accused since it can not be presumed that a person is not doing any business if his GSTIN is cancelled by the concerned authority. Further it has been brought on record in the evidence of DW-2 himself that accused has filed his GST Return again despite the cancellation of his GSTIN and the bill/invoice in question is duly reflected in the same with all other business transactions with the complainant. So the said contention of Ld. Counsel for the accused is not tenable. Another leg of argument by Ld. Counsel for the accused is that burden to prove the delivery of goods is on the complainant. However, the said contention of Ld. Counself or the accused is also devoid of merits since complainant has the presumptio of law Under Section 139 of the NI Act being the hlder of the cheque in question and it is the accused who has the reverse onus on him to discharge as to how did his cheque came into the possession of complainant if he did not issue the same and accused has miserable failed to prove the same. Accused has taken the plea of cheque in question being a stolen cheque but admittedly he has filed any complaint qua the same even till date and no action was taken by him against the complainant if he has the knowledge that complainant has stolen his cheque and misused the same. Therefore the said plea of defence may also not be taken into consideration.
13.4. It is duly observed by this court during the trial that since beginning accused has tried to mislead the court on one plea or the other since initially he completely refused to have any business transaction with the complainant and when complainant lead the evidence in this regard and duly proved the same then accused took another plea of defence by saying that complainant used to give cash to him and used to take cheque of his account. However, the said plea of accused is far beyond to be accepted since no prudent man shall ever do the same and even if it was the case or situation then accused could bring this fact earlier also at the time of recording his plea of defence while framing notice. Accused has further tried to NIDHI Digitally signed by NIDHI BALA Date:
BALA 2023.01.10
17:23:02 +05'30'
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distract the court by submitting that he has doubt if the cheque in question bears his signature or not which is again implausible since how can a person be doubtful about his own signatures, it may either be "his signatures" or not "his signatures". All the contentions raised on behalf of the accused qua the delivery of goods, having business transaction between the parties etc. Re good enough for a civil dispute between the parties qua payment but the provisionof Section 138 NI Act is a special provision of law which has been enacted with a specific object to achive and the said observation has been made by the Hon'ble Apex Court in catena of judgements and for the very purpose of achieving the specific object of said object several time the proceeduer of law has been diluted and specific provisions have been enacted in order to shorten the trial unlike the trial of a civil dispute qua the payment between the parties in business transactions between them. Accused has tried to contest the present case as a normal criminal trial in which the burden of proof remains on the prosecution to prove the guilt of accused beyond all reasonable doubts but it is not so since present case is related to Section 138 of NI Act which is a special statute and complainant enjoys certain presumptions in his favour.
13.5. In the present case the accused has miserably failed to explain as to how did his cheque in question came into the possession of complainant and why did he not take any action when he knew that the same has been stolen by the complainant.
13.6. Again, the accused is only supposed to discharge his onus not beyound the reasonable doubt but on the principle of preponderance of probabilities which is again a settled position of law and it has been reitereted again and again through the precedents that the said appreciation depends upon the facts and circumstance of each and every case and no air tight formula can be adopted in order to ascertain as to whether accused has been successful in dislodging the tesitomy of complainant before the court.
13.7. On the aspects of preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead the court to conclude either that the NIDHI Digitally signed by NIDHI BALA Date:
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17:23:14 +05'30'
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consideration did not exist or that its nonexistence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. The Hon'ble Supreme Court in Rohitbhai Jivanlal Patel vs State of Gujarat and Another 2019) 18 SCC 106 and in various other rulings have time and again, emphasized that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the requirements of rebuttal as envisaged under section 118 and 139 of the NI Act. Further, it has been held in Rajesh Agarwal v. State, 2010 SCC online Del 2501 that:-
"9. .....There is no presumption that even if an accused fails to bring out his defence, he is still to be considered innocent. If an accused has a defence against dishonour of the cheque in question, it is he alone who knows the defence and responsibility of spelling out this defence to the court and then proving this defences is on the accused....."
However, in the present case accused has merely denied the liability and failed to prove the same either by rebutting the testimony of complainant through his cross examination which led this court to believe that the non-exixtence of the consideration for which cheque in question is allegedly issued to complaiannat by accused, is so probable that any prudent man would consider the same in the facts and circumstances similar to the case in hand or by leading any cogent and believable evidence.
14. In the present case in hand, keeping in view the facts and circumstances of the present case and the settled position of law in this regard, the presumption of law as per section 118(a) and section 139 of NI Act clearly come to the rescue of complainant and his burden of proving the fact of issuance of cheque in question in discharge of legally enforceable debt stands discharged and the accused has miserably failed to dischrge his reverse onus. In the light of the foregoing discussions, this court is of the opinion that the accused has not led any cogent evidence to rebut presumptions under Sec. 118 and 139 of NI Act. There is nothing coming out during the trial which would probablise the defence raised by the accused or falsify the case of the complainant.
NIDHI Digitally signed by NIDHI BALA BALA 17:23:26 +05'30' Date: 2023.01.10 CC No. 29/2020 M/s. A A Traders Vs. Javed Page no. 21 of 22
15. In the above view, the complainant has proved that the accused had issued the cheque in question in his favour for discharge of the legally enforceable liability. This Court has considered opinion that in the facts and circumstances of the present case, the complainant has proved his case against the accused for the offence under Sec. 138 Negotiable Instruments Act. Resultantly, the accused is, thus, held guilty and stands convicted for the said offence.
NIDHI Digitally signed
by NIDHI BALA
BALA
Date: 2023.01.10
17:23:41 +05'30'
Announced in Open Court (NIDHI BALA)
today on 10.01.2023 MM (NI Act) Digital Court,
NORTH EAST,KARKARDOOMA
Certified that this judgment contains 22 pages and each page bears my signatures.
NIDHI Digitally signed
by NIDHI BALA
BALA Date: 2023.01.10
17:23:53 +05'30'
(NIDHI BALA)
MM (NI Act) Digital Court,
NORTH EAST,KARKARDOOMA/10.01.2023
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