Delhi District Court
• J.N Bhatia And Ors. vs . State And Ors., Manu/De/9961/2006. on 6 August, 2022
IN THE COURT OF METROPOLITAN MAGISTRATE (CENTRAL)
NI ACT-04, CENTRAL DISTRICT, TIS HAZARI COURT, DELHI.
Presided over by: - Mr. Robinjeet Singh
CC No. 513428/16
Unique case ID No. DLCT020012362015
In the matter of:-
Amar Steel Syndicate
Z-24, Loha Mandi Naraina,
New Delhi-110028
through its partners
1. Rajesh Kumar Aggarwal
2. Dinesh Kumar Aggarwall
Partner no.2
Both Office at:
Amar Steel Syndicate
Iron & Steel Merchants,
Z-24, Loha Mandi, Naraina,
New Delhi-110028 ......Complainant
Versus
1. M/s Shree Conveyor System (P) Ltd.
Plot No. 64, Sector-16, HSIDC
Bahadurgarh-124507, Dist. Jhajjar,
Haryana.
Through its Managing Director/Director
CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 1 of17
Mr. Vijay Shanker Madan
Also at:-
911-914, Vishal Tower,
District Centre, Janakpuri,
New Delhi-110058
Also at:-
775-776 MIE,
Bhadurgarh 124507,
District Jhajjar, Haryana.
Also at:-
364-365, HSIDC,
Sector 43, Bahadurgarh 124507,
District Jhajjar, Haryana.
2. Mrs. Madan Renu
3. Mr. Vijay Shanker Madan,
Both at:- 131, Ambika Vihar
Paschim Vihar
Delhi 110087
4. Ms. Pooja Aggarwal
(Secretary M/s. Shree Conveyor systems (P) Ltd.)
At:- 11002/4, Dooriwalan, East Park Road,
Karol Bagh, New Delhi-110005 ....... Accused persons
Date of Institution : 04.02.2015
Offence complained of : Section 138 Negotiable
or proved Instrument Act, 1881
Plea of Accused : Not guilty
Date of Filing : 02.02.2015
CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 2 of17
Date of Decision : 06.08.2022
Final Order : Acquitted
Argued by:- : Mr. Girish Gaur, Ld. Counsel for
complainant.
: Dr. Anurag Kumar Arora and Mr. Ram
Gupta, Ld. counsels for accused persons.
JUDGMENT
BRIEF STATEMENT OF REASONS FOR THE DECISION: -
FACTUAL MATRIX-
1. Shorn off the unnecessary details, the core facts of the case of the complainant which need recital are as follows:-
Complainant is a registered partnership concern consisiting of Sh. Rajesh Aggarwal and Sh. Dinesh Aggarwal as its partners. Complainant concern is in the business of import and trading of metallic scrap and other serviceable material. Accused no. 1 is a limited company engaged in manufacturing of Project Engineering. Accused no. 2 is the Managing Director, accused no. 3 is the Director and accused no. 4 is Secretary of accused no.
1. From the year 2010-2013, accused approached the complainant for purchase of steel tubes, CR sheets, MS Bar and other raw materials of various sizes and specifications. Pursuant to the several orders placed by accused, complainant supplied the said material from time to time vide invoices pertaining to the said purchase CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 3 of17 from the year 2010 to 2013. The goods were supplied to the accused company with the clear understanding that the payment of the outstanding amount would be made immediately on the receipt of the goods. In discharge of his legal liability, accused no. 1 issued the cheques drawn on Oriental Bank of Commerce-12, Nani Wala Bagh, Express Tower, Azad Pur, Delhi which are as follows;-
S.No. Cheque no. Dated Drawn on Amount
1. 121007 30.06.2013 Oriental Bank 7,50,000/-
of Commerce
2. 121009 30.06.2013 Oriental Bank 7,50,000/-
of Commerce
3. 121010 30.06.2013 Oriental Bank 7,50,000/-
of Commerce
4. 121008 30.06.2013 Oriental Bank 7,50,000/-
of Commerce
5. 121011 30.06.2013 Oriental Bank 7,50,000/-
of Commerce
6. 121006 30.06.2013 Oriental Bank 7,50,000/-
of Commerce
7. 121141 30.06.2013 Oriental Bank 6,00,000/-
of Commerce
8. 121012 30.06.2013 Oriental Bank 4,00,000/-
of Commerce
9. 121221 30.06.2013 Oriental Bank 18,08,200/-
of Commerce
CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 4 of17 All the abovementioned cheques are cheques in question. At request of the accused company, the said cheques were presented but the cheques mentioned at serial nos. 1 to 8 were returned unpaid with the remarks "payment stopped by drawer" vide respective memos dated 19.09.2013 and cheque mentioned at serial no. 9 was also returned back with the same remarks vide memo dated 03.12.2013.
Thereafter, a legal demand notice dated 10.10.2013 was served upon the accused but despite that he failed to pay the amount within the statutory period. Consequently, the instant complaint was instituted.
2. At the outset, it is pertinent to note that vide order dated 08.04.2005, accused no. 4 was dropped from the array of parties.
3. Notice of accusation under Section 251, Code of Criminal Procedure, 1973 (hereinafter referred to as "CrPC") was served upon accused no. 3 on his behalf and on behalf of accused no. 1 to which he pleaded not guilty and claimed trial. In his plea of defence he stated that cheques in question bear his signatures. He further stated that no goods had been supplied by the complainant to accused no. 1 company and all the invoices relied upon by the complainant are fake and fictitious. Eight cheques in question were issued by accused no. 1 as a security for delivering of the material which was not delivered by the complainant company. He further stated that there is no liability of accused no. 1 towards the complainant company.
Similarly, a notice under Section 251 Cr.P.C. was served upon accused no. 2 to which she also pleaded not guilty and claimed trial. In her plea of defence she stated that she was not involved in the affairs of the company as she is a housewife. Further, she stated that she did not look after the business of the company and is not the signatory of the cheques in CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 5 of17 question. Further, she stated that she has never dealt with the complainant at any point of time and had neither issued nor received any documents/correspondence in relation to transaction in question. She further stated that she has not ever received any notice under Section 138 of NI Act. Further, she stated that no one from the complainant company had ever approached her nor she approached any person belonging to the complainant. Further, she stated that she did not give any assurance to anyone belonging to the complainant as alleged in the complaint in question.
4. In order to substantiate his claim, Sh. Anil Kumar got examined himself as CW-1 and tendered his evidence by way of affidavit, Ex. CW- 1/11. He relied upon the following documents:-
(i) Ex. CW1/1 is copy of registration certificate of the complainant.
(ii) Ex. CW1/2 is Special Power of Attorney.
(iii) Ex. CW1/3 is account ledger of complainant from 2010- 31.03.2013.
(iv) Ex. CW1/4 (colly) are invoices from the year 2010-2013.
(v) Ex. CW1/5 (colly) are cheques in question.
(vi) Ex. CW1/6 (colly) are bank return memos.
(vii) Ex. CW1/7 is legal demand notice dated 10.10.2013.
(viii) Ex. CW1/8 & Ex. CW1/9 are postal receipts.
(ix) Ex. CW1/10 are tracking reports.
CW1 was cross-examined at length by Ld. Counsel for the accused.
5. Statement of the accused person under Section 313 Cr.P.C. read with Section 281 Cr.P.C. was recorded. Accused no. 3 on his behalf and on behalf of accused no. 1 company, after understanding the incriminating circumstances appearing in the complainant's evidence, stated that he approached the complainant in the year 2010 for purchasing the material as CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 6 of17 alleged in the complaint. Further, he stated that the cheques in question belong to his company and the same bears his signatures, however, he did no fill the other particulars in the cheques in question. Further, he stated that he does not know as to how the said cheques came in the possession of the complainant. There were 12 cheques out of which complainant fraudulently got cleared three cheques amounting to Rs. 26 Lakhs approximately in an account specially opened in Oriental Bank of Commerce, Bahadurgarh, now PNB. Further, he stated that his company has stopped the payment of said cheques as the same were never issued to the complainant. He further stated that one of his staff member was in collusion with the complainant and he helped the complainant to obtain these cheques. Further, he stated that the said cheques were blank signed and they were misused as the said cheques were used to be kept in his office. Further, he stated that the ledger filed by the complainant is fabricated and that he has been falsely implicated in the present case. Further, he expressed his willingness to led defence evidence.
Accused no. 2 in her statement u/s 313 read with 281 Cr.P.C stated that she has not issued any cheque in question to the complainant and her husband used to look after the affairs of accused no. 1 company. Further, she stated that she does not owe any liability towards the complainant and has been falsely implicated. She also expressed her willingness to led defence evidence.
6. It is pertinent to note that on 27.04.2022, in view of the submission made by Ld. Counsel for the accused, that accused do not want to led defence evidence, DE was closed and the matter was listed for hearing final arguments.
7. Arguments heard at length from both the sides. Ld. Counsel for the accused has relied upon certain precedents which are as follows:-
CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 7 of17 • J.N Bhatia and Ors. Vs. State and Ors., MANU/DE/9961/2006.
• N.K. Wahi Vs. Shekhar Singh and Ors., 2007 SCC OnLine Sc 347.
• Anita Malhotra Vs. apparel Export Promotion Council and Anr., 2011 SCC OnLine SC 1454.
• Raj Kumar Singh alias Raju alias Batya Vs. State of Rajasthan, 2013 SCC OnLine SC 435.
• Anvar P.V. Vs. P.K. Basheer and Ors., (2014) 10 Supreme Court Cases 473.
I have meticulously gone through the above mentioned authorities and carefully perused the record.
8. At the outset, it worths a mention that to bring home the guilt of the accused, the complainant has to prove beyond reasonable doubt elements of Section 138 Negotiable Instrument Act by crossing the following legal benchmarks:-
a.) The cheque was drawn by accused/drawer on account maintained by him with the banker for payment of any amount of money out of that account to the complainant.
b.) The said payment was made for discharge of his legally and enforceable debt or other liability, in whole or in part.
c.) The said cheque was returned unpaid by the bank.
d.) The cheque was presented before the bank within a period of three months from the date on which it was drawn or within a period of its validity, whenever is earlier.
e.) The payee or the holder in due course of the cheque as the case may be made a demand for the payment of said amount of CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 8 of17 money by giving the notice in writing to the drawer of the cheque within 30 days of receipt of information by him from the bank regarding the return of the cheque as unpaid.
f.) The drawer of the cheques 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 cheque within 15 days of the receipt of the said notice.
Further, a combined reading of Section 118, 139 & 146 of NI Act, provide a bunch of presumption in favour of complainant, which are as follows:-
(i) The cheque was drawn/transferred/accepted for consideration.
(ii) Holder of the cheque has lawfully received the cheque, meaning thereby that the holder was in lawful possession of the cheque.
(iii) The cheque was given in the discharge of any debt or liability.
(iv) Legally enforceable debt or liability was in existence at the time of issuance of the cheque; (contrary view has been overruled by the three judges bench of Hon'ble Supreme Court in Rangappa v.
S.Mohan decided on 07.05.2010).
(v) The cheque was of the nature as described in Section 138;
(vi) The cheque was drawn by the person who was maintaining the account pertaining to the cheque;
(vii) Amount of money mentioned in the cheque was intended to be given;
(viii) The cheque has been dishonoured for the reason mentioned in the memo.
9. After analysis of the material on record it is undisputed position that CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 9 of17 the cheques in question i.e. Ex.CW1/5 (colly) belong to the complainant and bear the signatures of accused no. 3. Further, from the unrebutted testimony of CW1 qua presentation and dishonour of the cheque in question and unimpeached dishonour memos Ex.CW1/6 (colly), the factum of presentment of the cheque within its period of validity and the factum of its dishonour stands established. Further, perusal of the record reveals that accused has admitted receiving of the legal demand notice Ex. CW1/7 from the complainant. Thus, it is manifest that the complainant has complied all the mandatory requirements of Section 138 and Section 142 of NI Act. Since, in the present case complainant has successfully established that the cheques in dispute were issued by the accused no. 3 and the same got dishonoured and thereafter accused despite the service of the statutory notice accused failed to make the payment, a presumption under Section 139 NI Act is drawn in favour of complainant to the effect that the cheques in dispute were issued by the accused for a legally enforceable debt.
10. At this stage it is important to highlight the ratio of the decision by the Hon'ble Apex Court in the case titled as Rangapa vs. Sri Mohan, AIR 2010 SC 1898. In para 14 of the judgement the Hon'ble Supreme Court has observed as herein below:-
"In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 10 of17 specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of cheque is largely in the nature of a civil wrong whose impact is usuallly confined to the private parties involved in a commercial transaction. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 11 of17 Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which create doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant and it is conceivable that in some cases the accused may not adduce evidence of his/her own."
11. Keeping in view the above legal discussion, now the moot question before the court is whether accused has been able to successfully rebut the mandatory presumption of law either by bringing on record any positive evidence or by creating doubt in the veracity of the material brought forth by the complainant. This court has meticulously analysed the oral and documentary evidence as adduced on behalf of the parties in the light of the legal benchmarks as discussed. In the instant case this court is of the opinion that accused has successfully rebutted the mandatory presumption of law by punching holes in the case of the complainant and had made its version doubtful. This opinion of the court is based upon the following observations:-
The whole case of the complainant is based on the premise that pursuant to the order(s) placed by the accused, complainant supplied the materials of various size and specification as prescribed by accused in its order and raised the invoices in lieu of which accused issued the cheques in question which on their presentation were dishonoured. In order to prove the alleged transactions complainant as CW1 has brought on record his ledger account from 2010 to 2013 and invoices pertaining to the same duration CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 12 of17 which are on record as Ex. CW-1/3 (colly) and CW-1/4 (colly) respectively. It is a trite law that contents of a document must be proved either by the production of document which is called primary evidence or by adducing secondary evidence as per Indian Evidence Act. In case of disputed documents, the first step is to produce the original or primary direct evidence and then leading the evidence of the person who is either the author of the document or has been a party to its formation or by leading secondary evidence of the same in accordance with section 63 and 65 of the Indian Evidence Act. A meticulous perusal of record reveals that CW-1 has brought forth the copies of the invoices and not the original which would be admissible as secondary evidence if any of the circumstances as enumerated u/s 65 of the Indian Evidence Act stands established. However, complainant has failed to prove any of the condition precedent as enumerated under section 65 and thus the secondary evidence of the contents of the document is not directly admissible. Further, it is pertinent to note that it is a settled law that any documentary evidence by way of an electronic record under the Evidence Act, in view of sections 59 and 65A, can be proved only in accordance with the procedure prescribed u/s 65 B. Production of a certificate u/s65B(4) is mandatory for the admissibility of electronic records contained in computer outputs. Further, it is important that such a certificate must accompany the electronic record, pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. Undeniably, in the instant case no such certificate has been produced by the complainant at the time copy of the ledger account of the complainant, Ex. CW-1/3 (Colly) was produced in evidence. At the time of advancing the final arguments, Ld. counsel for the complainant simply filed that certificate which cannot be considered at such a belated stage, in view of the legal benchmark as discussed. Thus, complainant has failed to prove Ex. CW-1/3 CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 13 of17 ( Colly) and Ex. CW-1/4 (Colly), in the manner laid down under the Indian Evidence Act.
It is the case of the complainant that on the basis of purchase order placed by the accused, material was supplied by the complainant as per the specifications with clear understanding that payment of the outstanding amount would be made immediately on the receipt of the goods and after receiving the goods accused issued the cheques in question for discharging his payment liability. However, a bare perusal of the matter on record reveals that no such purchase order has been adduced by the complainant and in his cross-examination complainant as CW1 admitted that he has not filed on record any such purchase order. Further, in his cross-examination CW1 stated that initially accused company issued few purchase orders but, later on orders were placed telephonically. However, on further being asked he deposed that he does not remember as to how many and for how much amount the purchase order placed by the accused telephonically. Further, a careful perusal of the record shows that no iota of evidence has been brought on record to prove the alleged delivery of goods by the complainant to the accused. Complainant has not bothered to disclose even the date, place or the person to whom the alleged delivery of the goods have been done either in the complaint or any other doucments filed on behalf of its complainant. Admittedly, no delivery challan/lorry receipts or truck receipts in respect of the goods mentioned in the invoices have been placed on record and no acknowledgement is there on the said invoices by the accused. It is trite that normal prudent business conduct of acknowledging delivery of goods should be followed and mere raising of a bill and reflecting the same in statement of account is not a good evidence of delivery of goods. Further, it is beyond the prudence of a reasonable person to believe that the invoices CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 14 of17 raised by one party with respect to goods against the other, without proof of placing of order of alleged goods and actual delivery of those goods will create any liability on the party against whom the said inovices have been raised. Thus, mere raising of invoices do not in itself create any liability upon the accused.
The instant complaint has been instituted against accused no. 1 company and the other accused being its Managing Director and Director and Secretary. It is a settled proposition of law that there must be speicific allegation in the complaint against the alleged directors as to the part played by them in the transaction. There should be clear and unambiguous allegation as to how the directors are in-charge and responsible for the business and conduct of the company. Mere bald allegations that a particular person or a director was responsible for the conduct of the business of the company would not be sufficient. That would be production of the language of 141(1) NI Act and would be without any consequence. A meticulous perusal of the complaint reveals that no specific averment is there regarding the role of accused no. 2 to 4 being incharge of and responsible for the conduct of the business. Complainant has only mentioned the designation of the accused person without there being a clear and unambiguous allegation as to how the directors etc. were in-charge and responsible for day to day conduct of the business. Thus, without any elaboration and description of the role of such person in respect of working in the company, mere reproducing the language of the statute is not enough.
It is undeniably evident from the matter on record that there are contradictions and discrepancies in the stand taken by the accused in his application under 145(2) NI Act, reply to the notice served upon him u/s 251 Cr.P.C and suggestions put forth by Ld. Counsel of accused during the cross-
CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 15 of17 examination of CW-1 on one hand and the stand taken by accused in his statement under U/s 313 Cr.PC. read with section 281 Cr.P.C., on the other hand. However, it is pertinent to note that it is a settled law that the statement or answers given by the accused U/s 313 Cr.P.C is not a piece of substantive evidence. It can be used for appreciating evidence led by the prosecution to accept or reject it. It is, however, not a substitute for the evidence of the prosecution. It can not be use to fill up the laches on the part of the prosecution. In case prosecution evidence is not suffice to convict the accused then, inculpatory statements given by the accused cannot be taken into consideration. Thus, it is clear that if prosecution evidence does not inspire confidence to sustain the conviction of the accused, the inculpatory part of the statement of the accused cannot be the sole basis of conviction. From the discussion in preceedings paras it is manifest that complainant in the instant factual score has miserably failed to prove the placing of the alleged order by the accused, raising of the alleged invoices against the alleged order, delivery of the alleged goods and issuance of the cheques in question by the accused towards payment as alleged. In view of the observations and discussion so far it is clear that the material brought forth by the complainant is not sufficient to fasten the accused with the liability as alleged. Thus, although there are some discrepancies in the version of the defence but in the considered opinion of this court the said discrepancy is not of such a nature which will turn the tables and can form the basis for conviction.
12. Thus, it is undeniably evident that accused has remained successful in rebutting the mandatory presumption in favour of the complainant by probablising the defence that the cheques in question were not drawn in lieu of the transaction as alleged by the complainant by creating doubt in the CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 16 of17 truthfulness and verity of material brought forth by the complainant. In the case titled as Krishna Janardhana Bhat V. Dattatreya G Hegde (2008) Volume II SCC Crl. 166, it was interalia observed by Hon'ble Supreme Court that if accused is able to raise a probable defence which creats doubt about the existence of legally enforceable debt and liability, the onus shift back to the complainant. However, the evidence adduced on behalf of complainant does not seem to be sufficient enough which could have helped the complainant to discharge the burden of proof shifted upon him.
13. To recapitulate the above discussion, the accused has been successful in establishing a probable defence on the standard of preponderance of probabilities to rebut the presumption under section 118 and 139 of the NI Act by punching holes in the case of the complainant on the basis of the materials already brought on the record by the complainant. Resultantly, the complaint of the complainant is hereby dismissed and the accused are hereby acquitted of the offence under section 138 of the NI Act.
Digitally signed by ROBINJEET Announced in the open court ROBINJEET SINGH
on 06.08.2022 SINGH Date: 2022.08.06
10:48:35 +0000
(Robinjeet Singh)
MM, NI Act-04, Central District, THC
06.08.2022
Note:- This judgment contains 17 pages and each page has been signed by me.
CC No. 514553/16 Amar Steel Syndicate v. M/S Shree Conveyor System (P) Ltd. & ors. 17 of17