Delhi District Court
Decision Of The Honble Supreme Court In ... vs . K. Gopala Krishnaiah; on 14 September, 2022
IN THE COURT OF SH. P. BHARGAV RAO, M.M.01, N.I. ACT, WEST DISTRICT,
TIS HAZARI, DELHI
C.C. No.15034/16
PS Sabzi Mandi DLWT020013042011
M/s Harvindra Engineering Works
Through its proprietor
Smt. Harvindra Kaur,
R/o 25/8A First Floor, Gali no.7,
Anand Parvat Industrial Area,
Delhi110005
....Complainant
Versus
M/s Chunni Lal Mahajan & Sons
Through its proprietor/authorized signatory
Sh. Naveen Mahajan,
R/o Shop no.258, Azad Market,
Delhi110006
.....Accused
Date of institution : 14.12.2011
Offence complained of: 138 NI Act
Reserved for judgment: 30.08.2022
Date of Decision: 14.09.2022
Plea of guilt: Plead not guilty
Decision: Convicted
C.C. No. 15034/16 Dated 14.09.2022 Pages 1
JUDGMENT:
The present complaint has been filed by the complainant against the accused under section 138 Negotiable Instruments Act, 1881 (hereinafter referred as the "Act").
Complainant's Version:
1. Complainant avers that the accused is firm and Sh. Naveen Mahajan is proprietor/authorized signatory of accused firm and have been purchasing goods from the complainant from time to time at complainant's office at Delhi. The accused placed an order and purchased Iron & steel pipe from the complainant at Delhi against proper bills. The accused gave an assurance that the payment of goods supplied to them shall be made after delivery of goods immediately. The accused by their misrepresentation induced the complainant to supply goods to the accused and relying upon the representation of the accused the complainant supplied goods for a sum of Rs. 5,53,720/. The said goods were duly received by the accused and in discharge of his liability accused issued cheque bearing no.693398 amounting to Rs. 2,00,000/ dated 20.07.2011 drawn on Oriental Bank of Commerce, 8780, Roshnara Road, Subzi Mandi, Delhi110007. Consequently, the complainant presented the impugned cheque with its Banker, Bank of Baroda, Service Branch, New Delhi which got dishonoured vide return memos dated 15.10.2011 with remarks "payment stopped by drawer".
2. Thereafter, the complainant sent a legal demand notice dated 31.10.2011 on address of the accused.
3. Upon failure of the accused to make payment of the cheque in question within the stipulated time of 15 days, the complainant has filed the present complaint u/s 138 of the Act.
4. The complainant examined himself in presummoning evidence and after considering the complaint and entire documents on record, summon was issued by this Court against the accused on 11.03.2014.
C.C. No. 15034/16 Dated 14.09.2022 Pages 2 Notice against the accused:
5. Notice was framed against the accused on 04.01.2016 and the accused pleaded not guilty and claim trial.
Plea of defence of the accused:
6. The accused had taken the following plea in his defence:
"I plead not guilty and claim trial.
The blank signed cheque in question was issued to the complainant towards security for the goods to be supplied to accused and the said cheque in question was misused by the complainant. The bills filed on record are false and fabricated".
7. Thereafter, accused was permitted to crossexamine the complainant on 04.01.2016.
Complainant's evidence:
8. It is important to mention that there are three other connected matters between the same parties and similar statement u/s 251 CrP.C and u/s 313 CrP.C and same cross examination have been done in all the other matters.
9. The complainant examined himself as CW1 and her husband Sh. Pritpal Singh as CW2 reiterating the statements made in the complaint. The complainant also relied upon the following documents Ex. CW1/1 to CW1/6.
• Original cheque Ex. CW1/1 • Return Memo Ex. CW1/2• Tax invoice Ex. CW1/3 and Ex. CW1/5 • Challan slip Ex. CW1/4 and Ex. CW1/6 • Copy of legal demand notice Ex.CW1/7 • Original postal receipts Ex. CW1/8
10. Thereafter, the complainant as CW1 and CW2 was examined and duly cross examined by the Ld. Counsel of the accused. CE was closed by this Court vide order dated 25.07.2019.
C.C. No. 15034/16 Dated 14.09.2022 Pages 3 Statement of the accused
11. Statement of the accused was recorded under section 313 Code of Criminal Procedure (hereinafter referred as "Cr.P.C") on 13.08.2019 wherein all the incriminating evidences were put up before the accused.
12. Accused stated that he had given the cheque in question to the complainant which was duly signed alongwith filled amount as security cheque. He was a tent manufacture. He run a business of manufacturing of tents and he had contacted the complainant for the purchase of accessories required in the manufacturing of tents. The cheques in question was given as security against the said purchase order. The order was placed with the complainant in the month of December 2010. The material was not supplied by the complainant and the cheques have been misused by the complainant. He demanded the cheques from the complainant however he did not return the same. The cheque was presented without his knowledge. Accused further submitted that he had not received the legal notice. The first address given in the legal notice is wrong. The second address was the shop address which was left by him in the year 2012. This is a false case against him and this case has been filed to victimize him so that the complainant could extort money from him.
Defence Evidence:
13. The accused examined himself as DW1, Sh. Naveen Mahajan. He also relied upon the following documents. DE was closed by this court vide order dated 17.12.2019.
Copy of voter Id card is Ex.DW1/A. Copy of bank passbook is Ex.DW1/B. Oriental bank of commerce cheque no. 524034 dt 01.08.2011 is Ex. DW1/X. Final arguments were heard on behalf of both the parties. I have heard the both the Ld Counsels and have given my thoughtful consideration to the material appearing on record.
C.C. No. 15034/16 Dated 14.09.2022 Pages 4 The Law relating to Sec. 138 NI Act
14. Before proceeding on the merits of the case, it is considered important to lay down the basic provisions of law with respect to section 138 of the Act which are as follows:
15. Section 138 of Negotiable Instruments Act, 1881 makes dishonour of cheques an offence. The Hon'ble Supreme Court in the case of Krishna Janardhan Bhat v. Dattatraya G. Hegde AIR 2008 SC 1325 held that the procedural requirements of section 138 are:
• There is a legally enforceable debt.
• The drawer of the cheque issued the cheque to satisfy part or whole of the debt.
• The cheque so issued has been returned due to insufficiency of funds.
16. In order to establish an offence u/s 138 NI Act, following ingredients must be fulfilled by the complainant :
(i) The cheque was drawn by a person on account maintained by him for payment of money and the same is presented for payment within a period of 03 months from the date on which it is drawn or within the period of its validity;
(ii) The cheque was drawn by the drawer for discharge of any legally enforceable debt or other liability;
(iii) The cheque was returned unpaid by the bank due to either insufficiency of funds in the account to honour the cheque or that it exceeds the amount arranged to be paid from that account on an agreement made with that bank;
(iv) A demand of the said amount has been made by the payee or holder in due course of the cheque by a notice in writing given to the drawer within 30 days of the receipt of information of the dishonor of cheque from the bank;
(v) The drawer fails to make the payment of the said amount of money within fifteen days from the date of receipt of notice.
C.C. No. 15034/16 Dated 14.09.2022 Pages 5 Points for Determination:
Whether the accused in the present case was in receipt of legal demand notice?
Whether presumption under section 118(a) read with section 139 of the NI Act can be raised in favour of complainant in the present case?
If the reply to the above question is in affirmative, whether the accused successfully rebutted the presumption u/s 118(a) r/w Section 139 of the NI Act through preponderance of probabilities?
If the reply to the above question is in affirmative, whether the complainant could prove his case beyond reasonable doubt?
I shall be deciding the abovementioned points of determination separately.
(I)Whether the accused in the present case was in receipt of legal demand notice?
17. The accused during the framing of notice and statement u/s 313 CrPC stated that he has not received the legal demand notice. Ld. Counsel for the accused argues that the complainant deliberately issued legal demand notice on the wrong address and filed false affidavit that the notice was duly served to the accused. He contends that the complainant has not filed any tracking report alongwith the complaint which shows that no legal demand notice was sent to the accused. He further argues that the correct address of the accused was A7, Second Floor, Vivek Vihar, Delhi whereas the legal demand notice was sent on A7, Surya Enclave opposite Vivek Vihar, Sahibabad, Gaziabad, U. P. He relies on Ex.DW1/A, Mark A and Ex.DW1/B to prove the said fact. Further, summons issued at Azad Market was also returned back with remarks that the accused has left the premises 23 years back. No witness from postal department has been examined by the complainant. He relies upon the decision of the Honble Supreme Court in Ajeet Seeds Ltd. Vs. K. Gopala Krishnaiah; 2014 AIR (SC) 3057 wherein it was held that Section 27 of General Clause Act gives rise to a presumption that services of notice has been effected when it is sent to the correct address by registered post.
C.C. No. 15034/16 Dated 14.09.2022 Pages 6
18. Per contra, Ld. Counsel for the complainant submits that the legal demand notice was sent on the correct address of the accused. Heard.
19. Before examining the issue in hand, it would be prudent to discuss the legal position on the due service of notice sent by post. Presumption regarding successful delivery of documents sent by post (whether registered or not) can be raised by the court as per provision enshrined in section 27 of General Clauses Act r/w section 114 of Indian Evidence Act, 1861(hereinafter referred as 'Evidence Act'). In terms of Section 27 of General Clauses Act, notice must be deemed to have been served in the ordinary course subject to the fulfillment of the conditions laid down therein. Section 27 reads as under;
"Where any [Central Act] or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression "serve" or either of the expressions "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post".
20. Reference can be taken from the decision of Hon'ble Supreme Court in the case of C.C Alavi Haji vs. Palapetty Muhd. & Anr 2007 6 SCC 555 wherein the Hon'ble Court has opined 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.
21. The aforesaid principle has been reiterated by the Hon'ble Supreme Court in the case of in the case of Subodh S. Salaskar vs. Jay Prakash M. Shah & Anr (2008) 13 SCC 689 wherein the Hon'ble Court has categorically held that service of notice which is sought to be effected by speed post / registered post shall be deemed to have been served in the ordinary course within few days. Such presumption of delivery of notice can also be raised u/s 114 of Evidence Act.
C.C. No. 15034/16 Dated 14.09.2022 Pages 7
22. A similar view was taken by the Honble Supreme Court in the case of M/s Madan & Company vs. Wazir Jaivir Chand 1989 1 SCC 264. In this case, the Hon'ble Court while dealing with the question, as to whether the duty of the landlord was complete by sending of notice with reference to the presumption u/s 27 of General Clauses Act, held that once there is a proper tender of demand notice at the correct address, then there is service of demand notice in view of the said presumption.
23. After examining the legal position with respect to the service of notice by way of registered post, it would be prudent to examine the instant case in realm of the above discussed legal position. In the present case, perusal of the file shows that the legal demand notice was sent on two addressee of accused i.e. one in Gaziabad U. P. and the other at Plot no.258, Azad Market, Delhi. Accused has stated in his statement u/s 251 CrP.C that he had vacated the said address mentioned in the legal demand notice in the month of September, 2011. Accused in his statement u/s 313 CrP.C r/w Section 281 CrP.C stated that the first address given in the legal demand notice is wrong and the second address was the shop address which was left by him in the year 2012. Accused has placed reliance upon Ex. DW1/A, Ex.DW1/B and Mark A which shows that the accused was residing in Vivek Vihar, Delhi in the year 2007. However, with respect to the address at Azad Market, Delhi no document has been placed on record to show that the accused was not residing at the same address. Perusal of the record shows that on the one hand, the accused in his statement u/s 251 CrP.C stated that he had vacated the address in the month of September, 2011 however in his statement u/s 313 CrP.C, he stated that he left the shop in the year 2012 whereas in his examinationinchief dated 17.12.2019, accused deposed that he closed the shop at Azad Market in the month of August, 2011 which is a clear contradiction on the part of the accused. Thus, accused has taken three different stands concerning the said address. Further, as already mentioned no document has been adduced by the accused to prove that he was not staying at Azad Market at the relevant time.
24. As far as report of summons issued to the accused is concerned, perusal of the record shows that vide order dated 16.07.2013, summons were issued to the address at 258 Azad Market, Delhi which was received back with report intimation given to employee of the accused and he telephonically informed the accused concerning the summons. The then Ld. C.C. No. 15034/16 Dated 14.09.2022 Pages 8 Predecessor court vide order dated 12.11.2013 observed that accused is absent despite execution of the process and issued BW against the accused.
25. Therefore, in light of the above mentioned judgments of the Hon'ble Supreme Court, I am of the considered view that a presumption regarding delivery of service of notice can be raised if the notice is sent through post on correct address of the accused. Therefore a presumption can be raised about its successful delivery at shop no. 258, Azad Market, Delhi.
(II) Whether presumption under section 118 read with section 139 NI Act can be raised in the favour of complainant in the present case?
26. The Ld. Counsel for accused argues that no presumption can be raised against the accused in the absence of existence of facts which have to be present before the presumption can be drawn. He relies upon the decision of the Hon'ble Supreme Court in M. S Narain Menon Vs. State of Kerela; 2006 AIR (SC) 3366.
27. The Hon'ble Supreme Court in Kumar Exports vs. Sharma Carpets (2009) 2 SCC 513, while discussing the contours of section 118(a) r/w 139 of the N I Act, has held interalia the following:
"14. Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
15. Applying the definition of the word "proved" in section 3 of the Evidence Act to the provisions of sections 118 and 139 of the Act, it becomes evident that in a trial under section 138 of the Act a presumption will have to be made that every negotiable intstrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was C.C. No. 15034/16 Dated 14.09.2022 Pages 9 executed by the accused, the rules of presumptions under section 118 and 139 of the Act help him shift the burden on the accused. The presumption will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists."
28. In the instant case, the accused at the time of framing of notice u/s 251 has admitted the issuance of cheque. Further, the complainant has brought invoices to prove the transaction. Thus, there are sufficient material on record to raise the presumption in favour of the complainant.
29. Ergo, this court is of the considered view that the statutory presumptions under section 118(a) and 139 of the NI Act would be raised in favour of the complainant.
(III) Whether the accused has successfully rebutted the presumption u/s 118(a) r/w Section 139 of the Act through preponderance of probabilities?
30. In order to create doubt in the complainant's claims regarding existence of a legally enforceable debt, the accused has primarily adopted the following defence:
Blank signed cheque was given as security.
Return memos does not bear signature and seal of the bank.
Contradictions in the complainant's evidence.
CW2 was not in the list of witnesses and the evidence of CW2 was deposed on affidavit which is not permissible and no permission was sought for adding his name in the list of witnesses.
Return memo is dated 07.09.2011 whereas legal demand notice was sent on
31.10.2011 which is beyond mandated 30 days.
C.C. No. 15034/16 Dated 14.09.2022 Pages 10 No material was supplied after 31.03.2011 by the complainant.
That the liability of the accused as alleged by the complainant is Rs. 5,53,720/, however, the combined amount of all the cheques issued by the accused is Rs. 6,00,000/.
No civil recovery suit has been filed by the complainant against the accused.
31. Ld. Counsel for the accused relies upon the following judgments.
1. Rangappa Vs. Sri Mohan, AIR 2010 SC 1898.
2. M. S Narain Menon Vs. State of Kerela; 2006 AIR (SC) 3366.
3. Ajeet Seeds Ltd. Vs. K. Gopala Krishnaiah; 2014 AIR (SC) 3057.
4. Sampelly Satyanaranayana Rao Vs. Indian Renewal Energy Development; 2016 AIR (SC) 4363.
5. State of Bombay Vs. Janardhan & Ors; 1960 (AIR) Bom 513.
32. I shall be dealing with these defences separately. However, before delving into the facts of the case, it is pertinent to note that the standard of proof which is required from the accused to rebut the statutory presumption under section 118 read with section 139 of the Act is preponderance of probabilities. The accused is not required to prove his case beyond reasonable doubt. This onus on the accused can be discharged from the materials available on record and from the circumstantial evidences. The Hon'ble Supreme Court in M.S Narayan Menon @ Mani vs. State of Kerala, Appeal (Crl) 1012 of 1999 has interalia held the following:
"The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies"
33. Further, it should also be noted that the standard of proof in order to rebut the statutory presumption may be inferred from the materials on record and circumstantial C.C. No. 15034/16 Dated 14.09.2022 Pages 11 evidences. It is not always mandatory for the accused to examine its own witnesses in order to rebut the said statutory presumption. At this point, reliance may be placed on the decision of the Hon'ble Supreme Court in the case of Krishna Janardhan Bhat (supra), wherein the Hon'ble Court has categorically held the following:
"32. accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. As accused has a constitutional right to remain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different.
34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove defence on the part of an accused is "preponderance of probabilities". Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies."
34. This principle has been reiterated by the Hon'ble Supreme Court in Rangappa vs. Sri Mohan (2010) 11 SCC 441 wherein while discussing the scope and ambit of statutory presumption under section 139 of the Act, the Hon'ble Court has held the following:
"27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendantaccused cannot be expected to discharge an unduly high standard of proof.
28. In the absence of compelling justifications, reverse onus clause usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the C.C. No. 15034/16 Dated 14.09.2022 Pages 12 accused is able to raise a probable defence which creates doubts about the existence of a legally recoverable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the material submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
35. Thus, section 139 of the Act puts the burden on the accused to prove his defence. However, the accused has to prove his defence on the balance of probabilities and not beyond reasonable doubt. Accused can prove his defence by drawing inferences from the materials already on record (including complainant's evidences), circumstances of the case and also leading his own evidences. If the accused successfully creates doubts in the complainant's claim about the existence of legally enforceable debt then the burden of proof shifts back to the complainant who is the required to prove the guilt of the accused beyond reasonable doubt. Reference can be taken from the decision of the Hon'ble Supreme Court in the case of Bharat Barrel & Drum Manufacturing Company vs. Amin Chand Pyarelal 1999 (3) SCC 35, wherein it was held:
"Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the nonexistence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non existence of the consideration can be either direct or by bringing on record preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading evidence as the existence of C.C. No. 15034/16 Dated 14.09.2022 Pages 13 negative evidence is neither possible not contemplated and even if led, it is to be seen with a doubt..."
36. Keeping in mind, the pronouncements laid down by the Hon'ble SC in the aforementioned cases, let us now examine the defence of the accused one by one :
(a) Blank signed cheque was given as security.
37. It is well settled that if the accused is issuing a cheque after signing the same to the complaint albeit blank, he is giving implied authority to the complainant to fill the blank details and to present the cheque on or after the date mentioned in the cheque. Therefore, aforementioned statutory presumptions can be raised in favour of the complainant even in case of blank cheque also.
38. Reference can be taken from the recent decision of the Hon'ble Supreme Court in the case of Bir Singh vs. Mukesh Kumar (2019) 4 SCC 197 wherein the Apex Court while upholding the validity of blank signed cheque and post dated cheque in a proceeding u/s 138 of the Act has interalia held the following:
"36. The proposition of law which emerges from the judgments referred to above is that the onus to rebut the presumption under Section 139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Negotiable Instruments Act.
37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.
38. If a signed blank cheque is voluntarily presented to a payee,towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence."
C.C. No. 15034/16 Dated 14.09.2022 Pages 14
39. Further, it should also be noted that statutory presumptions under 118(a) r/w 139 of the NI Act also arises even if the cheque is issued by the accused as security for the repayment of a legally enforceable debt or other liability. It is for the accused to prove that the cheque in such cases was not issued in discharge of any legal liability. Reference can be taken from the decision of the Hon'ble Supreme Court in the case of M/S Womb Laboratories Pvt Ltd vs Vijay Ahuja Criminal Appeals No. 13821383 of 2019 has categorically held that handing over of the cheques by way of security per se would not extricate the accused from the discharge of liability arising from such cheques.
40. Further, the Hon'ble Supreme Court in the case of Sripati Singh(since deceased) through his son Gaurav Singh vs. The State of Jharkhand & Anr. Crl. Appeal no.1269 1270 of 2021 while discussing the ambit of section 138 of the Act visavis a cheque which has been stated to be given as security for repayment of loan, had interalia held the following:
"16. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound".
41. Reference can also be taken from the decision of the Hon'ble Supreme Court in the case of ICDS vs. Beena Shabeer AIR 2002 SC 3014 wherein the Hon'ble Court has discussed the contours of section 138 of the Act in order to include in its ambit "any cheque"
issued in discharge of debt or other liability. Relevant extract of the judgment is reproduced below:
"The language, however, has been rather specific as regards the intent of the legislature. The commencement of the Section stands with the words "Where any cheque". The above noted three words are of extreme significance, in particular, by reason of the user of the word "any" the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the C.C. No. 15034/16 Dated 14.09.2022 Pages 15 commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment.
XXXXXXXXXXXX The language of the Statute depicts the intent of the lawmakers to the effect that wherever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of the Act. 'Any cheque' and 'other liability' are the two key expressions which stands as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the Statute. Any contra interpretation would defeat the intent of the legislature"
42. A combined reading of the aforementioned decisions of the Hon'ble Supreme Court suggests that a cheque which has allegedly been issued by the accused as a security to the loan would not per se be out of the ambit of section 138 of the Act. The important consideration is the fact as to whether the said cheque has been issued in discharge of a debt or other liability or not i.e. whether any legally enforceable debt existed on the date when the cheque was issued. If the answer is in affirmative then section 138 of the Act would be attracted as the purpose for which the cheque was issued by the accused would be immaterial if the said cheque was dishonoured by the bank and there existed a legally enforceable debt on the date when the said cheque was issued. It is for the accused to prove that no legally enforceable debt existed on the date on which the cheque was issued.Ergo, the defence taken by the accused is not sustainable.
(b) Return memos does not bear signature and seal of the bank.
43. Ld. Counsel for the accused argues that the return memo is neither signed nor bears the seal of the bank therefore the same cannot be looked into evidence. Perusal of the record shows that no such objection was raised by the Ld. Counsel for the accused at the time of crossexamination. No question was put to the complainant or CW2 with respect to the C.C. No. 15034/16 Dated 14.09.2022 Pages 16 return memo nor even any suggestion was put with respect to the return memo. Thus, the said objection cannot be raised at the time of final arguments.
(c) Contradictions in the complainant's evidence.
44. Ld. Counsel for the accused contends that the complainant in her crossexamination dated 13.08.2018 stated that she has no knowledge about the transaction with the accused therefore her evidence by way of affidavit cannot be relied upon.
45. Perusal of the record shows that the complainant in her crossexamination stated that she has no knowledge about the transaction however, she further stated that transactions is in the knowledge of her husband. This court should not lose sight of the fact that it is not very uncommon that the proprietor firm is in the name of one person and the affairs of the firm are looked after by some other person. In the present case, CW2 is the husband of the complainant and his evidence is duly recorded.
46. Another line of argument on behalf of the accused is that CW2 in his cross examination dated 28.06.2019 deposed that total goods supplied to the accused were of Rs. 10,53,720/ to the accused out of which he received a payment of Rs.5 lacs. Ld. Counsel for the accused argues during the final arguments that CW2 in his crossexamination dated 28.06.2019 has admitted that a payment of Rs. 5 lacs has already been received for the alleged invoices of Rs. 5,53,720/. Therefore, no case is made out against the accused. In my humble opinion, the said contention is not tenable as the question put to the CW2 was with respect to the goods supplied other than the invoices on record. The relevant portion of the crossexamination dated 28.06.2019 is reproduced hereunder:
Q. You have stated vide para 5 of your affidavit that the total goods supplied to the accused were for a sum of Rs. 5,53,720/. if there was any other goods apart that supplied to the accused?
Ans. We have supplied goods worth of Rs. 10,53,720/ to the accused out of which we received the payment of Rs. 5,00,000/.
47. In view of the above, the CW2 did not acknowledge the payment of Rs.5 lacs with respect to the cheque in question but he clarified the total goods were supplied for Rs.
C.C. No. 15034/16 Dated 14.09.2022 Pages 17 10,53,720/ out of which payment of Rs. 5 lacs was received and payment of Rs. 5,53,720/ is pending. Further, examination in chief dated 17.12.2019 of the accused shows that accused had admitted the previous transactions between the complainant. He admitted that he has received material from the complainant till the month of 31.03.2011 and he had paid those bills through RTGS as well as cash. Thus the contention of the Ld. Counsel for the accused does not hold water.
(d) CW2 was not in the list of witnesses and the evidence of CW2 was deposed on affidavit which is not permissible and no permission was sought for adding his name in the list of witnesses.
48. Ld. Counsel for the accused argues CW2 was not added in the list of witnesses and the complainant is restricted to the examination of witnesses whose names are given in the list. The court should not however given permission to add names to the list if it is going to prejudice the case of the accused or if it is not in the interest of justice. He relies on the judgment in State of Bombay Vs. Janardhan & Ors; 1960 (AIR) Bom 513.
49. The said contention is untenable in view of the directions of the Hon'ble Supreme Court in Indian Bank Association & Ors. Vs. Union of India & Anr Writ Petition (Civil) No.18 of 2013 wherein the Hon'ble Supreme Court held as under:
(5) The Court concerned must ensure that examination in chief, cross examination and reexamination of the complainant must be conducted within three months of assigning the case. The Court has option of accepting affidavits of the witnesses, instead of examining them in Court. Witnesses to be complaint and accused must be available for crossexamination as and when there is direction to this effect by the Court.
50. Further, Ld. Counsel for the accused argues that no permission was sought from the Court for adding his name in the list of witnesses. It is pertinent to mention that the then Ld. Predecessor Court vide order dated 04.07.2017 gave the liberty to the complainant to examine the husband of the complainant as an additional witness in the present case. Thereafter, on 09.01.2019 evidence by way of affidavit of CW2 was taken on record and C.C. No. 15034/16 Dated 14.09.2022 Pages 18 copy was supplied to the Ld. Counsel for the accused. Then CW2 was examined in part on 28.06.2019. It is pertinent to mention that no objection was raised by the Ld. Counsel for the accused neither at the time of receiving copy of the evidence by way of affidavit nor at the time of crossexamination of CW2. Thus, the said contention is not maintainable.
(e) No material was supplied after 31.03.2011 by the complainant.
51. Ld. Counsel for the accused argues that no material was supplied after 31.03.2011. He relies upon the examinationinchief of accused dated 17.12.2019 wherein the accused deposed as under:
"I have received material from the complainant till the month of 31.03.2011 and I had paid those bills through RTGS as well as cash. After 31.03.2011 our tender with J & K Police was closed and as such, I had not received any material from the complainant".
52. Perusal of the record shows that the complainant has relied upon Ex. CW1/3(OSR) to prove the transaction with the accused and the accused has denied the said transaction. However, in the instant case, no evidence has been adduced by the accused. It is well settled that mere denial is not enough to rebut the presumption under section 139 of the NI act and the same can be rebutted by the accused only by leading cogent evidence. In the present case, the accused has not brought any evidence on record to prove that the cheque in question was issued for some other transaction. The onus of proof is on the accused to prove the said fact and the accused has failed to prove it.
(f) Return memo is dated 07.09.2011 whereas legal demand notice was sent on 31.10.2011 which is beyond mandated 30 days.
53. Ld. Counsel for the accused argues that Return Memo is dated 07.09.2011 whereas legal demand notice was sent on 31.10.2011 which is beyond mandated 30 days. The said contention is untenable as a consolidated Return Memo has been filed by the complainant in CC no.15030/16 wherein Return Memo is dated 15.10.2011. Perusal of the legal demand notice shows that it was sent on 31.10.2011 and in para 4 of the said legal demand notice the complainant has specifically mentioned Return Memo dated 15.10.2011. In the complaint C.C. No. 15034/16 Dated 14.09.2022 Pages 19 and in the evidence by way of affidavit of CW1 also, it has been clearly mentioned by the complainant that the Return Memo is of dated 15.10.2011. Thus, it is not the case that the accused was not aware of the date of the Return Memo and he has been taken by surprise. Since, there was a common returning memo dated 15.10.2011 was issued by the bank for all the four complaint cases and the same is filed in the complaint case CC no.15030/16, no prejudice is caused to the accused. Further, during in the crossexamination of CW2 dated 25.07.2019 a specific question was put to the complainant as to how many time he has deposited the cheque in question with his banker and CW2 deposed that he has deposited the cheque in question thrice for payment. The accused has not disputed the Return Memo dated 15.10.2011. Even if it is presumed that the Return Memo is false and fabricated, it was incumbent upon the accused to examine the bank witness to prove that the said Return Memo is false and fabricated, however, the accused has not examined any bank witness. Thus, the said legal demand notice was sent within the statutory period.
(g) That the liability of the accused as alleged by the complainant is Rs. 5,53,720/, however, the combined amount of all the cheques issued by the accused is Rs. 6,00,000/.
54. Ld. Counsel for the accused argues that if on the date of the cheque liability or debt exists or the amount has become legally recoverable the section 138 is attracted. He relies on the judgment of Hon'ble Supreme Court in Sampelly Satyanaranayana Rao Vs. Indian Renewal Energy Development; 2016 AIR (SC) 4363.
55. Ld. Counsel for the accused contends that the combined amount of all the cheques issued by the accused is Rs. 6 lacs in all the four cases. However, liability of the accused as alleged by the complainant is Rs. 553720/. Heard. It is well settled law that under the NI Act, every cheque dishonored creates a different cause of action and the complainant is only required to show the liability with respect to the cheque in question. In the present case, the complainant is required to show his liability for the cheque amount. Reference may be sought from the Judgment of the Hon'ble Gujarat High Court in Vani Agro Interprises vs. State of Gujarat 2009 SCC Online Guj 4983 wherein the Hon'ble High Court held as under:
C.C. No. 15034/16 Dated 14.09.2022 Pages 20 "Dishonour of cheques constitute different offences and different cause of action. Merely because common notice was issued, it cannot be said that there is only one cause of action. Each dishonor of cheque has different cause of action for different individual offences".
56. Ergo, the contention of the Ld. Counsel for the accused is not sustainable.
(h) No civil recovery suit has been filed by the complainant against the accused.
57. The defence is not sustainable as institution of a civil suit with respect to the same cheque is not a precondition to file a criminal complaint case u/s 138 NI Act. Merely not filing a Civil suit against the accused is not sufficient enough to rebut the presumption u/s 139 r/w 118 of NI Act.
58. Ergo, evaluation of the entire defence pleas shows that the accused has failed to rebut the presumption u/s 118 (a) read with Sec 139 of the NI Act by establishing a probable defence on a standard of preponderance of probabilities. Therefore, the accused has failed to create any reasonable doubt in the complainant's claim and failed to prove that no liability existed towards the complainant.
Conclusion :
59. This court finds that a legally enforceable debt existed in favour of the complainant in the present case, impugned cheque was given by the accused in discharge of debt which got dishonoured. Execution of cheque is admitted by the accused. The accused failed to make payment to the complainant even after receiving the legal demand notice.
Decision:
60. In view of the above discussion, the accused is convicted for the offence under section 138 of the Act.
61. Let the accused be heard on the quantum of sentence on 30.09.2022.
C.C. No. 15034/16 Dated 14.09.2022 Pages 21
P BHARGAV Digitally signed by P
BHARGAV RAO
62. Copy of this judgment be given to the accused dasti. RAO Date: 2022.09.15
17:52:34 +05'30'
Announced in the open court on (P. BHARGAV RAO)
14.09.2022 MM01/NI Act/WEST/THC/DELHI
14.09.2022
It is certified that this judgment contains 22 pages and each page bears my signature.
P BHARGAV RAO Digitally signed by P BHARGAV RAO Date: 2022.09.15 17:53:14 +05'30' (P. BHARGAV RAO) MM01/NI Act/WEST/THC/DELHI 14.09.2022 C.C. No. 15034/16 Dated 14.09.2022 Pages 22