Delhi District Court
Upl Ltd vs Ritesh Singla on 11 December, 2024
IN THE COURT OF MS. PADMA LADOL
JUDICIAL MAGISTRATE FIRST CLASS-04,
NEW DELHI, PATIALA HOUSE COURTS, NEW DELHI
CT. CASES No. 15527/2017
UPL LTD. VS RITESH SINGLA
Ct. Cases No. 15527/2017
CNR No. DLND020255152017
Date of Institution 24.10.2017
Name, parentage and address of UPL Ltd.
complainant Through Its AR
Registered Address: 3-11, GIDC,
Vapi-396195 Gujarat.
Name, parentage and address of the Ritesh Singla
accused Proprietor of M/s. Jagdish Kumar
Ritesh Kumar
Mal Godown Road, Dhuri Sangrur,
Punjab-148024
Also at:
House no. 143A, Ward no. 5, Dhuri
Sangrur, Punjab-148024
Offence complained off 138 Negotiable Instruments Act,
1881
Ct Cases No.15527/2017 Digitally
signed by
State Vs. Ritesh Singla PADMA Page 1 of 17
PADMA LANDOL
LANDOL Date:
2024.12.11
16:45:50
+0530
Plea of Accused Not Guilty
Final Order Convicted
Date of Judgment 11.12.2024
-------------------------------------------------------------------------------
Argued by: Ms. Aparna Kumari, Ld. Counsel for the
complainant
Ms. Chandni Dugar, Ld. Counsel for the accused
-------------------------------------------------------------------------------
JUDGMENT
1. Vide this judgment, this Court shall dispose off complaint for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 filed by the complainant against the accused with respect to dishonour of a cheque of Rs.44,39,007/-. In a nutshell, it is the case of the complainant that complainant is a company dealing in agrochemical products. Accused approached the complainant seeking a non-exclusive dealership of its various products. Accordingly, a Dealership Agreement was executed between the parties. In the course of business, complainant supplied agrochemical products to accused which were accepted by him without any demur. Over a period of time, a huge sum became due and payable against the accused. While acknowledging the outstanding debt, accused issued a cheque bearing no. 024629 dated 31.07.2017 for Rs. 44,39,007/- [cheque in dispute, Ex.
Digitally signed by PADMA Ct Cases No.15527/2017 PADMA LANDOL State Vs. Ritesh Singla LANDOL Date:
2024.12.11 Page 2 of 17 16:45:55 +0530 CW-1/2] to the complainant. Upon the assurance of accused, complainant presented the cheque in dispute, but same was dishonoured vide memo dated 10.08.2017 [Ex. CW-1/3] with reasons 'Funds Insufficient'. The complainant sent a legal demand notice dated 08.09.2017 [Ex. CW-1/4] through postal receipts [Ex. CW-/5 (colly)] which was delivered upon the accused as shown by tracking reports [Ex. CW-1/6 (colly)], however, he did not make payment within the statutory period of legal demand notice, hence, this complaint.
2. Vide order dated 02.05.2018, after being satisfied that prima facie ingredients of Section 138 NI Act are made out cognizance was taken and summons were directed to be issued against the accused. Accused entered into appearance on 27.10.2018. Thereafter, notice under Section 251 Cr.PC was framed and served upon the accused on the same date to which he pleaded not guilty and claimed trial. Then application u/s. 145(2) NI Act was filed which came to be allowed.
3. The matter was then listed for Complainant Evidence.
Complainant examined its AR (CW-1) as the sole witness. CW-1/Complainant tendered her affidavit in post summoning evidence and relied upon following documents:
i) Power of Attorney: Ex. CW-1/X. Digitally signed by PADMA PADMA LANDOL LANDOL Date:
2024.12.11 Ct Cases No.15527/2017 16:46:02 +0530 State Vs. Ritesh Singla Page 3 of 17
ii) Original cheque bearing no. 024629 dated 31.07.2017 for Rs. 44,39,007/-: Ex. CW-1/2.
iii) Bank return memo dated 10.08.2017: Ex. CW-1/3.
iv) Legal demand notice dated 08.09.2017: Ex. CW-1/4.
v) Original Postal receipts dated 08.09.2017: Ex. CW-1/5 (colly).
vi) Internet generated tracking report: Ex. CW-1/6 (colly).
4. After the conclusion of complainant evidence, accused was examined under Section 313 Cr.PC read with Section 281 Cr.PC wherein all the incriminating evidence were put to him. Accused opted to lead DE. However, accused later refused to lead DE. Accordingly, DE was closed.
5. Final arguments have been heard at length. Complete record including the written submissions and judgments filed by the parties perused carefully.
6. The Court shall now deal with the defence taken by the accused and contentions of both the parties.
DEFENCE OF ACCUSED:
7. While framing of notice u/s. 251 Cr.PC, accused has stated in his defence that he has no legal liability against the cheque in dispute and the cheque has been misused by the complainant. He has further stated that the body of the cheque and the date have been filled by the complainant and it was given for security purposes. Thereafter he stated Digitally signed by PADMA Ct Cases No.15527/2017 PADMA LANDOL LANDOL State Vs. Ritesh Singla Date:
2024.12.11 Page 4 of 1716:46:14 +0530 that detailed defence shall be filed in his application u/s. 145(2) NI Act. In his statement u/s. 313 Cr.PC, accused has admitted that the complainant executed a dealership agreement with him and he had purchased agro chemical products from them. He has further stated that he is not aware about any running account maintained by the complainant and there is no outstanding dues against him. Accused has further stated that complainant had taken the cheque in dispute in blank from him initially at the time of execution of dealership agreement. That the dealership agreement was also blank and he was made to sign the same. That complainant also made him sign some blank letter head of his firm. Accused then stated that the said cheque was taken by way of security along with two other cheques and he did not receive any legal demand notice from the complainant. Lastly, accused stated that complainant has misused his security cheque.
8. In the final arguments, complainant has asserted its case for conviction against the accused essentially on the ground of having proved the cause of action against him, beyond all reasonable doubt. This is premised on the substantive proof of presentation of the cheques in dispute admittedly issued by the accused with his signature, its return as dishonoured from the payee's bank upon presentation for encashment and non-payment by the accused of the legally enforceable debts within the statutorily prescribed period, despite service of legal Digitally signed by Ct Cases No.15527/2017 PADMA PADMA LANDOL State Vs. Ritesh Singla LANDOL Date: Page 5 of 17 2024.12.11 16:46:20 +0530 demand notice. It is submitted by the Ld. Counsel for the complainant:
i) That the accused has admitted the issuance of cheque in dispute as well as execution of dealership agreement.
ii) Though the accused has denied receiving of the legal demand notice, he has admitted both the addresses to be correct.
iii) That accused never disputed receiving of any goods from complainant and the presumption u/s. 139 NI Act is in favour of the complainant and accused has failed to rebut the same.
9. Per contra, Ld. Counsel for the accused has prayed for dismissal of the complaint and acquittal of the accused persons on several counts:
i) The cheque in dispute was issued by way of security and there is no outstanding liability against the accused.
ii) Complainant failed to produce the dealership agreement, description of goods supplied/transport receipt before the Court despite sufficient opportunities.
iii) Goods were received by the accused, however he has cleared all the outstanding dues.
10. It is now pertinent to examine the factual matrix of the case in the light of the ingredients of the provision as produced herein:
138. Dishonour of cheque for insufficiency, etc., of funds in the account.--
Digitally Ct Cases No.15527/2017 signed by PADMA PADMA LANDOL State Vs. Ritesh Singla LANDOL Date: Page 6 of 17 2024.12.11 16:46:25 +0530 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 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 Digitally signed by Ct Cases No.15527/2017 PADMA PADMA LANDOL State Vs. Ritesh Singla LANDOL Date: Page 7 of 17 2024.12.11 16:46:31 +0530
(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.
The essential ingredients in order to attract Sec. 138 of NI Act, 1881 are:
i) Existence of legally enforceable debt or liability and issuance of cheque in discharge of said debt or liability;
(ii) Dishonour of cheque in dispute which must have been drawn on an account maintained by the accused;
(iii) Service of legal demand notice seeking payment of cheque amount within 30 days from the date of receipt of return memo;
(iv) Non-payment of cheque amount within fifteen days from the date of service of notice; and
(v) Filing of complaint within one month from the date on which cause of action arises.
11. Now, coming to the facts of the case in hand in the light of above mentioned legal principles. In the instant case, the issuance of the cheque in dispute [Ex. CW-1/2] by the accused, its presentation in the bank for encashment and subsequent dishonour due to the reason "funds insufficient", is not disputed and is a matter of record, as proved by the return memo [Ex. CW-1/3]. It is also admitted that the cheque in dispute belongs to Digitally Ct Cases No.15527/2017 signed by PADMA State Vs. Ritesh Singla PADMA LANDOL Page 8 of 17 LANDOL Date:
2024.12.11 16:46:37 +0530 the accused and even the signature on the same is admittedly of the accused. Once these facts are established, a presumption of the cheque having been issued in discharge of a legally existing liability and drawn for good consideration arises by virtue of Section 118 (a) of the Negotiable Instruments Act. Once Section 139 of the NI Act comes into picture, the Court presumes that the cheque was issued in discharge, in whole or in part, of any debt or liability. At this stage, with the help of presumption under Section 139 of the Negotiable Instruments Act, the case of the complainant stands proved.
12. Since the presumption under Section 139 read with Section 118(a) of the NI Act is in favour of the complainant, it is now for the accused to rebut the same either by discrediting the veracity of material relied upon by the complainant or by leading positive evidence to probabilise his defence on the touchstone of preponderance of probabilities as provided by the three Judge bench of the Hon'ble Supreme Court in Rangappa Vs Sri Mohan (2010) 11 SCC 441 and also in Rohitbhai Jivanlal Patel v. State of Gujarat & Anr. (2019) 18 SCC 106.
13. It is trite law that for rebuttal of the said presumption under Section 139 read with Section 118(a) of NI Act, 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 or even by raising presumptions of fact and law on the basis of material available on record. The accused has to make out a fairly plausible defence which is acceptable to the Digitally signed by PADMA Ct Cases No.15527/2017 PADMA LANDOL State Vs. Ritesh Singla LANDOL Date:
2024.12.11 Page 9 of 1716:46:42 +0530 Court. Therefore, the standard of proof required from the accused to prove his defence is "preponderance of probabilities" and not beyond reasonable doubts. However, at the same time, it is also to be remembered that bare denial of the existence of legally enforceable debt or other liability cannot be said to be sufficient to rebut the presumption and something which is probable has to be brought on record to shift the burden back to the complainant. The statutory presumption u/s. 118(a) NI Act reads as under:
118 Presumptions as to negotiable instruments. --
Until the contrary is proved, the following presumptions shall be made:--
(a) of consideration --that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration The statutory presumption u/s. 139 NI Act reads as under:
39. 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.
14. This Court shall now proceed to deal with the various defences taken by the accused and examine whether the accused has been able to rebut the presumption arising in favour of the complainant:
Digitally signed by PADMA PADMA LANDOL LANDOL Date:
2024.12.11 Ct Cases No.15527/2017 16:46:47 +0530 State Vs. Ritesh Singla Page 10 of 17 I. Denial of outstanding liability: The first and foremost defence taken by accused is that there is no outstanding liability against him. In this regard, accused has taken a defence while framing notice u/s. 251 Cr.PC that there is no legally enforceable liability against the cheque in dispute. During cross-examination of CW-1, the witness admitted that she has not filed the transport receipts, invoices, ledger or copy of orders placed by accused. During recording of statement u/s. 313 Cr.PC, accused has admitted delivery of agro chemicals products but denied having any outstanding liability. In the final arguments, Ld. Counsel for accused has contended that complainant has failed to produce the dealership agreement, description of goods supplied/transport receipt in the Court despite sufficient opportunities.
Perusal of the entire documents including the arguments reflect that the accused has admitted execution of dealership agreement with the complainant. He has further admitted the business transaction as he has categorically stated that he had received the agrochemical products from the complainant. Even in final arguments, accused side has stated that entire payment has been cleared by accused and there is no outstanding debt. Further, the factum of issuance of cheque in dispute has also been duly admitted by the accused. In view of these admissions, this Court is of the considered opinion that non-production of dealership agreement/ transport receipts/invoices/ ledger by the complainant is not fatal to their case, specially when the burden is on the accused to rebut the presumption against him. There is Digitally signed by PADMA Ct Cases No.15527/2017 PADMA LANDOL LANDOL Date:State Vs. Ritesh Singla 2024.12.11 Page 11 of 17
16:46:52 +0530 no gainsaying that a person cannot be expected to prove a negative fact by adducing positive evidence. However, in such cases, in order to rebut the presumptions raised against the accused under Sec. 139 r/w 118 NI Act, he is expected to raise a probable defence either by showing a circumstance under which the outstanding dues as alleged by complainant does not seem probable to a reasonable mind or otherwise by casting a shadow of doubt on the case of complainant. In the instant case, accused could have furnished the payment proof to show the payment made to the complainant, however accused failed to examine himself and lead such an evidence. Accused could have issued stop payment instructions to his bank if there was no liability qua the cheque in dispute. He has also not done the same. Mere denial of a liability without any proof/steps in that direction, is not sufficient to rebut the presumption under Sec. 139 r/w 118 NI Act, by any measures. In view of the same, the first and the primary defence taken by accused holds no water being merely an oral averment. It is devoid of merits. Hence, is liable to be dismissed.
II. Cheque in dispute was issued by way of security: Accused has contended that the cheque in dispute was given by way of security at the time of execution of dealership agreement. He has further contended that complainant has misused the cheque by filling the particulars and he has denied having any outstanding liability. In such situation, non-taking of any action against the complainant and even not issuing instructions to his banker for stopping payment of cheque in dispute raises serious Digitally signed by Ct Cases No.15527/2017 PADMA PADMA LANDOL State Vs. Ritesh Singla LANDOL Date: Page 12 of 17 2024.12.11 16:46:58 +0530 doubts in the defence of accused. Even otherwise, the law on the security cheques is not res integra. Qua presentation of security cheque for encashment, it has been held by the Hon'ble Supreme Court of India in Sripati Singh v. State of Jharkhand and Anr. 2021 SCC OnLine SC 1002 that:
"17. 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. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of NI Act would flow." Further, the Hon'ble High Court of Delhi in Credential Leasing & Credits Ltd. Vs. Shruti Investments 2015 SCC OnLine Del 10061 Digitally signed by PADMA Ct Cases No.15527/2017 PADMA LANDOL LANDOL Date:
State Vs. Ritesh Singla 2024.12.11
16:47:05
Page 13 of 17
+0530
has also held that even a security cheque can form the basis of complaint under Section 138 of the NI Act, if on the date of the deposit of the post-dated security cheque, the debt of the accused stood crystallized.
In the present case, accused has failed to show by leading positive evidence or otherwise that there was no outstanding liability against him on the date of presentation of the cheque in dispute, hence, the complainant was within its right to present the cheque in dispute and consequently file the present complaint. In view of the same, there is no gainsaying that this defence is also liable to be dismissed being devoid of merits. Accused has further contended that the complainant has filled the particulars (except signature) on the cheque in dispute and has misused the cheque. This argument of the accused is again devoid of merits since it is trite law that once a signed cheque is handed over to a person, the authority to fill up the remaining particulars and use the cheque also stands transferred to the holder. In this context, the observations of Hon'ble High Court of Delhi in Hon'ble High Court of Delhi in Ramesh Goyal v. State & Anr. 2017 SCC OnLine Del 8887 to the effect that-
'there is no law that a person drawing the cheque must necessarily fill it up on his own hand writing and once the signatures on the cheque are admitted, the liability arising therefrom cannot be evaded on the specious plea that the contents were not filled up by the drawer of the cheque', bears relevance.
The Hon'ble Supreme Court in Bir Singh v. Mukesh Kumar (2019) 4 SCC 197 has also held that-
Digitally signed by PADMA PADMA LANDOL Ct Cases No.15527/2017 LANDOL Date:
2024.12.11 State Vs. Ritesh Singla 16:47:10 +0530 Page 14 of 17 "34. 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."
Furthermore, Section 20 of the NI Act, 1881 also gives holder of a negotiable instrument authority to fill the same.
III. Non-receipt of legal demand notice:
It is contended by the accused that he did not receive the legal demand notice from complainant. Even though he has denied receiving the notice, he has never disputed either of the two addresses at which legal demand notice [Ex. CW-1/4] was sent. In fact, the accused has mentioned the same address (first address) in his affidavit filed along with application u/s. 145(2) NI Act. He has also mentioned the same address (second address) in his bail bonds as well as vakalatnama. Hence, the legal demand notice is deemed to be delivered upon accused in terms of Section 27 of General Clauses Act, 1897 read with Section 114 of Indian Evidence Act, 1872. Reliance in this regard is also placed on the judgment of Hon'ble Supreme Court in C.C Alavi Haji v. Palapetty Muhammed [(2007) 6 SCC 555].
16. It is a settled law that though the degree of burden on the accused to rebut the presumption is only to the extent of preponderance of probability, however, in order to cross this threshold accused has to take some steps which is more that mere Digitally signed by Ct Cases No.15527/2017 PADMA PADMA LANDOL State Vs. Ritesh Singla LANDOL Date: Page 15 of 17 2024.12.11 16:47:48 +0530 averments, however, this has not been done in the present case.
The Hon'ble Supreme Court in Rohitbhai Jivanlal Patel (supra) 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 fulfill the requirements of rebuttal as envisaged under section 118 and 139 of the NI Act. In the case at hand, keeping all the aspects in view, the defence put forth by the accused and rebuttal of presumption raised against him is only a mere denial when tested on the touchstone of preponderance of probability. Further, it has been held in Rajesh Agarwal v. State 2010 SCC OnLine Del 2511 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....."
15. In the light of the foregoing discussions, this court is of the firm 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 in the cross examination of CW-1 which would probabilize the defence raised by the accused or falsify the case of the complainant, in fact as already discussed the defence of the accused is based on oral averment not supported by any evidence, whatsoever and hence, cannot be termed as a Digitally Ct Cases No.15527/2017 signed by PADMA State Vs. Ritesh Singla PADMA LANDOL Page 16 of 17 LANDOL Date:
2024.12.11 16:47:56 +0530 compelling rebuttable evidence, by any standards. In the above view, the complainant has proved that the accused had issued the cheque in dispute in its favour for discharge of the legally enforceable liability. This Court has no hesitation in holding that in the facts and circumstances of the present case, the complainant has brought home his case proving the complicity of the accused in the offence under Sec. 138 Negotiable Instruments Act. Resultantly, the accused Ritesh Singla, Proprietor of M/s. Jagdish Kumar Ritesh Kumar is thus, held guilty and stands convicted for the said offence.
Announced in Open Court today on 11.12.2024.Digitally signed by PADMA
PADMA LANDOL LANDOL Date:
2024.12.11 16:45:34 +0530 Announced in the Open Court (PADMA LADOL) on this 11th December, 2024 JMFC-04: New Delhi: PHC Certified that this judgment contains 17 pages and each page Digitally signed bears my signatures. PADMA by PADMA LANDOL LANDOL Date:
2024.12.11 16:45:40 +0530 (PADMA LADOL) JMFC-04: New Delhi: PHC Ct Cases No.15527/2017 State Vs. Ritesh Singla Page 17 of 17