Delhi District Court
M/S Mars Shipping And Logistics vs M.S. Arora Cc No.4122/10 on 29 February, 2012
IN THE COURT OF SH. RAKESH KUMAR SINGH:
METROPOLITAN MEGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.-42, TIS HAZARI COURT COMPLEX, DELHI
M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10
29.02.2012
Judgment u/s-264 CrPC
Complainant through its AR has filed the instant complaint on the basis of two dishonoured cheques of Rs.41,577/- &
Rs.12,469/- respectively received in lieu of services done by the complainant. The said cheques when dishonoured for reason
funds insufficient, the complainant sent a legal demand notice but the accused failed to pay the amount. Hence the instant
complaint. The complainant filed his affidavit to establish the ingredients of Section-138 NI Act. The cheques Exh.CW1/A &
Eh. CW1/B, Dishonoured Memo Exh.CW1/C, Legal Demand Notice Exh.CW1/D, Registry Receipt & UPC Receipt
Exh.CW1/E (colly.), AD card Exh. CW1/E.1 & Power of Attorney is Exh.CW1/F.
When notice was framed against the accused, he did not plead guilty and wanted to file an application for cross
examination and was also to lead defence evidence. Despite that he never filed any such application. Even he never tried to
lead any evidence to establish his defence despite several opportunities. Consequently, the opportunity was closed.
Both the parties have been heard.
Accused has done nothing to controvert the mandatory presumptions available in favour of the accused.
Complainant has established his case by way of mandatory presumptions of law.
Accused failed to rebut mandatory presumptions of law (see subsequent discussion on legal issues) arising in favour
of the complainant.
The complaint has to succeed.
The Procedure:
2. Hon'ble High Court of Delhi has laid down the procedure for trial of the offences punishable U/s 138 NI Act in the
case title Rajesh Aggarwal Vs. State decided on 28.07.2010 as follows:
"17. The summary trial procedure to be followed for offences u/s 138 N.I. Act
would thus be as under:
Step I : On the day complaint is presented, if the complaint is accompanied by
affidavit of complainant, the concerned MM shall scrutinize the complaint &
documents and if commission of offence is made out, take cognizance & direct
M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 1
issuance of summons of accused, against whom case is made out.
Step II : If the accused appears, the MM shall ask him to furnish bail bond to
ensure his appearance during trial and ask him to take notice u/s 251 Cr. P.C.
and enter his plea of defence and fix the case for defence evidence, unless an
application is made by an accused under section 145(2) of N.I. Act for recalling a
witness for cross examination on plea of defence.
Step III : If there is an application u/s 145(2) of N.I. Act for recalling a witness of
complainant, the court shall decide the same, otherwise, it shall proceed to take
defence evidence on record and allow cross examination of defence witnesses by
complainant.
Step IV : To hear arguments of both sides.
Step V : To pass order/judgment."
Retrospective effect of the amended provisions:
Law in respect of retrospective effect of amended provisions in the NI Act has already been settled by the
Hon'ble Supreme Court holding that Section-143 to 147 NI Act shall be applicable even to the cases pending on the date when
these provisions came into effect.
It is apt to quote Hon'ble Supreme Court in M/s Mandvi Co-op Bank Ltd vs Nimesh B thakore, (2010) 3
SCC 83:
"28. Mr. Ranjit Kumar also made a feeble attempt to contend that the provisions of
sections 143 to 147 inserted in the Act with effect from February 6, 2003 would operate
prospectively and would not apply to cases that were pending on that date. The High Court
has considered the issue in great detail and has rightly taken the view that the provisions of
sections 143 to 147 do not take away any substantive rights of the accused. Those
provisions are not substantive but procedural in nature and would, therefore,
undoubtedly, apply to the cases that were pending on the date the provisions came
into force. We are fully in agreement and in order to buttress the view taken by the High
Court we will only refer to a decision of this court."
In case titled Gurpreet Singh Vs. M/s. Ranbaxy Laboratories Ltd. & decided on 02 August, 2010, Hon'ble High
Court of Delhi has observed and held as under:
"3. I have perused the orders passed by learned MM after summoning of accused. A
perusal of these orders would show that the learned MM proceeded with the case as if
M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 2
it was a summon trial case and after issuing notice asked the complainant to again
lead evidence despite the fact that the evidence by way of affidavit of complainant was
already on record. The Legislature has specifically made offence under Section 138 of the
Negotiable Instruments Act as a summary trial and once the accused is summoned, he has
to state his plea and state his defence in terms of Section 263 (g) read with Section 251
Cr.P.C. The summary trial proceedings can be converted to summon trial case only under
two circumstances, firstly when the Court comes to a conclusion that the sentence of one
year would be inadequate and it was a case where sentence of more than one year may be
required to be awarded, secondly when the MM is of the view for some reason (to be
recorded) that the case should be tried as a summon trial. In the present case none of the
two things happened. The learned MM did not pass an order as to why the case was to be
converted to a summon trial. The learned MM was bound to follow procedure of summary
trial and was bound to treat the affidavit and evidence already filed by the complainant on
record as the evidence sufficient to convict the accused unless accused had pleaded a
tenable defence and accused was prepared to prove the defence. The learned MM
therefore went wrong in posting the case repeatedly for complainant's evidence,
without asking the accused/petitioner as to what was the his defence. Since the learned
trial court committed a grave error in treating this case as a summon trial case, the order of
learned MM suffered from jurisdictional error and was liable to be set aside in
revision............Directions are hereby given to learned MM to treat the present case as a
summary trial case and the complainant's evidence, already given during inquiry at pre-
summoning stage should be treated as evidence at post-summoning stage in terms of
Section 145 of Negotiable Instruments Act and in terms of Section 263(2) of Cr.P.C
(summary trial proceedings) and the petitioner should be asked to lead evidence in defence.
(See judgment titled "Rajesh Aggarwal v State and another Crl.M.C. 1996 of 2010 decided
on 28th July, 2010)."
In M/S. KALUCHA PAPER HOUSE & ANR. Vs. M/S. MAHAVIR PAPERS & ANR. Criminal M.C. No.3687 of
2009 & C.M. Appl. No.12526 of 2009 decided on 02.08.2010, Hon'ble High Court of Delhi has held that:
"2. Both the above cited cases relied upon by the petitioners are of the period when
amendment to Negotiable Instruments Act had not been made and the cases under
Negotiable Instruments Act were summon trial cases. However, after the amendment in
Negotiable Instruments Act, the cases under Negotiable Instruments Act are summary trial
cases and in view of the judgment of this court passed in Criminal M.C. No.1996 of 2010
titled Rajesh Aggarwal Vs. State & Anr. dated 28th July, 2010, the procedure being
followed by learned Metropolitan Magistrate in this case was not a correct procedure. The
witnesses of the complainant could not have been recalled unless the petitioner had
M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 3
made an application under Section 145 (2) of Negotiable Instruments Act and had
taken a specific plea why he was not liable to pay the cheque amount. The procedure
being following by the learned trial court of repeatedly fixing the complaint case again for
evidence was, therefore, faulty and not in accordance with provisions of summary trial as
given in Criminal Procedure Code and Negotiable Instruments Act.
3. I consider that the trial under Section 138 of Negotiable Instruments Act is
mandatorily to be proceeded in a summary manner and it is the accused who has to disclose
his defence and make an application before the trial court as to why he wants to recall the
complainant or other witnesses for cross-examination. The evidence adduced before
summoning has to be considered sufficient during trial and unless an application is made
under Section 145 (2) of the Negotiable Instruments Act, there is no provision for re-
examining complainant witnesses. I, therefore, consider that this case is required to be sent
back for trial according to law as laid down by this court in Rajesh Aggarwal's case
(supra)."
Hon'ble High Court of Delhi in Ishan Systems Pvt. Ltd. & Ors. Vs. Vijaya Bank, Crl.MC 3871/2010, dt. 27.01.2011,
has observed that:
"3. This Court in Rajesh Agarwal v State & Another 171(2010) DLT 51 had made it
categorically clear that when summons are issued by the court of MM under Section
138 NI Act, the accused at the time of taking notice under Section 251 Cr.P.C. has to
disclose his defence to the court of MM and if the accused does not want to lead
evidence in support of his defence, the court will decide the complaint on the basis of
evidence of complainant and on the basis of defence raised by the accused, whether
the accused was liable to be convicted or not. The proceedings under Section 138 of
NI Act are summary in nature and the accused has to disclose to the court of MM his
defence and the court of MM is competent enough to decide whether the accused is
liable to be convicted under Section on 138 NI Act or not in light of defence raised by
him. The accused instead of disclosing his defence to the court of MM cannot approach
this Court and disclose his defence to this Court and ask to quash the complaint under
Section 138 of NI Act in view of the defence disclosed to this Court. In India, we have
division of work in the courts. The High Court cannot transport the cases triable by the
Magistrate to itself in the garb of exercising jurisdiction under Section 482 Cr.P.C and
start deciding whether a complaint under Section 138 NI Act was maintainable or not. In
fact, the Magistrates are appointed for this very purpose only. It is the MM who has to
exercise this jurisdiction and to decide, after disclosure of defence by the accused,
M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 4
whether the complaint was maintainable or not. It is only when the accused is not satisfied
with the decision of the Magistrate, the remedy of appeal, revision etc lies. No accused
can ask the High Court to transport the complaint to itself and adjudicate upon whether
the complaint was maintainable in light of the defence raised by him for the first time
before the High Court, when he could very well raise the same defence before the court of
learned MM."
In ORG INFORMATICS LTD. Vs STATE & ANR. Crl. M. C. No.2409/2011 decided on 01.08.2011 Hon'ble High
Court of Delhi has held that:
11. At the outset, it may be pertinent here to mention that although Section 482 Cr.P.C.
starts with a non obstante clause and reiterates powers of the High Court to pass any order
to prevent the abuse of process of law or to pass any such order to secure the ends of
justice, is not conditioned or curtailed by any provision but still Court has the discretion to
see whether the invocation of Section 482 Cr.P.C. is justified or not. It means that even if
a party has preferred a revision petition under Section 397 Cr.P.C., he can still prefer a
petition under Section 482 Cr.P.C. if the ingredients for the application of Section 482
Cr.P.C. are satisfied, namely, the fact that the situation is such which would warrant the
interference by the High Court for the purpose of preventing the abuse of processes of law
or to secure the ends of justice. In the instant case, I do not find that there is any
possibility of interference by the High Court as there is no abuse of processes of law nor
does any order require to be passed that is contrary to the one which has been passed by
the Sessions Court which directed the petitioners to seek a recall of witnesses under
Section 145 (2) of the Negotiable Instrument Act for the purpose of establishing his
defence. It may also be pertinent here to mention that Section 397 sub clause 3 of Cr.P.C.
prohibits a party from filing a second revision petition. The present petitioners have
already chosen to file a petition before the Sessions Court and having done so, they are
prohibited from filing a second revision petition even though it has been termed as a
petition under section 482 Cr.P.C. Having said so, a perusal of the provisions under
Section 143 read with Section 145 of the Negotiable Instrument Act would make it amply
clear that the concern of the legislature, while incorporating Section 143 and 145 by way
of amendment w.ef. 06.02.2003, was essentially to curtail the delay which was occurring
in the disposal of these complaints under Section 138 of the Negotiable Instrument Act.
The mandate of the law was that the case should be tried summarily as far as possible and
further, the trial should be conducted on day to day basis and preferably be disposed of
within a period of six months. In the instant case, the entire effort of the petitioners seems
to be to scuttle the trial and indulge in dilatory tactics. The petitioners had already brought
the matter before the High Court earlier in the first round and when, it was disposed of by
M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 5
Hon'ble Mr. Justice A. K. Pathak on 29.09.2010. In the present case also the learned
Additional Sessions Judge has specifically observed that no prejudice is likely to be
caused to the petitioners in the, the trial proceeds according to summary procedure and the
only thing that is to be done by the present petitioner is to file their statement of defence
and then seek a recall of the complainant/respondent witness for the purpose of cross-
examination as the complainant has already made a statement that the evidence which has
been filed by way of affidavit at the stage of pre summoning may also be treated as
evidence at the stage of post summoning and therefore, in my considered view the only
purpose of filing the present petition is to indulge in dilatory tactics, which cannot be
permitted by the Court. The plea that the learned Trial Court has reviewed its own order
or that the judgment title Rajesh Agarwal case (Supra) has been applied retrospectively
have already been dealt with by the Sessions Court. I feel that it need not be gone into
afresh by this Court. "
Clearly, it is immaterial that the case was instituted prior to the pronouncement of judgment in Rajesh
Agarwal (supra). As long as evidence by way of affidavit given at the pre summoning stage is available on record, the same
can be read in evidence in the trial by virtue of Section-145(1) NI Act and therefore accused has to disclose and prove his
defence. Provisions being procedural in nature can apply with retrospective effect as held by the Hon'ble Supreme Court in
Mandavi (supra) and matter can not be fixed for post summoning complainant's evidence as held by the Hon'ble High court of
Delhi in Gurpreet Singh (supra) and M/s Kalucha Papers(supra).
In view of these authoritative pronouncements, I am inclined to hold that no one can claim that the case was
instituted prior to the pronouncement of judgment in Rajesh Agarwal (supra), ratio of Rajesh Aggarwal (Supra) cannot be
made applicable to the present proceedings. The ratio has to be applied.
3. Consequently, this judgment.
Discussion on Legal provisions:
4. There are some mandatory presumptions of law arising in favour of the complainant. The same may be summarized
as under:
4.1 Section-118 of Negotiable Instruments 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, endorsed,
M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 6
negotiated or transferred, was accepted, endorsed, negotiated or transferred for
consideration;"
Presumptions are:
i. Cheque was drawn for consideration;
ii. Cheque was transferred for consideration;
iii. Cheque was accepted for consideration.
4.2. Section-139 of Negotiable Instruments Act reads as under:
"139. Presumption in favour of holder.- It shall be presumed, unless the contrary is
proved, that the holder of a cheque received the cheque, of the nature referred to in Section
138 for the discharge, in whole or in part, of any debt, or other liability."
Presumptions are:
i. Holder of the cheque has lawfully received the cheque, meaning thereby that the
holder was in lawful possession of the cheque;
ii. The cheque was given in discharge of any debt or liability;
iii. 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 vs S. Mohan (2010) 11 SCC 441) with the observation:
"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
specific facts and circumstances therein.")
iv. The cheque was of the nature as described in section-138;
M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 7
v. The cheque was drawn by the person who was maintaining the account pertaining to
the cheque;
vi. Amount of money mentioned in the cheque was intended to be given;
4.3. Section-146 of Negotiable Instruments Act reads as under:
"146. Bank's slip prima facie evidence of certain facts.-
The court shall, in respect of every proceeding under this Chapter, on production of bank's
slip or memo having thereon the official mark denoting that the cheque has been
dishonoured, presume the fact of dishonour of such cheque, unless and until such fact is
disproved."
Presumptions are:
i. The cheque has been dishonoured;
ii. The cheque has been so dishonoured for the reason mentioned in the memo.
4.4. Section-27, General Clauses Act reads as under:
"27. Meaning of service by post -
Where any (Central Act) or Regulation made after the commencement of this Act
authorizes of requires any document to be served by post, where the expression "serve" or
either of the expressions "give" or "send" or any other expression in used, then, unless a
different intention appears, the service shall be deemed to be effected by properly
addressing pre-paying 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."
Presumptions are:
i. Letter has been served upon the accused;
ii. The same is served within the normal reasonable time;
iii. The content of the letter was within the knowledge of the accused. (see a three
judges bench decision of Hon'ble Supreme Court if India in Harcharan Singh vs
Shiv Rani & Ors. AIR 1981 SC 1248).
M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 8
In this respect, a three judges bench of Hon'ble Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed and
Another (2007) 6 SCC 555 has held that:
"17. It is also to be borne in mind that the requirement of giving of notice is a clear
departure from the rule of Criminal Law, where there is no stipulation of giving of a notice
before filing a complaint. Any drawer who claims that he did not receive the notice
sent by post, can, within 15 days of receipt of summons from the court in respect of
the complaint under Section 138 of the Act, make payment of the cheque amount and
submit to the Court that he had made payment within 15 days of receipt of summons
(by receiving a copy of complaint with the summons) and, therefore, the complaint is
liable to be rejected. A person who does not pay within 15 days of receipt of the summons
from the Court along with the copy of the complaint under Section 138 of the Act, cannot
obviously contend that there was no proper service of notice as required under Section
138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act
and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso
would defeat the very object of the legislation. As observed in Bhaskarans case (supra), if
the giving of notice in the context of Clause (b) of the proviso was the same as the receipt
of notice a trickster cheque drawer would get the premium to avoid receiving the notice by
adopting different strategies and escape from legal consequences of Section 138 of the Act.
18. In the instant case, the averment made in the complaint in this regard is: Though the
complainant issued lawyers notice intimating the dishonour of cheque and demanded
payment on 4.8.2001, the same was returned on 10.8.2001 saying that the accused was out
of station. True, there was no averment to the effect that the notice was sent at the correct
address of the drawer of the cheque by registered post acknowledgment due. But the
returned envelope was annexed to the complaint and it thus, formed a part of the complaint
which showed that the notice was sent by registered post acknowledgment due to the
correct address and was returned with an endorsement that the addressee was abroad. We
are of the view that on facts in hand the requirements of Section 138 of the Act had been
sufficiently complied with and the decision of the High Court does not call for
interference."
On mere explanation, denial and minor inconsistencies:
5. Without any doubt, in a criminal case, the prosecution has to stand on its own lags. No blemishes in the story of the
accused will give a right to the complainant to claim that he has establish his case. Even accused can always rely upon the
M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 9
material and circumstances brought on record by the complainant. However, there must be something more than a bare denial
or a mere explanation.
5.1. It is a settled law that a mere denial of passing off consideration is not sufficient. In Bharat Barrel & Drum
Manufacturing Company v. Amin Chand Pyarelal, (1993) 3 SCC 35 (Para. 12) it has been held that:
"Upon consideration of various judgments as noted herein above, 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 non-existence 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 improbably 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 the 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
direct evidence as the existence of negative evidence is neither possible nor contemplated and
even if led, is to be seen with a doubt. The bare denial of the passing of the consideration
apparently does not appear to be any defence. Something which is probable has to be
brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To
disprove the presumption, the defendant has to bring on record such facts and
circumstances upon consideration of which the court may either believe that the
consideration did not exist or its non-existence was so probable that a prudent man would,
under the circumstances of the case, act upon the plea that it did not exist."
5.2. In the present case, no such circumstances have been brought on record which suggest the inference that
consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the
case, act upon the plea that it did not exist.
5.3. Further, a mere explanation given by the accused is also not sufficient. In case titled V S Yadav vs Reena CrLA No.
1136/2010 decided on 21.09.2010, Hon'ble High Court of Delhi has observed that:
M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 10
"3. The appellant had taken a stand that no reply to the notice of legal demand was
sent by the respondent, instead, envelopes with blank sheets in it were sent by the
respondent. In her examination under Section 281 Cr. P.C. she did not deny issuance
of cheques, but, took a defence that cheque were issued as security for seeking loan
but no loan was advanced and the cheques were therefore without consideration. The
learned MM observed that conviction under Section 138 of N.I. Act cannot be made
acting on evidence of complainant and considering the presumption under Section
139 of N.I. Act. The complainant has to prove beyond reasonable doubt the debt or
liability of the accused. Learned MM observed that complainant had not
specified the date of giving loan and a reasonable man would remember the date
of giving substantial sum of money as loan to other and this blissful forgetness of
the date by the complainant raised doubt about the liability of the accused, more
so, in view of the stand taken by the accused that the cheques were issued as security
and the same were never returned.
*******
5. It must be borne in mind that the statement of accused under Section 281 Cr. P.C. or under Section 313 Cr. P.C. is not the evidence of the accused and it cannot be read as part of evidence. The accused has an option to examine himself as a witness. Where the accused does not examine himself as a witness, his statement under Section 281 Cr. P.C. or 313 Cr. P.C. cannot be read as evidence of the accused and it has to be looked into only as an explanation of the incriminating circumstance and not as evidence. There is no presumption of law that explanation given by the accused was truthful. In the present case, the accused in his statement stated that he had given cheques as security. If the accused wanted to prove this, he was supposed to appear in the witness box and testify and get himself subjected to cross examination. His explanation that he had the cheques as security for taking loan from the complainant but no loan was given should not have been considered by the Trial Court as his evidence and this was liable to be rejected since the accused did not appear in the witness box to dispel the presumption that the cheques were issued as security. Mere suggestion to the witness that cheques were issued as security or mere explanation given in the statement of accused under Section 281 Cr. P.C., that the cheques were issued as security, does not amount to proof. Moreover, the Trial Court seemed to be obsessed with idea of proof beyond reasonable doubt forgetting that offence under Section 138 of N.I. Act was a technical offence and the complainant is only supposed to prove that the cheques issued by the respondent were dishonoured, his statement that cheques were issued against liability or debt is sufficient proof of the debt or liability and the onus shifts to the respondent/ accused to show the circumstances under which the cheques came to be issued and this could be M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 11 proved by the respondent only by way of evidence and not by leading no evidence.
*******
7..............The Trial Court in this case turned a blind eye to the fact that every accused facing trial, whether under Section 138 of N.I. Act or under any penal law, when charged with the offence, pleads not guilty and takes a stand that he has not committed the offence. Even in the cases where loan is taken from a bank and the cheques issued to the bank stand dishonoured, the stand taken is same. Mere pleading not guilty and stating that the cheques were issued as security, would not give amount to rebutting the presumption raised under Section 139 of N.I. Act. If mere statement under Section 313 Cr. P.C. or under Section 281 Cr. P.C. of accused of pleading not guilty was sufficient to rebut the entire evidence produced by the complainant/ prosecution, then every accused has to be acquitted. But, it is not the law. In order to rebut the presumption under Section 139 of N.I. Act, the accused, by cogent evidence, has to prove the circumstance under which cheques were issued. It was for the accused to prove if no loan was taken why he did not write a letter to the complainant for return of the cheque. Unless the accused had proved that he acted like a normal businessman/prudent person entering into a contract he could not have rebutted the presumption u/s 139 N.I. Act. If no loan was given, but cheques were retained, he immediately would have protested and asked the cheques to be returned and if still cheques were not returned, he would have served a notice as complainant. Nothing was proved in this case."
5.4. In Rangappa(supra), the case of the accused was that of a lost cheque. However initially, the High Court dealing with matter had held that:
'6. Once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under Section 139 of the Negotiable Instruments Act has to be raised by the Court in favour of the complainant. The presumption referred to in Section 139 of the N.I. Act is a mandatory presumption and not a general presumption, but the accused is entitled to rebut the said presumption. What is required to be established by the accused in order to rebut the presumption is different from each case under given circumstances. But the fact remains that a mere plausible explanation is not expected from the accused and it must be more than a plausible explanation by way of rebuttal evidence. In other words, the defence raised by way of rebuttal evidence must be probable and capable of being accepted by the Court. The defence raised by the accused was that a blank cheque was lost by him, which was made use of by the complainant. Unless this barrier is crossed by the M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 12 accused, the other defence raised by him whether the cheque was issued towards the hand loan or towards the amount spent by the complainant need not be considered. ...' The judgment of conviction upon the above basis recorded by the Hon'ble High Court was finally upheld by the Hon'ble Supreme Court in Rangappa (supra).
It was further held in Rangappa (supra) as under:
"Coming back to the facts in the present case, we are in agreement with the High Court's view that the accused did not raise a probable defence. As noted earlier, the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the 'stop payment' instructions to his bank. Furthermore, the instructions to 'stop payment' had not even mentioned that the cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version. Apart from not raising a probable defence, the appellant-accused was not able to contest the existence of a legally enforceable debt or liability. The fact that the accused had made regular payments to the complainant in relation to the construction of his house does not preclude the possibility of the complainant having spent his own money for the same purpose. As per the record of the case, there was a slight discrepancy in the complainant's version, in so far as it was not clear whether the accused had asked for a hand loan to meet the construction- related expenses or whether the complainant had incurred the said expenditure over a period of time. Either way, the complaint discloses the prima facie existence of a legally enforceable debt or liability since the complainant has maintained that his money was used for the construction-expenses. Since the accused did admit that the signature on the cheque was his, the statutory presumption comes into play and the same has not been rebutted even with regard to the materials submitted by the complainant. "
On requirement to establish the fact within special knowledge:
5.5. In Rajesh Agarwal vs State decided on 28.07.2010, Hon'ble High Court of Delhi has observed that:
"9. An argument is raised that the accused, under Article 21 of Constitution of India, has a right of silence in a criminal trial and therefore he cannot be forced to disclose his defence. This argument is misconceived in view of Section 106 of Indian Evidence Act. Since an M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 13 offence under section 138 of Negotiable Instrument Act is technical in nature and defence which an accused can take are inbuilt, like the cheque was given without consideration, the accused was not Director at that time, accused was a sleeping partner or a sleeping Director, cheque was given as a security etc. etc., the onus of proving these defences is on the accused alone, in view of section 106 of Evidence Act. Since the mandate of Legislature is trial of such cases in a summary manner, the evidence already given by the complainant by way of affidavit is sufficient proof of the offence and this evidence is not required to be given again in terms of section 145(1) of N.I. Act and has to be read during the trial. The witnesses i.e. the complainant or other witnesses can be recalled only when accused makes an application and this application must disclose the reason why accused wants to recall the witnesses and on what point witness is to be cross examined. One must not forget that the offence under section 138 of N.I. Act is not of the kind of offence as in IPC where the State prosecutes a person for offence against the society. The offence under section 138 of N.I. Act is an offence in the personal nature of the complainant and it is an offence made under N.I. Act so that the trust in commercial transactions is not destroyed because of the dishonour of cheques. When it is within the special knowledge of the accused as to why he is not to face trial under section 138 N.I. Act, he alone has to take the plea of defence and burden cannot be shifted to complainant. 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. I, therefore, consider that the proper procedure to be followed by MM is that soon after summoning, the accused must be asked to disclose his defence & his plea should be recorded. Where an accused takes no defence and simply says "I am innocent", there is no reason for the MM to recall the complainant or witnesses during summary trial and the evidence already given by the complainant has to be considered sufficient and the trial court can ask the accused to lead his evidence in defence on the plea of innocence as the evidence of the complainant is already there. In a summary trial, a complainant or his witness cannot be recalled in the court for cross examination only for the sake of pleasure. Once the complainant has brought forward his case by giving his affidavit about the issuance of cheque, dishonour of cheque, issuance of demand notice etc., he can be cross examined only if the accused makes an application to the court as to on what point he wants to cross examine the witness (es) and then only the court shall recall the witness by recording reasons thereto."
On representation of AR of the complainant:
5.6. Hon'ble Supreme Court in M/S. Shankar Finance & ... vs State Of Andhra Pradesh & Ors on 26 June, 2008 has held that:
M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 14 "10. This Court has always recognized that the power of attorney holder can initiate criminal proceedings on behalf of his Principal. In Ram Chander Prasad Sharma v.
State of Bihar and Anr. [AIR 1967 SC 349], the prosecution was commenced in regard to tampering of electric meter seals, with a charge sheet submitted by the police after investigation on a first information report by one Bhattacharya, Mains Superintendent of PatnaElectric Supply Co. (`PES Co.' for short). An objection was raised by the accused that the prosecution wasincompetent as it was not launched by a person competent to do so. The said objection was based on section50 of the Indian Electricity Act, 1910, which provided that no prosecution shall be instituted against anyperson for any offence against that Act or any rule, licence or order thereunder, except at the instance of the Government or an Electric Inspector, or of a person aggrieved by the same. This Court held : "... The P.E.S. Co., however, is a body corporate and must act only through its directors or officers. Here we have the evidence of Ramaswami to the effect that he held a general power of attorney from the P.E.S. Co., and that he was specifically empowered thereunder to act on behalf of P.E.S. Co., in all legal proceedings. The evidence shows that it was at his instance that Bhattacharya launched that first information report and, therefore, it would follow that the law was set in motion by the "person aggrieved". The objection based on Section 50 must, therefore, be held to be untenable."
12. The High Court has referred to the fact that the sworn statement before the learned Magistrate was of the attorney holder of the payee and not by the payee in person. According to the tenor of the order of the High Court, this was also irregular. But we find nothing irregular in such a procedure. It is now well settled that the object of section 200 of the Code in providing for examination of the complainant and his witnesses by the court is to satisfy itself about the existence of a prima facie case against the person accused of the offence and to ensure that such person is not harassed by false and vexatious complaints by issue of process; (See Nirmaljit Singh Hoon v. State of West Bengal - 1973 (3) SCC 753). Where the proprietor of the proprietary concern has personal knowledge of the transaction and the proprietor has signed the complaint, he has to be examined under section 200 of the Code. A power of attorney holder of the complainant who does not have personal knowledge, cannot be examined. But where the attorney holder of the complainant is in charge of the business of the payee- complainant and the Attorney holder alone is personally aware of the transactions, and the complaint is signed by the attorney holder on behalf of the payee-complainant, there is no reason why the attorney holder cannot be examined as the complainant. We may, in this connection, refer to the decision of this Court in Janki Vashdeo Bhojwani v. Indusind Bank Ltd. [2005 (2) SCC 217], where the scope M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 15 of an attorney holder `acting' on behalf of the principal in a civil suit governed by Code of Civil Procedure was examined. This Court observed: "Order 3 Rules 1 and 2 CPC empower the holder of power of attorney to "act" on behalf of the principal. In our view the word "acts" employed in Order 3 Rules 1 and 2 CPC confines only to in respect of "acts" done by them power-of-attorney holder in exercise of power granted by the instrument. The term "acts" would not include deposing in place and instead of the principal. In other words, if the power-of-attorney holder has rendered some "acts" in pursuance of power of attorney, he may depose for the principal in respect of such acts, but he cannot depose for the principal for the acts done by the principal and not by him. Similarly, he cannot depose for the principal in respect of the matter of which only the principal can have a personal knowledge and in respect of which the principal is entitled to be cross-examined."[Emphasis supplied] The principle underlying the said observations will apply to cases under section 138 of the Act. In regard to business transactions of companies, partnerships or proprietary concerns, many a time the authorized agent or attorney holder may be the only person having personal knowledge of the particular transaction; and if the authorized agent or attorney-holder has signed the complaint, it will be absurd to say that he should not be examined under section 200 of the Code, and only the Secretary of the company or the partner of the firm or the proprietor of a concern, who did not have personal knowledge of the transaction, should be examined. Of course, where the cheque is drawn in the name of the proprietor of a proprietary concern, but an employee of such concern (who is not an attorney holder) has knowledge of the transaction, the payee as complainant and the employee who has knowledge of the transaction, may both have to be examined. Be that as it may. In this case we find no infirmity."
Result:
6. I accordingly return a finding of guilt against the accused person.
7. The accused M.S. Arora is hereby convicted for the offence as punishable under Section-138 NI Act, 1881 charged in the present complaint case.
8. Let the convict be heard on the point of sentence.
9. A copy of this order be placed on the official website of the District Court.
(Rakesh Kumar Singh) MM (NI Act)-01, Central District, Delhi 29.02.2012 M/s Mars Shipping and Logistics vs M.S. Arora CC No.4122/10 16