Delhi District Court
M/S Nav Enterprises vs . Inderdeep Singh & Ors. on 21 October, 2020
IN THE COURT OF MS. APOORVA RANA
METROPOLITAN MAGISTRATE (SOUTH) 01,
N.I. ACT, SAKET COURTS : NEW DELHI
CC No. 461360/2016
M/s NAV Enterprises Vs. Inderdeep Singh & Ors.
1. Complaint Case number : CC No. 461360/2016
2 Name of the complainant : M/s NAV Enterprises,
Through its proprietor
Mr. Ramesh Sharma,
Having office at : 40, Savitri
Nagar, Malviya Nagar, New
Delhi110017.
3. Name and address of the : 1. Inderdeep Singh,
accused S/o Late Harjinder Singh,
R/o E41, Second Floor, Kirti
Nagar, New Delhi110015.
2. Kabul Silk Store,
4882, Kucha Ustad Dagh,
Chandni Chowk, Delhi110006.
4. Offence complained of or : Under Section 138 of the
proved Negotiable Instruments Act,
1881.
5. Plea of the accused : Pleaded not guilty and claimed
trail.
6. Final Order : Accused no.1 - Convicted
Accused no.2 - Not summoned
CC No. 461360/2016
M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 1 of 17
7. Date of Institution : 19.05.2016
8. Date of Reserving the : 11.02.2020
Judgment
9. Date of pronouncement : 21.10.2020 (normal functioning
of the Court was suspended
w.e.f. 17.03.2020 due to Covid
19 Pandemic)
Judgment:
1. The facts giving rise to the present complaint are that the accused no.1, Inderdeep Singh, (hereinafter referred to as "the accused"), approached the complainant at its office for purchase of some goods on behalf of Kabul Silk Store (accused no.2, against which cognizance was not taken and complaint was dismissed vide order dated 23.05.2016), which request of the accused was accepted by the complainant and the required goods were delivered by the complainant to the accused vide invoice number 036 and challan number 432, both dated 04.10.2015, for a sum of Rs.1,35,365/. It has been further averred that in respect of the said liability, the said accused had issued a post dated cheque bearing no. 057784, dated 23.03.2016, for a sum of Rs.1,35,365/, drawn on Oriental Bank of Commerce, Fateh Puri, Chandni Chowk, Delhi (hereinafter referred to as the 'cheque in question'), in favour of the complainant. That the cheque in question was returned upon presentation on account of CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 2 of 17 "funds insufficient" vide return memo dated 30.03.2016. Further, legal demand notice dated 28.04.2016 was duly sent by complainant to the accused in this regard, but to no avail. The complainant has stated that accused failed to pay the cheque amount within the statutory period. Hence, the present complaint under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act').
2. Upon service of summons, the accused entered an appearance, through counsel, in the present matter for the first time on 01.06.2017 and was admitted to bail on 08.06.2017. Notice under Section 251 Cr.P.C. was served upon accused on 08.08.2017, to which he pleaded not guilty and claimed trial. In his statement of defence, the accused stated that the cheque in question was given in respect of a chit fund maintained by the complainant, of which the accused was a member and that the cheque in question has been misused by the complainant as the accused has no liability towards him. He admitted his signatures on the cheque in question and also stated that other details were in his handwriting. Thereafter, accused was allowed to crossexamine the complainant under section 145 (2) NI Act. After cross examination of the complainant, matter was fixed for recording of statement of the accused under Section 313 Cr.P.C. In the said statement recorded on 17.04.2018, the accused reiterated the defence taken by him at the time of framing of notice u/s 251 Cr.P.C. Thereafter, the matter was fixed for defence evidence. Defence evidence was closed on 07.01.2019 and thereafter, the matter was fixed for final arguments.
CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 3 of 17Evidence
3. In order to support the case of the complainant, the proprietor of the complainant firm, Mr. Ramesh Sharma, stepped into the witness box as CW1 and tendered his affidavit Ex.CW1/1 into evidence, wherein, averments made in the complaint were reiterated. He also relied upon various documents such as Ex.CW1/A which is cheque in question, Ex.CW1/B which is cheque return memo, Ex.CW1/C which is legal notice, Ex.CW1/D which are postal receipts, Ex.CW1/E & Ex.CW1/F which is tracking report, Ex.CW1/X which is invoice dated 04.10.2015 and Ex.CW1/Y which is present complaint. No other witness was examined by the complainant.
4. Accused, on the other hand, examined himself as DW1 in support of his defence. No other witness was examined by the accused.
Arguments
5. Ld. counsel for the complainant has argued that all the requirements of Section 138 NI Act have been met with in the present case, and hence, the accused be convicted. On the other hand, it has been argued on behalf of accused that the complainant has not been able to prove his case beyond reasonable doubt and that he has no liability to discharge towards the complainant. I have heard the arguments and also gone through the record carefully.
CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 4 of 17Points for determination and reasons for decision
6. For an offence under Section 138 of NI Act to be made out against the accused, the complainant must prove the following points:
(i) The accused issued a cheque on account maintained by him with a bank.
(ii) The said cheque has been issued in discharge, in whole or in part, of any legal debt or other liability.
(iii) The said cheque has been presented to the bank within a period of 3 months from the date of cheque or within the period of its validity.
(iv) The aforesaid cheque, when presented for encashment, was returned unpaid/dishonored.
(v) The payee of the cheque issued a legal notice of demand to the drawer within 30 days from the receipt of information by him from the bank regarding the return of cheque.
(vi) The drawer of the cheque failed to make the payment within 15 days from the receipt of above mentioned legal notice of demand.
7. Thus, on the basis of the evidence adduced, the points that warrant determination are as follows:
Whether the accused issued the cheque in question to the complainant for discharge, in whole or in part, of any debt or other liability?
8. It is a well settled principle of criminal jurisprudence that a CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 5 of 17 criminal trial proceeds on the presumption of innocence of the accused i.e. an accused is presumed to be innocent unless proven guilty. Thus, normally the initial burden to prove is on the complainant/prosecution to prove the guilt of the accused. Also, the standard of proof required is that of "beyond reasonable doubt". However, in offences under Section 138 NI Act, there is reverse onus clause contained in Sections 118 and 139 of the Act. Thus, the primary burden of proof in order to prove the issuance of the cheque lies upon the complainant, and the same has to be proved beyond reasonable doubt, unless the accused admits the same.
Further, the explanation to Section 138 of the Negotiable Instruments Act, 1881 states that for the purpose of this Section, "debt or other liability" means a legally enforceable debt or other liability.
However, once the issuance of cheque is established, either by admission or by positive evidence, the presumption under Section 139 of the Negotiable Instruments Act, 1881 arises. Section 139 of the Negotiable Instruments Act, 1881 states 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. Therefore, here the onus shifts upon the accused to prove the nonexistence of debt or other liability. Section 139 of the Negotiable Instruments Act, 1881 uses the word "shall presume", and the meaning of the word "shall presume" in Section 4 of the Evidence Act, shows that the presumption under Section 139 is rebuttable.
Furthermore, the standard of proof required to rebut the CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 6 of 17 presumption under Section 139 is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or other liability, the onus shifts back to the complainant to prove by way of evidence, beyond reasonable doubt, that the cheque in question was issued by the accused in discharge, whole or in part, of any debt or other liability, and now the presumptions under Section 118 (a) and Section 139 will not come to the rescue of the complainant. [Bharat Barrel & Drum Manufacture Co. Vs. Amin Chand Pyarelal (1999) 3 SCC 3S and M.S. Narayan Menon Vs. State of Kerala (2006) 6 SCC 39 relied upon].
Mode of Proof: The accused may adduce direct evidence to prove that the note in question was not supported by consideration, and that there was no debt or liability to be discharged by him. However, the Court need not insist in every case that the accused should prove the nonexistence of the consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that a bare denial of passing of consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable, has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances (including presumption under Section 114 Evidence Act), upon the consideration of which, the Court may either believe that the consideration and debt did not exist, or their non existence was so probable that a prudent man would, under CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 7 of 17 circumstances of the case, act upon the plea that they did not exist. [Kishan Rao Vs. Shankaguda, 2018 (8) SCC 165, Mosaraf Hossain Khan Vs. Bhageeratha Engg. Ltd. & Ors (2006) 3 SCC 658, Goa Plast (P) Ltd. Vs. Chico Ursula D Souza (2004) 2 SCC 235, Monaben Ketanbhai Shah Vs. State of Gujarat (2004) 7 SCC 15, Prem Chand Vijay Kumar Vs. Yashpal Singh (2005) 4 SCC 417, DCM Financial Services Vs. J N Sareen (AIR 2008 SC 2255), K. Bhaskaran Vs. Shankaran Vaidhyan Balan (1999) 7 SCC 510 relied upon].
9. Averting to the facts of the present case, the accused has admitted in his defence against substance of accusation u/s 251 Cr.P.C. as well as in his statement u/s 313 Cr.P.C. that the cheque in question had been signed and issued by him and that other details on the same are also in his handwriting. As per Section 58 of the Indian Evidence Act, 1872, "No fact needs to be proved in any proceeding which the parties thereto or their agents agree to admit at the hearing, or which, before the hearing, they agree to admit by any writing under their hands, or which by any rule of pleading in force at the time they are deemed to have admitted by their pleadings: provided that the Court may, in its discretion, require the facts admitted to be proved otherwise than by such admissions." Due to the aforementioned admission made by the accused, the issuance of cheque in question by the accused in favour of the complainant stands proved.
10. Now, in his substance of accusation u/s 251 Cr.P.C. as well as in his statement under section 313 Cr.P.C., the accused has taken the CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 8 of 17 defence that the cheque in question was given in respect of a chit fund maintained by the complainant, of which the accused was a member and that the cheque in question has been misused by the complainant as the accused has no liability towards him. However, this defence of the accused does not inspire confidence because of the following reasons:
a) Though the accused has taken the defence that the cheque in question was issued in respect of a chit fund maintained by the complainant, he failed to bring on record any evidence to show that such a chit fund was indeed, run by the complainant or that the accused was a member thereof. On the contrary, the accused even failed to give the slightest of details regarding the alleged chit fund run by the complainant. Neither did the accused know the name under which the chit fund was run by the complainant, nor was he aware as to how many members were there in the alleged chit fund. He in fact, did not even know as to how the instalments of Rs.15,000/ were payable by him in respect of the total chit fund amount of Rs.2,00,000/. In such a scenario, one cannot turn a blind eye to the fact that the accused may have concocted his defence in order to avoid his liability towards the complainant.
b) It has been admitted by the accused that all the details on the cheque in question were filled up by him. Now, even if it is to be assumed for a moment that the cheque in question was issued in respect of the chit fund maintained by the complainant, the accused failed to explain as to why the cheque in question was issued in the name of "NAV Enterprises", i.e., the proprietorship concern of the complainant, when the accused did not even know the name under which the chit CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 9 of 17 fund was run.
c) Further, an inconsistency is brought to light in the version of the accused when, during his deposition as DW1, the accused stated that he has no connection whatsoever, with the Kabul Silk Store, while, during his statement of defence under section 313 of Cr.P.C., the accused stated that he worked at Kabul Silk Store in the capacity of a manager.
Not only this, during his testimony as DW1, the accused deposed that M/s. Kabul Silk Store is a partnership concern, with his mother and his uncle being partners thereof, which only further falsifies his own contention that the accused had no connection with the said store and thus, renders the defence of the accused dubious.
d) It has been argued by the counsel for the accused that the complainant failed to bring on record the ledger, balance sheet and proof of delivery of goods in support of his case. However, it is pertinent to note that as CW1, the complainant has not once stated that the said documents were not available with him. Rather, the complainant clearly mentioned that the ledger account statement pertaining to the transaction in question was maintained by him and that the transaction in question must also have been reflected in his balance sheet for financial year 20152016. Despite this statement of the complainant, the accused did not ask for the production of these documents from the complainant. In such a scenario, when the accused did not seek to have these documents produced before the court despite the opportunity for the same, he cannot, at this stage, draw sweeping presumption that nonproduction of these documents should raise an adverse presumption against the complainant. On the contrary, the CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 10 of 17 conduct of the accused in not having these documents called in the court raises an adverse inference against the accused himself to the effect that he did not ask for these documents because they might have been in favour of the complainant (reliance placed upon Suresh Thomas v. Mod Enterprises, Crl. Revision Petition No.512/2016, Delhi High Court).
e) Next, a suggestion was put to CW1 during his crossexamination that the bill/invoice, Ex.CW1/X, is a forged and fabricated document, which suggestion was denied by CW1. In terms of section 103 of the Indian Evidence Act, 1872, the burden of proving this lay upon the accused, but the accused failed to prove the same by way of any documentary or oral evidence.
f) It has also been argued by the counsel for the accused that the complainant operates from Malviya Nagar, New Delhi, but he illegally supplied the goods from Amritsar. This contention of the accused is absolutely baseless as the accused has failed to prove as to why the complainant could not have supplied the said goods from Amritsar, while operating from Malviya Nagar. In fact, during his cross examination, CW1 mentioned the fact that the goods were supplied to the accused from his factory situated in Amritsar and thus, the connection of the complainant with Amritsar stands satisfactorily explained.
g) Finally, the testimony of the complainant as CW1, visavis his complaint and affidavit of evidence, went unimpeached and no inconsistency was brought to light by the accused as would prove to be fatal to the case of the complainant.
CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 11 of 1711. From the above discussion, there appears to be no iota of doubt in concluding that the cheque in question was issued by the accused in discharge of his legal liability towards the complainant.
12. According to the scheme of Section 138 and 139 of NI Act, as herein before discussed, the complainant needs to prove the existence of legal liability, beyond reasonable doubt, only after the accused has succeeded in rebutting the presumption raised against him u/s 139 of the NI Act, on the scale of preponderance of probability. In the present matter, the complainant has placed on record the bill/invoice raised against the accused in respect of the transaction in question and the accused has failed to prove that the said document was a forged and fabricated document. Further, no cogent evidence or glaring loophole has been brought to light to raise suspicion in the version of the complainant.
13. Thus, in light of the above discussion, the accused has failed to discharge the burden of rebutting the presumption that lay upon him under S.139 of the NI Act, and therefore, the issuance of cheque by the accused to the complainant as well as existence of a legally enforceable liability, stands duly established.
Whether the cheques were, on presentation, dishonoured due to reasons specified in Section 138 of Negotiable Instruments Act, 1881 ?
CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 12 of 1714. As per Section 138 of Negotiable Instruments Act, 1881, the cheque must have been returned back as unpaid by the bank 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. But it has been held by the Hon'ble Supreme Court in various cases that "insufficiency of amount standing to credit of account/exceeds arrangement with the bank" is a genus, and dishonour for reasons such as "account closed/ blocked/ payment stopped/refer to drawer/signatures do not match/image not found" are only species of that genus. In all such cases, it shall be presumed that the amount standing to the credit of the accused's account, was insufficient to honour the cheque, as such results can possibly be brought about by the accused himself. Whether or not the dishonour was brought about by reason of insufficiency of funds is a matter of evidence, and the burden to prove that the remarks/reason for dishonour mentioned in the return memo was not due to paucity of funds, but due to some other valid cause, including absence of any debt or other liability, is upon the accused under Section 139 of the Negotiable Instruments Act. In all such cases, the question whether or not there was a legally recoverable debt or liability for discharge whereof the cheque was issued, would be a matter that the trial Court has to examine, having regard to the evidence adduced before it, and keeping in view the statutory presumption that unless rebutted, the cheque is presumed to have been issued for a valid consideration. The offence is not made out the moment a cheque is returned back as unpaid, but after a legal CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 13 of 17 notice has been issued regarding the same, and the payment has still not been made. The net effect is that all the aforesaid reasons will fall within the purview of "dishonour" within the meaning of Section 138 of Negotiable Instruments Act [Modi Cement Ltd. Vs. Kuchil Kumar Nandi (1998) 3 SCC 249, NEPC Micon Ltd. Vs. Magma Leasing Ltd. (1999) 4 SCC 253, M/s Laxmi Dyechem Industries Vs. State of Gujarat (2012) 3 SCC 375].
15. In the present case, the return memo Ex.CW1/B has been admitted by the accused in his statement made u/s 313 Cr.P.C. The reason for return, as per the return memos is "funds insufficient"
which falls straight within the purview of 138 of NI Act. Hence, it can be safely concluded that the return of cheque in question as unpaid was due to the reasons specified in Section 138 NI Act.
Whether the complainant has made a demand for payment of the amount of money in the cheques, by giving to the drawer, a notice in writing, within 30 days of the receipt of information by him, from the bank, regarding the return of the cheques as unpaid and the accused has failed to make the payment of the said amount of money to the complainant, within 15 days of the receipt of said notice?
16. The Hon'ble Supreme Court of India in C.C. Alvi Haji Vs. Palapetty Mohammad (2007) 6 SCC 555, has held that when the notice is sent by registered post, by correctly addressing the drawer CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 14 of 17 of the cheque, the mandatory requirement of issuance of the notice in terms of clause (b) of proviso to Section 138 of Negotiable Instruments Act, stands complied with, as per the statutory presumptions under Section 27 of the General Clauses Act and Section 114 of the Indian Evidence Act. Any drawer who claims that he did not receive the notice sent by post, can within 15 days of the receipt of summons from the Court in respect of the complaint under Section 138 of Negotiable Instruments Act, 1881, 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 the 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 summons from the Court along with 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 General Clauses Act and Section 114 of the Indian Evidence Act.
Needless to mention, the legal notice must satisfy the requirements of Section 138. The accused must be called upon, by such notice, to pay the amount which was payable under the cheque issued by it. [Central Bank of India Vs. M/s Saxons Farms (AIR 1999 SC 3607), M/s Rahul Builders Vs. M/s Arihant Fertilisers and Chemicals & Anr. (2008) Cr.L 4520 SC relied upon].
17. In the present case, the complainant has duly proved the legal notice Ex.CW1/C and postal receipts Ex.CW1/D and has been CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 15 of 17 successful in raising presumption of service in due course under section 114 of the Indian Evidence Act, 1872 and section 27 of the General Clauses Act, which the accused has failed to rebut by means of any positive evidence. In fact, the accused made an evasive statement with regard to receipt of legal notice by stating that he did not remember whether he had received it or not. No reply to the said legal demand notice has been brought on record by the accused. It is a settled law that failure on part of the accused to reply to the statutory notice under section 138 of the NI Act would lead to the inference that there is merit in the complainant's version (see Rangappa vs Sri Mohan, 2010 SC, relied upon in Santosh Mittal vs Sudha Dayal, 2014 Del HC). Testimony of CW1 also has remained unrebutted in this regard.
Thus, point number 3 also stands answered in the affirmative.
Whether the cheques were presented within the period of its validity or within, 3 months from the date on which they were drawn, and the complaint has been made, within a period of one month from the date when the cause of action has arisen under clause (c) of the proviso to Section 138 of Negotiable Instruments Act, 1881?
18. In the present case, both the requirements have been admittedly satisfied as the cheque bears the date 23.03.2016, the return memo is dated 30.03.2016, the legal notice was sent on 29.04.2016 and served upon the accused on 30.04.2016 and the complaint was filed on CC No. 461360/2016 M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 16 of 17 19.05.2016, which is within the period of one month from the date on which cause of action arose under clause (c) of proviso to Section 138 Negotiable Instruments Act, 1881.
Conclusion
19. In view of the above discussion, I am of the considered opinion that the complainant has established his case by leading cogent evidence and accused has failed to rebut statutory presumptions arising against him. Accused no.1 Inderdeep Singh, S/o Late Harjinder Singh, is hereby convicted for the offence punishable under Section 138 NI Act. Let the convict be heard separately on quantum of sentence. Copy of this judgment be given free of cost to the convict.
Digitally
signed by
APOORVA
Announced on 21.10.2020 through APOORVA RANA
videoconferencing in presence of RANA Date:
2020.10.21
17:06:49
the accused and his counsel. +0530
(Apoorva Rana)
Metropolitan Magistrate01 (South),
NI Act/Saket/New Delhi/21.10.2020
CC No. 461360/2016
M/s NAV Enterprises Vs. Inderdeep Singh & Ors. Page 17 of 17