Delhi District Court
Complainant vs . Bratindranath Banerjee (2001) 6 Scc ... on 4 March, 2022
IN THE COURT OF METROPOLITAN MAGISTRATE (CENTRAL) NI
ACT-04, CENTRAL DISTRICT, TIS HAZARI COURT, DELHI.
Presided over by: - Ms. Kratika Chaturvedi, DJS
CC No. 533771/2016
Unique case ID No. DLCT020010062007
In the matter of:-
Sh. D.S. Bharitya
S/o Late B.D. Bhartiya
Proprietor of:-
M/S Aackriti Alu-met
Office at- 8318, Street no. 4,
Multani Dhanda, Paharganj,
Delhi-110055.
......Complainant
Versus
M/S Modern Facades Co.
Through its proprietor/AR
Sh. Anil Sharma
Office at:- F-61/C, Subhash Vihar Road,
CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 1 of 17
North Ghonda, Delhi.
Also at:- B-7, West Jyoti Nagar,
Loni Road, Shahdara, Delhi-110094.
....... Accused
Date of Institution : 18.08.2007
Offence complained of : Section 138 Negotiable
or proved Instrument Act, 1881
Plea of Accused : Not guilty
Date of Filing : 14.08.2007
Date of Decision : 04.03.2022
Final Order : Acquitted
Argued by:- : Mr. Kunal Rawat and Ms. Dolly Verma, Ld.
Counsel for complainant.
: Mr. S.K. Verma, Ld. Counsel for accused.
JUDGMENT
BRIEF STATEMENT OF REASONS FOR THE DECISION: -
FACTUAL MATRIX-
1. The present complaint has been filed by the complainant, Sh. D.S. Bhartiya, proprietor of M/s Aackriti Alu-Met against the accused, Mr. Anil Sharma, proprietor of M/s Modern Facades Co. under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "NI Act"). The substance of allegations and assertions of the complainant is that the accused had approached the complainant to place an order for the supply of aliminum and accordingly, the complainant supplied the said CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 2 of 17 material to the accused as the complainant used to deal in the said material against bill no. 100 dated 11.12.2006 for Rs. 3,66,424/-, bill no. 102 dated 20.12.2006 for Rs. 7,04,922/-, bill no. 104 dated 02.01.2004 for Rs. 1,45,966/-, and bill no. 107 dated 22.02.2007 for Rs. 2,35,530/-, totalling amount of Rs. 14,52,842/- and the accused had agreed and undertaken to pay the said amount alongwith interest @ 24% per annum.
It is further stated that in discharge of his admitted liability in part, the accused issued various cheques in favour of the complainant vide cheque bearing nos. 304905 dated 22.01.2007 for Rs. 2,50,000/-, no. 297529 dated 27.02.2007 for Rs. 50,000/- and no. 2977528 dated 23.02.2007 for Rs. 1,50,000/-, drawn on Central Bank of India, Jyoti Nagar, Shahdara, Delhi-110093 (hereinafter referred to as the "cheque in question") with the assurance that the said cheque would be duly honoured after its presentation, however the said cheque in question was returned dishonoured on presenting with the remarks "funds insufficient & account closed" vide return memo dated 20.06.2007. The complainant thereafter issued a legal demand notice dated 06.07.2007 for the cheque in question which was duly served upon the accused. Despite service, the accused failed to repay the cheque amount within the stipulated period and hence, the present complaint has been filed under section 138 of the NI Act.
APPEARANCE OF ACCUSED AND TRIAL
2. On finding a prima facie case against the accused, the accused was summoned to face trial and after his appearance, notice of accusation under Section 251, Code of Criminal Procedure, 1973 (hereinafter referred to as "CrPC") was framed against the accused on 19.05.2008. In CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 3 of 17 reply to the notice of accusation, the accused pleaded not guilty and claimed trial.
3. Vide order dated 19.05.2008, the accused was allowed to cross-examine the complainant and the cross-examination of the complainant was closed vide order dated 23.05.2017.
4. During the trial, the complainant has led the following oral and documentary evidence against the accused to prove his case beyond reasonable doubt-:
ORAL EVIDENCE CW 1 : Sh. D.S. Bharitya (Complainant) DOCUMENTARY EVIDENCE Ex. CW1/1 to Ex. CW1/4 : Invoice/Bills Ex. CW1/5 : Cheque bearing no. 304905 dated 22.01.07 for an amount of Rs. 2,50,000/-
Ex. CW1/6 : Cheque bearing no. 297528 dated
23.02.07 for an amount of Rs.
1,50,000/-
Ex. CW1/7 : Cheque bearing no. 297529 dated
27.02.07 for an amount of Rs.
50,000/-
Ex. CW1/8 to Ex. CW1/10 : Return memo dated 20.06.2007
Ex. CW1/11 : Legal demand notice dated
06.07.2007
Ex. CW1/12 & Ex. CW1/13 : Postal receipts and A.D. Card
Ex. CW1/14 : Visiting card of the accused
Ex. CW1/15 : Speed post with receipt
Ex. CW1/16 : AD Card
CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 4 of 17
5. Before the start of defence evidence, in order to allow the accused to personally explain the incriminating circumstances appearing in evidence against him, the statement of the accused was recorded without oath under Section 313 of the CrPC on 01.11.2017. In reply, the accused had stated that that he has not issued the cheques in question to the complainant on behalf of the Modern Façade Company and that he is the proprietor of the Modern Facades and not Modern Façade company as alleged by the complainant.
6. Pursuant thereto, the accused has led the following oral evidence in its defence-:
ORAL EVIDENCE DW 1 : Sh. Munni Lal Sharma DW2 : Sh. Anil Kumar Sharma (accused) DOCUMENTARY EVIDENCE Ex. DW2/A (colly): Form 3CB of Modern Facades Ex. DW2/B : Copy of bill issued by Ajit Industries Pvt. Ltd.
to Modern Facade
Ex. DW2/C : Form VAT D-3 of Modern Facades
7. The final arguments were addressed by the Ld. Counsels for complainant and the accused. I have heard the Ld. counsels appearing for both the parties and have given my thoughtful consideration to the material appearing on record.
ARGUMENTS-
8. The Ld. Counsel on behalf of the complainant had argued that the ingredients to the offence under section 138 NI Act are fulfilled and the complainant has duly proved its case. He had argued that once the CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 5 of 17 signature on the cheque in question is admitted by the accused, a presumption of a legally enforceable debt has arisen in favour of the complainant and now it is for the accused to rebut the said presumption. He has placed reliance upon the judgment of Hon'ble Apex Court, Rangappa v. Sri Mohan 2010 (3) R.C.R. (Criminal) 164, wherein the court has observed as under, "This court held that once issuance of a cheque and signature hereon are admitted, presumption of a legally enforceable debt in favour of the holder of the cheque arises. It is for the accused to rebut the said presumption, though accused need not adduce his own evidence and can rely upon the material submitted by the complainant. However, mere statement of the accused may not be sufficient to rebut the said presumption."
9. The Ld. Counsel for the complainant argued that the onus to discharge the said presumption is upon the accused. He further argued that the complainant has placed on record the bills against whom the cheques were issued. He also argued that the accused has admitted that he used to maintain a running account with the complainant and pay money through cash or cheques to the complainant. He further submits that the accused and his father, Mr. Munni Lal Sharma in collusion has cheated the complainant by keeping identical names of their proprietorship firm.
10. As such, the Ld. Counsel for the complainant prays that the accused be convicted for the offence under section 138 of NI Act.
11. Per contra, the Ld. Counsel for the accused had argued that there exists no legal liability towards the complainant as the accused is not the proprietor of the accused company. He further submits that the proprietor of the accused company is Mr. M.L. Sharma, who has not been made a party to the present case. He further submits that these two are separate CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 6 of 17 proprietorship firms and have separate identities which is also reflected from its TIN number as placed on record. He also submits that the cheques in question were issued for the purpose of security by the accused. He also submits that it can be seen that no receiving of the goods has been taken on the bills placed on record by the complainant. He further submits that as per the list of sundry debtors, Modern Façade Co. is liable and not Modern Façade.
12. The Ld. Counsel for the accused submits that legal notice was addressed to the authorized representative of Modern Façade Co. and not Modern Façade. He further submits that no legal notice has been received by the accused and moreover, it was addressed incorrectly. He submits that the legal notice sent to the accused was not a valid notice and further the demand in the notice has been made with respect to one cheque which has not even been signed by the accused.
13. The Ld. Counsel for the accused further submits that as per the bills placed on record, the amount due comes to around Rs. 14,52,842/-, however, he has file the case with respect to Rs. 4,50,000/-. He further submits that no civil suit or any other complaint has been filed in order to recover the balance amount which shows that the story of the complainant is false and concocted. He further argued that the accused has successfully been able to rebut the presumption raised under Section 139 of NI Act.
14. As such, it is prayed that the accused be acquitted for the offence punishable under section 138 of the Negotiable Instruments Act.
CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 7 of 17INGREDIENTS OF OFFENCE AND DISCUSSION-
15. Before dwelling into the facts of the present case, it would be apposite to discuss the legal standards required to be met by both sides. In order to establish the offence under Section 138 of NI Act, the prosecution must fulfil all the essential ingredients of the offence. Perusal of the bare provision reveals the following necessary ingredients of the offence:-
First Ingredient: The cheque was drawn by a person on an account maintained by him for payment of money and the same is presented for payment within a period of 3 months from the date on which it is drawn or within the period of its validity;
Second Ingredient: The cheque was drawn by the drawer for discharge of any legally enforceable debt or other liability; Third Ingredient: The cheque was returned unpaid by the bank due to either insufficiency of funds in the account to honour the cheque or that it exceeds the amount arranged to be paid from that account on an agreement made with that bank;
Fourth Ingredient: A demand of the said amount has been made by the payee or holder in due course of the cheque by a notice in writing given to the drawer within thirty days of the receipt of information of the dishonour of cheque from the bank;
Fifth Ingredient: The drawer fails to make payment of the said amount of money within fifteen days from the date of receipt of notice.
APPRECIATION OF EVIDENCE-
16. The accused can only be held guilty of the offence under Section 138 NI Act if the above-mentioned ingredients are proved by the complainant co- extensively. Additionally, the conditions stipulated under Section 142 NI CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 8 of 17 Act have to be fulfilled. Notably, there is dispute at bar about the proof of the ingredients to the offence under section 138 of the NI Act. The accused had stated that only the cheques vide Ex. CW1/6 and Ex.CW1/7 are drawn on the account of the accused and not Ex. CW1/5. However, it was not disputed that the cheques in question were presented within its validity period. The cheque in question was returned unpaid vide return memo dated 20.06.2007 vide Ex. CW1/8 due to the reason "account closed" and Ex. CW1/9 & Ex. CW1/10 due to the reason, "funds insufficient". The accused had disputed that he had never received the legal notice dated 06.07.2007 vide Ex. CW1/11 and moreover, it was not addressed to the accused rather it was addressed to the proprietor of Modern Façade Co. who is the father of the accused, i.e. Mr. Munni Lal Sharma. However, the complainant had placed on record the legal demand notice dated vide Ex. CW1/11 alongwith the postal receipt and acknowledgement card vide Ex. CW1/12 and Ex. CW1/13. As such, only third ingredient of the offence under section 138 of the NI Act stands proved.
17. As far as the proof of second ingredient is concerned, the complainant has to prove that the cheques in question were drawn by the drawer for discharging a legally enforceable debt. In the present case, the issuance of the two cheques in question is not denied. As per the scheme of the NI Act, once the accused admits signature on the cheques in question, certain presumptions are drawn, which result in shifting of onus. Section 118(a) of the NI Act lays down the presumption that every negotiable instrument was made or drawn for consideration. Another presumption is enumerated in Section 139 of NI Act. The provision lays down the presumption that CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 9 of 17 the holder of the cheque received it for the discharge, in whole or part, of any debt or other liability.
18. The combined effect of these two provisions is a presumption that the cheque was drawn for consideration and given by the accused for the discharge of debt or other liability. Both the sections use the expression "shall", which makes it imperative for the court to raise the presumptions once the foundational facts required for the same are proved. Reliance is placed upon the judgment of the Hon'ble Supreme Court, Hiten P. Dalal vs. Bratindranath Banerjee (2001) 6 SCC 16.
19. Further, it has been held by a three-judge bench of the Hon'ble Apex Court in the case of Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The principles pertaining to the presumptions and the onus of proof were recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarise the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 10 of 17
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence. Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
20. The presumptions raised under Section 118(b) and Section 139 NI Act are rebuttable presumptions. A reverse onus is cast on the accused, who has to establish a probable defence on the standard of preponderance of probabilities to prove that either there was no legally enforceable debt or other liability. In this case, the arguments raised by the Ld. counsel for the accused to rebut the presumption are discussed below:
I. DEFENCE THAT THE COMPLAINT HAS BEEN FILED
AGAINST A SEPARATE ENTITY
21. It is the case of the accused that the complainant has filed the case against the cheques issued by two proprietorship firms, one is Modern Façade Co. and other is Modern Facades. Further, it is an admitted fact that the case has been filed by the complainant against the accused, M/s Modern Facade Co. and not against Modern Façades and that Mr. Anil Sharma, the proprietor of Modern Façades also has been made an accused to the present case being in the alleged capacity of sole proprietor of M/s Modern Façade Co. by the complainant. However, perusal of the visiting card vide Ex. CW/14 placed by the complainant reveals that Mr. Anil Sharma is the proprietor of the firm, i.e., Modern Facades and not of CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 11 of 17 Modern Façade Co. It is pertinent to note that the cheque bearing no. 304950 dated 22.01.2007 was issued by Modern Façade Co. and cheques bearing no. 297528 dated 23.02.2007 and 297529 dated 27.02.2007 were issued by Modern Facades. It is also worthy to note that the complainant has filed the statement of account/ledger account for the period 01.04.2006 to 31.03.2007 vide Ex. CW1/DX of the complainant company with respect to Modern Façade and not with Modern Facades Co. against whom the case has been filed. It is the case of the complainant that he used to deal with Mr. Anil Sharma and is not aware whether he is the proprietor of Modern Facades Co. or Modern Facade. However, the Ld. Counsel for accused has stated that the both the proprietorships firms have separate identity as they have different TIN numbers as evident from the documents placed on record vide Ex. DW2/C & Ex. DW1/A.
22. It is a well settled law that each proprietorship firm is a separate entity.
Thus, transaction with one firm will have no effect or bearing on the other firm even though the person handling the two firms is the same as alleged by the complainant. In the present case, it is clear that the complainant company cannot make these two separate proprietorships as one. Both Modern facades and M/s Modern Façade Co. have independent identities and cannot be inter-changed only because it is being run by the same person when it is clear from the records that both the proprietorship firms have their own identity. Further, the complainant has filed the case against the accused for the cheques in question where one of the cheque i.e., Ex. CW1/5 does not even bear his signature. It is a settled law that only signatory to the cheque in question can be made an accused in the offences under section 138 of the NI Act. Thus, the complainant has failed to explain as to why the case has been filed against the accused CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 12 of 17 when the said cheque in question which is Ex. CW1/5 does not even bear his signatures.
23. The first ingredient of the offence under section 138 is that the cheque shall be drawn or executed by a person (drawer/accused) on an account maintained by him with the banker. In the instant case, the cheque vide Ex. CW1/5 is drawn by the accused, Mr. Anil Sharma rather it bears the signature of his father, Mr. Munni Lal Sharma, who is the proprietor of Modern Facade Co even though the other two cheques i.e., Ex. CW1/6 and Ex. CW1/7 bears the signatures of the accused. Thus, in the light of the aforesaid discussion, it can be said that the first ingredient to the offence is not made out with respect to cheque vide Ex. CW1/5.
II. DEFENCE THAT THE ACCUSED DOES NOT HAVE ANY LEGAL LIABILITY TOWARDS THE COMPLAINANT
24. The accused in his plea of defence has taken a stand that he has no legal liability towards the complainant and that the cheques vide Ex. CW1/6 and Ex. CW1/7 were issued to the complainant as security for doing business with the complainant while the cheque vide Ex. CW1/ 5 bears the signatures of the father of the accused who is also the proprietor of M/s Modern Façade Co. It is pertinent to note that the complainant has placed on record the invoices vide Ex. CW1/1 to Ex, CW1/4, however CW1/1, Ex. CW1/3 and Ex. CW1/4 are issued in the name of the Modern Façade Co. while the invoice vide Ex. CW1/2 has been issued in the name of Modern Facades. The complainant's stand that the word company has been left inadvertently does not hold good as it is a different proprietorship firm. Further, the ledger account vide Ex. CW1/DX has been placed with respect to Modern Facades. The witness DW2, Munni Lal Sharma in his testimony has stated that he had given the cheque vide CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 13 of 17 Ex. CW1/5 for the purpose of security and thereafter DW2 closed the account on which the said cheque was drawn as he did not get the OD limit. He then opened a new account in Vijaya Bank and issued the cheque bearing no. 220360 dated 21.02.2007 drawn on Vijaya Bank in discharge of the liability towards the complainant, however, even after payment as shown at Point 'B' in Ex. CW1/DX, the complainant did not return the security cheque and misused the same, which the complainant has not been able to rebut successfully.
25. Further, it is an admitted fact that the complainant company has not filed any civil suit for the recovery of the cheque amount and the other balance amount. It is the case of the accused that the complainant has not taken any acknowledgement for the receipt of the material on the bills vide Ex. CW1/1 to Ex. CW1/4. Also, the list of sundry debtors vide Mark X-2 shows the list of all the debtors who owes the amount to the complainant, which shows that Modern Facades owes the amount and not Modern Facade Co. However, the invoices have been placed with respect to Modern Façade Co. and not Modern Facades against whom the amount is allegedly due by the complainant. Also, the complainant has not filed the ITR relating to the year 2006-07 showing the liability of the company.
26. In the present case, the accused has adduced sufficient evidence to rebut the presumption laid down under section 139 of the NI Act. A statutory presumption has an evidentiary value. The question as to whether the presumption stood rebutted or not, must, therefore, be determined keeping in view the other evidence on record. In the present case, the accused has raised a probable defence that no liability existed towards the complainant. Consequently, it can be said that no legal liability exists in CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 14 of 17 favour of the complainant, thus, the second ingredient to the offence under section 138 of NI Act does not stands proved.
III. DEFENCE THAT THE ACCUSED HAD NOT RECEIVED
THE LEGAL NOTICE
27. The Ld. Counsel for the accused states that the legal notice vide Ex.
CW1/11 was addressed to authorized representative of Modern Façade Co. and not addressed to Mr. Anil Sharma, proprietor of Modern Facades who has been made an accused in the present case. While the complaint has been filed against Modern Façade Co. who has not received any legal notice. When the legal notice is incorrectly addressed, the same could be fatal to the case. The Hon'ble High Court of Delhi in RL Varma & Sons (HUF) v. P C Sharma Crl. Rev. Petition 438/2017 held that the legal presumption of service of notice can only arise where the legal notice is correctly addressed. If the legal notice is incorrectly addressed, no legal presumption can be raised. It was further held that Section 138 of the Negotiable Instruments Act mandates the issuance of the statutory notice as a pre-condition to filing of a complaint. The cause of action to file a complaint under section 138 of the Negotiable Instruments Act arises only on issuance and service of statutory notice and failure of the accused to comply with the statutory notice. In the absence of service of statutory notice, the cause of action would not accrue. Service of statutory notice would also include legal presumption of service if circumstances so warrant.
28. In the present case, the legal notice was addressed to the proprietor of Modern Façade Co. and not Mr. Anil Sharma, who is the accused in the present case vide Ex. CW1/11. Also, in the cross-examination of CW1, the complainant has stated that he cannot say that whether the legal notice CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 15 of 17 was served upon Mr. Anil Sharma or not. Thus, the complainant has failed to prove as to whether the legal notice was received by the accused, Mr. Anil Sharma. Consequently, the fifth ingredient to the offence does not stand to be proved.
29. Further, the complainant has demanded an amount of Rs.4,50,000/ from the accused, however, it is also admitted by the complainant that the accused has signed only two cheques vide Ex. CW1/6 and Ex. CW1/7 while the cheque vide Ex. CW1/5 bears the signature of the father of the accused, i.e., DW1, Mr. Munni Lal Sharma. It is pertinent to note that the complainant has demanded the entire amount of Rs.4,50,000/- which is in excess of the amount which is allegedly due as per the cheques in question placed on record. The Hon'ble High Court of Delhi in the case of Alliance Infrastructure Pvt. Ltd. v. Vinay Mittal (2010) ILR 3 Delhi 459 held that, "When the principal amount claimed in the notice of demand is more than the principal amount actually payable to the payee of the cheque and the notice also does not indicate the basis for demanding the excess amount, such a notice cannot be said to be a legal and valid notice envisaged in Section 138(b) of Negotiable Instrument Act."
30. Consequently, in the considered opinion of the court, the fourth ingredient to the offence does not stand proved.
CONCLUSION
31. To recapitulate the above discussion, the accused has been successful in establishing a probable defence on a standard of preponderance of probabilities to rebut the presumption under section 118 and 139 of the NI Act by punching the holes in the case of the complainant and making CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 16 of 17 the case of the complainant doubtful. Cogent evidence is required to be proved beyond reasonable doubt to secure conviction in a criminal trial. The accused has been successful in establishing a probable defence from the evidence of the complainant and the circumstances of the case that no offence under section 138 of the NI Act has been made out.
32. As such, the complainant has failed to prove the offence beyond reasonable doubt and the accused has been able to raise a probable defence. Resultantly, the complaint of the complainant is hereby dismissed, and the accused, Mr. Anil Sharma is hereby acquitted of the offence under section 138 of the NI Act.
Announced in the open court on 04.03.2022 in the presence of both the parties. Digitally signed by KRATIKA KRATIKA CHATURVEDI CHATURVEDI Date: 2022.03.05 10:18:04 +0000 (Kratika Chaturvedi) MM, NI Act-04, Central District, THC 04.03.2022 Note:- This judgment contains 17 pages and each page has been signed by me.
CC No. 533771/2016 D S Bhartiya v. M/S Modern Facades Co. Page 17 of 17