Delhi District Court
M Prabhu Shankar vs M/S S Chand And Co Ltd on 8 January, 2024
IN THE COURT OF SH. LOVLEEN, ADDITIONAL SESSIONS
JUDGE-03, SAKET COURTS, NEW DELHI
DLSE010081992023 DLSE010082002023 DLSE010081982023
CRL. APPEAL No. 242/2023, 243/2023, 244/2023
M. PRABHU SANKAR,
PROPRIETOR OF M/S AA BOOK CENTER CENTER,
1241-B, SRI AMMAN COMPLEX, ONLY VIMAL TOWER,
BIG BAZAR STREET,
COIMBATORE- 641001
....Appellant
VERSUS
M/S S. CHAND & CO. LTD.
THROUGH ITS CFO SAURABH MITTAL
HAVING ITS REGISTERED OFFICE AT
7361, RAM NAGAR, QUTUB ROAD,
NEW DELHI-110055.
...Respondent
Date of institution : 05.08.2023
Date of Reserving judgment : 08.01.2024.
Date of Pronouncement : 08.01.2024.
Decision : Dismissed.
For Appellant : Ms. Nisha, Ld counsel for appellant.
For Respondent : Sh. Ajay Kumar, Ld proxy counsel for respondent
(through VC)
Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 1/30
JUDGMENT
1. Vide this common judgment, this court shall dispose of 03 connected appeals filed under section 374 Cr.PC by the appellant/accused against a common judgment dated 09.06.2023 passed by the Special Court (NI Act) South-East District, whereby the appellant was convicted of the offence punishable under Section 138 of NI Act in CC No. 637482/2016, CC No. 637480/2016, CC No. 637481/2016 and CC No. 682/2017, all filed by the respondent herein. After convicting the appellant, the Ld. Special Court was pleased to pass a common order on sentence dated 30.06.2023 whereby he was directed to pay a fine to the tune of Rs. 33,79,500/- for all the cases collectively within 5 days, all of which is payable to the respondent as compensation. In default the appellant is to undergo simple imprisonment for 06 months. (A connected appeal bearing no. 245/2023 against the final judgment dated 09.06.2023 and order on sentence dated 30.06.2023, passed in CC No. 682/2017 titled as M/s S. Chand & Co. Ltd Vs. M Prabhu Sankar, has already been remanded back by this court vide order dated 14.12.2023). For the sake of convenience, the appellant herein shall be referred to as 'accused' and the respondent herein shall be referred to as 'complainant'.
BRIEF FACTS
2. The facts of the case have been correctly noted by the Ld. Trial Court in its impugned judgment. The relevant paragraphs are reproduced hereinafter for ready reference:-
" 3. The short facts are that complainant, who is a well known publisher of books on different subject taught in school and colleges, used to supply book on credit to accused from time to Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 2/30 time and a ledger was maintained by it. It is alleged that an outstanding liability of Rs. 23,30,837/- was reflected in ledger. This was brought to notice of him, and in discharge of part liability, he allegedly issued following cheques, which form impugned cheques for each complaint as shown below Sl. Complaint No. Cheque No. & Date Amout (Rs.) No.
1. 637482/2016 927338 dated 28.09.2016; 3.00 lakhs & 927339 dated 01.10.2016; 3.00 lakhs
2. 637480/2016 927344 dt 07.10.2016; 3.50 lakhs; 3.50 927345 dt 05.10.2016 & lakhs & 3.83 927346 dt 26.09.2016 lakhs
3. 637481/2016 927341 dt 09.10.2016 3.00 lakhs
4. 682/2017 927343 dt 12.12.2016 2.73 lakhs
4. It is stated that these cheques on presentation in bank were returned dishonoured for the reason of payment stopped by drawer. The company issued a common legal notice Ex. CW1/F in each case demanding the dues within 15 days and on getting no dues, filed the above complaints.
5. The records also show that accused after receiving of legal demand notice sent a reply dated 16.11.2016 Ex. CW1/I. In this reply, the accused stated that the amount was not due, if ledgers were reconciled. He stated that company had approached the accused in various book Melas, and offered the books for sale on commission basis, and he used to settle bills on receiving of payment from book buyers. He further stated as per the trade practice, the purchase order is accompanied by a blank cheque as Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 3/30 a security, and that he was ready to settle the dues, as and when unsold stocks lying with him is returned and complainant takes back the unsold stock. He stated that the security cheques were misused and presented without any authority from him."
TRIAL
3. Vide order dated 16.01.2017, the Ld. Metropolitan Magistrate summoned the accused to face trial u/s 138 NI Act in the corresponding complaint cases. On 27.07.2018, a notice u/s 251 Cr.P.C. was framed upon the accused in all the complaint cases wherein he pleaded not guilty and claimed trial. At that time, accused admitted that the corresponding cheques in question bear his signatures, but stated that the same were issued in favour of complainant towards 'Security' in the year 2013. He further claimed that he was engaged in a business relationship with the complainant since the last 14 years. He further claimed that no liability exists against him and in favour of the complainant with respect to the corresponding cheques in question. Accused admitted the receipt of a legal demand notice from the complainant.
4. The complainant examined its AR namely Sh. Raman Malhotra as CW-1 in support of its allegations against the accused in all the cases. Statement of accused was recorded u/s 313 Cr.P.C. In defence, the accused examined himself as DW1. Upon the conclusion of trial, accused was convicted for the commission of offence punishable u/s 138 NI Act in all the cases vide the common judgment dated 09.06.2023.
GROUNDS OF APPEAL
5. The grounds cited by the accused against the impugned judgement are as under :
Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 4/30
i) Because the impugned order and judgment are against the facts on record and the law applicable thereto and is therefore liable to be set aside;
ii) Because the impugned order and judgment are based on conjectures and surmises without having any basis either in the complaints filed in the cases or in the statements made in support thereof by the complainant or its witnesses;
iii) Because the impugned order and judgment are bad in law inasmuch as that with the findings therein, the appellant has been convicted for acts which had never been committed and also based on the disputed cheques which had always been without any consideration and were merely given in trust and as security.
iv) Because the Ld. Trial Court has arbitrarily passed the judgment in favour of the Complainant/Respondent and against the appellant/Accused without taking into consideration certain facts placed on record by the appellant or otherwise ignoring the same by failing to mention in the judgment and thus leading to the miscarriage of justice.
v) Because the Ld. Trial court erred in failing to appreciate the fact that the cheque in question alongwith other cheques were being misused by the respondent since the same were never filled in by the appellant had been given to the respondent only by appending signatures thereto and on the specific understanding that the same were given as security alone and never were for any consideration. In fact, the respondent had committed breach of trust reposed in it by Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 5/30 the appellant by misusing the subject cheques.
vi) Because the Ld. Trial court has erred in law in refusing to appreciate the position that that a huge stock of books was lying dumped with the appellant blocking huge and valuable space and while the appellant had been billed against by the respondent without there being any purchase orders in that behalf from the Appellant and also that it had failed to accept the return of those stocks despite the existence of earlier arrangement between the parties to that effect.
vii) Because the impugned judgment and order passed by Ld. Court below is bad in law, as the Ld. court below failed to the appreciate that in the business transactions between the complainant and the accused, the respondent has already kept cheques of the appellant on trust basis/for security purpose.
viii) Because the impugned order and judgment are perverse in law inasmuch as that the learned court below was swayed away by extraneous considerations and had been misled into believing that the appellant was actually guilty of acts complained against him while the learned court below had completely glossed over the issue that the complainant could not have been supplying books valued at astronomical sums for close to fourteen years without receiving the due amounts or settling the bills from time to time and that the appellant had always remained at fault vis-à-vis the dealings with the complainant. There could be nothing farther from truth than these findings.
Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 6/30
ix) Because the alleged dishonour of cheques had occurred only because of the sheepish manner of presentation thereof to the bank of appellant without informing him even once about such act or intention while misusing such security cheques. Reference is craved to (2008)05 SC CK 0078 Sudhir Kumar Bhalla vs Jagdish Chand etc. wherein it is held "that the criminal liability of the appellant under the provisions of the Section 138 of the Act are attracted only on account of the dishonour of the cheques issued in discharge of the liability or debt, but not on account of issuance of security cheques".
x) Because the impugned order and judgment are bad in law inasmuch as that learned court below had failed to consider that the appellant had made periodical payments as when the books were sold and that the alleged huge amounts had never been left unpaid or awaiting long time for payment to the complainant. Reference is craved to the recent Hon'ble Supreme Court judgment of Dashrathbhai Trikambhai Patel vs Hitesh Mahendrabhai Patel & Anr.S.C.,2022 wherein it is held that "For the commission of an offence under section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation."
This had never been the position in either of the four cases which have been disposed off through the impugned order and judgment.
xi) Because the learned court below had erred in law in clubbing all the cases although those had different facts and situations to be dealt with independent of each other since no Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 7/30 notice under Section 251 Cr.P.C. had been framed in the complaint case No.682/2017 and also that the complainant had made various admissions during the cross examination which had substantially demolished the basis of his claims in the complaint cases. Such failure of the learned court below had put the appellant at serious disadvantage resulting in adverse findings.
xii) Because the learned court below had been misled in giving the finding that by the absence of notice under Section 251 Cr.P.C. in the complaint case No.682/2017 no prejudice resulted to the appellant since he had known the facts and also his defense well in time before the decision thereof.
xiii) Because the finding of the learned court below in paragraph 10 of the judgment is wholly erroneous in law and against the facts on record because it had never been the case of the appellant that the security cheques had been given from time to time alongwith the alleged placement of orders by the appellant. Such finding is baffling to say the least since the appellant has consistently claimed that all those cheques were signed together and delivered to the complainant in trust and as security to ensure it about the good intention of appellant. The finding is wholly untenable especially when such defense of the appellant also rested on the plea that he was willing to clear dues, if any, upon lifting of stocks of unsold books back by the complainant but this had never been done by them leading to such misgiving and adverse finding.
Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 8/30
xiv) Because the learned court below had erred in law in completely ignoring the debit note places on record as Ex.DW-1/B dated 5.11.2016 and another debit note dated 4.11.2016 which bore signature and stamp of the complainant company while giving the legally perverse finding based on the contention of complainant that those debit notes could have been forged and fabricated by the appellant. There is nothing on record to substantiate such finding which has finally led to the passing of order of conviction followed by the sentence, etc. While arriving at such finding, the learned court below had ignored the very short time gap between dates of those debit notes and the reply dated 16.11.2016 during which the factum of such debit notes could not be conveyed to the Advocate preparing the reply to be filed on behalf of the appellant. The appellant has wrongly been condemned merely because the complainant had filed the application under Section 340 Cr.P.C.
xv) Because the learned court below had erred in law once again in giving the finding in paragraph 13 of the judgment that the debit notes had been created for averting liability in the case although there is nothing on record to suggest this manner of acting by the appellant, especially when the appellant had constantly been requesting the complainant to lift those unsold stocks, clear his commercial space and settle the matter by adjusting the different payments made by him from time to time but the complainant had failed to do so and had also admitted during cross examination that no purchase Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 9/30 orders had been placed on record. Reference is craved to Para 3 of Hon'ble Delhi High Court judgment CRL.L.P.211/2018 (Sanjay Choudhary vs Dinesh Kundra) holding: "Vide impugned judgment dated 19/12/2017 Learned Metropolitan Magistrate acquitted the respondent on the grounds that the petitioner failed to disclose the mode and manner as well as the date/dates and exact amount of loan advanced by him to the respondent and had merely banked upon the acknowledgment by the respondent of his liability to the extent of Rs.50,00,000/-by way of promissory note Ex.Ce- 1/B."
xvi) Because the learned court below had committed serious illegality while believing the contention of complainant that "there cannot be supply of books without orders or invoices raised though the invoices are not on record". This finding is based merely on assumptions and assumptions without any factual or legal basis in the material on record and the appellant could not be dealt with in such arbitrary manner which vitiates the entire gamut of findings given against the appellant.
xvii) Because the Ld. Trial court has erroneously failed to appreciate the fact that the respondent used the appellant as a 'dump box' where all the stocks have been dumped even in the absence of any purchase order and the respondent had wrongly expected the appellant to pay for the said entire stock of books which had remained unsold and are worthless for the appellant.
Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 10/30 xviii) Because the learned court below has given the legally erroneous finding while relying on the status relating to the civil dispute between the parties wherein the complainant has obtained an exparte judgment and decree dated 05.02.2018 the liability by manipulating the manner in which the appellant had been proceeded exparte, especially when the application filed by the appellant under Order IX rule 13 and Section 151 CPC and other enabling provisions of law is pending adjudication and the money decree has not become final or binding on the appellant. Therefore, such exparte judgment or decree could not be used to form opinion against the appellant in the criminal complaint cases. The appellant has been exposed to serious adverse findings as a result thereof.
xix) Because the learned court below has erred in law while giving adverse findings against the appellant although in the present case, the complainant had failed to produce any cogent documents to show the liability of the appellant. Therefore the complaint was liable to be dismissed in limine. Reference is craved to Para 37 of Hon'ble Delhi High Court judgment 2015 Legal Eagle (DEL)3480 (ANIL AGGARWAL VS STATE AND ANOTHER) Holding "It has been held by a line of decisions that under Section 139,118(A) and 138 of the N.I.Act 1881, the existence of debt or other liabilities has to be proved in the first instance by the complainant and only thereafter the burden of proving to the contrary shifts on the accused"
Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 11/30 xx) Because the Ld. Trial court has failed to appreciate that the Appellant cannot be expected to produce any negative evidence to rebut the presumption U/s 139 and 118[a] of N.I. Act and therefore, the onus of proving the entire case was on the Respondent to show that that a legally enforceable debt or liability existed at the time of issuing the notice and also at the time of filing of the complaint against the Appellant.
xxi) Because the learned court below had erred in law in completely side tracking the submission of the appellant that in a similar matter, the Hon'ble High Court of Delhi in case titled as M/s Total Finself India Limited Vs Smt.Rashmi Parnami numbered as CRL.A. 1239/2011 had held that "Mere liability of the respondent to pay her dues towards purchase of goods (if any) is not enough to proceed under Section 138 Negotiable Instruments Act as the complainant has civil remedy to recover outstanding dues." However, the learned court below had not even discussed the issue. xxii) Because the learned court below had erred law in ignoring the confession of the complainant during the course of his cross examination that total financial liability of the appellant after 2014-15 was Rs.23,30,300/- when certain book stocks had been taken back by them but inspite of that the complainant had misused those security cheques given in trust and held as such by the complainant and this resulted in grave miscarriage of justice to the appellant. xxiii) Because the learned court below had erred in law in Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 12/30 giving findings based on frivolous assumptions and presumptions which had no support from the material on record but had prejudicially affected the defence of the appellant.
xxiv) Because the learned court below had erred in law in exceeding its brief while providing relief to the complainant much beyond their original claim against the appellant. xxv) Because the findings of the learned court below are absolutely misconceived and against the principles of natural justice inasmuch as while giving such adverse findings against the appellant, it had refused to consider the balance required to be maintained between an established publisher and a petty businessman who was running around to earn the bread and butter of his dependents.
xxvi) That the appeal is being filed within limitation. xxvii) That the Appellant reserves his right with the permission of this Hon'ble Court to address further oral submissions, in the interest of justice.
xxviii) That the appellant has not filed any other appeal or proceedings relating to or touching upon the subject matter of this appeal before this Hon'ble Court or before any other court of law.
xxix) That the appellant is filing herewith the supporting affidavit which may be treated as part and parcel of this Memo of Appeal and submissions made therein are not being repeated herein for the sake of brevity. The affidavit also Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 13/30 correctly refers to the non-filing of any appeal or proceedings relating to or touching upon the subject matter of this appeal.
6. It is prayed that the common judgment dated 09.06.2023 and and the order on sentence dated 30.06.2023 may be set aside.
7. On the other hand, Ld. Counsel for the complainant has argued that the accused has been correctly convicted by the Special Court and an appropriate sentence has been imposed upon him. He prays for dismissal of the appeals.
DISCUSSION
8. This Court has considered the oral submissions as well as the records.
9. Recently, the Hon'ble Supreme Court was pleased to define the contours of the law relating to the provision u/s 138 of Negotiable Instruments Act in Rajesh Jain Vs. Ajay Singh 2023 INSC 888. The relevant extracts of the observations are reproduced below for ready reference:-
Section 138 of the NI Act - Necessary Ingredients
25. Essentially, in all trials concerning dishonour of cheque, the courts are called upon to consider is whether the ingredients of the offence enumerated in Section 138 of the Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by Section 139 of the Act.
26. In Gimpex Private Limited vs. Manoj Goel (2022) 11 SCC 705 , this Court has unpacked the ingredients forming the basis of the offence under Section 138 of the NI Act in Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 14/30 the following structure:
(1) The drawing of a cheque by person on do account maintained by him with the banker for the payment of any amount of money to another from that account;
(i) The cheque being drawn for the discharge in whole or in part of any debt or other liability;
(iii) Presentation of the cheque to the bank arranged to be paid from that account,
(iv) The return of the cheque by the drawee bank as unpaid either because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount
(v) A notice by the payee or the holder in due course making a demand for the payment of the amount to the drawer of the cheque within 30 days of the receipt of information from the bank in regard to the return of the cheque; and
(vi) The drawer of the cheque failing to make payment of the amount of money to the payee or the holder in due course within 15 days of the receipt of the notice.
27. In K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC 510 this Court had summarised the constituent elements of the offence in fairly similar terms by holding:
"14. The offence Under Section 138 of the Act can be completed only with the concatenation of a Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 15/30 number of acts.The following are the acts which are components of the said offence: (1) drawing of the cheque, (2) presentation of the cheque to the bank, (3) returning the cheque unpaid by the drawee bank, (4) giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, (3) failure of the drawer to make payment within 15 days of the receipt of the notice."
28. The five (5) acts as set out in K Bhaskaran's case (supra) are, generally speaking, matters of record and would be available in the form of documentary evidence as early as, at the stage of filing the complaint and initiating prosecution. Apart from the above acts, it is also to be proved that cheque was issued in discharge of a debt or liability (Ingredient no. (ii) in Gimpex's case). The burden of proving this fact, like the other facts, would have ordinarily fallen upon the complainant. However, through the introduction of a presumptive device in Section 139 of the NI Act, the Parliament has sought to overcome the general norm as stated in Section 102 of the Evidence Act and has, thereby fixed the onus of proving the same on the accused. Section 139, in that sense, is an example of a reverse onus clause and requires the accused to prove the non-existence of the presumed fact, i.e., that cheque was not issued in discharge of a debt/liability.
Burden of Proof and Presumptions: Conceptual
Underpinnings
29. There are two senses in which the phrase 'burden of Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 16/30 proof' is used in the Indian Evidence Act, 1872 (Evidence Act, hereinafter). One is the burden of proof arising as a matter of pleading and the other is the one which deals with the question as to who has first to prove a particular fact. The former is called the 'legal burden' and it never shifts, the latter is called the 'evidential burden' and it shifts from one side to the other. [See Kundanlal v. Custodian Evacuee Property (AIR 1961 SC 1316)]
30. The legal burden is the burden of proof which remains constant throughout a trial. It is the burden of establishing the facts and contentions which will support a party's case. If, at the conclusion of the trial a party has failed to establish these to the appropriate standards, he would lose to stand. The incidence of the burden is usually clear from the pleadings and usually, it is incumbent on the plaintiff or complainant to prove what he pleaded or contends. On the other hand, the evidential burden may shift from one party to another as the trial progresses according to the balance of evidence given at any particular stage; the burden rests upon the party who would fail if no evidence at all, or no further evidence, as the case may be is adduced by either side (See Halsbury's Laws of England, 4th Edition para 13). While the former, the legal burden arising on the pleadings is mentioned in Section 101 of the Evidence Act, the latter, the evidential burden, is referred to in Section 102 thereof. [G.Vasu V. Syed Yaseen (AIR 1987 AP139) affirmed in Bharat Barrel Vs. Amin Chand [(1999) Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 17/30 3 SCC 35] ]
31. Presumption, on the other hand, literally means "taking as true without examination or proof". In Kumar Exports v. Sharma Exports (2009) 2 SCC 513, this Court referred to presumption as "devices by use of which courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence."
32. Broadly speaking, presumptions are of two kinds, presumptions of fact and of law. Presumptions of fact are inferences logically drawn from one fact as to the existence of other facts. Presumptions of fact are rebuttable by evidence to the contrary. Presumptions of law may be either irrebuttable (conclusive presumptions), so that no evidence to the contrary may be given or rebuttable. A rebuttable presumption of law is a legal rule to be applied by the Court in the absence of conflicting evidence (Halsbury, 4th Edition paras 111, 112]. Among the class of rebuttable presumptions, a further distinction can be made between discretionary presumptions ('may presume') and compulsive or compulsory presumptions ('shall presume'). [G. Vasu V. Syed Yaseen (Supra)]
33. The Evidence Act provides for presumptions, which fit within one of three forms: 'may presume' (rebuttable presumptions of fact), 'shall presume' (rebuttable presumption of law) and conclusive presumptions (irrebuttable presumption of law). The distinction between Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 18/30 'may presume' and 'shall presume' clauses is that, as regards the former, the Court has an option to raise the presumption or not, but in the latter case, the Court must necessarily raise the presumption. If in a case the Court has an option to raise the presumption and raises the presumption, the distinction between the two categories of presumptions ceases and the fact is presumed, unless and until it is disproved, [G.Vasu V. Syed Yaseen (Supra)] Section 139 NI Act-Effect of Presumption and Shifting of Onus of Proof
34. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that 'unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability'. It will be seen that the 'presumed fact' directly relates to one of the crucial ingredients necessary to sustain a conviction under Section
138.
35. Section 139 of the NI Act, which takes the form of a 'shall presume' clause is illustrative of a presumption of law. Because Section 139 requires that the Court 'shall presume' the fact stated therein, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 19/30 established. But this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary as is clear from the use of the phrase 'unless the contrary is proved'.
36. The Court will necessarily presume that the cheque had been issued towards discharge of a legally enforceable debt/liability in two circumstances. Firstly, when the drawer of the cheque admits issuance/execution of the cheque and secondly, in the event where the complainant proves that cheque was issued/executed in his favour by the drawer. The circumstances set out above form the fact(s) which bring about the activation of the presumptive clause. [Bharat Barrel Vs. Amin Chand] [(1999) 3 SCC 35]
37. Recently, this Court has gone to the extent of holding that presumption takes effect even in a situation where the accused contends that 'a blank cheque leaf was voluntarily signed and handed over by him to the complainant. [Bir Singh v. Mukesh Kumar (2019) 4 SCC 197]. Therefore, mere admission of the drawer's signature, without admitting the execution of the entire contents in the cheque, is now sufficient to trigger the presumption.
38. As soon as the complainant discharges the burden to prove that the instrument, say a cheque, was issued by the accused for discharge of debt, the presumptive device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 20/30 that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further.
39. John Henry Wigmore12 on Evidence states as follows:
"The peculiar effect of the presumption of law is merely to invoke a rule of law compelling the Jury to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge's requirement of some evidence), the presumption 'disappears as a rule of law and the case is in the Jury's hands free from any rule."
40. The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the non- existence of the presumed fact beyond reasonable doubt. The accused must meet the standard of 'preponderance of probabilities', similar to a defendant in a civil proceeding. [Rangappa vs. Mohan (AIR 2010 SC 1898)]
41. In order to rebut the presumption and prove to the contrary, it is open to the accused to raise a probable defence wherein the existence of a legally enforceable debt or liability can be contested. The words 'until the contrary is proved' occurring in Section 139 do not mean that accused must necessarily prove the negative that the Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 21/30 instrument is not issued in discharge of any debt/liability but the accused has the option to ask the Court to consider the non-existence of debt/liability so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist. [Basalingappa Vs. Mudibasappa (AIR 2019 SC 1983) See also Kumar Exports Vs. Sharma Carpets (2009) 2 SCC 513]25
42. In other words, the accused is left with two options. The first option-of proving that the debt/liability does not exist-is to lead defence evidence and conclusively establish with certainty that the cheque was not issued in discharge of a debt/liability. The second option is to prove the non- existence of debt/liability by a preponderance of probabilities by referring to the particular circumstances of the case. The preponderance of probability in favour of the accused's case may be even fifty one to forty nine and arising out of the entire circumstances of the case, which includes: the complainant's version in the original complaint, the case in the legal/demand notice, complainant's case at the trial, as also the plea of the accused in the reply notice, his 313 statement or at the trial as to the circumstances under which the promissory note/cheque was executed. All of them can raise a preponderance of probabilities justifying a finding that there was 'no debt/liability'. [Kumar Exports and Sharma Carpets, (2009) 2 SCC 513] Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 22/30
43. The nature of evidence required to shift the evidential burden need not necessarily be direct evidence i.e., oral or documentary evidence or admissions made by the opposite party; it may comprise circumstantial evidence or presumption of law or fact.
44. The accused may adduce direct evidence to prove that the instrument was not issued in discharge of a debt/liability and, if he adduces acceptable evidence, the burden again shifts to the complainant. At the same time, the accused may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling the burden may likewise shift to the complainant. It is open for him to also rely upon presumptions of fact, for instance those mentioned in Section 114 and other sections of the Evidence Act. The burden of proof may shift by presumptions of law or fact. In Kundanlal's case- (supra) when the creditor had failed to produce his account books, this Court raised a presumption of fact under Section 114, that the evidence, if produced would have shown the non- existence of consideration. Though, in that case, this Court was dealing with the presumptive clause in Section 118 NI Act, since the nature of the presumptive clauses in Section 118 and 139 is the same, the analogy can be extended and applied in the context of Section 139 as well.
45. Therefore, in fine, it can be said that once the accused adduces evidence to the satisfaction of the Court that on a preponderance of probabilities there exists no Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 23/30 debt/liability in the manner pleaded in the complaint or the demand notice or the affidavit-evidence, the burden shifts to the complainant and the presumption 'disappears' and does not haunt the accused any longer. The onus having now shifted to the complainant, he will be obliged to prove the existence of a debt/liability as a matter of fact and his failure to prove would result in dismissal of his complaint case. Thereafter, the presumption under Section 139 does not again come to the complainant's rescue. Once both parties have adduced evidence, the Court has to consider the same and the burden of proof loses all its importance. [Basalingappa vs. Mudibasappa, AIR 2019 SC 1983; See also, Rangappa vs. Sri Mohan (2010) 11 SCC 441] Existence of Statutory Presumptions
11. Coming to the present case, it must be noted at the very outset that the accused has admitted at the time of framing of notice u/s 251 Cr.PC that the corresponding cheques in question bear his signatures. He has further admitted the factum of handing over of the same to the complainant, albeit for a different purpose than what is claimed by the complainant. All the above facts are sufficient to invoke the presumptions available to the complainant u/s 118 NI Act and u/s 139 NI Act. As such, the evidential burden stood transferred upon the accused to prove that the cheques in question were not issued towards discharge of any liability. Until the said evidential burden is discharged by the accused, the presumptions available against the accused u/s 118 NI Act and u/s 139 NI Act will have to be assumed to be true, without expecting the complainant to do anything Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 24/30 further. The said burden could be discharged by the accused either by leading defence evidence to conclusively establish that the cheques were not issued in discharge of a debt / liability or by proving the non existence of debt / liability on preponderance of probabilities by referring to the particular circumstances of the case. The nature of evidence required to shift the evidential burden need not necessarily be direct evidence. Once the accused produces such evidence, the burden shifts back to the complainant and the above mentioned presumptions disappear.
Rebuttal of Statutory Presumptions
12. Now, the question left to be decided is whether the said presumptions have been successfully rebutted by the accused or not. In order to adjudicate the same, this Court must deal with the facts adduced on record by the accused during the cross-examination of complainant.
13. The said adjudication requires an understanding of the stand taken by the parties. As per complainant, the cheques in question were issued by the accused in favour of the complainant in order to discharge his liability to repay the sum of Rs. 23,30,837/-, which amount had accrued against him towards the supply of books by the complainant from time to time. On the other hand, the accused denies any such liability and claims, in response to notice framed upon him u/s 251 Cr.PC, that the cheques in question were handed over as a 'security' to the complainant in the year 2013 and he does not have any existing liability towards the complainant with respect to the amounts mentioned in the cheques in question. In his statement recorded u/s 313 Cr.P.C, the accused stated that the cheques in question were handed over to the complainant as a 'guarantee' only. He further stated that he used to keep books sent by the complainant on a sale or return basis. He elaborated that in the books selling industry whenever the new edition Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 25/30 comes, the old edition is returned. He further stated that the complainant did not take the old edition books which are lying in his godown and if the complainant accepts those books, the whole liability would stand extinguished. However, in his statement recorded as DW-1, the accused has deposed that he used to deal with the complainant on a sale or return basis. He further deposed that in view of the Debit Notes dated 04.11.2016 and 05.11.2016, duly acknowledged by the complainant, no liability exists towards the cheques in question. He further deposed that he was falsely implicated on the basis of fabricated documents as the cheques in question were issued on 'Trust' basis. Apparently, the accused has taken contradictory and inconsistent stands at different stages of trial, whose effect shall be dealt with later on in this Judgment. Be that as it may, this Court hereby proceeds to assess whether the accused has been able to rebut the legal presumptions.
14. Now we delve into the testimony of AR of complainant, who was examined as CW-1. CW-1 deposed in line with the facts mentioned in the afore-going paragraphs. He was cross-examined at length on behalf of the accused. However, he did not betray any signs of falsity or untruth, nor any inconsistency has been noticed in his oral testimony. In fact, during cross examination of CW-1, the accused seems to have admitted the supply of books to him by the complainant on a credit of 90 days for approximately 06 to 07 years. The accused also seems to have admitted an existing liability with respect to the said supply of books. The accused also admits that he 'defaulted' in making the payments against the said liability. Although CW-1 admitted during cross-examination that some books returned by the accused were accepted by the complainant in the year 2014-2015, however, he promptly denied the suggestion of the accused that Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 26/30 the said books (accepted by the complainant) were worth Rs. 14,63,742/-. CW-1 further denied the suggestion of the accused that against all the books were supplied to the accused on credit basis and payments were to be made (by the accused) only after sale of the same and otherwise the unsold books were to be accepted back by the complainant. CW-1 further denied the suggestion of the accused that the accused was supplied unwanted books worth Rs. 14,63,742/-. Surprisingly, the accused has not explained as to why he did not put the Debit Notes dated 04.11.2016 and 05.11.2016 (EX. DW1/B and Ex. DW1/C) bearing the acknowledgment of the complainant to CW-1 at the relevant time. This omission dents the claim of the accused as to the return of books worth Rs. 14,63,742/-. It is a settled law that 'mere denial' of liability is not sufficient to dislodge the statutory presumptions available in favour of complainant (please see para 20, Rohit Bhai Jivan Lal Patel Vs. State of Gujrat & Ors. MANU/SC/0393/2019). In the considered opinion of this Court, the accused has not been able to rebut the said statutory presumptions in the cross-examination of complainant.
15. This Court had already noted in the aforegoing paragraph that the stand taken by the accused at the time of framing of notice u/s 251 Cr.PC, at the time of recording of his statement u/s 313 Cr.PC and at the time of recording of his testimony as DW-1 are inconsistent with each other. In response to notice framed upon him u/s 251 Cr.PC, the accused submits that the cheques in question were handed over as a 'security' to the complainant in the year 2013 and he does not have any existing liability towards the complainant with respect to the amounts mentioned therein. In his statement recorded u/s 313 Cr.P.C, the accused stated that the cheques in question were handed over to the complainant as a 'guarantee' only. He Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 27/30 further stated that he used to keep books sent by the complainant on a sale or return basis. He elaborated that in the books selling industry whenever the new edition comes, the old edition of the book is returned to the publisher. He further stated that the complainant did not take the old edition books, which are lying in his godown and if the complainant accepts those books, his whole liability would stand extinguished. However, in his statement recorded as DW-1, the accused has deposed that he used to deal with the complainant on a sale or return basis. He further deposed that in view of the Debit Notes dated 04.11.2016 and 05.11.2016, duly acknowledged by the complainant, no liability exists towards the cheques in question. Accused deposes that the acknowledgments made by the complainant on the said Debit Notes reflect the return of 10,060 books, which fact is sufficient to assume that his liability towards the supply of said books stands extinguished. Apparently, the accused is blowing hot and cold as to the 'possession' of said 10,060 books. At the prior stages of the trial( i.e. 251 Cr.PC and 313 Cr.PC) , the accused does not claim that he has returned the said number of books, but while deposing as a defence witness he claims that the said books have been returned vide Debit Notes dated 04.11.2016 and 05.11.2016. This contradiction reflects adversely upon the claim of the accused. That apart, the oral testimony of the accused is liable to be rejected on the grounds (i) that the accused failed to produce any material corroborating his claim that he asked the complainant to accept the return of said 10,060 books, (ii) that he did not disclose the dates when the said books were handed back to the complainant, (iii) that he did not bother to explain the mode by which the said books were transported from his godown, (iv) that he did not bother to seek a credit note in respect of the said 'return' of books, (v) that he has failed to explain as to why he did not Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 28/30 bother to put the said claim, regarding return of books, to CW-1; nor has he explained the reason as to why the said claim isn't reflected in his reply dated 16.11.2016 Ex. CW1/I sent through his counsel in response to the legal demand notice Ex. CW1/F. In the considered opinion of this Court, the oral testimony of accused could not be relied upon in view of above discrepancies. It seems that accused has fabricated Debit Notes Ex. DW1/B and Ex. DW1/C in order to sustain his false defence. Having ruled so, it could be safely held that the accused has not been able to rebut the legal presumptions available in favour of the complainant even through defence evidence.
DECISION
16. Since the statutory presumptions available to the complainant remain unrebutted and intact, therefore, we again turn to the evidence of complainant. Admittedly, the cheques in question were dishonoured upon being presented for encashment by the complainant. Legal notices were then sent by the complainant to the accused demanding the amounts due under the cheques in question. Service of the said legal notices is admitted by the accused. In fact the 'service' could also be presumed in view of the provision u/s 27 General Clauses Act as it was sent by registered post at the admitted address of the accused. That apart, accused has not bothered to claim, while deposing as DW-1, that he did not receive the legal demand notices. Admittedly, the accused did not bother to make any payment demanded vide the said legal notices within the period prescribed u/s 138 of NI Act. Apparently, all the ingredients of the offence punishable u/s 138 NI Act are available against the accused. Consequently, it has to be held that accused was correctly convicted u/s 138 NI Act by the Ld. Special Court. For the afore-going reasons, the common judgment dated Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 29/30 09.06.2023 is hereby upheld.
17. So far as the aspect of sentencing by Ld. Special Court is concerned, I am of the view that Ld. Special Court has already taken quite a lenient view while sentencing the accused. As such, the sentence imposed by the Ld. Special Court does not call for any interference. Benefit of Section 428 Cr.P.C. be also given to the accused.
18. All Appeals filed by accused therefore stand disposed of in above terms.
Digitally signed by LOVLEENAnnounced & Dictated in the LOVLEEN Date: 2024.01.08 Open Court today i.e. 08.01.2024. 16:25:40 +0530 (Lovleen) ASJ-03 (South East) Saket Courts, Delhi Crl. Appeal No: 242/23, 243/23, 244/23 M Prabhu Shnakar vs M/s Chand and Co. Ltd 30/30