Delhi District Court
Nitin Bansal vs Tarun Sharma on 1 August, 2023
IN THE COURT OF BHUJALI,
M.M. - 01, (N. I. ACT), CENTRAL DISTRICT,
TIS HAZARI COURTS, DELHI.
JUDGMENT
Nitin Bansal................................. ..................................Complainant Versus Tarun Sharma.....................................................................................Accused
a) Unique/new case number : 10725/2018
b) Name of complainant : Nitin Bansal
c) Name of accused person(s) :Tarun Sharma, proprietor of M/s Seagull Interiors & Fabricators AO53, sector 91, DLF NTH, Gurugram, Haryana
d) Offence complained of : Under Section 138 of N. I. Act,1881
e) Plea of accused person(s) : Pleaded not guilty
f) Final order : Convicted
g) Date of such order : 01.08.2023 BRIEF STATEMENT OF THE REASONS FOR THE DECISION (As mandated u/s 355 (i) of the Code of Criminal Procedure, 1973.) Case of the complainant
1. The present Judgment is a result of culmination of trial initiated on the complaint filed by the complainant alleging that the accused being proprietor of the firm M/s Seagull Interiors & Fabricators, the accused had purchased tiles and tiles adhesive from the complainant vide bill no. GST/148/1718 and GST/149/1718, dated 16.03.2018 and 17.03.2018 for Rs. 1,33,977/ and Rs. 40503/ respectively. In addition to the above a sum of Nitin Bansal Vs. Tarun Sharma page no. 1 Rs. 500/ have been debited to the account of the accused on account of labour charges. These goods have been supplied by the complainant to the accused and same were duly received by the accused after being satisfied with the quality and quantity of the goods and on account of the above due discharge/ liability accused person had issued one account payee post dated cheque bearing no. 770664, dated 16.03.2018, drawn on ICICI Bank, B/o 236 Velacherry main road, Salaiyur Chennai 600073 (hereinafter referred to as cheque in dispute). The cheque when presented for payment was dishonored with remarks, "Funds Insufficient", after which, a legal demand notice dated 08.04.2018, was sent to the accused. Since, the legal demand notice went unheeded, the complainant was constrained to file the present case. The complainant examined himself as CW1 and tendered affidavit Ex. CW1/A and documents Ex. CW1/1 to Ex. CW1/10.
The Defence
2. On the other hand, the accused in his plea of defence recorded on 23.11.2019, pleaded not guilty and claimed trial and took the defence that the cheque in dispute was given by him to the complainant as advance cheque for supply of tiles, however, the tiles supplied by the complainant were sub standard. He admitted his signatures on the cheques and stated that he has already made the payment of Rs.50,000/ towards the cheque. The accused examined two witnesses in his defence as DW1 Sh. Rakesh Kumar & DW2 Sh. Mukesh Kumar Masta.
The Law This, in sum and substance, is that factual position in the present case. To bring home the guilt of the accused, the complainant has to prove beyond reasonable doubt elements of Section 138 Negotiable Instrument Act by crossing the following legal benchmarks.
a) The cheque was drawn by drawer on an account maintained by him with the banker for payment of any amount of money out of that account to the complainant.
b) The said payment was made for discharge of a legally enforceable debt or other liability, in whole or in part.
c) The said cheques were returned unpaid by the bank.
d) The cheques were presented to the bank within a period of three months from
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the date on which it was drawn or within the period of its validity whichever is earlier.
e) The payee or the Holder in due course of the cheques as the case may be made a demand for the payment of the said amount of money by giving the notice in writing to the drawer of the cheques within 30 days of the receipt of information by him from the bank regarding the return of the cheques as unpaid.
f) The drawer of the cheque fails to make the payment of the said amount of money to the payee or as the case may be the Holder in due course of the cheques within 15 days of the receipt of the said notice.
Appreciation of Evidence and Application of the law to the facts of present case
(i) Issuing of Cheque in favour of Complainant
5. The first ingredient of offence u/s 138 N.I.Act which has to be established by the complainant is that the cheque(s) in dispute were drawn by the accused on an account maintained by him with his banker and was given to the complainant. To that effect, complainant as CW1 deposed through his affidavit to discharge his liability the accused had issued one account payee post dated cheque bearing no. 770664, dated 16.03.2018, drawn on ICICI Bank, B/o 236 Velacherry main road, Salaiyur Chennai 600073 (Ex. CW1/5) from his bank account.
The accused in plea of defence recorded on 23.11.2019, admitted his signatures on the cheque and took the defence that the cheque in dispute were given by him to the complainant as advance cheque for supply of tiles, however, the tiles supplied by the complainant were substandard.
The accused also stated that all of the particulars in the cheque were filled by his own executive.
Thus, it has been established that the cheque in dispute was drawn by the accused on his account maintained by him with his banker and were given to the complainant.
(ii) Presentment and Dishonour of Cheque(s)
6. The next ingredient to be proved by the complainant is that when the cheque in dispute was presented for encashment, it was returned by the bank unpaid. Complainant as CW1 has deposed in his affidavit that cheques in dispute were presented for encahsment but Nitin Bansal Vs. Tarun Sharma page no. 3 the same was dishonored due to "Insufficient Funds" in the account of the accused. To substantiate his deposition CW1 has brought on record original Cheque (Ex. CW1/5), original returning memo (Ex. CW1/6).
The genuineness of the same has not been disputed by the accused. The accused in his statement recorded on 23.07.2019 has admitted the genuineness and correctness of the return memo and cheque.
Therefore, the factum of presentment of cheque within its period of validity and the factum of its dishonor stands established.
(iii) Legal Demand Notice
7. The next ingredient to be proved by the complainant is that after the dishonor of the cheque, a legal demand notice was sent to the accused person within statutory period of 30 days of the receipt of information about dishonor of cheque and that the accused failed to make payment of the cheque amount within 15 days of the receipt of the said notice. Original postal receipts Ex. CW1/9, courier receipt is Ex. CW1/8, legal demand notice Ex. CW1/7 have been placed on record.
The accused in plea of defence recorded on 23.11.2019 has stated that he did not receive the legal demand notice. However, the accused had not disputed his address on the legal demand notice.
Also the accused in statement under section 313 Cr.P.C recorded on 02.05.2022 stated that he have received the legal demand notice from the complainant. Therefore, in such circumstances presumption under section 114 of Evidence Act and Section 27 of General Clauses Act can be raised to the effect that the notice was duly served upon the accused. When the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issue of notice in terms of Clause (b) of proviso to Section 138 of the Act stands complied with. Needless to emphasize that if any accused wants to contend that she or he has not received the legal demand notice, such accused is at liberty to make the payment of cheque within 15 days from the service of summons as held by three judges bench of Hon'ble Supreme Court in C.C Alvi Haji Vs. Palapetty Muhammed and another (2007) 6 SCC 555 wherein it has been held as under: "Any drawer who claims that he did not receive the notice sent by post, can, within 15 Nitin Bansal Vs. Tarun Sharma page no. 4 days of receipt of summons from the Court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons(by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court alongwith the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act, and Section 14 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation."
8. Admittedly, accused did not make the payment of cheque amount within 15 days of receipt of the demand notice and therefore cause of action against the accused arose and the present complaint was filed on 16.05.2018 i.e. well within the limitation period.
(iv) Legally Enforceable Debt or other Liability Presumption
9. Once the fundamental ingredients which gives rise to cause of action u/s 138 N.I.Act have been established a mandatory presumption u/s 139 of N.I.Act, is effected in favour of complainant and it also extends to the existence of legally enforceable liability itself.
10. A three judged bench of Hon'ble Supreme Court in Rangappa Vs. S.Mohan (2010) 11 SCC 441 has held that:
"In the light of these extracts, we are in agreement with the respondentclaimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable dept or liability. To the extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way caset doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.
11. Since in the present case, the complainant has successfully established that the cheques in dispute were issued by the accused and the same got dishonored and the accused failed to make the payment even after service of statutory notice, a presumption u/s 139 N.I.Act is drawn in favour of the complainant to the effect that the cheque in dispute was Nitin Bansal Vs. Tarun Sharma page no. 5 issued by the accused for a legally enforceable debt.
(v) Rebuttal of Presumption by Accused
12. Hon'ble Supreme Court in Rangappa Vs. S.Mohan decided on 07.5.2010 has further held : "However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transaction. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused /defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden.
Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is tht of 'preponderance of probabilities. Therefore, if the accused I sable to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his /her own."
The presumption raised under section 139 is rebutable. The defendant can prove non existence of consideration by raising a probable defence. The burden upon the defendant of proving non existence of consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In case where the defendant fails to discharge the initial onus of proof by showing the non existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under section 139 in his favour. In such a scenario the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused defendant can not be expected to discharge an unduly high standard of proof. In the absence of compelling justification, reverse onus clauses usually impose an evidentiary burden not a persuasive burden.
13. In the present case, this court is of the opinion, the accused has failed to rebut the mandatory presumption of law and has also failed to controvert the story of the complainant or to establish his own story. This opinion of the court is based upon the following observations: The accused in plea of defence recorded on 23.11.2019 has admitted that he had Nitin Bansal Vs. Tarun Sharma page no. 6 placed a purchase order with the complainant for the purchase of tiles. The accused has not disputed that the tiles were infact supplied to him by the complainant in pursuance of the purchase order. However, the accused has stated that the tiles were substandard as compared to the sample shown.
Thus, it is clear that the accused has received the tiles supplied by the complainant. To substantiate his version of the story, the complainant has also filed the invoices dated 16.03.2018 and 17.03.2018, as Ex. CW1/1 & Ex. CW1/2.
The accused has stated in his plea of defenced recorded on 23.11.2019 that the signatures of Sonu and Ravi on the invoices filed by the complainant are forged and fabricated but the accused did not lead any independent evidence to substantiate the same. Since, it is not dipsuted that the accused had received the tiles for which the invoices Ex. CW1/1 & Ex. CW1/2 were raised, this defence of accused regarding the forged signatures of Sonu and Ravi fails to punch holes through the version of the complainant. It has been established that goods for invoices Ex. CW1/1 & Ex. CW 1/2 were supplied to the accused. The complainant has also filed the payment voucher for the labour charges i.e. Ex. CW1/3 for the supply of tiles to the accused. The defence taken by the accused is that the tiles were substandard. However, the accused failed to cross examine the complainant to prove that the tiles were not in conformity with the sample shown. The accused failed to file any purchase order on record to show that for which tiles the order was placed. The accused also failed to issue any written notice or complaint to the complainant regarding the alleged defective tiles. It is not the case of the accused that due to the alleged defective tiles, he returned the same to the complainant and could not use the same. It is not the case of accused that he did not use the tiles supplied by the complainant. The only defence taken by the accused is that he did not receive payment of his client due to substandard tiles supplied by the complainant. The accused failed to examine any client to substantiate that any substandard tiles were used in their project. The accused failed to bring on record any written notice or complaint given by any client of the accused regarding substandard tiles. The accused failed to bring on record any agreement showing what kind of tiles were demanded by his client or the payment agreed by the client to be made to the accused. The accused failed to examine any Nitin Bansal Vs. Tarun Sharma page no. 7 client to show that any payment was stopped by such client towards the accused and for what purpose. The accused failed to bring on record any receipt of payment made by the client or any notice for stopping the payment.
The accused failed to examine himself as witness to depose on oath his version of the story thereby subjecting his testimony to be tested on the touchstone of cross examination. Thus, the accused failed to step into the witness box to put forth his defence. In the case of Sumeti Vij vs M/S Paramount Tech Fab Industries on 9 March, 2021, it was held by the Hon'ble Supreme court of India that the statement of the accused recorded under Section 313 of the Code is not a substantive evidence of defence, but only an opportunity to the accused to explain the incriminating circumstances appearing in the prosecution case of the accused. In his defence evidence the accused examine DW1 Sh. Rakesh Kumar who is the childhood friend of the accused to substantiate his defence that the accused made a payment of Rs. 50,000/ to the complainant in his presence and that the tiles which were used at the site were not according to the order. However, the witness failed to tell any date or month of the payment made by the accused during his cross examination and deposed that it happened in the year 2017. However, the perusal of the invoices show that the goods were supplied in March 2018. Thus, there arises no occasion of making any payment by the accused for the tiles in the year 2017 as deposed by the witness DW1.
The accused has also failed to file on record his ledger account, books of business or account statements to show that any payment was made by him to the complainant for any amount of Rs.50,000/ and if the same is reflected in his books of accounts or to show that any payment was stopped by the alleged client which is due towards him in his books of account.
In his defence evidence the accused also examined DW2 Sh. Mukesh Kumar Masta, who was working as the site supervisor for the accused to substantiate his defence that the accused made a payment of Rs. 50,000/ to the complainant in his presence and that the tiles which were used at the site were not according to the order. DW2 deposed that the accused had given order of white tiles but the tiles supplied were of Nitin Bansal Vs. Tarun Sharma page no. 8 offwhite color.
DW2 further deposed that at the time of delivery of tiles the witness as well as accused were not present at the site. Perusal of file shows that the invoices were raised dated on 16.03.20189 and 17.03.2018 and the receipt of payment of labour charges for supply of tiles is also dated 16.03.2018. The cheque has been issued dated 16.03.2018 (wherein the date was filled by the executive of accused himself). Thus, it is clear that the cheque in dispute was issued against the invoices itself and is thus not an advance cheque as alleged by the accused in his plea of defence. The cheque has been presented on the very next day by the complainant i.e. on 17.03.2018 to receive the payment of the supplied goods. Thus, all these events being concurrent go on to refute the claim of the accused that the cheque was an advance cheque. The cheque thus presented was returned dishonoured on 23.03.2018.
DW2 deposed that he was not present at the site when the order of the tiles from the complainant was delivered and after 34 days of the delivery he saw the said tiles. However, the complainant had already presented the cheque on 17.03.2018 for the legitimate expectation to receive payment for the goods supplied by him. Thus, the payment of the cheque was not stopped due to substandard tiles rather the cheque could not be honored due to insufficient funds in the account of the accused which was independent of the alleged quality of tiles as the cheque was already presented and dishounoured.
DW3 also deposed that after the payment of Rs 50,000/ at IMT Manesar (which took place after more than a month of delivery of tiles as per the version of the witness himself), upon the demand, the previous cheque( i.e. the cheque in dispute) was not returned by the complainant who assured that he will return the cheque after balance payment. DW3 also deposed that, " Later on we came to know that the said previous cheque had been presented in the bank, which is wrong and illegal". However, it is a mater of record that the cheque in dispute was already presented on 17.03.2018 and not later on presented. Rather, legal demand notice dated 08.04.2018 was also issued by the complainant for the dishonour. Thus, the version of the substandard tiles was nowhere in picture at the time of the dishonour of cheque and appears to be an afterthought.
Nitin Bansal Vs. Tarun Sharma page no. 9 The accused has not stepped into the witness box to prove the payment of Rs. 50,000/ allegedly made by him to the complainant. Nor the accused has filed any receipt reflecting the same. The accused has failed to examine himself or to question the complainant on this aspect. The two witnesses DW1 and DW2 have materially contradicted themselves regarding the alleged payment of 50,000/ and have failed to provide a clear picture as DW1 stated that payment was made in 2017 and DW2 failed to provide clear timeline of events as illustrated earlier thus casting doubt upon the version of the accused.
Contention has been raised by the counsel for accused that no offence u/s 138 NI Act has been made out in the present matter as the cheque has been presented for the full amount without endorsing part payment of Rs. 50,000/ made by the borrower. The contention is not tenable as the accused has not been able to prove any part payment made as discussed above. Even if the version of the accused is wholly believed, the alleged part payment was made more than a month after the dishonor of the cheque. Since the cheque was presented the very next day it was drawn, no question of any endorsement arises. It is also settled position of law that payment of any amount in discharge of a part of the amount covered by the cheque after its dishonor will not affect the prosecution and can not wipe out the crime itself. If the whole of the cheque amount is not paid within 15 days of the legal demand notice, any part payment does not affect the cause of action.
Thus, even though in demonstrating the probability of his defence, the standard of proof which the accused is required to meet is preponderance of probability and not beyond reasonable doubt. On the appreciation of entire gamut of evidence placed before the court and the totality of circumstances obtaining in the case, it is apparent that the accused has been unable to set up a probable defence, which can rebut the presumption u/s 139 N.I.Act, which has been raised in favour of the complainant nor has he been able to punch holes through the case of the complainant.
CONCLUSION
14. As such, I hold that accused failed to rebut the mandatory presumption of law drawn in favour of the complainant.
Nitin Bansal Vs. Tarun Sharma page no. 10
15. I accordingly return a finding of guilt against the accused Tarun Sharma.
16. The accused Tarun Sharma is hereby convicted for the offence as punishable under Section 138 N.I.Act, 1881.
17. Let the accused be heard on the point of sentence.
18. A Copy of this order be placed on the official website of the District Courts.
Judgment contains 11 pages.
Announced in the open Court On 1st August, 2023.
(BHUJALI)
M.M.01(N.I.Act)/Central,
THC/Delhi/01.08.2023
Nitin Bansal Vs. Tarun Sharma page no. 11