Delhi District Court
Interpreted Recently By The Hon'Ble ... vs . on 29 April, 2011
IN THE COURT OF SH. ARVIND BANSAL
METROPOLITAN MAGISTRATE
NEW DELHI DISTRICT: NEW DELHI
Shri Bharat Bhushan Wadhwa
Proprietor M/s. VEEKAY Enterprises,
252A, Opposite DDA market,
Shakarpur Jat, new Delhi49.
.....Complainant
Versus
1. Masoor Khan,
Proprietor M/s. Glaze Advertising,
3815, Aram Park, Khurezi Khas,
In front of State Bank of India,
Delhi, 51.
.....Accused
(a) Complainant Case No. 119/1(Original CC No.3112/1/07)
&
120/1 (Original CC No.3111/1/07)
(b) Date of Institution: 17.11.2007
(c) Offence: U/s 138 N I Act
(d) Plea of accused Pleaded not guilty and claimed trial.
(e) Argument heard and 23.3.2011
reserve for order:
(f) Final Order: Convicted
(g) Date of Judgment: 29.4.2011
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JUDGMENT
BRIEF REASONS FOR JUDGMENT: Vide this common judgment, the Court shall dispose off two connected matters between the parties related to the same transaction and arising out of the same set of facts.
1. The present is a complaint under section 138 of Negotiable Instruments Act 1881 (hereinafter referred to as 'the Act') filed by the complainant on the averments that the complainant Bharat Bhushan Wadhwa, Proprietor of M/s. Veekay Enterprises had supplied digital printing items to the accused, Masroor Khan, Proprietor of M/s. Glaze Advertising and accused issued the impugned cheques in consideration of the same. It is averred that the accused issued six cheques in the denomination of Rs. 2,496/, Rs. 6,864/ and Rs. 23,712/, Rs. 5,928/ , Rs. 22,256/ and Rs. 12,064/. The said six cheques got dishonored on presentation by the complainant on the remarks, "insufficient funds/exceeds arrangement" vide six separate return memos. The complainant sent two separate legal demand notices one each in respect of first three cheques by registered AD ad one in respect of another three cheques which is averred to be duly served.
2. It is averred that the accused did not make the payment of the amount qua impugned cheques despite service of legal notice and expiry of stipulated time and hence, this complaint.
PROCEEDINGS BEFORE THE COURT
3. The accused was summoned vide order dated 19.11.2007 for the offence u/s 138 of the Act in respect of the aforesaid cheques. Thereafter, :3: the accused appeared before the Court and was admitted to bail in the present case. Notice u/s 251 Cr.P.C for the offence u/s 138 N I Act was served upon all the accused on 20.2.2008 to which he pleaded not guilty and claimed trial.
4. The complainant appeared himself as a witness PW1 and led his post summoning evidence by way of affidavit which is Exhibit PW1. He relied on the same documents in both the complaints. In both complaints the three respective cheques are Exhibit CW1/A to CW1/C. The three return memos each are Exhibit CW1/D to F, legal demand notice with postal receipt is Exhibit CW1/G. The AD card is Exhibit CW1/H. The complainant was duly crossexamined by the counsel for accused.
5. After complainant evidence was led, the statement of the accused was recorded u/s 313 Cr.P.C wherein all incriminating material existing on record including exhibited documents were put to the accused to which the stand of the accused was of general denial. He stated that cheques exhibit (in both complaints) CW1/A to CW1/C were given by him to the complainant but the same were given as advance as complainant had to supply the articles. He stated that he received the articles but the same were defective. He stated that complainant had assured him to give 20% rebate on the articles supplied but he gave only 10% rebate. He denied any liability against the cheques. He expressed his willingness to lead evidence.
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6. Accused sought the permission of the Court to examine himself U/s 315 Cr.P.C as a defence witness which was accordingly allowed. Accused appeared as DW1 and deposed that he is in the business of advertising in digital printing. He used to take raw material from the complainant company namely Veekay Enterpirses. After taking raw material, he used to use the material in printing. After making those printings, he used to supply the same to the different companies/firms. He had taken these raw material in the year 2007 for which he issued cheuqes in dispute as security before the supply of raw material. The raw material supplied to him by the complainant was defective one and this fact was communicated to the complainant wherein he had suggested that he would deduct some amount from the actual cost of raw material.
7. He further deposed that he used to give cash in lieu of the cheques issued to the complainant and at the time of giving cash, he used to recollect those cheques. Some of them were enclosed and exhibited as DW1/1 to DW1/3. At the time of taking back those cheques, he took endorsement as 'cash received' on the said cheques. After the assurance of the complainant that 20% would be deducted from the amount of raw material, the complainant never informed him about the presentation of the cheque in dispute to the bank. The accused further stated that he still had business relations with the complainant and continued taking raw material in cash despite the present complaint. He was duly cross examined by the counsel for complainant.
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8. The defence evidence was closed on the request of counsel for accused. I have heard the final arguments addressed on behalf of both the parties and have carefully perused the record. APPRECIATION OF EVIDENCE:
9. For proving an offence u/s 138 of N I Act, following ingredients are required to be fullfilled :
1) That there is a legally enforceable debt or liability,
2) The drawer of the cheque issued the cheque to discharge in part or whole the said legally enforceable debt or liability,
3) The cheque so issued was returned unpaid by the banker of the drawer,
4) Legal demand notice was served upon the accused and the accused failed to make the payment within 15 days of the receipt of said notice.
INGREDIENTS NO. 1 & 2.
10. Before going on to decide ingredient no. 1 and 2, it is necessary here to reproduce section 118 (a) and section 139 of the Act which deal with the law particularly necessary to decide ingredient no. 1 and 2. The section 118(a) reads as:
"that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or :6: transferred, was accepted, endorsed, negotiated or transferred for consideration".
And Section 139 reads as under:
"It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, or any debt or other liability".
11. The said two sections have been elaborately discussed, and interpreted recently by the Hon'ble Supreme Court in Rangappa Vs. Sri Mohan, 2010 AIAR Cri 584. In this matter the Hon'ble Supreme Court disapproved the following observations of its own in Krishna Janardhan Bhat Vs. DuttaTraya G. Hegde (2008) 4 SCC 54 i.e., "... the existence of legally recoverable debt is not a matter of presumption u/s 139 N I Act..."
and approved the following i.e., "...it merely raises a presumption to the favour of the holder of cheque that the same has been issued for discharge of any debt or any liability..."
Thus, the Hon'ble Supreme Court approved a dual proposition that Section 139 N I Act raises two presumptions , (a) with regard to the existence of legally recoverable debt and (b) with regard to the :7: issuance of cheque for a legally recoverable debt or liability.
12. The following observations of the Hon'ble Supreme Court in Hiten P Dalal Vs. Bratindra nath Banerjee (2001) 6 SCC 16, at this stage are important;
"..because both Sections 138 and 139 require the Court 'shall presume' the liability of the drawer of the cheques for the amounts for which the cheques are drawn... it is obligatory on the Court to raise this presumption in every case where the factual basis for raising the presumption has been established. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused".
But the standard of proof to discharge the burden shifted on accused to rebut the presumption raised by the Court U/s 139 is not the same as upon the prosecution to prove the case.
13. This is the case of the complainant that he sold and supplied digital printing items to accused who issued the impugned cheques to discharge his legal debt/liability for cost of the material sold and supplied to him. All the cheques got dishonored on presentation to the banker of accused due to insufficient funds and hence the present complaint against him. :8:
14. To the case of the complainant, it is the defence of the accused that although the digital printing items were supplied to him by the complainant but the same were defective. It is the defence of the accused that complainant agreed to deduct 20% from the amount of raw material but did not. Further that complainant did not inform him before presentation of cheque and therefore he does not have any liability to pay.
15. To rebut the presumption of law raised against him U/s 139 of the Act, the accused duly crossexamined the complainant, his statement U/s 313 Cr.P.C was recorded and he himself appeared as defence witness, DW1.
16. Before entering into the arena of disputed facts, it is first necessary to delve into the undisputed facts area. It is an admitted fact that cheques were issued by the accused under his signatures, to the complainant. It is also not disputed that the material was actually supplied by complainant to accused. It is further not disputed that cheques got dishonored for "insufficient funds".
17. To the case of complainant that cheques were handed over to him at the time of delivery of goods, it is the defence of accused that he issued the impugned cheques as advance/security before the supply of raw material. It has been admitted by the accused, both in his statement U/s 313 and examination in chief that goods were actually supplied to him. The argument of the counsel for accused that complainant has admitted in his evidence that cheques were issued as security and therefore, accused entitles himself to acquittal, is thoroughly misconceived. The reason is, :9: first, that neither the post summoning affidavit tendered by complainant in evidence nor his cross examination anywhere finds such an admission, and second, that even if the impugned cheques were issued as security, it has been admitted by accused both in his statement U/s 313 Cr.P.C and cross examination that impugned cheques were issued as security for supply of goods (emphasis supplied). Meaning thereby that issuance of advance cheques was only to secure the supply of goods from complainant which admittedly were supplied. Hence, the purpose of security cheques came to an end with the intended supply. The complainant discharged his business obligation by said supply and now the legal obligation of getting the cheques encashed reverted to accused, which is in question in this case.
18. It is further the defence of the accused that the complainant supplied defective goods to the accused, the fact which was allegedly disclosed by accused to complainant over phone and in person. In his crossexamination, the complainant, deposed that he was never informed by the accused that the goods supplied to him were of inferior quality. He further denied as wrong the suggestion that accused approached him for the goods supplied were of inferior quality and he had assured accused to get those goods refunded.
The accused has not brought any direct, cogent or probable evidence in his defence to raise a probability that goods supplied to him were defective. He has admitted in his crossexamination that he did not get the said material tested from any laboratory and also did not get any :10: photographs of the material clicked. In view of the inability of accused to bring any cogent evidence on record and denial of all the averments of accused by the complainant, the defence of defective goods has remained a hollow averment without weight and firmness.
19. It has further been contended by the counsel for accused that during the usual course of business, the accused had been issuing similar cheques as security and after receipt of goods he used to make entire payment in cash. In his examinationinchief, the accused deposed that he used to give cash in lieu of the cheques issued and at the time of cash payment, used to recollect such alleged cheques as Exhibit DW1/1 to DW1/3. He deposed that at the time of receiving back those cheques, he used to get an endorsement 'cash received' on said cheques.
The present contention through which the counsel for accused has tried to substantiate his earlier contention of issuance of cheques as security, is completely devoid of merit. The reason is that accused in his crossexamination has admitted that cheques relied upon by him i.e., DW1 to DW1/3 had got dishonored and he made payment qua those the very next day of dishonor. This admission symbolises the conduct of accused. The accused did not make payment of cheques exhibited in defence (as alleged) because the said cheques were issued by accused as security to complainant and the complainant supplied him the material but on the contrary the payment was made to save his skin from criminal prosecution.
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The admission of accused is selfdestructive as it proves that the dishonor of the impugned cheques is not the first default of accused in getting the issued cheques honored. The earlier contention of accused that impugned cheques were also issued as security in the same manner in which cheques Exhibit DW1/1 to DW1/3 were issued in the general course of business between complainant and accused; came under the lens of doubt through this admission. Therefore, Exhibit DW1/1 to DW1/3 does not create any probability in the favour of accused but the complainant.
20. The another contention of accused is that he asked a 20% deduction in amount of raw material but the complainant agreed only for 10% of such deduction and, therefore, he is not liable for any amount to complainant. Such a contention, does not at all come to the rescue of accused when the offence against him is dishonor of cheques and nonpayment of amount qua the said cheques despite service of legal service. Further, accused has produced no evidence for goods being defective, and second, it is not the appropriate forum to argue, and adjudicate on defect of goods, percentage of deductions etc. Accused should have preferred an appropriate action against complainant for defect in goods which he has not initiated at least qua this transaction.
Furthermore, while there was a dispute between both the parties regarding quality of goods as alleged, the accused could have very well instructed to his bank to stop the payment of impugned cheques. More so when the accused had to issue fresh cheques in lieu of impugned cheques :12: after agreed deductions. But, in the present case, accused has failed to rebut as to why the impugned cheques got dishonored for "insufficient funds/exceeds arrangement".
In view of the aforesaid discussion, the accused has failed to rebut both the presumption of existence of legally enforceable debt and issuance of impugned cheques for discharge of that debt/liability. Hence, ingredient No. 1 and 2 stand decided against the accused. INGREDIENTS NO. 3 AND 4
21. As regard the return of cheque returned unpaid for reasons insufficient funds/exceeds arrangements is well established from the cheque return memos placed on record Exhibit CW1/D to F. Section 146 of the Act reads as under:
"The Court shall in respect of every proceeding under this chapter, on production of bank's slip or memo having thereupon the official mark denoting that the cheque has been dishonored, presume fact of dishonor of such cheque unless and until such fact is disproved".
In view of the above the dishonor of the cheques stand proved.
22. Perusal reveals that the legal demand notice was sent to accused within 30 days of the receipt of information of dishonor of cheque. It is contention of the counsel for accused that accused did not receive the legal demand notice.
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The complainant has placed on record the postal receipt of registered AD sent to accused and AD card which was received back. AD card bears a signature and date. In view of the presumption U/s 27 General Clauses Act and illustration (b) of Section 114 Indian Evidence Act, 1872, the service of legal demand notice is hereby presumed. The Hon'ble Supreme Court of India in case tilted V Raja Kumari Vs. P. Subbarama Naidu AIR 2005 SC 109 held that :
"the provision for notice is meant to protect honest drawers who genuinely wanted to fulfill their promise and not meant to protect unscrupulous drawers who never intended to honor the cheques issued by them. Therefore, the context envisaged in Section 138 of the Act invites a liberal interpretation for the person who has the statutory obligation to give notice because he is presumed to be loser in the transaction and it is for his interest the very provision is made by legislature. Where the sender has dispatched the notice by post with the correct address written on it, then it can be deemed to have been served on the addressee unless he proves that it was not really serve and he was not responsible for such non service."
The onus to disprove the presumption of service lies upon the accused. The accused deposed in crossexamination that he did not know whose signatures appear on the acknowledgment of registered cover dated 29.10.2007.
:14:He further deposed that address mentioned in Exhibit CW1/H (i.e., AD card) is correct except house No. 3815. He denied as wrong the suggestion that he had received the legal notice or AD card has been signed by his son. Accused has not brought any other independent evidence on record to disprove the service of legal notice.
It is significant to mention that accused did not raise the question/issue of nonservice of legal notice either in his statement U/s 313 Cr.P.C or his examination in chief as defence witness. It appears that nondelivery of legal notice was never the defence of accused. In the opinion, of a reasonable or prudent man, this could be so when the accused actually received the notice.
23. Furthermore, the deposition of accused in crossexamination that address is not correct can't be accepted in view the reason, first, that accused did not prove by cogent and direct evidence that the legal deamnd notice was not served through post at the address given on the AD card i.e., Exhibit CW1/H; second, that summons sent to accused through courier were duly delivered on the same address and proof of delivery is on record and third, that report on bailable warrants received in the Court shows that process server reached at the correct address of accused despite the process bearing the same address as furnished by the complainant in the complaint. It appears that there is a little typographical error in the address provided by complainant as 3815 instead or 38/5. Such an error can't b considered, keeping in mind the report on summons and bailable warrants and the practical situation of the case. :15: Thus, the accused has failed to disprove the service of legal service and it accordingly stands proved against him.
24. The accused admittedly didn't make payment of the impugned cheques after expiry of stipulated period of 15 days and it was therefore, that this complaint came to filed against the accused. In view of this discussion, ingredients No. 3 and 4 stand decided against the accused. STANDARD OF PROOF :
25. It is the basic principle of criminal law that in order to hold an accused guilty of an offence, all the ingredients of that offence should be established against him beyond reasonable doubt and the burden upon accused is not so onerous and the standard expected of him is that of preponderance of probabilities by moving cogent and viable evidence. The observations of the hon'ble Supreme Case in the case Krishna Janardhan Bhat Vs. Dutta Traya G. Hegde (2008) 4 SCC 54 are important:
" the standard of proof for accused is preponderance of probabilities. The standard of proof on the part of an accused and that of the prosecution in a criminal case is different.
Whereas prosecution must prove the guilt of an accused beyond all unreasonable doubt, the standard of proof as to prove a defence on part of the accused is Preponderance of probabilities. :16: Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to circumstances upon which he relies".
This settled position finds mention in the Rangappa (supra) in para 14 in the following words:
"...it is a settled position that when an accused has to rebut the presumption u/s 139, the standard of doing so is that of preponderance of probabilities...".
FINAL ORDER:
26. In view of the above discussion, this Court is of the considered opinion that the complainant has proved all the ingredients of the offence U/s 138 of the Act beyond reasonable doubt. The accused at the same time has failed to rebut the presumptions U/s 139 of the Act even on preponderance of probabilities. Therefore, accused is hereby convicted for offence U/s 138 of the Act.
Announced in Open Court On 29th April, 2011.
(ARVIND BANSAL) METROPOLITAN MAGISTRATE:3 PATIALA HOUSE COURTS, NEW DELHI.
CC No. 119/1 and 120/1
ORDER ON SENTENCE
3.5.2011
Present: Counsel for complainant.
Convict with counsel.
The accused was convicted vide a separate judgment dated 29.4.2011. Today the matter is fixed for hearing the parties on the quantum of sentence.
It is stated by the counsel for complainant that convict is a habitual offender and there are some other cases pending against him. He prays for a maximum punishment to the convict.
It is stated by the counsel for convict that accused has a large family to support. It is stated that the convict has seven children who are completely dependent upon him. He is the sole bread earner of the family. It is further stated that the cheques got dishonored due to the business ups and downs. He, therefore, prays for a lenient view against the accused.
In view of the fact that the matter is pending for more than three long years, the present case is not a fit case to give benefit of probation of offender's Act to the convict.
After hearing the submissions of both the parties, the convict is hereby sentenced to pay a fine of Rs. 1 lac as compensation to the complainant (consolidated in both the connected matters) and in default to undergo a simple imprisonment for a term of three months.
The counsel for convict has moved a common application U/s 389 Cr.P.C for both the connected matters for suspension of sentence. Heard.
The convict has been asked to furnish bail bond in the sum of Rs. 20,000/ with one surety of like amount. The convict has shown his inability to furnish the surety bond. The convict is admitted to bail on furnishing personal bond in the sum of Rs. 20,000/ for one day only. Personal bond furnished and accepted. Now put up for 4.5.2011 for furnishing surety bond and order on suspension of sentence.
(ARVIND BANSAL) MM3/ 3.5.2011 CC No. 119/1 and 120/1 4.5.2011 Present: Convict with ld. counsel Shri Rashid Hussain.
Heard on application U/s 389 Cr.P.C for suspension of sentence.
The sentence is thereby suspended for a period of 30 days from today or until an appeal against the order on conviction is filed, whichever is earlier. Convict is admitted to bail on furnishing a common bail bond in the sum of Rs. 20,000/ with one surety of like amount in both the connected matters. Bail bond furnished and accepted.
Copy of order on sentence and judgment be given to the convict free of cost.
File be consigned to record room.
(ARVIND BANSAL) MM3/ 4.5.2011