Delhi District Court
CT CASES/617313/2016 on 27 October, 2021
M/s Crafts v. Overseas Associates; CC No. 617313/16
IN THE COURT OF MS. TWINKLE CHAWLA: MM, NI
ACT-02, SOUTH-EAST DISTRICT, SAKET COURTS
COMPLEX: NEW DELHI
M/s Crafts v. Overseas Associates & Anr.
CC No. 617313/16
U/s 138 Negotiable Instruments Act, 1881
1. CIS number : DLSE020003432008
CT CASES/617313/2016
2. Name of the : Sh. Mohd. Suleman, Proprietor, MS
Complainant Crafts, M-72, Batla House, Gali No. 8,
Okhla, Jamia Nagar, New Delhi.
3. Name of the Accused, : 1. Overseas Associates, through Sh.
parentage & residential Saud Alam (Proprietor) E-23,
address Sector-8, Noida, U.P.
2. Sh. Saud Alam, R/o H.No. 401, 4th
Floor, Saba Apartments, D-3,
Sector-44, Nodia-U.P.
4. Offence complained of : U/s 138 of Negotiable Instruments Act,
or proved 1881
5. Plea of the Accused : Pleaded not guilty and claimed trial
6. Final Judgment/order : ACQUITTAL
7. Date of judgment/order : 27.10.2021
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M/s Crafts v. Overseas Associates; CC No. 617313/16
JUDGMENT
1. The Complainant has filed the present complaint under Section 138 /142 of Negotiable Instruments Act, 1881 ("NI Act") on the averments that the Complainant had supplied home furnishing items to the Accused, totaling to Rs. 1,22,125 (as of July 2008) and the Accused in partial discharge of this lability issued a cheque for Rs. 68,663/- bearing no. 932969 dated 21.07.2008, drawn on ICICI Bank G-31 and G-32, Sector-18, Noida Branch in favour of the Complainant (hereinafter referred as "cheque in question"). However, when the said cheque was presented for payment, it was dishonoured for the reason "insufficient funds". Thereafter, the Complainant through Counsel had issued a legal demand notice which was duly served upon the Accused. Hence, despite the service of the legal demand notice, the Accused failed to make the payment. Hence, the present complaint has been filed.
2. After taking pre-summoning evidence, Accused was ordered to be summoned in this case for commission of offence under Section 138 of NI Act vide order dated 30.08.2008.
3. Accused appeared and was released on bail on 31.03.2009. On finding a prima facie case, notice U/s 251 of the Code of Criminal Procedure, 1973 ("CrPC") was served upon the Accused on 16.07.2009 to which he pleaded not guilty and opted Page 2 of 15 M/s Crafts v. Overseas Associates; CC No. 617313/16 to contest.
4. Vide order dated 16.07.2009 opportunity was granted to the Accused to cross examine the Complainant. In post summoning evidence, Complainant / CW1 filed his post summoning evidence affidavit Ex. CW1/1 and also proved following documents:
Ex. CW1/A: Cheque bearing no. 932969 dated 21.07.2008 of Rs. 68,663/-.
Ex. CW1/B: Bank returning memo dated 23.07.2008 in respect of the cheque in question.
Ex. CW1/C: Legal demand notice dated 01.08.2008. Ex. CW1/D: Registered AD in respect of the legal demand notice.
Ex. CW1/E: UPC in respect of the legal demand notice. Ex. CW1/F: Complaint under Section 138 NI Act
5. During the cross-examination of the Complainant, two documents, i.e., Ex. DW1/A and Ex. DW1/B were put to the Complainant by Ld. Counsel for the Accused.
6. Complainant also examined Sh. Maneesh Shende, Manager of IDBI Bank, NFC, New Delhi, i.e., the banker of the Complainant, as CW2 who proved the certified copy of statement of account of the Complainant, i.e., Ex. CW2/A. Complainant Evidence was closed vide separate statement on 22.01.2018.
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7. Thereafter, Accused was examined under Section 313 of CrPC for explaining the circumstances appearing against him in Complainant's evidence. He denied the Complainant's case and pleaded false implication in the present case and opted to lead evidence in his defence. Further, the application of the Accused for referring Ex. DW1/B to a handwriting expert was allowed vide order dated 10.12.2018. However, despite opportunity, he did not lead DE or appoint a handwriting expert, and hence, defence evidence was closed by way of court order on 20.11.2019.
8. However, subsequently vide order dated 24.02.2021, application filed by the Accused under Section 311 CrPC for examining a witness from Deco Design was allowed and one Mr. Sinwan Bin Rizwan was examined as DW1. DW1 was examined in chief and cross-examined and he proved the following documents:
Ex. DW1/A: Receipt bearing signature of the Complainant wherein cheque no. 188785 has been given to the Complainant in lieu of the cheque in question.
Ex. DW1/B: Copy of cheque bearing no. 188785 dated 23.07.2008 signed by DW1 and one Mr. Faraz.
Ex. DW1/C: Overleaf of the cheque bearing no. 188785 that bears the signature of the Complainant at Mark A. Page 4 of 15 M/s Crafts v. Overseas Associates; CC No. 617313/16 Ex. DW1/X1: Partnership Deed of M/s Deco Design.
Ex. DW1/X2: Letter of authority issued by the partnership firm in favour of DW1.
9. I have heard Ld. Counsel for the parties and have perused the case file carefully and meticulously.
Submissions of the Complainant and Accused
10. The Ld. Counsel for the Complainant submitted that all ingredients of Section 138 NI Act are fulfilled in the present case and hence, the presumption under Section 139 NI Act arises in the favour of the Complainant, which has not been successfully rebutted by the Accused.
11. Ld. Counsel for the Accused submitted that the Accused has already paid the cheque amount to the Complainant through one firm namely, Deco Design and hence, the presumption under Section 139 NI Act has been successfully rebutted by the Accused.
Legal Framework Ingredients of Section 138 NI Act:
12. The Hon'ble Supreme Court of India ("Hon'ble SC") in Kusum Ingots & Alloys Ltd and Ors v. K Pennar Peterson Securities Ltd and Ors., (2000) 2 SCC 745 ("Kusum Ingots Case"), has clearly stipulated that "the ingredients which are to Page 5 of 15 M/s Crafts v. Overseas Associates; CC No. 617313/16 be satisfied for making out a case under the provision are:
(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;
(ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier;
(iii) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
(iv) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice;
If the aforementioned ingredients are satisfied then the person who has drawn the cheque shall be deemed to have committed an offence."
13. Therefore, if the aforesaid ingredients are made out, the Accused is deemed to have committed an offence under Section 138 NI Act.
Presumption under Section 139 NI Act/Section 118 NI Act:
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14. Section 139 NI Act states that:
"Presumption in favour of holder: It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability"
15. Section 139 NI Act is a type of reverse onus clause, which stipulates a presumption in the favour of the Complainant as to fact of a cheque being received in discharge of a legal debt or liability.
16. Further, Section 118(a) of the NI Act, states as follows:
"Presumptions as to negotiable instruments. -- Until the contrary is proved, the following presumptions shall be made:
(a) of consideration --that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;"
17. The Hon'ble SC has in a number of judgments dealt with the combined effect of the presumptions raised under Section 139 and Section 118(a) NI Act.
18. The following proposition can be summarized on a perusal of the judgments of the Hon'ble SC in Kalamani Tex v. P. Balasubramanian, 2021 SCC OnLine SC 75; APS Forex Services Pvt. Ltd. v. Shakti International Fashion Linkers and Ors., AIR 2020 SC 945 ("APS Forex Case"); Rohitbhai Page 7 of 15 M/s Crafts v. Overseas Associates; CC No. 617313/16 Jivanlal Patel v. State of Gujarat and Ors., AIR 2019 SC 1876; Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513 ("Kumar Exports Case"); K.N. Beena v. Muniyappan and Anr., (2001) 8 SCC 458; and Dhanvantrai Balwantrai Desai v. State of Maharashtra, 1964 Cri. LJ 437:
(i) Once the execution of cheque is admitted; Section 139 of the NI Act mandates a presumption that the cheque was for the discharge of legally enforceable debt or liability;
(ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the Accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities;
(iii) Something which is probable has to be brought on record by the Accused for getting the burden of proof shifted to the Complainant. To disprove the presumptions, the Accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist;
(iv) The words "unless the contrary is proved" which occur in Section 139, make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by Section 139 NI Act cannot be said to be rebutted;Page 8 of 15
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(v) To rebut the presumption, it is open for the Accused to rely on evidence led by him or Accused can also rely on the materials submitted by the Complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely;
(vi) That it is not necessary for the Accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
Analysis
19. In the case at hand, it is not in dispute that the cheque in question was drawn from the bank account of Accused No. 1. Further, it is also not in dispute that the Accused No. 2 is the signatory of the cheque in question as in his statement under Section 313 CrPC, he has stated the same. Presentation of the cheque in question by the Complainant is also not in dispute. The dishonour of the cheque in question by way of the return memo, Ex. CW1/B, is also not in dispute. Hence, it is clear that the cheque in question was returned unpaid for the reason "insufficient funds".
20. The Complainant sent the legal demand notice, dated 01.08.2008 (Ex. CW1/C) by way of registered AD and UPC (Ex. CW1/D and Ex. CW1/E). In fact, the Accused in his statement under Section 313 CrPC has also stated that he had received the Page 9 of 15 M/s Crafts v. Overseas Associates; CC No. 617313/16 legal demand notice. Hence, the service of the legal demand notice is also undisputed. Finally, the complaint has been filed within the period of limitation. Therefore, essential ingredients mentioned from point (i) to (v) as stipulated by the Hon'ble SC in Kusum Ingots Case; have been duly satisfied.
21. Further, as noted above, once the execution of the cheque by the Accused is proved/admitted, the presumption of the same being drawn for consideration stands attracted in terms of Section 139 NI Act. Now, in the case at hand, so far as the question of existence of basic ingredients for drawing of presumption U/s 118 (a) and 139 of NI Act is concerned, from the aforesaid discussion, it is apparent that the Accused has not denied his signatures on the cheque in question that has been drawn in favour of the Complainant on a bank account maintained by the Accused; and hence the said presumption can be drawn.
22. Accordingly, it is required to be presumed that the cheque in question was drawn for consideration and the holder of the cheque i.e., the Complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the Accused to establish a probable defence so as to rebut such a presumption.
23. In the segment on legal framework, set out above, the legal proposition with respect to the burden of proof upon the Accused has already been discussed. Hence, it is now to be examined as to whether the Accused brought any material on record or pointed Page 10 of 15 M/s Crafts v. Overseas Associates; CC No. 617313/16 out glaring inconsistencies in the Complainant's case for dislodging the presumption which meets the standard of preponderance of probabilities.
24. The Accused in the present case, has in fact stated that he had issued the cheque in question to the Complainant in discharge of his liability; however, he has stated that he has already repaid the cheque amount through one firm, namely, Deco Design and hence, no prosecution under Section 138 NI Act can be maintained against him. It is trite law that the Accused is required to rebut the presumption under Section 139 NI Act by the standard of preponderance of liabilities, which is further to be judged from the point of view of a reasonable man (Reliance placed on Kumar Exports Case (supra)). Additionally, the Hon'ble Supreme Court in the APS Forex Case (supra) had noted that:
"to rebut the presumption, the Accused was required to lead the evidence that full amount due and payable to the Complainant has been paid."
25. Hence, where the Accused takes the defence of re-payment of the cheque amount, he is required to prove the same. In the present case, the Accused has in the cross-examination of the Complainant, confronted the Complainant with (i) a receipt purportedly signed by the Complainant, i.e., Ex. DW1/B, whereby the Complainant is stated to have accepted payment of Rs. 69,000 by way of cheque bearing no. 188785 drawn on the Page 11 of 15 M/s Crafts v. Overseas Associates; CC No. 617313/16 account of Deco Design as payment in lieu of the cheque in question; and (ii) copy of the cheque bearing no. 188785 dated 23.07.2008, drawn on the account of Deco Design in favour of the Complainant for an amount of Rs. 69,000, i.e., Ex. DW1/A. The Complainant denied his signatures on Ex. DW1/B and stated that the said receipt is forged. However, in cross-examination dated 29.07.2013, the Complainant stated that he had encashed the cheque, Ex. DW1/A and received the amount of Rs. 69,000. He further stated that the same was not an account payee cheque and was a self-cheque. In addition to these questions and suggestions in the cross-examination, the Accused also examined one Mr. Sinwan Bin Rizwan as DW1, who is a partner in Deco Design. DW1 deposed that he had given the cheque, i.e., DW1/A to the Complainant at the behest of the Accused and that the firm Deco Design had no other relations with the Complainant and the said cheque was given to the Complainant as repayment of the liability of the Accused. DW1 further deposed that the Complainant had told him that after this encashment, the cheque in question would be returned to the Accused. DW1 has further identified and stated that the signatures at Mark A on Ex. DW1/B and Ex. DW1/C are of the Complainant. DW1 has not been cross-examined by the Complainant at length and apart from two / three suggestions as to DW1 deposing at the behest of the Accused, DW1 having no knowledge of the transaction between Deco Design and the Complainant; no substantial cross-
Page 12 of 15M/s Crafts v. Overseas Associates; CC No. 617313/16 examination has been conducted. No fact to break the credibility of DW1 has been brought on record. A perusal of the cheque issued by Deco Design to the Complainant, Ex. DW1/A shows that the same bears the signature of DW1 as well. Further, the partnership deed and letter of authority, i.e., Ex. DW1/X1 and DW1/X2 also show that DW1 was a partner of Deco Design firm, from whose account the cheque Ex. DW1/A was issued; thereby accentuating his capacity to depose. On the other hand, no fact has been brought on record in the cross-examination which would impeach the credibility of DW1.
26. As laid down in the segment on legal framework, the Accused is only required to rebut the presumption by the standard of preponderance of probabilities and not by the standard of beyond all reasonable doubt. Seen against this background, the present defence of the Accused, i.e., repayment of the amount of the cheque in question through Deco Design, in light of the testimony of DW1, the admission of encashment of cheque Ex. DW1/A by the Complainant, the proximity between the dates of issuance of the cheque, Ex. DW1/A (23.07.2008) and the cheque in question (21.07.2008); the similarity in the amount of cheque in question (Rs. 68,663) and the cheque, Ex. DW1/A (Rs. 69,000); is not by way of mere/bare denial and does inspire confidence from the stand point of a reasonable man. Accordingly, the onus shifts back to the Complainant and it is now to be examined whether the Complainant has proved the Page 13 of 15 M/s Crafts v. Overseas Associates; CC No. 617313/16 existence of the legal debt/liability beyond all reasonable doubt.
27. In light of the defence taken by the Accused, the Complainant was required to prove that the payment made by Deco Design by way of Ex. DW1/A was not towards the cheque in question and was in respect of some other transaction between the Complainant and Deco Design. However, in the cross- examination, the Complainant, despite specific questions being put to him, did not specify any details of his transaction with Deco Design. He in fact stated that he does not have any record of the transactions with Deco Design or Mr. Faraz (i.e., the partner of Deco Design) and did not depose on any details of the transactions with the said firm which could justify the issuance of the cheque, Ex. DW1/A to him.
28. In view hereof, the Accused has brought on record material which makes it probable that the liability qua the cheque in question has already been discharged. Hence, the onus shifted back to the Complainant to prove the existence of the liability. In light of the aforesaid discussion, the Complainant has failed to discharge this burden.
CONCLUSION
29. In light of these observations, it appears that the Accused has successfully rebutted the presumption under 139 NI Act by the standard of preponderance of probabilities and the Complainant has been unable to prove the existence of the legal Page 14 of 15 M/s Crafts v. Overseas Associates; CC No. 617313/16 debt/liability. Accordingly, the ingredients of Section 138 of NI Act are not proved. Therefore, Accused is held not guilty and is acquitted of the offence punishable under Section 138 of the Negotiable Instrument Act, 1881.
ORDER: ACQUITTAL
Announced in Open Court (Twinkle Chawla)
27.10.2021 MM (NI-Act 02), South East
Saket Court, New Delhi
Note: This judgment contains 15 pages and each page has been signed by me.
(Twinkle Chawla) MM (NI-Act 02), South East Saket Court, New Delhi Page 15 of 15