Delhi District Court
Devansh Digitally Signed By vs . on 4 October, 2021
IN THE COURT OF METROPOLITAN MAGISTRATE (NI-05),
WEST, TIS HAZARI COURTS, NEW DELHI
Presided over by- Sh. Devanshu Sajlan, DJS
Case No. - 2038-2016
Unique Case ID No. - DLWT02-001170-2016
In the matter of :-
SH. HANS SETHI
Prop. M/s Pushya Trade Link,
F-22, Shopping Center
Mansarovar Garden,
New Delhi-15
... Complainant
VS.
SH. KARAN MANOCHA,
C/o M/s Brands in One,
1. C-2D/5A, Janak Puri,
New Delhi
2. Tilak Nagar,
Main Market, Mall Road,
New Delhi.
3. 6/1, Top Floor, Ashok Nagar
New Delhi-18
... Accused
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DEVANSHU Digitally signed by
DEVANSHU SAJLAN
SAJLAN Date: 2021.10.04 17:34:12
+05'30'
1 Name of Complainant : Sh. Hans Sethi
2 Name of Accused : Sh. Karan Manocha
3 Section 138, Negotiable
Offence complained of or proved :
Instruments Act, 1881.
4 Plea of Accused : Not Guilty
5 Date of Filing : 16-02-2015
6 Date of Reserving Order : 18-02-2021
7 Date of Pronouncement : 04-10-2021
8 Final Order : Acquitted.
Argued by: Ms. Monica Sharma, learned counsel for the complainant.
Sh. Sahil Kakkar, learned counsel for the accused.
TABLE OF CONTENTS
A. Mediation Order.....................................................................3
B. Factual Matrix .......................................................................................... 4
C. Pre-Summoning Evidence & Notice ..........................................................5
D. Complainant's Evidence ............................................................................6
E. Statement of Accused ................................................................................ 7
F. Ingredients of Offence and Discussion ......................................................8
I. Contention 1: No business relation with the complainant and the cheque
issued as security cheque
II. Contention 2: The complainant did not deliver stock worth Rs. 8,86,387
to the accused
II.1 Version of the accused to establish that no debt is due to the
complainant
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II.2 Position of law: Extract of an account book is not admissible
in evidence under section 34 of the Indian Evidence Act
II.3 Position of law: It is the duty of the party to lead best
evidence in his possession; and in absence of the same, adverse
inference can be drawn
II.4 Best evidence, in the form of VAT records and invoices (to
the extent of Rs. 2,19,401), has not been produced by the
complainant
II.5. Conclusion: Probable Defense established.
G. Conclusion ................................................................................................... 22
_____________________________________________________________________
BRIEF STATEMENT OF REASONS FOR THE DECISION:-
A. MEDIATION ORDER
1. Before dwelling into the facts of the present dispute, it is pertinent to first deal with
the aspect of the mediation order dated 19.05.2015. It has been contended by the
learned counsel for the complainant that the present matter was settled vide the
mediation order dated 19.05.2015 and the statement of both the parties was recorded
to this effect in the court on 19.05.2015. However, the accused did not honour the
mediation settlement and an application under section 421/431 CrPC was filed on
behalf of the complainant during the pendency of the trial praying for giving effect to
the mediation settlement order. However, by virtue of the order dated 08.07.2019, the
Learned Predecessor of this court rejected the said application on the ground that
clause 6 of the said settlement itself states that in case of default, the settlement would
become null and void and the matter shall continue as per law. Now, at the stage of
final arguments, learned counsel for the complainant has again contended that the
said mediation order should be given effect to, and the accused must be made to pay
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the settlement amount to the complainant, especially since the statement of both the
parties was recorded before the court.
2. The said contention is rejected on the ground of maintainability. Learned Predecessor
of this court has already dealt with the application under section 421/431 CrPC and
the said issue has been laid to rest by the Learned Predecessor. The undersigned court
cannot review an order already passed by it earlier. The only recourse available to the
complainant is to challenge the order dated 08.07.2019 before the appropriate forum.
B. FACTUAL MATRIX
3. The present complaint has been filed by Sh. Hans Sethi (Prop. of M/s Pushya Trade
Link) (hereinafter "complainant") against Sh. Karan Manocha (hereinafter
"accused") under section 138 of the Negotiable Instruments Act, 1881 (hereinafter
"NI Act").
4. The substance of allegations, as contained in the complaint, are as follows:
(a) The complainant is engaged in the business of trading of garments. The accused, on
behalf of his firm, M/s Brands in One, used to purchase garments from the
complainant and a running account was being maintained in the name of the firm of
the accused.
(b) In November 2014, the total outstanding of the firm of the accused in books of the
complainant was of an amount of Rs. 10,74,329. It has been claimed that in partial
discharge of the said outstanding liability, the accused issued a cheque of Rs.
8,86,387/- dated 01.12.2014. When the complainant presented the cheque, the bank
returned it unpaid on 12.12.2014 as no balance was available in the account.
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Thereafter, the complainant sent a legal demand notice dated 02.01.2015 to the
accused which was duly delivered on 03.01.20215. However, the accused allegedly
failed to pay the cheque amount and therefore, the complainant filed the present
complaint.
5. Accused's stance, on the contrary, is that he had taken some garment stock from the
complainant, but the said stock was not up to standard and hence, the accused was not
able to sell the same. Around the same time, father of the accused expired, and the
accused was in a lot of trouble. The complainant, around the time when the father of
the accused had expired, used to frequently visit the shop of the accused to ask for
money from the accused. In order to stop the complainant from visiting his shop, the
accused issued a blank signed security cheque in favour of the complainant. However,
the complainant filled up an excessive amount in the cheque and filed a false case
against the accused. In the words of the accused, "I do not owe much money to the
complainant".
C. PRE-SUMMONING EVIDENCE & NOTICE
6. Pre-summoning evidence was led by the complainant and on finding a prima facie
case, the accused was summoned to face trial vide order dated 30.03.2015. On
appearance, the accused was served with the notice of accusation under Section 251,
Code of Criminal Procedure, 1973 (hereinafter "CrPC") on 04.03.2017, to which
the accused pleaded not guilty and claimed trial. While the accused admitted his
signature on the cheque in question, he stated that rest of the particulars were not
filled by him. Further, the following plea of defence was taken by the accused at this
stage:
I had taken some garment stock from the complainant but the said stock was
not up to the standard and I could not sell the same. During that time, my
father expired and the complainant used to keep visiting my shop asking me
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Date: 2021.10.04
for money. I was in a lot of trouble and to evade the whole thing, I gave a
blank signed cheque to the complainant and asked him to stop visiting my
place. I had not filled up the amount on the cheque and I do not owe much
money to the complainant. The complainant has filed a false case against me.
7. Thereafter, the accused moved an oral application u/s 145(2) NI Act which was
allowed vide order dated 04.03.2017 and the complainant was allowed to be cross-
examined by the accused.
D. COMPLAINANT'S EVIDENCE
8. During the trial, the complainant has led the following oral and documentary
evidence against the accused to prove his case beyond reasonable doubt:-
Oral Evidence
CW1 Hans Sethi (Complainant) (tendered his evidence by way
of affidavit and the same is exhibited as CW1/A)
Documentary Evidence
Ex.CW1/1 Statement of account of the complainant (Account Ledger
from 01.04.2014 to 10.02.2015)
Ex.CW1/2 Cheque in question of Rs. 8,86,387 bearing No. 189104
dated 01.12.2014
Ex.CW1/3 Return memo dated 12.12.2014
Ex.CW1/4 Legal notice dated 02.01.2015 issued to the accused
Ex.CW1/5 Postal Receipts dated 02.01.2015 in relation to dispatch
of legal notice at three different addresses of the accused
Ex.CW1/6 (Colly) Tracking Report
Ex. CW1/7 Returned envelope containing the legal notice
Ex. CW1/8 Returned envelope containing the legal notice
Ex. CW1/9 (i) Returned envelope containing the legal notice
Ex. CW1/10 (ii) Bank account statement of the complainant showing
relevant entry of dishonor of the cheque in question along
with certificate u/s 65B Indian Evidence Act
Ex. CW1/11 (iii) Copy of sales tax registration form
Ex. CW1/12 (iv) Copy of mediation order dated 19.05.2015
Ex. CW1/D1 (Colly)
(v) 1. Invoice no. TI=5 dated 07.04.2014
(OSR) (vi) 2. Invoice no. TI=7 dated 08.04.2014
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Date: 2021.10.04
(vii) 3. Invoice no. TI=8 dated 12.04.2014
(viii) 4. Invoice no. TI=10 dated 14.04.2014
(ix) 5. Invoice no. TI=12 dated 16.04.2014
(x) 6. Invoice no. TI=34 dated 10.05.2014
(xi)
E. STATEMENT OF ACCUSED
9. Thereafter, before the start of defence evidence, in order to allow the accused to
personally explain the circumstances appearing in evidence against him, his statement
under Section 313 CrPC was recorded without oath. In reply, the accused denied all
the allegations against him and took the same plea of defence which he took while
framing of Notice under section 251 CrPC. However, there are a couple of material
contradictions in the defence taken at the stage of framing of Notice under section
251 CrPC and the defence taken at the stage of recording of statement under section
313 CrPC, as highlighted below:
(i) During the recording of his defense under section 251 CrPC, the accused stated that
he had taken some garment stock from the complainant, but the said stock was not up
to standard and hence, the accused was not able to sell the same. However, at the
stage of recording of statement of the accused under section 313 CrPC, the accused
stated that he never had any business relation with the complainant.
(ii) Secondly, during the recording of his defense under section 251 CrPC, the accused
stated that, "I do not owe much money to the complainant". However, at the stage of
recording of statement of the accused under section 313 CrPC, the accused stated that
he has no liability towards the complainant.
10. The aforesaid contradictions are discussed later in the judgment. After recording of
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the statement of the accused u/s 313 CrPC, the accused examined himself in terms of
section 315 CrPC in his defense and was duly cross-examined by the counsel for the
complainant.
11. After listening to final arguments from both sides, the matter was reserved for
pronouncement. I have heard the learned counsels on both the sides and have given
my thoughtful consideration to the material appearing on record.
F. INGREDIENTS OF OFFENCE AND DISCUSSION
12. Before dwelling into the facts of the present case, it would be pertinent to discuss the
legal standards required to be met by both sides. In order to establish the offence
under Section 138 of NI Act, the complainant must fulfil all the essential ingredients
of the offence, as highlighted below:-
First Ingredient: The cheque was drawn by a person on an account maintained by
him/her for payment of money and the same is presented for payment within a period
of 3 months from the date on which it is drawn or within the period of its validity;
Second Ingredient: The cheque was drawn by the drawer for discharge of any
legally enforceable debt or other liability;
Third Ingredient: The cheque was returned unpaid by the bank due to either
insufficiency of funds in the account to honour the cheque or that it exceeds the
amount arranged to be paid from that account on an agreement made with that bank;
Fourth Ingredient: A demand of the said amount has been made by the payee or
holder in due course of the cheque by a notice in writing given to the drawer within
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Date: 2021.10.04
thirty days of the receipt of information of the dishonour of cheque from the bank;
Fifth Ingredient: The drawer fails to make payment of the said amount of money
within fifteen days from the date of receipt of notice.
13. In addition to the above, the conditions stipulated under Section 142 NI Act have to
be fulfilled.
14. Notably, the first, third, fourth and fifth ingredient have been duly proved without
there being any real controversy regarding the same:
(a) The complainant has proved the original cheque, Ex. CW1/2, which the accused has
not disputed as being drawn on the account of the accused. The accused's only
contention is that the cheque in question was given as a blank signed cheque which
has been filled at a subsequent date by the complainant and he has manipulated the
amount in the cheque. However, giving a blank signed cheque does not erase the
liability under the NI Act. If a signed blank cheque is voluntarily presented to a
payee, towards some payment, the payee may subsequently fill up the amount and
other particulars (Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197, ¶ 34). This, in
itself, would not invalidate the cheque (Ibid). The onus would still be on the accused
to prove that the cheque was not in discharge of a debt or liability (Ibid).
(b) The cheque in question was returned unpaid vide return memo Ex. CW1/3 due to the
reason, "Funds Insufficient".
(c) The complainant has proved on record legal notice Ex. CW1/4, postal receipts Ex.
CW1/5, tracking reports Ex. CW1/6 (colly) and the returned envelopes Ex. CW1/7,
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Ex. CW1/8 and Ex. CW1/9. The accused has also admitted receipt of the legal notice
in his statement under section 313 CrPC.
(d) The fact that the payment was not made within 15 days of the receipt of the legal
notice is also not disputed. As such, on the basis of the above, the first, third, fourth
and fifth ingredient of the offence under Section 138 NI Act stands proved against
the accused.
15. The controversy in the present complaint case pertains to second ingredient.
16. As far as the proof of second ingredient is concerned, the complainant is required to
prove that the cheque in question was drawn by the drawer for discharging a legally
enforceable debt. In the present case, the issuance of the cheque in question is not
denied. As per the scheme of the NI Act, once the accused admits signature on the
cheque in question, certain presumptions are drawn, which result in shifting of onus
on the accused.
17. The combined effect of section 118(a) NI Act and section 139 of the NI Act is that a
presumption exists that the cheque was drawn for consideration and given by the
accused for the discharge of debt or other liability. Both the sections use the
expression "shall", which makes it imperative for the court to raise the aforesaid
presumptions once the foundational facts required for the same are proved (Hiten P.
Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16). Further, it has been held by the
Hon'ble Apex Court in Rangappa v. Sri Mohan, (2010) 11 SCC 441 that the
presumption contemplated under Section 139 of NI Act includes the presumption of
existence of a legally enforceable debt. In order to rebut the statutory presumption u/s
139 NI Act, the standard of proof is that of preponderance of probabilities, by which
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the accused is required to raise a probable defence. To rebut the presumption, it is
open to the accused to rely on evidence led by him/her or the accused can also rely on
the materials submitted by the complainant or the circumstances upon which the
parties rely in order to raise a probable defence (Basalingappa v. Mudibasappa,
(2019) 5 SCC 418).
18. In this case, arguments raised by the learned counsel for the accused to rebut the
presumption are discussed below.
I. Contention 1 - No business relation with the complainant and the cheque issued
as security cheque
19. It has been contended on behalf of the accused that the accused did not have any
business relations with the complainant and the complainant never supplied any stock
to the accused. It has been submitted that the accused, upon the death of his father,
took charge of the business of his father. It has been further submitted that the
complainant, around the time when the father of the accused had expired, used to
frequently visit the shop of the accused to ask for money from the accused since the
accused's father had some business relations with the complainant. However, it has
been submitted that the complainant would never furnish any proper statement of
accounts and would ask for any arbitrary amount from the accused. In order to stop
the complainant from visiting his shop, the accused issued a blank signed security
cheque in favour of the complainant which had to be filled at a subsequent date after
reconciling the accounts, which was never done.
20. The aforesaid position taken by the accused does not appear to be true. There are a
couple of material contradictions in the defence taken at the stage of framing of
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U SAJLAN Date: 2021.10.04
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Notice under section 251 CrPC and the defence taken at the stage of recording of
statement under section 313 CrPC, as highlighted below:
(i) During the recording of his defense under section 251 CrPC, the accused stated that
he had taken some garment stock from the complainant, but the said stock was not up
to standard and hence, the accused was not able to sell the same. However, at the
stage of recording of statement of the accused under section 313 CrPC, the accused
stated that he never had any business relation with the complainant. He further stated
that he came to know about the complainant only after the death of his father when
the complainant started coming to his shop asking for money from the accused (in
relation to his dealings with the accused's father) without furnishing any proof of the
same.
(ii) Secondly, during the recording of his defense under section 251 CrPC, the accused
stated that, "I do not owe much money to the complainant". However, at the stage of
recording of statement of the accused under section 313 CrPC, the accused stated that
he has no liability towards the complainant.
21. When the accused has specifically submitted in his defense at the stage of framing of
notice that he had taken stock from the complainant (defective or not is a separate
question), the subsequent statement at the stage of recording of statement under
section 313 CrPC that he does not have any business relations with the complainant
appears to be a mere afterthought. Therefore, once the accused has taken a specific
stand at the stage of framing of notice, he cannot be allowed to take a completely
contradictory stand at a later stage. Accordingly, the contention of the accused that he
did not have business relations with the complainant does not merit any
consideration.
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Date: 2021.10.04
22. Secondly, it has been contended that the accused had issued a blank signed security
cheque in favour of the complainant which had to be filled at a subsequent date after
reconciling the accounts (in relation to the complainant's dealings with the father of
the accused), which was never done. It has been further submitted that the accused
has not filled up the cheque and the complainant has filled an excessive amount in the
cheque in question.
23. The aforesaid contention of the accused is not sustainable since it is immaterial
whether the cheque has been filled by the complainant once the cheque has been
admitted to be duly signed by the drawer-accused. It is a settled position of law that if
a signed blank cheque is voluntarily presented to a payee, towards some payment, the
payee may fill up the amount and other particulars (Bir Singh v. Mukesh Kumar,
(2019) 4 SCC 197, ¶ 34). This, in itself, would not invalidate the cheque. The onus
would still be on the accused to prove that the cheque was not in discharge of a debt
or liability by adducing evidence.
II. Contention 2: The complainant did not deliver stock worth Rs. 8,86,387 to the
accused
II.1 Version of the accused to establish that no debt is due to the complainant
24. It is a settled position of law that the accused, to rebut the statutory presumption,
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 (Kumar Exports v. Sharma
Carpets, (2009) 2 SCC 513, ¶ 20).
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25. In order to discharge the aforesaid onus, the accused has put forth the following
contentions:
(a) The invoices placed on record (Ex. CW1/D1, i.e., Invoice no. TI=5 dated 07.04.2014,
Invoice no. TI=7 dated 08.04.2014, Invoice no. TI=8 dated 12.04.2014, Invoice no.
TI=10 dated 14.04.2014, Invoice no. TI=12 dated 16.04.2014 and Invoice no. TI=34
dated 10.05.2014), even if admitted to be correct, do not amount to Rs. 8,86,387
(cheque amount). If the invoice amount of all these invoices is added, the total due
amount comes to Rs. 6,66,986, whereas the cheque amount is of Rs. 8,86,387, i.e.,
Rs. 2,19,401 more than the invoice amount.
(b) The ledger account, Ex. CW1/1, mentions that there was an opening balance of Rs.
4,07,343 as on 01.04.2014. The cheque amount of Rs. 8,86,387 has been reached by
the complainant after adding the total due amount as per the exhibited invoices (Ex.
CW1/D1 (Colly)) with the aforesaid opening balance amount of Rs. 4,07,343.
However, during his cross-examination, the complainant stated that the accused was
supplied goods on credit basis and a period of 30 days used to be granted to the
accused to clear the credit, but the accused used to take approximately 60 days to
clear the same. In light of the said deposition, it has been contended that it is highly
improbable that a credit of Rs. 4,07,343 would have been pending for such a long
time since as per the complainant's own version, the accused used to clear the
pending dues every 60 days. Therefore, despite 60 days having elapsed, no reminder /
legal notice was sent to the accused which raises doubt as to the existence of the said
opening balance.
(c) It has been further submitted that no corresponding invoices have been furnished in
relation to the opening balance of Rs. 4,07,343 mentioned in the account ledger Ex.
CW1/1.
(d) During cross-examination, when the complainant was asked to furnish the VAT
records filed by him during the relevant period, he specifically refused and submitted
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that the said records have been destroyed.
(e) There is no 'transport bilty'1 on record to prove the version of the complainant to the
effect that the stock mentioned in the exhibited invoices was actually delivered to the
accused's shop.
(f) No employee was called as a witness by the complainant who could depose to the fact
that he delivered the stock to the accused.
26. After considering the aforesaid contentions, I am of the view that the accused has
been able to raise a probable defence for the reasons given in the ensuing paragraphs:
27. It is a settled position of law that the accused is not required to lead negative evidence
in order to prove that there was no existence of debt. As long as the accused is able to
bring on record such facts and circumstances, upon consideration of which, the court
may believe that the consideration and debt did not exist, the onus will shift again on
the complainant to prove his/her case. The following extract from Kumar
Exports v. Sharma Carpets, (2009) 2 SCC 513 lays down the law succinctly in this
regard:
20 . . . [T]he court need not insist in every case that the accused should
disprove the nonexistence of consideration and debt by leading direct evidence
because the existence of negative evidence is neither possible nor
contemplated. At the same time, it is clear that bare denial of the passing of
the consideration and existence of debt, apparently would not serve the purpose
of the accused. Something which is probable has to be brought on record 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. Apart from adducing direct
1
When goods are sent through transportation, an acknowledgment is given by the transporter known as
bilty (in common parlance).
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evidence to prove that the note in question was not supported by consideration
or that he had not incurred any debt or liability, the accused may also rely upon
circumstantial evidence and if the circumstances so relied upon are
compelling, the burden may likewise shift again on to the complainant.
(Emphasis added).
28. In the present case, during cross-examination of the complainant, the accused has
specifically questioned the complainant regarding the supply of stock worth the total
amount of the cheque in question. It is the stand of the accused that the complainant
never supplied stock worth the cheque amount to the accused. Now, when it was
pointed out, during cross-examination of the complainant, that the invoices on record
(Ex. CW1/D1 (Colly)) do not add up to the cheque amount, it was imperative for the
complainant to bring on record such documents which would show an outstanding
liability equal to the cheque amount. The complainant did not bring on record any
further documents in this regard. However, the complainant has relied upon Ex.
CW1/1 (account ledger) which was filed at the time of filing of the complaint.
However, it must be noted that the Ex. CW1/1 is not a complete book of accounts and
is a mere one-page loose sheet for the time period from 01.04.2014 - 10.02.2015, i.e.,
it is an extract of the complete book of accounts.
II.2 Position of law: Extract of an account book is not admissible in evidence
under section 34 of the Indian Evidence Act
29. It is a settled position of law that the extracts from book of accounts are not
admissible in evidence under section 34 of Indian Evidence Act. This is because,
from the extracts, it cannot be discovered whether the accounts are kept in the regular
course of business. The following extract from Ishwar Dass Jain v. Sohan Lal,
(2000) 1 SCC 434 propounds the law on this point concisely:
22. Ex. D-2 is an extract of accounts. So are Exs. D-3 to D-5. . . Unfortunately,
in a latter passage, the trial court referred to these extracts as "account books"
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and applied Section 34 of the Evidence Act. The Court forgot that these were
extracts of alleged accounts.
23. Now under Section 34 of the Evidence Act, entries in "account books"
regularly kept in the course of business are admissible though they by
themselves cannot create any liability. Section 34 reads as follows:
"34. Entries in books of account when relevant.--Entries in books of account,
regularly kept in the course of business, are relevant whenever they refer to a
matter into which the court has to inquire, but such statements shall not alone
be sufficient evidence to charge any person with liability."
It will be noticed that sanctity is attached in the law of evidence to books of
account if the books are indeed "account books" i.e. in original and if they
show, on their face, that they are kept in the "regular course of business". Such
sanctity, in our opinion, cannot attach to private extracts of alleged
account books where the original accounts are not filed into court. This is
because, from the extracts, it cannot be discovered whether the accounts
are kept in the regular course of business or if there are any interpolations
or whether the interpolations are in a different ink or whether the
accounts are in the form of a book with continuous page-numbering.
Hence, if the original books have not been produced, it is not possible to know
whether the entries relating to payment of rent are entries made in the regular
course of business. (Emphasis added)
30. Further, in Central Bureau of Investigation v. V.C. Shukla [(1998) 3 SCC 410, it
has been held by the Hon'ble Supreme Court that for purposes of Section 34,
Indian Evidence Act, loose sheets of paper or scraps of paper cannot be termed as
"book" for they can be easily detached and replaced.
31. In the context of NI cases as well, it has been held that mere ledger/bahi entries
are not enough to establish existence of debt. In this regard, the following extract
from the judgment of Hon'ble Punjab & Haryana High Court in Narsi Dass v.
Surender, MANU/PH/2858/2014 is pertinent:
10. What cannot possibly be disputed here is that such Bahi entries are not the
instruments of advancement of loan like pronote, bonds or Bill of exchange
etc., which can legally be enforced, as recognized in the NI Act. These entries
are only relevant u/s. 34 of The Indian Evidence Act, 1872, that too, in case,
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Date: 2021.10.04
the same were kept regularly in the course of business. At the same time, such
Bahi entries must be kept in conformity with some known system of
accountancy, either in the official language or customary language well known
to the parties and not otherwise. Where the books produced in a case are
merely ledgers, these are not supported by any daybook or roznama, do
not contain entries of transactions and there is no daily opening or closing
balance, the same are meaningless. Therefore, such Bahi entries cannot
and indeed should not be taken to be account book regularly kept in the
course of business, as provided u/s. 34 of The Indian Evidence Act, in view
of ratio of law laid down by the Assam High Court in case Chandi Ram Deka
v. Jamini Kanta Deka, MANU/GH/0078/1951 : 1952 AIR (Assam) 92 and
Orissa High Court in case Hira Meher and another v. Birbal Prasad Agarwala,
MANU/OR/0002/1958 : 1958 AIR (Orissa) 4 and are not at all legally
enforceable. (Emphasis added).
32. The aforesaid position of law was also reiterated by Hon'ble Punjab & Haryana High
Court Norang Rai Inder Sain v. Nihal Singh MANU/PH/0379/2018:
The case of the complainant is based upon the ledger/bahi entries and it is held
by this Court in Narsi Dass's case (supra) that if the complainant has set up a
case of advancing loan by making the ledger/bahi entries, such entry cannot be
treated as a negotiable instrument under Section 118 of the NI Act read with
Section 34 of the Indian Evidence Act and, therefore, the entries alone is not
sufficient to charge a person with liability as the entries in the ledger/bahi
entries are not per se admissible.
33. While the ledger entries in Ex. CW1/1 are duly supported/ corroborated with
corresponding invoices Ex. CW1/D1 (Colly) to the extent of Rs. Rs. 6,66,986, there is
no supporting document/ invoice with respect to the opening balance amount
mentioned in the ledger account, i.e., Rs. 4,07,343. Accordingly, in absence of any
corroborative evidence, the extract of the ledger account Ex. CW1/1 cannot prove the
existence of liability to the extent of the cheque amount.
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II.3 Position of law: It is the duty of the party to lead best evidence in his
possession; and in absence of the same, adverse inference can be drawn
34. It is a settled position of law that it is the duty of the party to lead the best evidence in
his/ her possession, which could throw light on the issue in controversy and in case
such material evidence is withheld, the court may draw adverse inference under
Section 114(g) of the Evidence Act notwithstanding, that the onus of proof did not lie
on such party and it was not called upon to produce the said evidence. (See
Murugesam Pillai v. Gnana Sambandha Pandara Sannadhi, AIR 1917 PC
6; Hiralal v. Badkulal, AIR 1953 SC 225; A. Raghavamma v. A.
Chenchamma, AIR 1964 SC 136; The Union of India v. Mahadeolal Prabhu
Dayal, AIR 1965 SC 1755; Gopal Krishnaji Ketkar v. Mohamed Haji Latif, AIR
1968 SC 1413; Bharat Heavy Electrical Ltd. v. State of U.P., (2003) 6 SCC
528 : AIR 2003 SC 3024; Musauddin Ahmed v. State of Assam, (2009) 14 SCC
541 : AIR 2010 SC 3813; and Khatri Hotels Pvt. Ltd. v. Union of India, (2011) 9
SCC 126).
35. Further, in relation to NI cases as well, in Sachin Food Processor v. Sanjay T.
Pathak, 2016 SCC OnLine Bom 1071, the Hon'ble Bombay High Court has held that
when the respondent was very much challenging the existence of transaction through
the cross-examination of appellant, it was incumbent on the appellant to produce the
available documentary evidence especially when it was available with the appellant:
12. . . He has also not produced any document on record to show receipt of
broiler chicken by the respondents, on the dates mentioned by him. He has
further admitted that he has not placed any document to show that he had
supplied broiler chicken of Rs. 2,69,000/- to the respondent. In his complaint,
he has stated that he has maintained accounts of the transactions.
However, those accounts are not produced on record. Further he has
admitted in his cross-examination that his partnership firm issues receipt of the
payment received from the customer by cash or by cheque. However, no such
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provisional receipt is issued to the respondent after receiving cheque. He has
further admitted that his partnership firm issues delivery challan at the time of
supply of goods to the customers. However, the copies of delivery challans of
the goods supplied to respondent are also not produced on record. Even the
office copies of bills issued to the respondent are also not produced on record.
Thus, there is no iota of evidence to prove the alleged transaction of purchase
of broiler chicken by respondent from the shop of appellant.
13. When the respondent was very much challenging said transaction
through the cross-examination of appellant, it was incumbent on the
appellant to produce such evidence especially when it was available with
the appellant. In the light of these facts, trial Court was constrained to uphold
that when on the dates mentioned in the complaint admittedly broiler chicken
was not supplied to the respondent and when no documentary evidence is
produced by the appellant to prove that on any other dates broiler chicken was
supplied to the respondent and that too worth Rs. 2,69,000/-, it becomes fatal to
the case of appellant as through the cross-examination of appellant, respondent
has succeeded in rebutting the presumption which was available to the
appellant under sections 118(a) and 139 of the N.I. Act.
II.4 Best evidence, in the form of VAT records and invoices (to the extent of Rs.
2,19,401), has not been produced by the complainant
36. In the present case, the complainant has neither produced the corresponding invoices
in relation to the opening balance amount mentioned in the ledger account, i.e., Rs.
4,07,343, nor has it produced the relevant VAT returns in relation to the same2. If the
invoice amount of all the invoices (Ex. CW1/D1 (Colly)) is added, the total due
amount comes to Rs. 6,66,986, whereas the cheque amount is of Rs. 8,86,387, i.e.,
Rs. 2,19,401 more than the invoice amount. There are no invoices on record in
relation to the said amount. The said amount has been explained by the complainant
as part of the opening balance amount in the ledger as on 01.04.2014 (Ex. CW1/1).
However, apart from the said ledger entry (Rs. 4,07,343), no corresponding invoices/
2
When the complainant was asked to produce the relevant VAT Records, it was stated by him that the
same have been destroyed.
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VAT records have been filed on record to corroborate the said ledger entry. It has
already been held above that the extract of the ledger account, Ex. CW1/1, is not a
book of account as per section 34 of the Indian Evidence Act, and hence it is not
admissible per se. Therefore, the complainant was required to bring on record
corresponding available documentary evidence to corroborate the ledger entry in Ex.
CW1/1.
37. Under Section 26 of the Delhi Value Added Tax Act (DVAT Act) read with Rule 28
of the Delhi Value Added Tax Rules, 2005 (DVAT Rules), a registered dealer is
required to submit a return for each tax period. Along with the return, the dealer has
to submit information regarding the summary of purchases and sales made and the
VAT paid thereon in Annexures 2A and 2B respectively. Therefore, when the
accused was challenging the existence of supply of stock worth the amount
mentioned in the account ledger and asked the complainant to furnish the VAT
returns, it was incumbent upon the complainant to produce the relevant VAT returns,
which would have been the best evidence to disprove the allegation of the accused.
38. Therefore, in absence of relevant invoices or VAT returns having been produced, as
mentioned above, an adverse inference needs to be drawn against the complainant.
Further, the submission of the complainant that the VAT records have been destroyed
is also contrary to the requirement of law. As per the section 48 (6) and Rules 42 and
19 of Delhi VAT Act & Rules, a registered dealer is required to maintain and retain
prescribed records at the declared principal place of business in Delhi for seven years.
Therefore, the complainant was required to preserve the relevant VAT returns for a
period of seven years and could not have destroyed the same in 2019 (when the cross-
examination was conducted). Lastly, even if the said records have been destroyed, the
complainant could have called the relevant official from the DVAT office to bring the
necessary records.
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II.5. Conclusion: Probable Defense established.
39. In light of the aforesaid discussion, I am of the considered view that the accused has
not been able to establish the legal liability of the accused to an extent of Rs.
8,86,387. At best, the complainant has been able to establish a legal debt of Rs.
6,66,986. However, an accused cannot be convicted under section 138 NI Act if the
total legal liability is less than the cheque amount.
G. CONCLUSION
40. In the backdrop of the above discussion, I am of the considered opinion that the
accused has successfully raised a probable defence in his favour and the complainant
has failed to prove his case beyond reasonable doubt.
41. In the result of analysis of the present case, the accused Karan Manocha is hereby
acquitted from the charge of offence punishable under Section 138 of the Negotiable
Instruments Act. Accused has already furnished bail bond and surety bond in terms
of section 437-A CrPC. Accordingly, the bail bond and surety bond of accused,
furnished at the time of first appearance, are cancelled, and the surety is discharged.
Documents of surety be returned after cancellation of endorsements thereon.
DEVANSH Digitally signed by
DEVANSHU SAJLAN
ORDER :- ACQUITTED U SAJLAN Date: 2021.10.04 17:33:46 +05'30' Announced in the Open (Devanshu Sajlan) Court on 04.10.2021 MM (NI Act-05), West, THC DELHI CC No. 2038/16 Hans Sethi v. Karan Manocha 22 of 22