Delhi District Court
B. N Paper Company vs Rajesh Jain on 17 February, 2020
IN THE COURT OF SHRI AJEET NARAYAN, M.M (CENTRAL): TIS
HAZARI COURTS, DELHI
CC No. : 512707/16
U/s : 138 N. I. Act
P.S :Kotwali
B. N Paper Company vs Rajesh Jain
JUDGMENT
1. Sl. No. of the case : 512707/16
2. Date of institution of the case : 12.01.2015.
3. Name of complainant : B. N Paper Company
913/917, Second Floor, Mela
Ram Market, Chawri Bazar,
Delhi-110006.
Through its SPA Holder
Sh. Ankit Jain.
4. Name of accused, parentage
& address : Sh. Rajesh Jain
R/o 384, Gagan Vihar, Delhi-
51.
Also At
Shop No. 980-81, 3/7, First
Floor, Makki Market, Chawri
Bazar, Delhi-06.
Also under C/o
J. D Jain, F1-65, Second Floor,
Mangal Bazar, Laxmi Nagar,
Delhi-92.
5. Offence complained of
or proved : 138 N. I. Act
6. Plea of accused : Accused pleaded not guilty
CC no. 512707/16 1/ 16 B. N Paper Company vs Rajesh Jain
7. Final order : Acquittal.
8. Date on which order was
reserved : 26.11.2019.
9. Date of pronouncement : 17.02.2020.
BRIEF REASONS FOR THE DECISION OF THE CASE
Factual Background of the case
1. Briefly stated facts of this case as per complaint are that the complainant is a proprietorship concern and dealing in the business of papers and accused is also engaged in the same business. On 05.09.2014, accused approached the complainant for purchase of the material and complainant supplied the material vide bill/ invoices dated 05.09.2014 and 09.09.2014 total amounting to Rs. 17,66,817/- and the accused has issued two cheques on behalf of complainant for discharging his liability cheque bearing no. 002077 dated 09.09.2014 amounting to Rs. 7,27,200/- and another cheque bearing no. 002079 dated 12.09.2014 amounting to Rs. 10,39,617/-, drawn from Development Credit Bank, Chandni Chowk, New Delhi-110006. The abovementioned cheques were got dishonoured by bankers of the accused vide returning memos 18.11.2014 with the endorsement "Account Blocked". After enquiry, complainant finds that the accused had cheated many traders in the same manner and committed fraud of crores of rupees and an FIR No. 237/14, PS Jama Masjid have already been registered against the accused regarding similar offence and copy of the FIR is also placed on record. Thereafter, complainant served a legal demand notice dated 26.11.2014 to the accused through Courier and Speed Post, at his address. The legal notice was duly received but despite that no payment was made. So, CC no. 512707/16 2/ 16 B. N Paper Company vs Rajesh Jain present case was filed under Section 138 Negotiable Instruments Act.
Proceedings Before Court
2. On the basis of pre-summoning evidence, accused was summoned for the offence u/s 138 Negotiable Instrument Act vide order dated 12.01.2015. Accused put his appearance on 27.07.2015 and thereafter, a notice under Section 251 Cr.P.C was framed against him on 20.11.2015 by Ld. Predecessor to which he pleaded not guilty and claimed trial. In the defence recorded, the accused stated that accused issued post dated cheque in advance in lieu of material but material was found to be defective and complainant had agreed to take back the material. Accused further stated that it was mutually agreed that the said cheques shall not be presented due to absence of any pecuniary liability to be discharged and requested to the complainant to return the said cheques.
3. The complainant has filed post-summoning evidence. Complainant has relied upon the documents i.e. SPA as Ex.PW1/A, Copy of bills as Ex.PW1/B (colly.), original Cheques as Ex.CW1/C and Ex.CW1/D, copy of bank return memo as Ex.CW1/E, copy of Legal notice as Ex.CW1/F, delivery report and courier, speed post receipts as Ex.CW1/G (colly.) and complainant has been duly cross-examined by Ld. Defence counsel. Thereafter, CE was closed, on 20.02.2018.
4. Statement of accused under section 313 Cr.P.C. r/w section 281 Cr.P.C. was recorded in which he replied that he was innocent. He stated that he was having business relations with the complainant since 2009 and in the year 2014-15 several consignments were received from the complainant out of which two consignments received in the month of September 2014 were defective and he intimated the same about the CC no. 512707/16 3/ 16 B. N Paper Company vs Rajesh Jain complainant and after inspection complainant admitted that the goods were defected and complainant assured him that he will take back the goods. Accused further stated that on 15.09.2014, the defective goods were taken back by the complainant from his godown through transporter. Accused further stated that the business practice was to issue blank signed cheques to the complainant alongwith the order and the amount and other particulars were used to be filled after delivery of goods. Accused further stated that his cheques were not returned even after requests and same were misused and his account was blocked in a criminal case lodged at the instance of complainant.
Accused has lead DE, but has not examined himself in DE. Mr. Aditya Marwah, Deputy Branch Manager, DCB Bank, Chandni Chowk, banker of accused, and Sh. Bhushan Kumar Judicial Assistant, Tishazari courts were examined and cross-examined as DW-1 and DW-2 and DE was closed on 16.11.2018. Afterwards final arguments were heard and after hearing the arguments trial was concluded.
5. I have heard counsel for the parties, perused the record and have gone through relevant provisions of the law.
Findings
6. Before appreciating the facts of the case in detail for the purpose of decision, let relevant position of law be discussed first. Now, Section 138 Negotiable Instrument Act provides as under:
Section 138.- Dishonour of cheque for insufficiency, etc., of funds in the account.- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any CC no. 512707/16 4/ 16 B. N Paper Company vs Rajesh Jain debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that 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 that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless--
(a) the 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;
(b) the payee or the holder in due course of the cheque, as the case may be, 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 thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation -- for the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
It is well settled position of law that to constitute an offence under S.138 N.I. Act, the following ingredients are required to be fulfilled:
(1) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/part any debt or liability;
(2) cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the CC no. 512707/16 5/ 16 B. N Paper Company vs Rajesh Jain period of its validity whichever is earlier; (3) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque, (4) giving notice in writing to the drawer of the cheque within 30 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount, (5) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice.
Being cumulative, it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the N I Act.
7. The Act raises two presumptions in favour of the holder of the cheque i.e. Complainant in the present case; firstly, in regard to the passing of consideration as contained in Section 118 (a) therein and, secondly, a presumption under Section 139, that the holder of cheque receiving the same of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability.
Analysing all the concerned provisions of law and various pronouncements in this regard, the Hon'ble Apex Court in Basalingappa v. Mudibasappa, AIR 2019 SC 1983, noted at para 23 as follows [Bharat Barrel and Drum Manufacturing Company v. Amin Chand Pyarelal, (1999) 3 SCC 35; M.S. Narayana Menon alias Mani v. State of Kerala and another, (2006) 6 SCC 39; Krishna Janardhan Bhat v. Dattatraya G. CC no. 512707/16 6/ 16 B. N Paper Company vs Rajesh Jain Hegde, (2008) 4 SCC 54; Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513; Rangappa v. Sri Mohan, (2010) 11 SCC 441 referred]:
(i) Once the execution of cheque is admitted, Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other 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) 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.
(iv) 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.
(v) It is not necessary for the accused to come in the witness box to support his defence.
8. To put in nutshell, the law regarding the presumption for the offence under Section 138 N.I. Act, the presumptions under Sections CC no. 512707/16 7/ 16 B. N Paper Company vs Rajesh Jain 118(a) and 139 have to be compulsorily raised as soon as execution of cheque by accused is admitted or proved by the complainant and thereafter burden is shifted upon the accused to prove otherwise. These presumptions shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability etc. The onus to prove the issuance of the cheque lies upon the complainant, and the same has to be proved beyond reasonable doubt, unless the accused admits the same. Once the issuance of cheque is established, either by admission or by positive evidence, the presumption under Section 139 of the Negotiable Instruments Act, 1881 arises. We can summarize the general principles in the following way:
Onus of proof: Section 139 of the Negotiable Instruments Act, 1881 states that 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. Therefore, here the onus shifts upon the accused to prove the nonexistence of debt or other liability. Section 139 of the Negotiable Instruments Act, 1881 uses the word "shall presume", which means that the presumption under Section 139 is rebuttable.
Standard of proof: The standard of proof required to rebut the presumption under Section 139 is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or other liability, the onus shifts back to the complainant to prove by way of evidence, beyond reasonable doubt, that the cheque in question was issued by the accused in discharge, whole or in part, of any debt or other liability, and now the presumptions under Section 118 (a) and CC no. 512707/16 8/ 16 B. N Paper Company vs Rajesh Jain Section 139 will not come to the aid of the complainant.
Mode of Proof: The accused may adduce direct evidence to prove that the note/cheque in question was not supported by consideration, and that there was no debt or liability to be discharged by him. However, the Court need not insist in every case that the accused should prove the nonexistence of the 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 a bare denial of passing of 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 the consideration of which, the Court may either believe that the consideration and debt did not exist, or their nonexistence was so probable that a prudent man would, under circumstances of the case, act upon the plea that they did not exist.
As discussed above, from the legal provisions and the law laid down in various judgments, it can be safely gathered that it is for the accused to rebut the presumptions. He can do so by cross examining the complainant, leading defence evidence, thereby demolishing the case of the complainant. It is amply clear that the accused does not need to discharge his or her liability beyond the shadow of reasonable doubt. He just needs to create holes in the case set out by the complainant. Accused can say that the version brought forth by the complainant is inherently unbelievable and therefore the prosecution cannot stand. In this situation the accused has nothing to do except to point inherent inconsistency in the version of the complainant or the accused can give his version of the story CC no. 512707/16 9/ 16 B. N Paper Company vs Rajesh Jain and say that on the basis of his version the story of the complainant cannot be believed.
09. In the present case, the accused in his defence under Section 251 Cr.P.C. has accepted the issuance of cheque. In such a scenario, a presumption shall be raised under Section 139 r/w Section 118 of NI Act that cheque in question was issued in discharge of valid debt or liability and it is thereafter upon him, to rebut them by adducing evidence. If upon preponderance of probabilities, the accused is able to do the same, onus once again shifts back on the complainant to prove its case beyond reasonable doubt.
10. The defence taken by accused under Section 251 Cr.P.C. is that impugned cheques were given as post dated cheques given in advance in lieu of material supplied. Goods were found to be defective and complainant agreed to take back goods and it was mutually agreed that said cheques shall not be presented. Also, accused requested the complainant to return the impugned cheques.
Accused in his statement under section 313 Cr.P.C. stated that he received defective goods from the complainant and complainant after inspecting the goods lifted the goods worth the impugned cheques through a transporter. Accused reiterated that cheques in question were issued as post dated blank cheques.
11. As regards the defence of accused that cheque in question was post dated security cheque is without any merits in view of the decision of Hon'ble Apex Court in ICDS Ltd Vs. Beena Shabeer (2002) (2) SCC 426 and of Hon'ble High Court of Delhi in Credential Leasing & Credits Ltd. Vs. Shruti Investments & Anr 223 (2015) DLT 343, that CC no. 512707/16 10/ 16 B. N Paper Company vs Rajesh Jain security cheques fall within the purview of Section 138 NI Act. As per the decision of Credential Leasing & Credits Ltd. vs. Shruti Investments & Anr (supra) it has been held that the scope of Section 138 NI Act would cover cases where ascertained and crystallized debt or other liability exists on the date when the cheque is presented and not only to the cases where ascertained and crystallized debt or other exists on the date on which it was delivered to the seller as a post dated cheque or as a current cheque with a credit period. Hence, it would have to be examined in a case to case basis, whether an ascertained or crystallized debt or other liability exists or not.
It is clear that accused has received the goods worth the amount of cheques in question as admitted by him. The main consideration is whether the goods supplied were defective and whether on the date of dishonour, there was legal liability in favour of complainant. It is also contended by accused in his statement under section 313 Cr.P.C. that on 15.09.2014, the defective goods were taken back by complainant from his godown through a transporter. Now the onus to prove this fact is on accused, which accused has failed to do through any independent witness. Accused has not brought on record anything to prove that the goods supplied to him were defective and complainant has taken back the defective goods. Accused could have brought his stock register, ledger account statement to show that goods delivered by the complainant were defective and were returned by complainant. These are merely bald assertions in absence of any cogent evidence. Hence the defence of defective goods is without any merits.
12. The accused has cross-examined the complainant mainly only on the question of receiving of the goods. The receiving of goods is not in dispute as it is admitted by the accused himself that complainant CC no. 512707/16 11/ 16 B. N Paper Company vs Rajesh Jain has supplied the defective goods to the accused which was taken back by the complainant and defective goods were of value of cheque amount. Hence, the accused has not been able to elicit anything in his favour regarding his defence. There is nothing in the cross-examination of the complainant regarding the defence taken by the accused, which could be of assistance to accused.
13. Accused has brought two witness DW-1 & DW-2 in his defence evidence to prove that when his account was blocked and what was the reason of blocking of account. Witness from the bank of accused, DCB Bank, has brought bank statement of account of accused exhibited as Ex.DW1/C1 (colly) and also document pertaining to the blocking of account exhibited as Ex.DW1/1 (colly). DW-1 has deposed that bank account of accused was blocked pursuant to letter dated 09.10.2014 issued by Mr. Praveen Kumar, Inspector, PS Jama Masjid. DW-2 Judicial Assistant, Tis Hazari Courts deposed that in FIR No. 237/14, PS Jama Masjid under Section 420 IPC complainant herein is also a witness/additional complainant in the FIR case and has produced document regarding the same exhibited as Ex.DW2/1.
It is evident that Ex.DW1/1 (colly) is a letter written by IO to Bank Manager of DCB Bank, Chandni Chowk, Delhi dated 09.10.2014 to stop the debit of the amount from the account of accused due to undergoing investigation in the FIR case under Section 420 IPC. FIR copy, Ex.DW2/1 (colly), shows that FIR was registered on 01.10.2014 and complainant in this case i.e., B N Paper Company is listed as additional complainant in list of witnesses.
14. The main defence which accused has taken in this case that, no offence under section 138 NI Act is made out as reason of dishonour of CC no. 512707/16 12/ 16 B. N Paper Company vs Rajesh Jain cheque was "account blocked" which was due to instructions received from IO investigating a criminal case involving accused. It is contended by accused that accused could not make payment in view of the fact that account was blocked on the order of IO and there was no default on his part.
It is argued by complainant that only debit was stopped by the IO and credit was open, so accused could easily had accessed his bank account in terms of depositing money. Also, complainant argued that there was no sufficient balance in the bank of account of accused at time of dishonour of cheque which is proved by the bank statement of accused Ex.DW1/C1 (colly). It is also argued by complainant that accused could have made application to concerned Ld. MM for reopening his account but accused has not made any efforts in this regard.
Accused has relied on cases of Onkar Nath Goenka Vs. Gujrat Lease Finance Ltd. IV (2008) BC 514, Vijay Choudhary Vs. Gyan Chand Jain, 2008 (4) RCR (Criminal) 159, Prem Chand Gupta v State, I (2010) DLT (CRL.) 800, and Cease Fire Industries Ltd. Vs. State & Ors Manu/DE/4664 2017 of Hon'ble High Court of Delhi in which it was held that accused can't be faulted if accounts is blocked for reason beyond the control of the accused. Section 138 of NI Act is not made out in case account is blocked /freezed/attached on the order of some statutory authorities, because the blocking / attachment of bank cannot be said to be a voluntary act of drawer. In Prem Chand Gupta v State, (Supra), the Hon'ble High Court held that:
"10. .............Since the company could not have disobeyed the order passed by BIFR, it was not possible for it to make payment of the amounts of the cheques at any time after 1st December, 1998. The purpose of issuing of CC no. 512707/16 13/ 16 B. N Paper Company vs Rajesh Jain notice under Section 138(b) of Negotiable Instruments Act is to inform an honest drawer of the cheque, who, for one reason or the other, could not arrange funds at the time of presentation of the cheque to his bank, to show his bona fide, by making payment within 15 days of the receipt of the notice. If a person is prohibited on account of an order passed by BIFR from making payment on the date the statutory period of 15 days expires, nonpayment being beyond his control, no offence under Section 138 of Negotiable Instruments Act would be made out against him."
15. Hon'ble High Court of Delhi in Cease Fire Industries Ltd. vs. State (supra) has held that if complainant is aware of the fact that account has been frozen in terms of direction by some statutory authority and he has still presented the cheque, then offence of section 138 NI Act is not attracted. In this case cheque was dishonoured on 18.11.2014, for which present complaint is filed, but account was blocked on 09.10.2014 by the direction of IO in pursuance of investigation in FIR case, which was registered on 01.10.2014. Complainant herein is also an additional complainant in the FIR case. It can be safely assumed that complainant was aware that account has been blocked in pursuance of direction of IO to banker of accused.
16. Before appreciation of evidence regarding the issuance of cheque for discharging the legally enforceable debt, it is important to recapitulate the essential ingredients of offence under section 138 NI Act. The first ingredient is that cheque shall be drawn or executed by a person (drawer / accused) on an account maintained by him with a banker.
A careful analysis of Section 138 NI Act reveals that to CC no. 512707/16 14/ 16 B. N Paper Company vs Rajesh Jain maintain the complaint under section 138 NI Act, is the cheque issued by the account holder must be from "account maintained" by account holder with the drawer Bank for discharge of any debt or other liability. This expression "account maintained by him" must necessarily include that the said account is not only alive and operative, but the account holder is capable of executing command to govern the financial transactions which include the clearance of cheques etc. The authority and control of the account holder upon the account must exist on the effective date i.e. when the cheque becomes valid for presentation in the bank. Mere fact that the record of the drawer bank shows a particular name as account holder would not be sufficient to establish that account is being maintained by the account holder, unless the said account holder holds the authority and control over the said account. In other words, if an account holder is deprived off his authority, control and dominion over the bank account, it cannot be said that the account is being maintained by the said account holder.
It is evident from the facts of the case that on the date of dishonour of cheque, account was already blocked on the orders of IO, which was beyond control of accused. The contention of the complainant that only debit was blocked and not credit, so accused could have deposited the money in his account is not tenable because, if debit was blocked then cheque could not have been honoured upon presentation in any case.
In the given facts, there is no hesitation in holding that on the date when the cheques were presented by the complainant to the drawee Bank, the account holder was not maintaining the said account. Resultantly, in the absence of this material condition it cannot be said that the offence punishable under Section 138 NI Act would be made out.
CC no. 512707/16 15/ 16 B. N Paper Company vs Rajesh Jain
17. The complainant has failed to prove the first basic ingredient of offence that cheque shall be drawn by accused on an account maintained by him with a banker. In the scenario that complainant has failed to prove first basic ingredient, there is no need to look into the other aspect of the offence and other contentions of accused.
18. Considering this, the complaint is not maintainable against the present accused. Accused Rajesh Jain is hereby acquitted for the offence under Section 138 NI Act. Digitally signed by AJEET AJEET NARAYAN NARAYAN Date:
2020.02.19 Announced in the 12:51:16 +0530 open Court on 17.02.2020 (AJEET NARAYAN) Metropolitan Magistrate (Central-02), Tis Hazari, Delhi.
CC no. 512707/16 16/ 16 B. N Paper Company vs Rajesh Jain