Delhi District Court
M/S Su-Kam Power Systems Ltd. vs . M/S Sun Systems Etc on 16 August, 2022
IN THE COURT OF SH. MAYANK GOEL:MM(NI ACT)-02,WEST, TIS HAZARI
COURTS : DELHI
_______________________________________________________________________
CIS No. 17083/2016
M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC
PS Mayapuri
U/s. 138 Negotiable Instrument Act
M/s Sun Systems,
B-49, A.P.M.C. Market-1,
Phase-II, Vashi,
Navi Mumbai-400703 ........................ COMPLAINANT
Vs.
Rakesh Aggarwal,
Proprietor of M/s Sun Systerms,
B-49, A.P.M.C., Market-1,
Phase-II, Vashi,
Navi Mumbai-400703 .......................... ACCUSED
___________________________________________________________________________________________________
CIS No. 17083/2016
M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 1 of 25
PS Mayapuri
U/s. 138 Negotiable Instrument Act
JUDGMENT
1) Offence complained of : Section 138 Negotiable Instruments Act 2) Plea of accused : Pleaded not guilty 3)Date of institution of the case : 20.09.2008 4) Final order : Convicted 5) Date of reserving of order for judgment : 12.08.2022 6) Date of final order : 16.08.2022
___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 2 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act Brief reasons for decision:
1) The necessary facts for disposal of present case as reflected in the complaint is that the complainant is a public limited company which is incorporated under Companies Act, 1956. That at the time of registration, the name of the complainant company was Su-Kam Communication Systems Pvt. Ltd., which was changed to Su-Kam Communications Systems Ltd. w.e.f. 10.08.1999 and further changed to Su-Kam Power Systems Limited vide fresh certificate of incorporation consequent upon change of name issued by the Registrar of Companies, NCT of Delhi & Haryana dated 11.05.2005. That a copy of the fresh certificate of incorporation consequent upon the change of name issued by the Registrar of Companies, NCT of Delhi & Haryana dated 11.05.2005, which is Mark A. That the Managing Director of the complainant company vide a certificate and authorization letter dated 05.09.2008, has authorized its DGM- Commercial, Shri. Narendra Somani, to initiate appropriate legal proceedings against the accused persons and to do all other acts, deeds and things as may be deemed fit and proper by the complainant. That the original letter/certificate of authorization is annexed with the complaint and is Ex. CW 1/A. That the accused no. 1 is a proprietorship firm of accused no. 2, who is a proprietor, owner, authorized representatives/signatory of the accused no. 1 and is in-charge of and responsible for day-to-day working, conduct and business affairs of the accused no. 1, being its proprietor. That the accused no. 2 had placed orders with the complainant company from time to time for himself and on behalf of the accused no. 1 ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 3 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act and had been communicating with the complainant company. That the accused no.2 is the authorized signatory of the cheque, also issued by and on behalf of the accused no. 1. That the complainant is a reputed manufacturer and dealer of power equipments such as inverters, uninterrupted power supplies (UPS), batteries, etc. by the brand name of Su-Kam and has its marketing and distribution network all over India. That the complainant enjoys good reputation in its circle and its products are sold and widely accepted in the market because of its reputation, good quality and service. That the accused no. 2 had been dealing with the complainant company from its Pune as well as Mumbai office for himself and on behalf of his sole proprietorship firm, the accused no. 1 in the products of the complainant company from his office situated in Mumbai. That the accused no. 1 is a proprietorship of accused no. 2, the accused persons have always been treated as single entity for all legal purposes in the records of the complainant company and it is the accused no. 2, who is responsible for debts/liabilities of the accused. That the accused persons were acting as Consignment agent of the complainant company for its products in Mumbai till September, 2004, when due to the irregularities by the accused, such agency was terminated. That the accused no. 2 proposed the complainant company to act as distributor of the complainant company to act as distributor of the complainant company through its proprietorship firm, the accused no. 1 and after negotiation, the accused was appointed as distributor of the complainant company in Mumbai since September, 2005 and from that time, the accused continued to act as distributor, placed the ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 4 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act orders for the products of the complainant company, received and utilized the goods of the complainant company from time to time in its business.
That it was mutually decided between the accused and the complainant that both will have a running account maintained in the books of each other and the accused shall make payments to the complainant from time to time based on the invoices. That the accused also assured the complainant that the accused will adhere to the terms of payment as per the invoices raised for the goods supplied from time to time. That the accused purchased and the complainant supplied the goods namely UPS, inverters, batteries, trolleys, etc from time to time to the accused against invoices, which were received by the accused and utilized in its business. That initially all the goods supplied to the accused were billed from the Delhi office of the complainant company till 24.11.2006 where after, since the complainant company had already established its full-fledged office in Pune, all the billing to the accused started taking place from Pune office of the complainant company irrespective of the facts as regards source of supply of material to the accused. That the complainant company reorganized its networks for the sake of operational efficiency and established its office in Mumbai. That after establishment of office of the complainant in Mumbai, the complainant started maintaining the accounts of the accused from its Mumbai office since 29.12.2007 as well apart from the transactions from Pune office. That after commencement of billing from the Mumbai office of the complainant to the accused, it was agreed and decided that the accused would settle the Pune account separately before 31.03.2008 and no further ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 5 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act goods will be ordered by the accused to the Pune office of the complainant after 31.01.2008 where after the accused shall immediately settle the account relating to Pune office and make the payment immediately but in no case later than 31.03.2008. That on 31.03.2008, a sum of Rs. 1,33,67,883.63/-(Rupees One Crores Thirty Lakh Sixty Seven Thousand Eight Hundred Eighty Three and sixty three paise only) was due and payable by the accused to the complainant against the supplies made to the accused from Pune branch of the complainant company. That the accused had already started receiving goods from the Mumbai office of the complainant and another sum of Rs.91,37,834/- (Rupees Ninety One Lakh Thirty Seven Thousand Eight Hundred Thirty Four Only) had become due and payable by the accused against supplies made from Mumbai Branch of the complainant. That after the said date i.e. 31.01.2008, when the complainant company started asking for payments from the accused as the outstanding liability of the accused had gone too high, the accused approached the officials of the complainant company and presented a story as if the accounts relating to supplies from Pune office have not been reconciled and verbally claimed various credits on account of discounts, incentives, scheme, return of goods, etc, without presenting any documents in support of his claim. That a provisional reconciliation statement was prepared narrating all the verbal submissions of claim of the accused on 15.02.2008. That the accused committed that the accused shall submit the requisite support document for all his verbal claims within a week there from but the accused failed to submit any support document for his alleged ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 6 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act claims thereby nullifying the said statement. That the accused shall make the outstanding payment immediately against Pune account before 31.03.2008. That in the absence of any support document submitted by the accused, all the false claims including the provisional reconciliation became useless, non-existent, without any substance and accordingly, the said statement lost its existence. That after the said date of 31.01.2008, the complainant did not supply any material from Pune office to the accused and the accused made part payments on various dates to the complainant leaving an outstanding balance of Rs. 70,78,993.63/- (Rupees Seventy Lakh Seventy Eight Thousand Nine Hundred Ninety Three and Sixty Three paise only) as on 31.03.2008 against its Pune branch. That in addition to the outstanding against Pune branch, another sum of Rs. 1,51,19,942/- (One Crore Fifty One Lakh Nineteen Thousand Nine Hundred Forty Two Rupees Only) had also become due and payable by the accused against the supplying of goods to the accused and the relationship with the accused from Pune branch of the complainant came to an end by transferring the balance receivable from the accused to the main office since both Pune and Mumbai were supplying the goods to the accused persons only under the same proprietorship, both the accounts of the accused got merged as single account w.e.f. 31.03.2008 at the close of the financial year. That a copy of the statement of the account maintained by the complainant company in the name of the accused from both its branches, Pune and Mumbai separately till 31.03.2008 are Ex. CW 1/B and Ex. CW 1/C respectively. That the complainant merged both the accounts of the accused whereby an aggregate ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 7 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act amount of Rs. 2,21,98,935.63/- (Two Crore Twenty One Lakh Ninety Eight Thousand Nine Hundred Thirty Five and Sixty Three paise) became due and recoverable from the accused in favour of the complainant as on 31.03.2008 where after taking the said amount as opening recoverable balance from the accused, the complainant maintained only one account with respect to the accused. That in the month of February, 2008 regarding the alleged outstanding claims and prepared a statement of account for supplies from Pune branch of the complainant to the accused provisionally on the basis of the accused no. 2 with the undertaking that the accused no. 2 will submit the support document within a week there from, the accused did not submit any documents in support of his claim against the company ever although he did make part payments to the complainant on various dated. It is further submitted that non submissions of the support documents by the accused for his alleged claims made the said statement of reconciliation non-existent and void and finally, a sum of Rs. 2,02,64,364.06/- because due and payable by the accused in favour of the complainant company as on 30.06.2008. That a copy of statement of account containing transactions with the accused persons since 01.04.2008, maintained by the complainant in its books of account in the name of the accused persons since 01.04.2008, maintained by the complainant in its books of account in the name of the accused, which is Ex. CW 1/D. That against the outstanding liability of Rs. 2,02,64,364.06/-, the accused issued a cheque in question Ex CW1/F bearing No. 252422 dated 02.07.2008 for Rs. 2,02,64,300/- drawn on TamilNad mercantile Bank Limited, Navi Mumbai, Maharastra. On ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 8 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act presentation by the complainant with its banker, the said cheque was dishonored with remarks "Funds insufficient" as reflected vide returning memos dated 15.07.2008 and 22.07.2008 which are Ex. CW 1/G and Ex. CW1/H. Thereafter, legal demand notice Ex. CW1/I dated 06.08.2008 was served upon the accused calling him to pay the cheque amount but despite the service of the legal notice, the accused has not paid the cheque amount within the stipulated period of 15 days as per NI Act. Thereafter, complainant has filed the present written complaint case u/s 138 r/w 142 of the Negotiable Instruments Act, 1881.
2) Cognizance of offence under section 138 NI Act was taken against the accused and summons was issued. Notice of accusation u/s 251 Cr.PC was served upon the accused on 03.08.2009 and plea of defence of the accused was also recorded on the same day in which he had not pleaded guilty and claimed trial. The plea of accused had also been recorded on the same day and the accused submitted that the cheque in question bears his signature but he has not filled up the other particulars in the cheque in question and was towards security. He further stated that the cheque in question was not issued against any legally enforceable debt or liability.
3) In post summoning evidence, Complainant examined Sh. Parmeshwar Prasad Singh as CW1 and Sh. Sanjay Sharma as CW2 as complainant's ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 9 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act witnesses for proving his version of the case and was duly cross examined by Ld. Counsel for accused.
4) Thereafter, memorandum of statement of accused u/s 313 Cr.P.C. was also recorded in the case wherein accused stated that the cheque in question bears his signature but he had not filled up the other particulars in the cheque in question. He further stated that he was made a distributor for the complainant for the city of New Bombay, Thane and Raigad. He further stated that the complainant had taken four cheques from him including the cheque in question as security and the cheques were given on the understanding that as and when any dispute arises the account shall be settled and then the cheques shall be presented and the complainant never settled any accounts with him and instead presented the cheque in question. He further stated that he did not owe any liability towards the complainant as alleged in the complaint and hence he is not liable to pay the amount of the cheque in question. He further stated that he also had the receiving of the complainant with respect to the four cheques given by him as security. He further stated that he had received the legal demand notice and relied the same. He further stated that his brother had also set up a factory of battery and the complainant was apprehensive that he would be engaged in sellig the batteries of his brother and on account of this apprehension the cheque in question was misused. He further stated that the complainant also issued a letter to all his dealers in the market against him due to which he had suffered huge losses and it is the complainant who owes money to him. ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 10 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act
5) In his defence, the accused examined himself as DW1.
6) Thereafter, Learned Counsels for both the parties made detailed final oral submissions on behalf of respective parties and also filed written arguments.
7) Ld. Counsel for the complainant contended that the accused has admitted that his dishonored cheque in question bears his signature and legal presumption of consideration u/s 139 of NI Act would act against the accused. It is further stated by Ld. Counsel for complainant that complainant has very well proved his case. It is further stated by Ld. Counsel for complainant that all the facts of the present case are duly mentioned in the complaint filed by the complainant Ex. CW1/P. It is further stated by Ld. Counsel for complainant that the complainant in support of his case examined two witnesses. It is further stated by Ld. Counsel for complainant that during the course of cross-examining the witnesses of the complainant, the accused persons confronted four documents i.e. Performance appreciation letter dated 07.08.2022 from Januray, 2005 to December, 2005 Ex.CW1/D1, Letter dated 01.08.2008 by Tushar Shinde, Brach Manager of the complainant company addressed to all the channel partners Ex. D2, Letter dated 08.07.2006 issued by the authorized signatory acknowledging the receipt of the four security cheques ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 11 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act Ex. D3 and Email dated 11.07.2008 issued by the accused to the erstwhile AR of the complainant with respect to the reconciliation of accounts Ex D4. It is further stated by Ld. Counsel for complainant that the defence of the accused is that of non-existence of legally enforceable debt or liability of the accused towards the complainant. It is further stated by Ld. Counsel for complainant that the statement of the accused made under Section 313 Cr.P.C. r/w Section 281 Cr.P.C. is contradictory to the defence of the accused as it is stated by the accused that four cheques including cheque in question were given as security on understanding that as and when dispute arises, the accounts shall be settled and the cheques shall be presented. It is further stated by Ld. Counsel for complainant that the present dispute arose out of the commercial transactions between the parties wherein the accused was appointed as the distributor for the Mumbai region and the same has been admitted by the accused and it is himself stated by the accused that the security cheques were given against the legal and lawful liability which could have arose in future against the goods supplied by the complainant company. It is further stated by Ld. Counsel for complainant that the statement of accounts as maintained by the complainant company has time and again served upon the accused in order to reflect the existing liability of the accused against the goods supplied by the complainant company and the notice dated 18.07.2008 Ex. CW1/I sent by accused specifically depicts that the statement of account of Pune Branch as well as that of the Mumbai Branch has always been served and reconciled with the accused and hence the defence of accused that Ex CW 2/2 was never served upon the accused ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 12 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act is sham and bogus and the same is also corroborated by the testimony of CW 2. It is further stated by Ld. counsel for complainant that the accused failed to prove the Letter dated 08.07.2006 issued by the authorized signatory acknowledging the receipt of the four security cheques Ex. D3 as the witnesses of the complainant were confronted with the said document and the witnesses have denied the same and in the said condition the accused persons ought to have proved the said document by summoning the authorized signatory but the accused deliberately faied in doing the same. Ld. Counsel for the complainant relied upon the following judgments in support of his case:-
a) ICDS Ltd Vs. Beena Shabeeb & Anr. (2002) 6 SCC 426.
b) Haryana Petro Chemical Ltd. Anr Vs. Indian Petro Chemical Ltd.
& Anr. Crl. Rev Petition No. 656 of 2009 and 546 of 2011.
c) Credentials Leasing & Credits Ltd. Vs. Shruti Investments & Anr. Cri.L.P. No. 558 of 2014.
d) Sampelley Satyanarayana Rao Vs. Indian Renewable Energy Development Agency, Cri. Appeal no. 867 of 2016 arising out of SLP (Cri) No. 510 of 2010.
e) Suresh Chandra Goyal Vs. Amit Singhal, Cr.L.P. No. 706 of 2014 decided on 15.05.2015.
It is stated by Ld. Counsel for accused that the present complaint is not filed by the competent person and relied upon the judgment of Hon'ble ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 13 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act Supreme Court of India in A C Narayanan Vs. State of Maharashtra AIR 2014 SC 630 in which it has been held that the person filing the complaint under Section 138 NI Act must have knowledge regarding the transaction of the case and in the present case there is no assertion made in the entire complaint that Mr. Narendra Somani is having the knowledge regarding the transaction. It is further stated by Ld. Counsel for accused that cheque in question was not given towards legal liability as the said cheque is given as security which was used by the complainant arbitrarily filling the amount, date etc. It is further stated by Ld. Counsel for accused that the said fact that the cheque is security cheque is also specifically proved by Ex CW1/I as well as by Ex. D3. It is further stated by Ld. Counsel for accused that email sent by the complainant company dated 15.02.2008 specifically mention the balance amount is of Rs. 60.1 lakhs. It is further stated by Ld. Counsel for accused that it is averred by the complainant in his complaint that distributorship of complainant company was given to the accused in September, 2005 and as per Ex. CW 1/D1, the complainant company gave performance appreciation to the accused from January-December, 2005, which is in itself contradictory. It is further stated by Ld. Counsel for accused that all the computer generated documents placed on record by the complainant is not supported by certificate u/s 65B Indian Evidence Act and the accused has filed certificate u/s 65B Indian Evidence Act with his documents and therefore, the documents filed by the complainant cannot be read in evidence. It is further stated by Ld. Counsel for accused that Ex. CW 1/D (Colly) which is the ledger account of the complainant company maintained by the accused specifically shows the ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 14 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act balance amount of Rs. 53,52,801/- and out of which, goods of Rs.30,00,000/- is lying with the accused and accused is ready to pay the balance amount of Rs. 23,52,801/-. It is further stated by Ld. Counsel for accused that the accused has regularly sent his statements of accounts to the complainant company. Ld. Counsel for the accused relied upon the judgments of Hon'ble Supreme Court of India in Indus Airways Pvt. Ltd. & Ors. Vs. Magnum Aviation Pvt. Ltd & Ors.(2014) 12 SCC 539 and Kumar Exports Vs. Sharma Carpets, AIR (2009) 2 SCC 513. It is further stated by Ld. Counsel for accused that the complainant has misused the cheque in question in order to harass the accused and to extort money from him.
8) This is the factual matrix of this case. Let us now examine the legal benchmark which is to be satisfied in order to constitute an offence under section 138 NI Act:
(i) that the persons must have drawn a cheque on an account maintained by him in a bank for payment of certain amount of money to another person from out of that account.
(ii) That the cheque should have been issued for discharge in whole or in party of any debt or other liability.
(iii) that the cheque has been presented to a bank within a period of three months from the date on which it was drawn.
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(iv) that cheque is returned by the bank unpaid because of the amount of money standing to the credit of account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account or any other reason.
(v) that the payee or the holder in due course of the cheque makes a demand for the payment of said amount by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of the information by him from the bank regarding the return of cheque as unpaid.
(vi) that the drawer of the said cheque fails to make payment of the said amount to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
9) 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 u/s 138 of NI Act.
10) As per section 114, Indian Evidence Act,1872 which is applicable to communication sent by the post, the court are to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. Section 27 of the General Clauses Act envisages that when a registered notice is posted , it is presumed to have been served unless rebuttal is given.
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11) Final arguments addressed on behalf of both the parties have been heard and carefully considered along with the entire evidence on record.
12) In Kumar Exports Vs. Sharma Carpets, (2009) 2 SCC 513, the Hon'ble Supreme Court, held as under:
"The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the nonexistence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note 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 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 evidence to prove that the ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 17 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act 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 the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act."
13) In M.S Narayana Menon Vs. State of Kerala, (2006) 6 SCC 39, the Apex Court dealing with the statutory presumption under Sections 118(a) and 139 of the N. I. Act inter alia held as under:
"29. In terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words "proved" and "dis proved" have been defined in Section 3 of the Evidence Act (the interpretation clause)......
30. Applying the said definitions of "proved" or "disproved" to the principle behind Section 118(a) of the Act, the Court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the nonexistence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.
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32. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies.
XXX XXX XXX Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the s standard of reasonability being that of the 'prudent man'."
14) It is a well settled proposition of law that once execution of Negotiable instrument is admitted, the presumption under Section 118(a) NI Act would arise that it is supported by a consideration. However, such presumption is rebuttable and the accused can prove the non-existence of a consideration by raising a probable defence. The burden upon the accused of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. To disprove the presumption, the accused has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non- existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist.
15) The gist of two above mentioned precedents is that the accused is in trial under Section 138 NI Act is left with two alternatives for his defence. He ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 19 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act can either show that consideration and debt did not exist for which direct evidence could be adduced which is seldom available or he can show by relying upon circumstantial evidence that under the particular circumstances of the case the nonexistence of consideration and debt is so probable that prudent man ought to suppose that no consideration and debt existed. It is evident that standard of proof to rebut the statutory presumption is not to prove it beyond the reasonable doubt as required in a criminal complaint. The onus to that effect on the accused is not onerous and what is required is a probable defence which could primarily find its foundation in preponderance of probabilities. In order to raise a probable defence, the accused can also rely on the evidence adduced by the complainant. However, a bare denial of the statutory presumption by the accused will not suffice.
16) In present case, accused has admitted his signature and account number with respect to cheque in question. It is the case of the complainant that the accused is the distributor of the complainant and the complainant had supplied goods to the accused and accused had issued the cheque-in- question in discharge of his legal liability for the payment of goods supplied to the accused. The main defence of the accused is that the cheque-in- question has been issued as a security cheque on 08.07.2006 and not in discharge of his legal liability and he had to make the payment of only Rs. 23,52,801/- to the complainant and ready to pay the same. In order to prove that the cheque-in-question has been issued as a security cheque, the ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 20 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act accused relied upon the document Ex. D3, which had been alleged to be issued by the Authorized Signatory on behalf of the complainant company. When the said document had been put to the complainant's witnesses, they denied the execution of the said document. The accused failed to summons the signatory of said document Ex. D3, to prove the said document and therefore, failed to prove Ex. D3 as per law. Even if, the court considered that the said cheque-in-question was given as security to the complainant, it was held in catena of judgments by Hon'ble High Court of Delhi and Hon'ble Supreme Court of India that in a complaint case filed u/s 138 NI Act, the accused cannot escape merely on the bald plea that cheque-in- question was issued by way of security as Section 138 does not carved out any such exeption. The cheque issued as security, pursuant to a financial trasaction, cannot be considered as a worthless piece of paper. A security is given, deposited or pledged to ensure the fulfillment of an obligation undertaken. If a cheque is issued to secure payment of goods purchased and if the payment was not made on or before the due date, the drawee would be entitled to present cheque for payment and if a cheque is dishonoured, the consequences contemplated u/s 138 NI Act would follow. The accused himself stated at the time of recording of his statement u/s 313 Cr.P.C. r/w Section 281 Cr.P.C. that " the complainant had taken 4 cheques from me including the cheque-in-question as security. The cheques were given on the understanding that as and when any dispute arises the account shall be settled and then the cheques shall be presented. However, the complainant never settled any accounts with me and instead presented ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 21 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act the cheque-in-question." Here, the accused himself admitted that the cheque-in-question was given for presentment for encashment after settlement of accounts. Therefore even if the cheque-in-question was given as a security cheque, the complainant is very well in his rights to present the cheque-in-question for encashment. The accused also failed to prove the entries regarding the miscellaneous expenses, freight and cartridge charges, discount and scheme incomes, as mentioned in Ex. DW 1/D (Colly) to prove that he had only the liability to pay an amount of Rs. 23,52,801/- (Rs. 53,52,801/- minus the goods of Rs. 30,00,000/- lying with the accused) to the complainant. Perusal of the ledger accounts placed on record by the complainant as well as by the accused shows that there is no mismatch in the goods supplied by the complainant to the accused and dispute is only about the miscellaneous expenses, freight and cartridge charges, discount and scheme incomes, which the accused failed to prove. The accused also failed to place on record any document that on what basis the miscellaneous expenses, freight and cartridge charges, discount and scheme incomes has been mentioned by the accused in his ledger accounts. The existence of commercial transactions between the parties stands admitted and the burden of proof was upon the accused to prove the steps taken by the accused in settling account to the complainant and adduce documentary proof with respect to the credits claim by him, which the accused failed to do so. Nothing came out of the cross examination of the complainant which can shake the veracity of the complainant's evidence and his credibility. Here, the admission of signature and account number has itself creates the ___________________________________________________________________________________________________ CIS No. 17083/2016 M/S SU-KAM POWER SYSTEMS LTD. Vs. M/S SUN SYSTEMS ETC Page No. 22 of 25 PS Mayapuri U/s. 138 Negotiable Instrument Act presumption u/s 139 of NI Act in favor of the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. When an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of preponderance of probabilities. Therefore, if the accused is able to raise the probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail.
17) In the present complaint case, the accused has failed to rebut the presumption raised under section 139 of NI act that such liability do not exist.
18) Ld. Counsel for the complainant relied on several judgements. The proposition of law which has been clearly explained in Bir Singh V. Mukesh Kumar dated 06.02.2019 and have been subsequently relied upon by the Apex Court and other Hon'ble Courts is as follows:-
a) That the onus to rebut the presumption u/s 139 of the NI Act that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post-dated does not absolve the drawer of the cheque of legal consequences.
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b) That the bare reading of the provisions of Section 20, Section 87 and Section 139 of the NI Act makes it amply clear that a person who signed the cheque and makes it over to the Payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for a payment of debt or in discharge of a liability. It has also been held that it is immaterial that the cheque may have been filed by any other person other than the drawer if the cheque has been duly signed by the drawer.
c) Even if the blank cheque leaf voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption u/s 139 of the NI Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of any debt.
19) In view of above discussions, this court is of considered view that accused has failed to create reasonable doubt over the veracity of story of complainant by balance of probabilities. It is noticeable that the complainant has to prove his case beyond reasonable doubt only when the accused has rebutted the presumption under section 139 NI Act which the accused has failed to do in the present case.
20) In upshot of aforesaid discussion, I return finding of conviction of accused for offence u/s 138 of NI Act in this case.
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21) Let the copy of judgment be given free of cost to the convict.
22) Let convict be heard on quantum of sentence. Digitally signed MAYANK by MAYANK GOEL Announced in open court GOEL Date: 2022.08.16 17:07:14 +0530 on 16.08.2022 (MAYANK GOEL) MM(NI ACT)-02/West District THC Courts/Delhi
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