Delhi District Court
Sidhbali Trading Pvt Ltd vs Futuremate Enterprises on 16 July, 2024
IN THE COURT OF MS. MANSI MALIK,
JUDICIAL MAGISTRATE FIRST CLASS/NI ACT-
01/WEST/DELHI
CC No. 7173/2017
M/s Shri Sidhbali Trading Pvt. Ltd.
Through its Director
403, Padma Tower-1,
Rajendra Place,
New Delhi-110008 ................Complainant
Vs.
1. M/s Futuremate Enterprises
1544, Suiwalan Gali Kotana,
Suiwalan, Daryaganj, Delhi-110006.
Also at
1531, SIF, Gali Kotana,
A Partnership firm,
1544, Suiwalan Gali, kalkatta Bag wali,
Daryaganj, Delhi-110008
2. Mr. Mohd. Aziz,
Partner in M/s Futuremate Enterprises,
1544, Suiwalan Gali Kotana,
Suiwalan, Daryaganj, Delhi-110006.
Also at
1531, SIF, Gali Kotana,
A Partnership firm,
1544, Gali Kotana Suiwala,
Daryaganj, Delhi-110006.
3. Mr. Mohd. Sami,
Partner in M/s Futuremate Enterprises,
1544, Suiwalan Gali Kotana,
Suiwalan, Daryaganj, Delhi-110006.
Digitally
CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. MANSI
1/26
signed by
MANSI
MALIK
MALIK Date:
2024.07.16
16:49:11
+0530
Also at
1531, SIF, Gali Kotana,
A Partnership firm,
1544, Gali Kotana Suiwala,
Daryaganj, Delhi-110006 .............Accused
Date of institution of case : 14.11.2017
Date of reserving the judgment : 22.06.2024
Date of pronouncement of judgment : 16.07.2024
JUDGMENT
1. S. No. of the Case : 7173/2017
2. Date of institution of the case : 14.11.2017
3. Name of the complainant : Sidhbali Trading Pvt. Ltd.
4. Name of the accused : 1. Futuremate Enterprises
2. Mr. Mohd. Aziz
3. Mr. Mohd. Sami
5. Offence complained or proved : 138 N.I. Act
6. Plea of Accused : "Not Guilty"
7. Final Order : Conviction
8. Date of Final Order : 16.07.2024
BRIEF FACTS AND REASONS FOR DECISION
1. Vide this judgment, this Court shall dispose of the present complaint filed by the Complainant against the above-named Accused persons under Section 138 read with Section 142 of Negotiable CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 2/26 Digitally signed by MANSI MANSI MALIK MALIK Date:
2024.07.16 16:49:28 +0530 Instrument Act, 1881 (hereinafter referred to as N.I. Act) for dishonour of cheque bearing no. 003068 dated 06.09.2017 for Rs. 7,46,827/- and cheque bearing no. 003069 dated 06.09.2017 for Rs. 3,36,496/- both drawn on OBC, Tronica City, Loni, Ghaziabad, U.P.
2. The brief facts of the case are as follows:-
(a) That the accused has availed the services of complainant in assisting the accused in purchase of writing and printing paper of the quality being K.R. Briteone (sheet) and (reel), GSM and size as was prescribed and specified by the accused.
(b) That the accused apprised the complainant about the trade practice being, upon receipt of details of order from the accused, the complainant was to place purchase order on K.R. Pulp and Papers Ltd., who was to deliver the goods directly to the accused and within 7 days of dispatch to the accused, the complainant was to make payment of invoice raised by K.R. Pulp and Papers Ltd. to K.R. Pulp and Papers Ltd. K.R. Pulp and Papers Ltd., upon receipt of payment from the complainant, would confirm to the accused about receipt of payment and in additional 83 days, the accused was to release the payment to the complainant of the goods supplied by K.R. Pulp and Papers Ltd. to the accused. Thus, while the complainant was to make payment within 7 days of dispatch to K.R. Pulp and Papers Ltd., the accused were to reimburse the complainant within 90 days of dispatch. It is pertinent to mention here that the complainant was to receive its commission as it was to make payment of the invoice value to K.R. Pulp and Papers Ltd. after deducting its commission and it was to receive 100% of the invoice value from the accused.
CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 3/26Digitally signed by MANSI MANSI Date:
MALIK MALIK 2024.07.16 16:49:33 +0530
(c) That on requisition of the accused, upon the specification of quantity and quality as specified by the accused for purchase of K.R. Briteone (sheet) & (reel) and K.R. Dura One (sheet), the complainant placed the order upon K.R. Pulp and Papers Ltd. of the address Jalalabad road, Shahjahanpur, U.P. for supply of the same to accused. K.R. Pulp and Papers Ltd. supplied the same to the accused. That the invoices were raised by K.R. Pulp and Papers Ltd. on the accused, which were duly paid by the complainant after deducting its commission and receipt of payment was duly confirmed by K.R. Pulp & Paper Ltd.
(d) That after the receipt of the goods as mentioned in the invoices, the accused persons had issued certain cheques in respect of few of the invoices. However, the accused did not clear the outstanding payment.
The complainant accordingly by way of letter informed the accused that it was going ahead with the presentation of the cheques handed over to the complainant. The said letter was duly received by the complainant.
(e) The complainant presented two cheques for encashment in the bank, the details of which are as under:-
Sr. No. Cheque No. Date Amount Drawn on
OBC, Tronica City, Loni,
1. 003068 06.09.2017 7,46,827/-
Ghaziabad, U.P.
OBC, Tronica City, Loni,
2. 003069 06.09.2017 3,36,496/-
Ghaziabad, U.P.
(f) That the complainant presented the aforesaid cheques for encashment but the cheques were returned back dishonored vide bank memos dated both 07.09.2017 with the remarks "Funds Insufficient".
(g) That on 18.09.2017 the complainant sent legal notice to the accused CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 4/26 Digitally signed by MANSI MANSI MALIK MALIK Date:
2024.07.16 16:49:37 +0530 persons and the accused persons failed to comply with the requirement of the said notice within the stipulated period of 15 days from the date of service of notice.
(h) That the accused persons have issued the said cheques in discharge of a credit liability knowing fully well that they have no sufficient funds in their bank account and had issued the said cheques with malafide intention to cheat the complainant and thus they have committed an offence U/s. 138 of the Negotiable Instrument Act. Hence, the present complaint has been filed.
3. After taking pre-summoning evidence, the Court took cognizance of the offence under section 138 NI Act and directed issuance of process against the accused no. 1, 2 and 3 only. In pursuance thereof, both the accused no. 2 and 3 appeared before the Court and furnished Court Bail. Proceedings qua accused no.2/Mohd. Aziz were abated on 21.08.2019 as he had expired. Thereafter, proceedings were continued qua accused no.1 and 3.
4. Notice under section 251 Cr.P.C. was framed against accused no.3/ Mohd. Shami as well as against accused no.1 through accused no.3 to which they pleaded not guilty and claimed trial. It was submitted by accused Mohd. Shami that he was the partner of Futuremate Enterprises and he was the authorized signatory of the bank account maintained by accused no. 1. It is further stated that the accused firm had purchased paper material from the complainant company and the cheques in question were given as security cheques to the complainant company and they were presented without intimation to them. It is further stated that CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 5/26 Digitally signed by MANSI MANSI MALIK MALIK Date:
2024.07.16 16:49:42 +0530 the complainant has misused the cheques in question. The accused admitted his signatures on the cheques in question but stated that he did not fill in the particulars on the cheques in question. The accused denied receiving the legal demand notice from the complainant.
5. In Complainant's Evidence (CE), the complainant has examined himself as CW-1 by way of tendering an affidavit of evidence, which is exhibited as Ex. CW-1/A. The complainant placed reliance on the following documents:-
(a) Ex. CW1/1 is the resolution passed by Board of Directors of complainant company.
(b) Ex. CW1/2 is the purchase order sent on e-mail.
(c) Ex. CW1/3 is the purchase order placed by the complainant.
(d) Ex. CW1/4 & 5 are the invoices raised by K.R. Pulp and Papers Ltd.
(e) Ex. CW1/6 is the bank account statement.
(f) Ex. CW1/7 & 8 are the receipts of invoices.
(g) Ex. CW1/9 is the letter sent by the complainant to accused.
(h) Ex. CW-1/10 are the postal receipts.
(i) Ex. CW-1/11 are the tracking reports.
(j) Ex. CW-1/12 is the cheque bearing no. 003068.
(k) Ex. CW-1/13 is the return memo dt. 07.09.2017.
(l) Ex. CW-1/14 is the cheque bearing no. 003069.
(m) Ex. CW-1/15 is the return memo dt. 07.09.2017.
(n) Ex. CW-1/16 is the summary of accounts.
(o) Ex. CW-1/17 is the legal notice dt. 18.11.2017.
(p) Ex. CW-1/18 are the postal receipts.
(q) Ex. CW-1/19 are the acknowledgement cards.
CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 6/26 Digitally signed MANSI by MANSI MALIK MALIK Date:
2024.07.16 16:49:46 +0530 CW-1 was cross-examined at length by Ld. counsel for accused.
6. The complainant has also examined Sh. Iqbal Ahmed, Senior Branch Manager, PNB Bank(erstwhile OBC), Tronika City, Loni, as CW-
2. CW-2 placed reliance upon following documents :
(a) Ex. CW2/1 is the statement of account of account bearing no.
11871131003064.
CW-2 was not cross examined by counsel for the accused despite opportunity given.
7. The complainant has also examined Sh. Shiv Pratap Singh, Relationship Manager, ICICI Bank, East Patel Nagar, Delhi as CW-3. CW-3 placed reliance upon following documents :
(a) Ex. CW3/A is the authority letter.
(b) Mark X are the copy of cheques bearing no. 003062 and 003063 alongwith copy of return memos.
8. Thereafter, CE was closed vide order dated 11.03.2024. It was followed by recording of statement of the accused persons u/s 313 Cr.PC. All the incriminating evidence was put to accused persons to which they pleaded innocence and false implication. It was stated by the accused Mohd. Shami that the purchase orders and invoices are incorrect and that he does not have any knowledge about them. It is further stated that the cheques in question do not bear his signatures and the same were not issued by him to the complainant. It is further submitted that he has not received any letter from the complainant. It is further stated that the cheques in question were not issued to the complainant and the same CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 7/26 Digitally signed by MANSI MANSI Date:
MALIK MALIK 2024.07.16 16:49:51 +0530 does not bear his signatures. It is further stated that he does not know how the cheques came in possession of the complainant. It is further stated that he does not owe the cheque amount to the complainant and the cheques in question have been misused by the complainant. Accused persons opted not to lead DE.
9. Thereafter, matter was posted for final arguments. During the course of arguments, it was argued on behalf of the complainant that all the ingredients of the offence under Section 138, NI Act, are fulfilled in the present case. On this basis, the complainant has argued that the presumption under Section 139 read with Section 118 of the NI Act lies in favour of the complainant and the accused persons have failed to rebut the presumption and raise a probable defence.
10. Per contra; Ld. Counsel for the accused has opposed the arguments rendered on behalf of the complainant and submitted that the accused persons do not have any legal liability towards the complainant as no goods were ever supplied by the complainant to the accused. It is also submitted that the cheques in question have been issued as security cheques to the complainant, which have been misused by the complainant.
11. The Court has carefully perused the case record and has heard arguments advanced by Ld. Counsel for complainant as well as by Ld. Defence counsel.
12. The question in the present case revolves around whether the CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 8/26 Digitally signed by MANSI MANSI Date:
MALIK MALIK 2024.07.16 16:49:58 +0530 impugned cheque was issued towards the discharge in whole or in part of legally enforceable liability or debt as envisaged under section 138 NI Act. Thus it becomes apposite at this juncture to reproduce section 138 NI Act:
"138. Dishonour of cheque for insufficiency, etc., of funds in the accounts 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 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 extend to two year", or with fine which may extend to twice the amount of the cheque, or with both Explanation: For the purpose of this section, "debt or other liability"
means a legally enforceable debt or other liability."
13. Thus, in order to ascertain whether the accused has committed an offence u/s 138 NI Act, the following ingredients constituting the offence have to be proved:
(a) The drawer of the cheque should have issued the cheque for the discharge, in whole or in part of a legally enforceable debt or other liability.
(b) The cheque is returned by the bank unpaid, either because of the CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 9/26 Digitally signed MANSI by MANSI MALIK MALIK Date: 2024.07.16 16:50:02 +0530 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.
(c) The drawer of such cheque fails to make the payment of the said amount of money within fifteen days of the receipt of the notice from the payee or the holder in due course demanding the payment of the said amount of money.
It is only when all the above mentioned ingredients are satisfied that the person who has drawn the cheque can be said to have committed an offence u/s 138 NI Act.
14. Section 138 NI Act has to be read with the legal presumptions u/s 139 and 118 NI Act in favour of the payee or holder in due course. The said sections are reproduced below:
"139. Presumption in favour of holder It shall be presumed, unless the Contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, or any debt or other liability."
"118. Presumptions as to negotiable instruments of consideration Until the contrary is proved, the following presumptions shall be made:
(a) Of consideration: that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has bee accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration.
(b) As to date that every negotiable instrument bearing a date was made or drawn on such date;..............."
CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 10/26 Digitally signed by MANSI MANSI Date:
MALIK MALIK 2024.07.16 16:50:07 +0530
15. These presumptions in favour or complainant are rebuttable in nature and it is no more res integra that the burden lies on the shoulder of the accused to rebut the same. It is now well established that the accused can prove the non-existence of any debt or any other liability by raising a probable defence or by demolishing or discrediting the case of the complainant in cross-examination of witness adduced by the complainant. It is not necessary for the accused to lead direct evidence to rebut the presumptions. He may do so by showing preponderance of probabilities and that may be by relying upon the circumstances on record.
16. The Hon'ble Apex Court in M.S. Narayana Menon Vs. State of Kerala, (2006) 6 SCC 39 laid down the law in the given terms:
"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. This Court, therefore, clearly opined that it is not necessary for the defendant to disprove the existence of consideration by way of direct evidence. The standard of proof evidently is pre-ponderances of probabilities. Inference of pre-ponderance of probabilities can be drawn not only from the materials on records but also by reference to the circumstances upon which he relies."
17. The Apex Court also clarified that the standard of proof is not as heavy as that of prosecution, which is to prove the guilt beyond reasonable doubts but the one upon the accused is only mere preponderance of probabilities. The observations made in K. Prakashan vs P. K. Surenderan, (2008) 1 SCC 258 are as follows:
CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 11/26 Digitally signed by MANSI MANSI MALIK MALIK Date:
2024.07.16 16:50:11 +0530 "It is furthermore not in doubt or dispute that whereas the standard of proof so far as the prosecution is concerned is proof of guilt beyond all reasonable doubt; the one on the accused is only mere preponderance of probability".
18. Now coming to the factual matrix of the present case, this complaint has been filed by the complainant against accused persons on the allegations that the cheque amount is due and payable by the accused persons to the complainant towards the amount paid by the complainant to KR. Pulp and Papers Ltd. for the goods supplied by K.R. Goods and Pulp Ltd. directly to the accused persons. That the accused persons in discharge of their legally enforceable liability had issued cheque bearing no. 003068 dated 06.09.2017 for Rs. 7,46,827/- and cheque bearing no. 003069 dated 06.09.2017 for Rs. 3,36,496/- both drawn on OBC, Tronica City, Loni, Ghaziabad, U.P. However, the aforesaid cheques were dishonoured on presentation. Despite service of legal notice, the accused persons did not pay the cheque amount to the complainant and thus committed the offence u/s 138 NI Act.
19. The accused persons have assailed the present complaint and has pleaded that no goods were ever supplied by complainant to them and that the cheques in question were issued as security cheques to the complainant, which have been misused by the complainant. It is observed here that accused no. 3/Mohd. Shami, partner in accused partnership firm, has denied his signatures on the cheques in the notice framed against him u/s 251 Cr.P.C. as well as in his statement recorded under Section 313 Cr.P.C. in the capacity of being a partner CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 12/26 Digitally signed by MANSI MANSI MALIK MALIK Date:
2024.07.16 16:50:16 +0530 in the firm. However, in the notice u/s 251 Cr.PC., accused Mohd. Shami has stated that the cheques in question were given as security to the complainant company and were presented without intimation to the accused firm.
20. In such a scenario, when the accused being a partner of the accused firm, has denied that the signatures on the cheques for which the instant case has been filed, belong to him, the question which then arises is whether the presumption under Section 118 of the NI Act that the cheques in question were issued in discharge of any legally enforceable debt/liability can be raised in favor of the complainant in the absence of admission of the signatures by the accused. The Hon'ble Supreme Court in the case of Ajitsinh Chehuji Rathod Versus State Of Gujarat & Anr. (2024 SCC Online SC 77) dated 29.01.2024 has ruled on the said point. The relevant extract is reproduced below:
"14. Section 118 sub-clause (e) of the NI Act provides a clear presumption regarding indorsements made on the negotiable instrument being in order in which they appear thereupon. Thus, the presumption of the indorsements on the cheque being genuine operates in favour of the holder in due course of the cheque in question which would be the complainant herein. In case,the accused intends to rebut such presumption, he would be required to lead evidence to this effect.
15. Certified copy of a document issued by a Bank is itself admissible under the Bankers' Books Evidence Act, 1891without any formal proof thereof. Hence, in an appropriate case, the certified copy of the specimen signature maintained by the Bank can be procured with a request to the Court to compare the same with the signature appearing on the cheque CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 13/26 Digitally signed by MANSI MANSI Date:
MALIK MALIK 2024.07.16 16:50:21 +0530 by exercising powers under Section 73 of the Indian Evidence Act, 1872.
16. Thus, we are of the view that if at all, the appellant was desirous of proving that the signatures as appearing on the cheque issued from his account were not genuine, then he could have procured a certified copy of his specimen signatures from the Bank and a request could have been made to summon the concerned Bank official in defence for giving evidence regarding the genuineness or otherwise of the signature on the cheque."
21. Therefore the Hon'ble Supreme Court in the aforementioned case has held that once the issuance of the cheque in question is admitted by the accused i.e. it is shown that the complainant was the holder of the cheque in due course, the presumption u/s 118(e) of the NI Act come into play as per which it is presumed that the indorsements on a cheque are genuine. The said presumption would operate in favour of the holder in due course of the cheque in question, which would be the complainant herein. If the accused intends to rebut such presumption and prove that the cheque does not bear his signatures, he would be required to lead evidence to this effect. However, in the present matter, the accused persons have not led any evidence to show that the cheques do not bear the signatures of any of the partners of the accused firm. Infact, accused no.3/Mohd. Shami as mentioned above has stated in the notice u/s 215 Cr.P.C. framed qua him that the cheques in question were issued as security cheques to the complainant. It is only during the recording of the statement of accused no.3/Mohd. Shami u/s 313 Cr.P.C. that he states that he does know how the cheques in question came into the possession of the complainant. Such contradictory statements do not help the case of CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 14/26 Digitally signed by MANSI MANSI MALIK MALIK Date:
2024.07.16 16:50:26 +0530 the accused persons and adversely impacts the credibility of the statements made by them before the Court. However, when at the outset accused no.3 in the notice framed against him u/s 251 Cr.P.C has admitted that the cheques in question were issued as security cheques to the complainant, it is then quite clear that the accused persons have admitted that the accused firm issued the cheques in question to the complainant but have denied the signatures on the said cheque. In such a scenario, as per the Judgment reproduced above, Section 118(e) of the NI Act comes into the picture and it is presumed that all the indorsements appearing upon the negotiable instrument were made in the order in which they appear thereon. Therefore, it is presumed that the signatures on the cheque belong to one of the partners of the accused firm unless proved to be contrary by the accused persons. In the present matter, the accused persons have not led any evidence to show that the cheques in question do not bear the signatures of any of the partners of the accused firm. The accused persons were at liberty to summon the bank witness alongwith the specimen signatures of the persons authorised on behalf of the accused firm to sign on the cheques issued from the account of the firm, to show that the cheques in question does not bear the signatures of any of the partners/authorized persons, however, they failed to do so. Infact, if the cheques in question are examined, it appears that they bear the signatures of accused no.2/Mohd. Aziz against whom proceedings have already abated. However, there is no requirement to ascertain as to who has signed on the cheques as it is presumed that the signatures on the cheque belong to one of the partners of the accused firm once it is admitted that the cheques were issued as security cheques to the complainant. Therefore, it is presumed that the statutory presumption u/s CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 15/26 Digitally signed by MANSI MANSI Date:
MALIK MALIK 2024.07.16 16:50:31 +0530 118 Indian Evidence Act and Section 139 NI Act is raised in favour of the complainant and the complainant has been able to prove that the cheques in question was given by the accused firm for a debt or liability. The onus of proof thereafter shifts on the accused persons to rebut the presumption.
The accused persons can rebut this presumption either by bringing out contradictions in the evidence led by the complainant or by leading their own evidence.
22. It is the case of the accused persons that no goods were ever supplied by the complainant to the accused persons and that the cheques in question were issued as security cheques to the complainant. It is further submitted that no privity of contract exists between the complainant and the accused and that the right of the complainant, if any, is limited to the amount of commission it would have received from K.R. Pulp and Papers Ltd. Per contra, it is the case of the complainant that the accused persons availed the services of the complainant in assisting the accused firm in purchase of writing and printing paper. Upon receipt of details of the order from the accused, the complainant was to place purchase order on K.R. Pulp and Papers Ltd., who was to deliver the goods directly to the accused and within seven days of dispatch of goods to the accused, the complainant was to make payment of invoices raised by K.R. Pulp and Papers Ltd. directly to K.R. Pulp and Papers Ltd. Upon receipt of payment from the complainant, K.R. Pulp and Papers Ltd. would confirm to the accused about receipt of payment and in an additional 83 days, the accused were to release the payment to the complainant of the goods supplied by K.R. Pulp and Papers Ltd. to the accused. Thus, as per the complainant, the complainant was to make CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 16/26 Digitally signed MANSI by MANSI MALIK MALIK 2024.07.16 Date:
16:50:36 +0530 payment of the entire invoice value to K.R. Pulp and Papers Ltd. after deducting its commission and it was to then receive 100% of the invoice value from the accused. It is further submitted that upon the requisition from the accused, the complainant placed an order with K.R. Pulp and Papers Ltd. for which invoices were raised in the name of the accused, which were duly paid by the complainant after deducting its commission and that the receipt of payment was duly confirmed by K.R. Pulp and Papers Ltd. It is further submitted that after receipt of the goods as mentioned in the invoices, the accused issued certain cheques to the complainant but when the accused did not clear the outstanding amount for the payment made by the complainant to K.R. Pulp and Papers Ltd., the complainant after informing the accused, presented the cheques in question before the bank, which were then dishonoured. It is therefore submitted by the complainant that the cheque amount is due and payable by the accused persons in discharge of their liability.
23. As has already been discussed above, a presumption u/s 139 r/w 118 NI Act has already been raised in favour of the complainant that the cheques in question were issued in discharge of legally enforceable debt/liability. The onus is then on the accused persons to rebut the presumption raised in favour of the complainant. The only argument of the accused persons is that no goods were supplied by the complainant to the accused persons and thus that there is no privity of contract between the parties. It is also contended that the complainant is only entitled to its commission at best and not the entire invoice amount as prayed for by the complainant. A perusal of the record shows that the complainant has placed on record the invoices alongwith the transportation receipts, CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 17/26 Digitally signed by MANSI MANSI Date:
MALIK MALIK 2024.07.16 16:50:41 +0530 which are Ex. CW-1/4(colly) and Ex. CW-1/5(colly). A scrutiny of the invoices shows that they have been raised by K.R. Pulp and Papers Ltd. in the name of the accused i.e. M/s Futurmate Enterprises through the complainant i.e. Sh. Sidhabali Trading Pvt. Ltd. Therefore, the invoices themselves mention that they have been raised through the complainant company thereby supporting the case of the complainant. The transportation receipts annexed with each invoice also mention the name of the consigner as K.R. Pulp and Papers Ltd. and the consignee as Futuremate Enterprises i.e. the accused. The transportation receipts mentions the details of the goods as well as the vehicle numbers vide which the goods were transported. The name of the vehicles mentioned on the receipts tallies with the vehicle numbers mentioned on the invoices. The receipts also bear the signatures of the receivers alongwith the date but it cannot be ascertained as to who has signed on the receipts. Thereafter, the complainant has also placed on record its bank statement from the date 03.04.2015 to 04.04.2015, showing that it has transferred a sum of Rs. 16,23,248/- to the complainant company, which is the amount due to K.R. Pulp and Papers Ltd. as per invoices after adjusting its commission amount and adding the bank RTGS charges. The calculation of the amount has been mentioned on the bank statement itself. Further, the complainant has also annexed on record the letters issued by K.R. Pulp and Papers Ltd., which is Ex. CW-1/7 and Ex. CW-1/8, confirming that K.R. Pulp and Papers Ltd. has received the payment of Rs. 7,46,827/- qua invoice no. 5654 and Rs. 3,36,496/- qua invoice no. 5655, for the material supplied to M/s Futuremate Enterprises. The letter also mentions that Sidhbali Trading Pvt. Ltd. can take payments directly from M/s Futuremate Enterprises against the said invoices. In view of the CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 18/26 Digitally signed by MANSI MANSI Date:
MALIK MALIK 2024.07.16 16:50:46 +0530 evidence led by the complainant which has been reproduced above, it is crystal clear that K.R. Pulp and Papers Ltd. supplied goods to M/s Futuremate Enterprises for which payment was made by the complainant and that the complainant was then at liberty to take the invoice value directly from the accused. In such a scenario, the defence of the accused falls to the ground that there was no contract between the complainant and the accused as no goods were supplied by the complainant to the accused. In any case, the doctrine of privity to contract does not apply to Indian law and hence this argument of the accused is not sustainable.
24. Going further, the counsel for the accused has put a suggestion to the AR of the complainant, who has been examined as CW-1 that it is wrong to suggest that the accused has made payment directly to K.R. Pulp and Papers Pvt. Ltd. Therefore, it is then the case of the accused persons that goods were delivered by K.R. Pulp and Papers Pvt. Ltd. to the accused and that the accused has made payment directly to K.R. Pulp and Papers Pvt. Ltd. for the goods delivered to it. The accused persons have then admitted that goods were supplied to them by K.R. Pulp and Papers Pvt. Ltd. However, the accused persons have not led any evidence to show that they had made payment to K.R. Pulp and Papers Pvt. Ltd.
for the goods delivered by K.R. Pulp and Papers Pvt. Ltd. to them. Therefore, the liability of the accused persons remains intact and it has not been proved by them that they had made payment of the amount due and payable by them for the goods delivered by K.R. Pulp and Papers Pvt. Ltd.
25. The accused persons have also sought to bring up the defence that CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 19/26 Digitally signed by MANSI MANSI MALIK MALIK Date:
2024.07.16 16:50:50 +0530 certain blank signed cheques were handed over to the complainant as security, which have been misused by the complainant. It is pertinent to mention here that the accused persons have not been able to justify as to why security cheques were issued by them to the complainant in the first place when infact the defence taken by the accused is that there was no privity of contact between the complainant and the accused. The court fails to understand as to why security cheques would have been issued by the accused persons to the complainant if the complainant did not have any role in the transaction at hand. In any case, even if it is assumed that the cheques in question were issued as security cheques to the complainant, this defence will also not help the accused as the Act only uses the word "where any cheque", therefore, the language of the Section itself makes it clear that the Act does not differentiate between the cheques issued for different purposes. The only requirement of the Section is that the cheque must be issued in discharge of a debt or other liability.
In Suresh Chand Goyal Vs. Amit Singhal (Crl.A. 601/2015 decided on 14.05.2015) the concept of security cheques were discussed. It was held in the aforesaid case that:
28. There is no magic in the word "security cheque", such that, the moment the accused claims that the dishonoured cheque (in respect whereof a complaint under Section 138 of the Act is preferred) was given as a "security cheque", the Magistrate would acquit the accused. The expression "security cheque" is not a statutorily defined expression in the NI Act. The NI Act does not per se carve out an exception in respect of a security cheque to say that a complaint in respect of such a cheque would not be maintainable. There can be myriad situations in which the cheque CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 20/26 Digitally signed by MANSI MANSI MALIK MALIK Date:
2024.07.16 16:50:55 +0530 issued by the accused may be called as security cheque, or may have been issued by way of a security, i.e. to provide an assurance or comfort to the drawee, that in case of failure of the primary consideration on the due date, or on the happening (or not Vs happening) of a contingency, the security may be enforced. While in some situations, the dishonor of such a cheque may attract the penal provisions contained in Section 138 of the Act, in others it may not"
Hon'ble Delhi high Court in Credential Leasing & Credits Ltd. vs. Shruti Investments and Anrs.: 2015 (151) DRJ 147 observed as under:
"30. Thus, I am of the considered view that there is no merit in the legal submission of the respondent accused that only on account of the fact that the cheque in question was issued as security in respect of a contingent liability, the complaint under Section 138 of the NI Act would not be maintainable. At the same time, I may add that it would need examination on a case to case basis as to whether, on the date of presentation of the dishonoured cheque the ascertained and crystallized debt or other liability did not exist. The onus to raise a probable defence would lie on the accused, as the law raises a presumption in favour of the holder of the cheque that the dishonoured cheque was issued in respect of a debt or other liability".
26. The accused persons, in the present case, have taken the defence of security cheque, however, the accused persons have not been able to show that there was no liability existing on the date of the presentment of the cheque. The accused persons have not denied that goods were supplied to them by K.R. Pulp and Papers Pvt. Ltd. and they have also CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 21/26 Digitally signed by MANSI MANSI MALIK MALIK Date:
2024.07.16 16:51:00 +0530 not shown that they made payment for the goods delivered to them. Therefore, the liability of the accused persons exists and has not been discharged by them. Further, whenever a cheque is issued, it is presumed to be issued in discharge of a liability on the part of the accused though the liability may be an existing one or one that may arise in future. If that were not so, there would be no purpose of obtaining a security cheque from a debtor. A security cheque is issued by the debtor so that the same may be presented for payment as and when the apprehended liability arises otherwise it would not be termed as a security cheque. Therefore, if a cheque is issued to secure any future liability arising towards the drawee of the cheque for the purpose of which the cheque was given by the drawer, the drawer cannot raise the defence that the cheque was issued for security purpose. Moreover, in the present case, the complainant has also sent letter which is Ex. CW-1/9 to the accused persons intimating the complainant that the cheques issued to the complainant are being presented in the bank as the due payment had not been made by the accused persons. The postal receipts and the tracking report with respect to the said letter are also on record. Thus, the complainant has clearly intimated the accused persons about their intention to present the cheques in their possession before the bank. The said letter bears the same address which has been mentioned by the accused persons in the notice u/s 251 Cr.P.C. framed against them and in their statement recorded u/s 313 Cr.P.C. Hence, the presumption raised u/s 139 NI Act is not rebutted in view of the aforesaid discussion.
27. The only question which remains to be determined is whether accused no.3/ Mohd. Shami can be held liable for the legal liability/debt CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 22/26 Digitally signed by MANSI MANSI Date:
MALIK MALIK 2024.07.16 16:51:05 +0530 of accused no.1/M/s Futuremate Enterprises. It is imperative to refer to Section 141 NI Act at this stage. Section 141 NI Act states that if the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Further, the expression "company" has been defined to mean any body corporate and to include a firm or other association of individuals. Therefore, there is no doubt that a partnership firm is included in the expression company and thus the same law applies to a partnership firm, which applies to a company as per Section 141 NI Act.
28. The question which then arises for consideration is that whether accused no.3/Mohd. Shami in the present matter was responsible for the conduct of the business of the accused no.1 partnership firm at the time when the cheque in question was issued. In the present matter, accused no.3 has himself admitted in the notice framed against him u/s 251 Cr.P.C. that he was the authorized signatory of the bank account maintained by accused no.1 firm and that he used to control the affairs of the firm. Once the said accused has himself admitted that he was controlling the affairs of firm and that he was the authorized signatory of the account, he is vicariously liable for the acts of the partnership firm. as per the mandate of Section 141 NI Act. No defence has been taken on behalf of the accused to say that he was not in charge of and was not responsible to the partnership firm for the conduct of the business of the partnership firm.
CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 23/26 Digitally signed by MANSI MANSI Date:
MALIK MALIK 2024.07.16 16:51:09 +0530
29. In view of the aforesaid discussion, it is observed that the accused persons have failed to raise a probable defence through the cross- examination of the complainant and also that they have not led any evidence themselves to raise a probable defence. They have not been able to rebut the presumption that is raised in favour of the complainant with respect to the existence of a legally recoverable debt or liability of the cheque amount. Thus, the first ingredient of Section 138 NI Act has been proved by the complainant.
30. The second ingredient of the offence is that the cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honor the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank. Perusal of record shows that complainant has already proved the bank return memos through Ex. CW- 1/13 and Ex. CW-1/15. Further, it has already been presumed that the signatures on the cheques, Ex. CW-1/12 and Ex. CW-1/14 belong to one of the partners of the accused no.1 firm and they have not assailed the factum of the said cheques being dishonored. Thus, the second ingredient of the offence is also satisfied in the present case.
31. The third ingredient is that the drawer of such cheque fails to make the payment of the said amount of money within fifteen days of the receipt of the notice from the payee or the holder in due course demanding the payment of the said amount of money. Accused no.3 in his statement recorded u/s 313 Cr.P.C. has admitted to receiving the legal CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 24/26 Digitally signed by MANSI MANSI MALIK MALIK Date:
2024.07.16 16:51:14 +0530 notice from the complainant. Further, the complainant has also placed on record, Ex. CW1/18 i.e. postal receipts and the AD cards Ex. CW1/19 vide which the legal notice was sent to the accused persons, thus, the presumption of service of legal notice can also be raised in view of Section 27 of General Clauses Act. The said presumption has not been displaced on behalf of the accused. Infact, the address mentioned in the legal notice is the same address which has been mentioned by accused no.3 in the notice u/s 251 Cr.P.C. framed against him and in his statement recorded u/s 313 Cr.P.C. Thus, it is presumed that the legal notice was delivered to the accused. Despite the receipt of legal notice, the accused persons have failed to make the payment to the complainant that they were liable to pay, within 15 days from the date of receipt of notice. Hence, the third ingredient of the offence under Section 138 NI Act also stands proved by the complainant.
32. In view of the aforesaid discussion, this Court is of the view that the contentions of the Ld. Counsel for accused are not sufficient to rebut the presumptions raised in favour of complainant and the same are liable to be rejected.
33. The accused persons have failed to shake the credibility of CW-1 i.e. the complainant. The defence of the accused persons appears to be an afterthought and same is baseless. The accused persons in this case have not adduced any evidence to rebut the presumptions raised against them.
34. In the light of above discussion, this court is of view that accused no.1/M/s Futuremate Enterprises and accused no.3/Mohd. Shami are CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 25/26 Digitally signed by MANSI MANSI MALIK MALIK Date:
2024.07.16 16:51:18 +0530 guilty for the offence punishable u/s 138 N.I. Act and are accordingly convicted for the same. Let the convicts be heard on the point of sentence separately.
Digitally
signed by
MANSI
MANSI MALIK
Announced in open Court (MANSI
MALIK MALIK) Date:
2024.07.16
th
on 16 of July, 2024 JUDICIAL MAGISTRATE
16:51:23
+0530
FIRST CLASS NI ACT-01/WEST/DELHI
CC No. 7173/2017 Sidhbali Trading Pvt. Ltd. Vs. Futuremate Enterprises Pg no. 26/26