Delhi District Court
M/S Suncom Technologies vs M/S Syscom Infonet on 14 May, 2011
1
IN THE COURT OF SH ANUJ AGGARWAL : METROPOLITAN MAGISTRATE - 03
SOUTH : SAKET COURT : NEW DELHI
M/s Suncom Technologies vs M/s Syscom Infonet
CC No 701/10
U/s 138 Negotiable Instruments Act
JUDGMENT
(1) Serial number of the case : 701/10
(2) Name of the complainant : M/s Suncom
Technologies through its
proprietor Alok Kumar,
C2, LGF, Sanwal Nagar,
Sadiq Nagar, New Delhi
(3) Name of the accused, 1. M/s Syscom Infonet
parentage & residential address : Through its proprietor
Rajender Ravi Shanker
Mishra, 308A, First Floor,
Shivalik, Malviya Nagar,
New Delhi110017
2. Rajender Ravi Shanker
Mishra, 308A, First Floor,
Shivalik, Malviya Nagar,
New Delhi110017
(4) Offence complained of or proved : 138 Negotiable
Instruments Act
(5) Plea of the accused : Pleaded not guilty
(6) Final Order : Convicted
(7) Date of Institution : 03/01/2007
(8) Date on which reserved for judgment : 09/05/2011
(9) Date of Judgment : 14/05/2011
1. At the outset, I may mention that though the complainant has arrayed M/s M/s Syscom Infonet, the proprietorship firm as accused no. 1 and Rajender Ravi Shanker as accused no. 2 being sole proprietor of accused no. 1, however, it is a settled principle of law that a proprietorship firm is not a separate legal entity and cannot be distinguished M/s Suncom Technologies vs M/s Syscom Infonet 2 from its proprietor. A proprietorship firm is a synonym of proprietor. In B. Adarsh Rao v. M/S Tamil Nadu Electricals, 1998 (3) Crimes 337=I (2000) BC 176: 1999 (4) RCR (Crl) 376 (Madras) "The proprietary concern is not an independent, legal and jurisdic entity having legal recognition in the eyes of law. Therefore, neither it can initiate any proceedings nor proceedings can be initiated against it. In case the of proprietary concern the proprietor is always an affected person who can either indict or be indicted.
The proprietor or owner of the said concern is the affected party and he can only file the complaint."
Therefore, no judgment is being passed qua accused no. 1, M/s Syscom Infonet and this judgment be read qua accused no. 2 Rajender Ravi Shanker only.
2. The case set up by the complainant is that the complainant is a proprietor firm and deals in software business and accused is also a proprietorship firm dealing in software & hardware business. Accused and complainant were in business relationship with each other. As per normal practice of business, the accused used to take goods from the complainant and makes payments to the complainant . However, some time later, accused was not making payment to complainant regularly hence complainant was constrained to stop the supply to the accused. Thereafter, the accused approached the complainant and tried to assure him that from now onwards he will not default in making payments.
3. On 14/10/2006, accused visited office of the complainant and asked the complainant to supply "Novell Open Workgroup Suit" (a software) in the month of September 2006. However, taking note of previous activities of accused (irregular payments), the complainant asked the accused to make payments in advance for the same. Upon which, accused issued a cheque bearing no. 423264 dated 15/08/2006 for a sum of Rs 1,35,720/ drawn on Canara Bank, Nehru Place, New Delhi in advance to show their sincerity in respect of this transaction and requested that the accused may be allowed to make payments in cash at the time of delivery failing which the complainant M/s Suncom Technologies vs M/s Syscom Infonet 3 will put the cheque for encashment.
4. The complainant supplied 30 numbers of computer software @ Rs.4350/ + extra 4% VAT amounting to Rs.1,35,720/ against bill no. 193 dated 13/09/2006. After receipt of the aforesaid software, accused failed to make the payment in cash as per aforesaid terms and requested the complainant to present the cheque no. 423264 dated 15/08/2006. Complainant presented the said cheque to his banker. However, the said cheque was returned unpaid on presentation for reason "Funds Insufficient" vide return memo dated 13/10/2006. The complainant made a demand for payment of the said amount of money by giving a Demand Notice dated 11/11/2006 to accused. Statutory notice of demand was duly served upon accused but he failed to make the payment of the said amount to complainant within stipulated time. Thereafter, the complainant has filed this complaint U/s 138 of Negotiable Instruments Act, 1881 (hereinafter "the Act") against the accused.
5. On 03/01/2007, the court took cognizance of the offence U/s 138 of the Act. On being satisfied that the complainant has a prima facie case against the accused, the court summoned the accused for offence U/s 138 of the Act.
6. On 16/08/2007, accused appeared pursuant to the process issued by the court and on 05/08/2008, the particulars of the offence were read over and explained to the accused, to which he pleaded not guilty and claimed trial.
7. In order to substantiate its case, the complainant examined himself as the only complainant witness.
8. All the circumstances appearing in the evidence against the accused were put in order to enable him to offer him explanation. In his statement U/s 313 CrPC recorded on 18/01/2010, the accused stated that he has no liability to make any payment against the cheque in question and that the cheque was given by way of advance for purchase of some software products. He further stated that he is innocent and falsely implicated in the present case.
9. Accused examined himself as the only defence witness.
M/s Suncom Technologies vs M/s Syscom Infonet 4
10. I have heard counsel for both the parties at length and perused the record. It has been argued by Ld. counsel for the complainant that from evidence, complainant has proved that the cheque in question was signed by accused which was dishonoured and despite service of legal notice, accused did not make payment. It has been argued that during cross examination of witnesses, nothing material has come out and the complainant has been able to prove his case to the hilt. It has been further argued that accused has failed to discharge the burden cast upon him to rebut the presumption under the provisions of NI Act.
11. Per contra, it has been argued with vehemence by Ld. counsel for defence that no case is made out against accused and in the present case complainant has misused the cheque in question . It has been argued that no liability can arise on a cheque which has been given as an advance payment.
12. Before looking into the factual issues involved herein, let us consider the provisions of Section 138 of the Act. For fastening liability U/s 138 NI Act, following are the requirements :
(1) drawing of a cheque by any person.
(2) the drawer of the cheque issued the cheque to discharge in whole or part any legally enforceable debt or other liability.
(3) the cheque so issued has been returned due to insufficiency of finds. (4) the drawer fails to make the payment within stipulated time after receipt of demand notice.
13. Section 118 (A) of N I Act provides for presumptions regarding consideration for a Negotiable Instrument. It reads as under :
"That every negotiable instrument was made or drawn for consideration and that every such instrument when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration".
M/s Suncom Technologies vs M/s Syscom Infonet 5
14. Section 139 of the Negotiable Instruments Act provides for presumption in favour of a holder. It reads as under :
"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".
15. Apex court in Rangappa vs Mohan AIR 2010 SC 1898 while over ruling the judgment titled Krishna Janardhan Bhatt vs Dattatraya G Hegde AIR 2008 SC 1325 observed in para 14 that :
"the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observation in Krishna Janardhan Bhatt (supra) cannot be correct............This is of course in the nature of a rebuttable presumption and it is opened to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested".
16. Therefore, in view of the statutory provisions and apex courts judgment, there is a presumption in favour of holder of the cheque that he has received the same for discharge in whole or in part of any legally enforceable debt or other liability. It is a well settled principle of law that the presumption available U/s 139 N I Act can be rebutted by the accused by adducing evidence. Therefore, the burden of proof is on the accused to discharge his burden. The accused can prove the non existence of consideration by raising a probable defence and if he proves the same, then only the onus would shift upon complainant, who has to prove it as a matter of fact and his failure to prove would disentitle him to grant the relief.
17. In Hiten P Dalal vs Brstindranath Banerjeet AIR 2001 Supreme Court 3897, Hon'ble Supreme Court observed that the defence submission that the cheques were not drawn for the discharge in whole or in the part of any debt or other liability is answered by the third presumption available to the banks U/s 139 of the Negotiable Instruments Act. This section provides 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 M/s Suncom Technologies vs M/s Syscom Infonet 6 Section 138 for the discharge, in whole or in part, of any debt or other liability". The effect of these presumptions is to place the evidential burden on the defence of proving that the cheque was not received by the bank towards the discharge of any liability.
18. The only defence taken up by the accused in his statement U/s 313 CrPC is that he has no liability to make payments against the cheque in question as the same was given as advance for purchase of some software products.
19. At this juncture, I shall quote judgment of Delhi High Court titled "V S Yadav vs Reena 172 (2010) Delhi Law Times 561 wherein it was held at para 5 : "it must be borne in mind that the statement of accused U/s 281 CrPC or under section 313 CrPC is not the evidence of the accused and it can not be read as part of evidence. Accused has an option to examine himself as a witness, his statement U/s 281 CrPC or U/s 313 CrPC cannot be read as evidence of accused and it has to be look into only as an explanation of incriminating circumstances and not as an evidence". The High Court further observed at para 7 that "in order to rebut the presumption U/s 139 of N I Act, the accused by cogent evidence has to prove the circumstances under which the cheque were issued".
20. I shall now examine the evidence brought on record to adjudicate whether accused has been able to rebut the presumption U/s 139 NI Act or not? Complainant examined himself as the only complainant witness and deposed by way of affidavit. The cheque in question was exhibited as ExCW1/1. The bill dated 13/09/2006 for supply of computer software was exhibited as ExCW1/2. The return memo and demand notice along with original courier receipt and AD cards were exhibited as ExCW1/3 & ExCW1/4 (colly) respectively. Complainant was duly cross examined by Ld. counsel for accused. The material part of his cross examination is as follows :
"....................It is correct to suggest that when the cheque was issued, accused was not having any liability towards the complainant. It is wrong to suggest that the invoice ExCW1/2 is wrong. The invoice ExCW1/2 was received by the employee of accused company Mr Rakesh. It is wrong to suggest that Mr Rakesh was employed with me at that time when the invoice was received. I know Mr Rakesh for the last 15 years. I demanded cash amount at the time of delivery of material as shown in invoice ExCW1/2. I delivered the material to Mr Rakesh while M/s Suncom Technologies vs M/s Syscom Infonet 7 they did not pay cash at the time of delivery. Accused has directly placed orders to my vendor M/s Triffin Technology for the said material. Accused had given written purchase order to the said vendor....................".
21. It has been vehemently argued by Ld. Counsel for accused that from the cross examination of complainant, it has come on record that there was no liability of accused when the cheque was issued. Ld. Counsel for accused has further argued that no liability can arise against the cheque given in advance and relies upon two judgments titled as Uppinangady Grama Panchayath Puttur vs P Narayana Prabhu and M/s Shreyas Agro Services Pvt Ltd vs Chandrakumar S.B. of Karnataka High Court.
22. The submission made by ld. Counsel for accused has no force in view of judgment of Delhi High Court in Magnum Aviation (Pvt.) Ltd vs State & ors. 172 (2010) Delhi Law Times 91, wherein it has been held that :
"...........5. The only issue which this petition raises is whether the cheques issued at the time of signing the contract, as a condition of the contract, can be said to be against a liability or they are the cheques issued for no liability. The liability as per dictionary meaning is the state of being liable, that is, for which one is responsible or liable or has obligation. Liability and legal debt are two different terms. Legal debt is one which is recoverable at a point of time. A debt is a liability owing from one person to another person, however, a liability may be incurred without a debt being in existence. It is not necessary that while incurring a liability debt should already be there. A liability can be incurred without a debt being there. It is not necessary that a cheque is always issued against debt. A cheque can be issued against liability also. This liability may be in respect of a contract which is entered into by the person for purchase as an advance payment so that seller either procures the material or manufactures it.
23. It has been further held at para 8 :
"If at the time of entering into a contract it is one of the conditions of the contract that the purchaser has to pay the amount in advance then advance payment is a M/s Suncom Technologies vs M/s Syscom Infonet 8 liability of the purchaser. The seller of the items would not have entered into contract unless the advance payment was made to him. A condition of advance payment is normally put by the seller for the reason that the purchaser may not later on retract and refuse to take the goods either manufactured for him or procured for him. Payment of cost of the goods in advance being one of the conditions of the contract becomes liability of the purchaser. The purchaser who had issued the cheque could have been asked to make payment either by draft or in cash. Since giving cheque is a mode of payment like any other mode of payment, it is normally accepted as a payment. The issuance of a cheque at the time of signing such contract has to be considered against a liability as the amount written in the cheque is payable by the person on the date mentioned in the cheque..........."
24. The present case is squarely covered by the judgment of Magnum Aviation case (supra) and therefore, it can be safely said that the cheque issued by accused as an advance was against the liability . As per the complainant, since accused was irregular in making payments in past, therefore, cheque in question was taken as an advance for the supplies to be made in future. In my view, had there been no advance cheque by the accused, complainant would not have agreed for supply to accused as per agreed term. Therefore, accused cannot avoid liability on the pretext of advance cheque. The judgments relied upon by the counsel for the accused are not applicable in the present case as the fact of this case are very much different from the facts of aforesaid judgments.
25. It has also been argued by Ld. Counsel for accused that it is evident from testimony of complainant that the order was placed to M/s Triffin Technology and not to the complainant, therefore, there cannot be any liability of accused towards the complainant. In my considered view, the said submission of Ld. Counsel does not hold any good ground as the deposition of complainant is very clear that M/s Triffin Technology was his vendor and in my view it is a very normal business practice that the supplies of a product are made to a purchaser directly by vendor of the seller. This plea of Ld. Counsel does not inspire my confidence also for the reason that it is not the case of accused that he has made payment to M/s Triffin Technology for the said material.
26. Accused has examined himself as the only defence witness. Material part of his examination in chief is reproduced as follows :
M/s Suncom Technologies vs M/s Syscom Infonet 9 "..............4. That complainant with malafide intentions deposited the said cheque which was given to him as a security and against the said cheque I have not been supplied any material from him.
5. That complainant has exhibited a bill as ExCW1/2 which was not given to me and I have not issued any cheque against this bill.
6. That cheque was given to complainant as a security and for future uncertain liability but it was misused by complainant by depositing the cheque without incurring any liability towards him.................."
27. The testimony of accused even without being put to test of cross examination is inconsistent and does not inspire confidence of this court at all. Whereas in his statement U/s 313 CrPC, it was stated by accused that cheque in question was given as an advance, in his deposition, the accused has come with a totally new plea that the cheque was given to the complainant as a security. Further, it remains unexplained as to why did not accused take his cheque back from the complainant if no supply was made to him by the complainant. No explanation whatsoever came forth from accused side in this regard.
28. The deposition of accused that the cheque was given for future uncertain liability is also not trustworthy because a careful perusal of cheque i.e. ExCW1/1 reveals that it is for an amount of Rs.1,35,720/ which is a definite and certain amount. The bill dated 13/09/2006 i.e. ExCW1/2 which has been raised by complainant against the supplies is also for the same amount meaning thereby that the liability at the time of giving of cheque was very much certain and calculated.
29. In view of the above discussion, I am of the view that accused has miserably failed to prove his defence and the plea of accused that he has no liability against the cheque in question which was an advance cheque has paled into insignificance.
30. Now the question is whether the complainant has proved to the hilt his case. I have analyzed the deposition of the complainant witnesses. Having considered M/s Suncom Technologies vs M/s Syscom Infonet 10 the testimony of the complainant witnesses, it is proved that the cheque was issued by accused in discharge of liability and which was dishonoured for the reasons of insufficiency of funds and accused failed to make payment within the stipulated time despite service of demand notice.
31. In totality of the facts and circumstances of the case, it was the sole burden and duty of the accused to defend a presumption which was supporting the dishonoured cheque. The accused has failed to discharge the burden. Having considered the entire evidence, it is proved that accused had issued the cheque against liability and the said cheque was dishonoured due to insufficiency of funds.
32. It is proved on record that accused despite service of statutory notice of demand failed to make the payment of the cheque in question within 15 days from receipt thereof. The complainant has fulfilled all the ingredients of Section 138 of the NI Act. Accordingly, accused stands convicted for committing the offence U/s. 138 NI Act. Let he be heard on the point of sentence.
Announced in the open court on 14/05/2011 (ANUJ AGGARWAL) Metropolitan Magistrate 03/N I Act/South Saket Court/New Delhi Certified that this judgment contains 10 pages and each page bears my signature.
(ANUJ AGGARWAL) Metropolitan Magistrate 03/N I Act/South Saket Court/New Delhi M/s Suncom Technologies vs M/s Syscom Infonet 11 IN THE COURT OF SH ANUJ AGGARWAL : METROPOLITAN MAGISTRATE -
03SOUTH : SAKET COURT : NEW DELHI M/s Sumcom Technologies vs M/s Syscom Infonet CC No. 701/10 U/s 138 Negotiable Instruments Act ORDER ON SENTENCE Present : Counsel for complainant along with complainant.
Convict with counsel.
I have heard both the parties on the point of sentence.
It is argued by Ld. counsel that convict is a first time offender, remorseful of his conduct and has also made a payment of Rs.2,00,000/ to the complainant after his conviction and therefore, a prayer for leniency towards convict is made by Ld. counsel.
Ld. counsel for complainant also submits that complainant has no grievance left against convict as he has been adequately compensated by the convict by way of payment of Rs.2,00,000/ Considering the circumstances and above submissions of the parties, convict is sentenced to pay a fine of Rs.5,000/ in default of payment, the convict shall undergo simple imprisonment for 15 days. Fine paid. In view of this, surety of accused stands discharged. Endorsement if any be cancelled. File be consigned to record room.
Announced in the open court
on 15.09.2011 (ANUJ AGGARWAL)
Metropolitan Magistrate03/South
New Delhi/15.09.2011
M/s Suncom Technologies vs M/s Syscom Infonet