[PRECEDENT] [ENTITY] Vs M/s [ENTITY] IN THE COURT OF [ENTITY] METROPOLITAN MAGISTRATE DISTRICT-NORTH, TIS HAZARI COURTS, DELHI SANDEEP DUA Date of institution of case : 27.06.2008 VS Date of decision of case : 24.12.2011 M/s NAVAL ENTERPRISES PVT. LTD. Unique ID No. 02401R0880022008 CC.No. 73/A/10 P.S.- Kirti Nagar U/S 138 Negotiable Instrument Act JUDGMENT
1. Date of the commission of offence : 22.05.2008 2. Name & address of the complainant : Sh.[ENTITY] S/o Sh. [ENTITY], Proprietor of M/s Lakshmi Rubber & Chemicals, Situated at WZ-41, Basai Dara Pur, New Delhi-110015. 3. Name & address of the accused : 1) M/s [ENTITY] Situated at 10/60 A, Kirti Nagar Industrial Area, Delhi-110015 2) Sh. [ENTITY] M/s [ENTITY] 10/60 A, Kirti Nagar Industrial Area, Delhi-110015 [PRECEDENT] [ENTITY] Vs M/s [ENTITY] Also At:- Sh. [ENTITY] R/o H.No.33, Banglow Road, Near Roop Nagar Police Station, Delhi 4. Offence complained of : Under [SECTION] of [ACT] 5. Plea of accused & examination if an : Pleaded not guilty. Examination u/[SECTION] [ACT] Defence evidence was led. 6. Final order : Acquitted 7. Date of such order : 24.12.2011 [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
8. BRIEF FACTS AND REASONS FOR DECISION OF THE CASE
1. By way of the present judgment, this court shall decide the complaint case under [SECTION] [ACT] (as amended upto date) filed by the complainant Sh. [ENTITY] against the accused Sh. [ENTITY], Director of M/s [ENTITY]
2. Brief facts necessary for the disposal of the present case as per the allegations in the complaint, are as follows :-
The complainant is dealing in the sale of Rubber Chemicals in the name and style of M/s Lakshmi Rubber & Chemicals and accused is engaged in the business of manufacturing of rubber products in the name and style of M/s Naval Enterprises. The complainant and accused persons were having friendly as well as business relations with each other. Accused approached the complainant and requested the complainant to supply different kinds of Rubber chemicals and as per the request and demand, the complainant supplied different kinds of Rubber chemicals to the accused on credit basis from time to time and same were duly received by the accused in good condition.
In discharge of his legal liabilities towards the complainant, the accused issued 10 cheques as a part payment to the complainant in favour of the firm of the complainant and further requested the complainant to present the said [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
cheques for its encashment in the first week of April 2008 as prior to 1st week of April 2008, the accused was not in a position to arrange funds in his bank account. On 03.04.2008, the complainant asked the accused for presentation of the cheques and assured the complainant regarding the encashment of the said cheques as the accused was having sufficient funds in his bank account. As per the ledger account of the accused maintained by the complainant, the accused has to make total payment till date in the sum of Rs 1,07,367/- and he made part payment through above mentioned cheques out of which present complaint has been filed in respect of 2 cheques i.e. bearing no. 2[SECTION]83 dated 22.11.2007 of Rs. 6,421/- and bearing no. 2[SECTION]84 dated 29.11.2007 of Rs. 7,000/- both drawn on HDFC Bank.
However, on presentation, the cheques were dishonored vide cheque returning memos with remarks " Account Closed" . The complainant issued a legal notice of demand dated 03.05.2008 to the accused through his lawyer which was sent by Registered post & UPC on 03.05.2008, thereby calling upon the accused to make the payment of the cheques amount. But the accused did not make the payment of the dishonored cheques and sent a false and fabricated reply dated 09.06.2008.
As a result of which the complainant has filed present complaint case.
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It is pertinent to mention that complainant has filed 04 complaint cases under [SECTION] of the [ACT] in respect of 9 different cheques for amount totalling Rs. 61,963/- including the instant case based on the same version wherein proceedings were conducted jointly against the present accused, the particulars of which are as follows: complaint cases bearing no. 71/A/2010, 72/A/2010 which were filed in respect of 5 cheques drawn on ICICI Bank involving a total amount of Rs. 34,903/- and complaint cases bearing no. 73/A/2010 and 74/A/2010 which were filed in respect of four cheques drawn on HDFC Bank involving a total amount of Rs. 27,060/- .
3. After considering the entire material and documents on record, summons were issued by my Ld. Predecessor court against the accused vide order dated 08.07.2008 for the offence under [SECTION] of the [ACT]. On appearance of the accused, a separate notice under [SECTION] of the [ACT] was served upon the accused on 17.09.2010 to which accused pleaded not guilty and claimed trial.
4. In order to prove the case, Sh. [ENTITY], complainant got himself examined as CW-1 by tendering his affidavit EX.CW-1/A and relied upon the [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
documents i.e original cheques, cheque returning memos, legal notice of demand dated 03.05.2008, postal receipt and UPC etc. which were duly exhibited. Sh. [ENTITY], complainant was cross examined by learned counsel for the accused. Thereafter, the complainant evidence was closed.
5. After that the statement of accused was recorded under [SECTION] of the [ACT] in which all the incriminating evidence alongwith exhibited documents were put to the accused Sh. [ENTITY]. The accused admitted signatures on the cheque and stated that the cheques were issued by him to the complainant for the payment of bill no. 216 and 217. The accused further stated that entire payment in respect of the bills has been already paid in the form of Demand Drafts which were sent by him to the complainant along with reply to the legal notice.
6. Opportunity for leading the defence evidence was given to the accused.
The accused got himself examined under [SECTION] [ACT] after the application filed under [SECTION] [ACT] was allowed by this court on 03.01.2011. Accused was examined, cross examined and discharged. Opportunity for examining other witness if any, was granted to the accused, which the accused did not avail and [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
defence evidence was closed on statement of Ld. Counsel of accused.
Thereafter, the case was fixed for final arguments.
7. The court heard the arguments advanced by the learned counsels and perused the entire record of the case file as well as evidence on record.
Legal Discussion
8. Before proceeding further, it would be appropriate to quote the Hon'ble Supreme Court in [PRECEDENT] arising out of [PRECEDENT] decided on 07.05.2010.
"Ordinarily in cheque bouncing cases, what the courts have to consider is whether the ingredients of the offence enumerated in [SECTION] of the Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by [SECTION] of the Act."
8.1 In order to bring home the conviction of the accused, the complainant has to prove the ingredients of the offence complained of. The main ingredient of [SECTION] of the [ACT] are as follows:
a The accused issued cheque on an account maintained by him with a bank.
b The said cheque has been issued in discharge of any legal debt or other liability.
c The cheque has been presented to the bank within the period of six months from the date of the cheque or within the period of its validity.
[PRECEDENT] [ENTITY] Vs M/s [ENTITY]
d When the aforesaid cheques were presented for encashment, the same were returned unpaid/dishonoured.
e The payee of the cheque issued a legal notice of demand within 30 days from the receipt of information by him from the bank regarding the return of the cheque.
f The drawer of the cheque failed to make the payment within 15 days of the receipt of the aforesaid legal notice of demand.
If the aforesaid ingredients are satisfied then the drawer of the cheque shall be deemed to have committed an offence punishable under [SECTION] of the [ACT].
Offence u/[SECTION] [ACT] is a technical offence, which involves a reverse onus clause and the reverse onus can be rebutted by raising a mere preponderance of probability.
8.2 Nature and Extent of Rebuttal
a) A three judges bench of Hon'ble Supreme Court while dealing with presumptions under [ACT] has observed in [PRECEDENT] as under:
" The presumption however, is not absolute. It is rebuttable. The accused can prove the contrary. The quantum and the nature of proof required to displace this presumption may vary according to the circumstances of each case. Such proof may partake the shape of defence evidence led by the accused, or it may consist of circumstances appearing in the prosecution evidence itself, as a result of cross-examination or otherwise. But the degree and the [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
character of the burden of proof which [SECTION] casts on an accused person to rebut the presumption raised thereunder, cannot be equated with the degree and character of proof which under [SECTION], [ACT] rests on the prosecution While the mere plausibility of an explanation given by the accused in his examination under [SECTION], [ACT] may not be enough, the burden on him to negate the presumption may stand discharged, if the effect of the material brought on the record, in its totality, renders the existence of the fact presumed, improbable. In other words, the accused may rebut the presumption by showing a mere preponderance of probability in his favour; it is not necessary for him lo establish his case beyond a reasonable doubt- see [PRECEDENT].
Another aspect of the matter which has to be borne in mind is that the sole purpose of the presumption under [SECTION] is to relieve the prosecution of the burden of proving a fact which is an essential ingredient of the offences under [SECTION] of the [ACT] and [SECTION], [ACT]. The presumption therefore can be used in furtherance of the prosecution case and not in derogation of it. If the story set up by the prosecution inherently militates against or is inconsistent with the fact presumed, the presumption will be rendered sterile from its very inception, if out of judicial courtesy it cannot be rejected out of hand as still born."
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b) To what extent a mere reliance upon the presumptions of law can help the complainant is being discussed in the following paragraphs:-
Hon'ble High Court of Bombay in [PRECEDENT] has dealt with the above aspect in great detail. This was also a case of friendly loan of Rs. 12 lakhs which the complainant had lent to the accused after collecting the same from several other persons. Complainant had examined the persons from who he collected the amount. There was also an agreement executed by the accused person. However, after a detailed factual and legal discussion, Hon'ble High Court has acquitted the accused primarily on the ground that complainant has failed to discharge his onus to establish accumulation of money. It has been observed therein that:
" In juxtaposition though the Complainant was faced with the aforesaid material which has come through the cross examination of Cw.2, Cw.3 and Cw.4, the Complainant did not choose to lead any further evidence to discharge the burden of proving the existence of the liability when the burden again shifted to him. Applying the principles that the Complainant has to prove the offence beyond reasonable doubt but the Accused has to only probabilise his defence, in my view, the test has been satisfied by the Accused then the Complainant. The Complainant as can be seen has not led any further cogent evidence to prove the factum of the lending of the money to the Accused and thereby has not discharged the burden which had shifted to him on account of the evidence which has come in cross examination of the Complainant and his witnesses."
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c) Hon'ble Supreme Court in [PRECEDENT] decided on 10 October, 2007 has also dealt with the aspect of friendly loan and scope of presumptions of law. The facts of the case were:
" 3. Respondent herein allegedly, on diverse dates, advanced a sum of Rs. 3,16,000/- to the appellant who issued a cheque for the said amount on 18.12.1995. The said cheque was dishonored on the ground of insufficient fund. Allegedly, when the matter was brought to the notice of the appellant, he undertook to remit the amount on or before 30.01.1996. The cheque was again presented but the same was not enchased on the ground payment stopped by the drawer.
5. The complainant in support of its case led evidence to show that he had advanced various sums on the following terms: On 31-1-94 a sum of Rs. One lakh; on 8-6-94, Rs. 86,000/-; on 12-6-94, Rs. 28,000/-; on 23-4-95, Rs. 50,000/- on 18-6-95, Rs. 40,000/- and on 7-8-95, Rs. 12,000/-.
6. Defence of the appellant, on the other hand, was that he had issued blank cheques for the purpose of purchase of spare parts, tyres, etc. in connection with the business of transport services run in the name of his brother. The blank cheques used to be returned by the sellers of spare parts, etc. when the amounts were paid. According to the appellant, the complainant lifted the impugned cheque book put in the bag and kept in his shop. Appellant in [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
support of his case examined the Bank Manager of the Bank concerned. "
Hon'ble High Court having reversed the judgment of acquittal, accused approached the Hon'ble Supreme Court. Hon'ble Supreme Court has observed therein that:
" 14. The learned Trial Judge had passed a detailed judgment upon analysing the evidences brought on record by the parties in their entirety. The criminal court while appreciating the evidence brought on record may have to weigh the entire pros and cons of the matter which would include the circumstances which have been brought on record by the parties. The complainant has been found to be not man of means. He had allegedly advanced a sum of Rs. 1 lakh on 13.01.1994. He although had himself been taking advances either from his father or brother or third parties, without making any attempt to realize the amount, is said to have advanced sums of Rs. 86,000/- on 8.06.1994. Likewise he continued to advance diverse sums of Rs. 28,000/-, Rs. 50,000/-, Rs. 40,000/- and Rs. 12,000/- on subsequent dates. It is not a case where the appellant paid any amount to the respondent towards repayment of loan. He even did not charge any interest. He had also not proved that there had been any commercial or business transactions between himself and the appellant. Whey the appellant required so much amount and why he alone had been making payments of such large sums of money to the appellant has not been disclosed. According to him, he had been [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
maintaining a diary. A contemporaneous document which was in existence as per the admission of the complainant, therefore, was required to be brought on records. He failed to do so. He also did not examine his father and brothers to show that they were men of means and in fact advanced a huge sum to him only for the purpose of grant of loan by him to the appellant. The learned Trial Court not only recorded the inconsistent stand taken by the complainant in regard to the persons from whom he had allegedly borrowed the amount, it took into consideration the deposit of the cheques in the bank commenting: Ext. D1 the counterfoil of the cheque book issued to the accused from that bank, was proved through him. It contains the counterfoils of the cheques 782451 to 782460. Ext. D2 is the pass book issued to the accused from that bank. SW1 is the Branch Manager of Syndicate Bank, Koyilandy. He would say that in Ext. P4 ledger extract, cheque No. 782460 reached the bank for collection on 30.12.93. The net transaction in that account was in the year 1996. Cheque No. 782451 reached the bank on 8.1.96. Ext. D1 shows that is the first cheque in that book. 782460 is the lost cheque in that book. If the lost cheque i.e. 782460 reached the bank for collection on 30.12.93 in normal and reasonable course the first cheque i.e. 782451 might have been issued even prior to that date. Case of the complainant is that Ext. P1 cheque was given to him by the accused on 5.10.95 and the cheque was dated 18.12.95. Ext. P4, D1 and D2 substantiate the case of the accused that the allegation of the complainant that Ext. P1 cheque was given to him on 18.12.95 is not genuine."
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Hon'ble Supreme Court has observed therein that the High Court, as noticed herein before, on the other hand, laid great emphasis on the burden of proof on the accused in terms of [SECTION] of the Act.
The question came up for consideration before a Bench of this Court in [ENTITY] (supra) wherein it was held:
" 38. If for the purpose of a civil litigation, the defendant may not adduce any evidence to discharge the initial burden placed on him, a fortiori even an accused need not enter into the witness box and examine other witnesses in support of his defence. He, it will bear repetition to state, need not disprove the prosecution case in its entirety as has been held by the High Court."
A presumption is a legal or factual assumption drawn from the existence of certain facts. It was furthermore opined that if the accused had been able to discharge his initial burden, thereafter it shifted to the second respondent in that case.
The said legal principle has been reiterated by this Court in Kamala S. v. Vidhyadharan M.J. and Another [(2007) 5 SCC 264] wherein it was held:
" The Act contains provisions raising presumption as regards the negotiable instruments under [SECTION] of the Act as also under [SECTION] thereof. The said presumptions are rebuttable ones. Whether presumption stood rebutted or not would depend upon the facts and circumstances of each case."
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The nature and extent of such presumption came up for consideration before this Court in [ENTITY] Alias Mani V. State of Kerala and [PRECEDENT] wherein it was held :
" 30. Applying the said definitions of proved or disproved to the principle behind [SECTION] 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 non-existence 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 dos 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.
" This Court clearly laid down the law that standard of proof in discharge of the burden in terms of [SECTION] of the Act being of preponderance of a probability, the inference therefore can be drawn not only from the materials brought on record but also from the reference to the circumstances upon which the accused relies upon. Categorically stating that the burden of proof on accused is not as high as that of the prosecution, it was held; Presumption drawn under a statute has only an evidentiary value. Presumptions are raised in terms of the [ACT]. Presumption drawn in respect of one fact may be an evidence even for the purpose of drawing presumption under another. "
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Reliance is also placed upon a decision of this Court in Goaplast (P) Ltd. v. Chico Ursula DSouza and Another [(2003) 3 SCC 232] wherein this Court opined:
" The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. This presumption coupled with the object of [SECTION] of the Act which is to promote the efficacy of banking operation and to ensure credibility in business transactions through banks persuades us to take a view that by countermanding payment of post-dated cheque, a party should not be allowed to get away from the penal provision of [SECTION] of the Act. A contrary view would render [SECTION] a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of ones own wrong. If we hold otherwise, by giving instructions to banks to stop payment of a cheque after issuing the same against a debt or liability, a drawer will easily avoid penal consequences under [SECTION]. Once a cheque is issued by a drawer, a presumption under [SECTION] must follow and merely because the drawer issued notice to the drawee or to the bank for stoppage of payment it will not preclude an action under [SECTION] of the Act by the drawee or the holder of the cheque in due course. This was the view taken by this Court in [ENTITY] Cements Ltd. v. Kuchil Kumar Nandi. On same facts is the decision of this Court in [PRECEDENT]. The decision in [ENTITY] case overruled an earlier decision of this [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
Court in [PRECEDENT] which had taken a contrary view. We are in respectful agreement with the view taken in [ENTITY] case. The said view is in consonance with the object of the legislation. On the faith of payment by way of a post-dated cheque, the payee alters his position by accepting the cheque. If stoppage of payment before the due date of the cheque is allowed to take the transaction out of the purview of [SECTION] of the Act, it will shake the confidence which a cheque is otherwise intended to inspire regarding payment being available on the due date. "
No exception to the aforementioned legal principle can be taken. What, however, did not fall for consideration in the aforementioned case was as to how the said burden can be discharged.
It is now trite that if two views are possible, the appellant court shall not reverse a judgment of acquittal only because another view is possible to be taken. The appellate courts jurisdiction to interfere is limited. [See [ENTITY] (supra) and [PRECEDENT]]. The High Court furthermore has not met the reasons of the learned Trial Judge. It proceeded on the premise that the appellant had not been able to discharge his burden of proof in terms of [SECTION] of the Act without posing unto itself a further question as to how the said burden of proof can be discharged. It furthermore did not take into consideration the legal principle that the standard of proof upon a prosecution and upon an accused is different. "
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Hon'ble Supreme Court in [PRECEDENT], decided on 20.02.2007 observed that :
" The Act contains provisions raising presumption as regards the negotiable instruments under [SECTION] of the Act as also under [SECTION] thereof. The said presumptions are rebuttable ones. Whether presumption stood rebutted or not would depend upon the facts and circumstances of each case.
This Court clearly laid down the law that standard of proof in discharge of the burden in terms of [SECTION] of the Act being of preponderance of a probability, the inference therefor can be drawn not only from the materials brought on record but also from the reference to the circumstances upon which the accused relies upon "
Hon'ble Supreme Court in [ENTITY] v. Dattatraya G. Hegde 2008 AIR SCW 738 has observed that:
" 30. The proviso appended to the said section provides for compliance with legal requirements before a complaint petition can be acted upon by a court of law. [SECTION] of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under [SECTION] of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability.
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31. The courts below, as noticed herein before, proceeded on the basis that [SECTION] raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct.
32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of the accused and that of the prosecution in a criminal case is different.
34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of the accused is p ' reponderance of probabilities'. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies.
45. We are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This however, shall not mean that the courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have been rebutted. Other important principles of legal jurisprudence, namely, presumption of innocence as a human right and the doctrine of reverse burden introduced by [SECTION] be delicately balanced. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same."
d) It may be pertinent to mention here that a three judges bench of the Hon'ble Supreme Court in [PRECEDENT] has considered the dictum of [ENTITY] (supra) and overruled the view so far as existence of liability is concerned, however, has not dissented with other parameters observed and laid down in the said case. It has been observed therein that:
" 14. In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by [SECTION] of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in [ENTITY] (supra) may not be correct. However, this does not in any way cast doubt on the [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
correctness of the decision in that case since it was based on the specific facts and circumstances therein. "
e) This court is of the opinion that an accused has a right to rebut the presumption by placing reliance upon the circumstances brought and material placed by the complainant. Hon'ble Supreme Court in [PRECEDENT] has further held that:
" H owever, it must be remembered that the offence made punishable by [SECTION] can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under [SECTION], the standard of proof for ' reponderance of probabilities'. Therefore, if the doing so is that of p accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
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9. Version of Accused Accused persons admitted that there were business relations with the complaint and in course of business relations accused no.2 on behalf of accused no.1 had been purchasing different kinds of rubber chemicals from the complainant. It is stated on behalf of accused persons that the payment were made through cheques simultaneously or sometimes in cash in lieu of earlier given cheques. The accused persons issued 5 cheques drawn on ICICI Bank for a total sum of Rs. 34,903/- and another four cheques drawn on HDFC Bank for a sum of Rs. 27,060/- . The accused persons admitted the liability in respect of five cheques drawn on ICICI Bank regarding which the accused persons have sent a Demand Draft along with reply dated 17.05.2008 to legal notice for a sum of Rs. 34,903/- equal to the total amount involved in these five cheques. Regarding the four cheques drawn on HDFC Bank for a total sum of Rs. 27,060/-, it is submitted by the accused persons that account maintained with HDFC was closed due to heavy service charges. The accused issued five other cheques of Rs. 5,000/- each in lieu of these four cheques requesting the complainant to not to present these four cheques and to return those five cheques. The accused further submitted that the complainant encashed the aforesaid five cheques amounting to Rs. 25,000/- and did not return the four cheques drawn on HDFC Bank which have been misused to file false complaint. It is further submitted by accused persons that the remaining amount of Rs. 2060/- in respect of four cheques drawn on HDFC Bank has been tendered to the complaint vide another Demand Draft dated 17.05.2008 along with the reply to legal notice. So, there is no liability owed by the accused persons in respect of present complaint cases.
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10. Now let us deal with the each ingredient of the [SECTION] of the [ACT] to see whether the case against the accused has been proved or not.
By virtue of the affidavit filed at the time of evidence, wherein legal demand notice and postal receipts have been duly exhibited, requirement of [SECTION] appended to [SECTION] of the [ACT] stands satisfied (presumption of law arising under [SECTION] [ACT] is bound to arise). By virtue of Cheque Returning Memo dishonour stands Proved vide [SECTION] [ACT]. (Moreover, the accused has not controverted any of the above presumptions by even giving any suggestion in the cross examination of the complainant to negate the aforesaid presumptions and had even replied the legal demand notice). The cheques dated 22.11.2007 and 29.11.2007 had been presented on 08.04.2008, which is within six months of date of issuance and were returned unpaid on 09.04.2008 vide return memos due to the reason " A ccount closed" . Notice dated 03.05.2008 was dispatched on 03.05.2008 which is within 30 days of dishonor of cheques in question. The complaint has been filed on 13.06.2008 which is well within one month of arising of the cause of action as the cause of action to file the present complaint arose on 22.05.2008 after completion of 15 days of the deemed delivery of legal notice.
11. By virtue of mandatory presumptions of law arising under [SECTION] and [SECTION] of the [ACT] legal liability can be treated as proved. It is pertinent to mention that the mandatory presumptions extend to the existence of legally enforceable debt or liability. (See a three judges bench decision of Hon'ble Supreme Court in [PRECEDENT] arising out of [CASE NUMBER] decided on 07.05.2010.
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12. Complainant has primarily relied upon the mandatory presumption of law in respect of legal liability. The issuance of cheque being admitted, signatures admitted & dishonor being proved presumption u/[SECTION] and [SECTION] of the [ACT] has to arise. So, it must be presumed that the liability as alleged was existing at the time when cheques were given.
13. Now it has to be seen whether the accused has been able to rebut the aforesaid presumption or not:-
13.1 It is a settled law that accused is entitled to discharge the onus placed on him even on the basis of materials brought on record by the complainant. It is not obligatory on the accused to separately adduce evidence or to enter into witness box if she can successfully gather the material from the evidence of complainant which would sufficiently disprove the presumptive facts by a rising a mere preponderance of probability without resorting to proof beyond reasonable doubt particularly in relation to the pre-existence of legal liability of the debt for the discharge of which cheque was given. In the present cases, the accused has ,relied on the material brought by the complainant and also preferred to appear in the witness box and examine himself as defence witness.
13.2 The accused consistently put his defence to the complainant during cross examination of complainant and affirmed the same in his own testimony.
Accused admitted by volunteering during his cross examination that a total of nine cheques were issued to complainant out of which four were to be returned by the complainant, but the complainant did not do so. Accused further clarified that these four cheques were issued towards payment of sum of Rs. 27,076/-, [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
the amount due on bill no. 216 and 217 but cheques were issued for Rs. 27,060/- as a sum of Rs. 16/- had already been paid in excess while making payment of Bill No. 194, which has been adjusted in the payment of these bills i.e. Bill no. 216 & 217. Accused admitted during his cross examination that his bank account with HDFC Bank was closed due to levy of heavy service charges after issuance of aforesaid four cheques and this fact was also intimated to the complainant in person but the accused did not remember the date month and year of said information. Accused further clarified that 5 cheques of Rs. 5,000/- each were handed over to the complainant in lieu of these four cheques of HDFC Bank.
The accused admitted during his cross examination that dealings / payments were made some times in cash and some times through cheque as per the requirement of the complainant.
The aforesaid admissions and clarifications of accused were not rebutted by the complainant by even putting a suggestion to negate the same which amounts to admission of accused's defence by the complainant in respect of all these cheques. Complainant not only failed to controvert the above said version of the accused but also failed to support his case during his cross examination which in the present facts, creates grave suspicion on the complainant's case, benefit of which should be given to the accused.
The accused during his defence evidence exhibited his ledger account and purchase register in respect of transactions/purchases made from the complainant which has been maintained by the accused in regular course of dealings during the financial year 2007-2008 wherein the ledger shows sum of Rs. 2,060/- as balance amount to be paid to the complainant and the purchase register clearly shows the various bills wise transactions done by accused with complainant. The complainant did not challenge the said ledger and purchase [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
register as even a suggestion that these records are false or fabricated was not put to the accused in his cross examination. This omission amounts to admission of the authenticity of these records which fortifies the version taken by accused in his defence.
Complainant deposed during his cross examination that he cannot tell whether five cheques of Rs. 5,000/- each drawn on ICICI Bank were received against bill no. 216 & 217 and thus gave evasive reply which creates doubt on the version of complainant and benefit of the same must go to the accused. This evasive reply further fortifies the aforediscussed unrebutted version of accused.
The above flip flop of complainant shows that the complainant is not sure about the bills against which he received five cheques of ICICI Bank Ltd. which were allegedly issued by accused in lieu of four cheques drawn on HDFC Bank which are subject matter of complaint cases bearing nos. 73 & 74. However, the complainant, admitted that he received the payments against the bills by cheques. Believing this admission of complainant to be true , it becomes all the more important that the complainant should provide details of the bills against which these five cheques have been encashed. But the complainant failed to do so. This failure gives rise to clouds of suspicion even on the ledger and bills filed by the complaiannt which in turn falsifies the total outstanding liability as shown in all the complaints. It thus probabalizes the accused's version that these five cheques were given in lieu of four cheques drawn on HDFC Bank which have been misused by complainant by filing false complaints bearing no. 73/A/2010 & 74/A/2010 despite encashing the Demand Draft for a sum of Rs. 2,060/- sent in reply to legal notice for actual amount due on these bills.
The complainant during his cross examination firstly denied to have received payment against bill no. 201 for Rs. 11,597/- in cash and to have returned the two cheques drawn on HDFC Bank bearing no. 23979 and 2[SECTION]80, [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
but immediately afterwards stated that he does not remember whether the accused requested to return the aforesaid two cheques saying that the account has been closed and paid the amount in cash. This evasive testimony of complainant creates doubt on complainants version and reinforces the accused's defence that aforesaid two cheques were returned by complainant after receiving aforesaid amount in cash. This version of accused becomes more probable as admittedly all the four cheques drawn from HDFC in dispute were issued prior to closure of bank account on 24.01.2008, the date as shown in the bank accounts statement filed by accused during final arguments. The complainant did nothing to rebut the same and rather got the same admitted by the accused in his cross examination. Had the bank account been closed prior to the issuance of cheques then the accused's versions could not have been believed.
Ld. Counsel for accused argued that in respect of remaining four cheques drawn on HDFC Bank, the accused issued five cheques drawn on ICICI Bank and did not pay cash amount. But the complainant did not return the four cheques drawn on HDFC upon receiving of five cheques of ICICI and even after their encashment. This version of accused seems probable as usuallly people do not return earlier cheques till the time subsequently issued cheques are encashed. In this case, despite encashment of subsequent cheques, some amount was still outstanding against the accused.
So, it was but natural for the complainant to not to return the earlier four cheques drawn on HDFC Bank. Thus, the version of accused that the complainant did return the cheques seems to be reasonable and believable . But the complainant with malafide intention was not justified in filing complaints qua these four cheques for unaccounted amounts while the amount due was Rs. 2,060/- which was even tendered by the accused by way of Demand Draft upon receipt of legal notice within the statutory period. If the complainant was not [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
ready to accept the accused's version that only a sum of Rs. 2,060/- was outstanding qua the four cheques, then he should not have encashed the Demand Draft and returned the same with reasoned reply, which would have been the conduct of an ordinary prudent and honest man.
On perusal of record, it is revealed that legal demand notice was served upon the accused on 06.05.2008 and in reply of complainant's notice accused sent reply along with two Demand Drafts drawn for Rs.34,903/- and Rs. 2,060/- respectively to the complainant. The complainant admitted of receiving the drafts vide signatures on AD Card Ex.CW1/D1 through which reply dated 17.05.2008 was sent by accused on the correct address of accused and the address has also been admitted to be his correct address by complainant during his cross examination. It is thus clear that the accused received the notice of complainant on 06.05.2008 and accused sent reply along with two Demand Drafts dated 17.05.2008 which admittedly was served upon the complainant on 21.05.2008.
Complainant denied to have received reply dated 17.05.2008 but admitted that two Demand Drafts dated 17.05.2008 were received by him in reply to his legal notice dated 03.05.2008. Denial of reply can not come to the rescue of accused as what is required to be done by drawer of cheque upon receipt of legal notice under [SECTION] [ACT] is to pay the amount as demanded, which the accused has done in the present cases within the statutory period by dispatching two Demand Drafts one of which covered the entire cheque amount due in respect of cheques which are subject matter of complaint cases having nos. 71/A/2010 & 72/A/2010 and other one is for the actual amount due as per accused's version, which the complainant failed to rebut, on four cheques drawn on HDFC bank which are subject matter of complaint cases bearing nos. 73/A/2010 & 74/A/2010 which have been encashed [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
by the complainant as shown in his ledger in entry dated 26.05.2008. So, there being no liability in respect of all the 9 cheques involved in all the four complaint cases, the complaints are liable to be dismissed on this ground alone.
The accused has deposed in para 8 of his affidavit that reply dated 17.05.2008 along with two demand drafts was sent and duly received by the complainant. This part of accused's testimony was not rebutted by the complainant during cross examination of accused which amounts to admission of this version of accused by complainant which was however denied by complainant during his own cross examination.
Complainant admitted that he did not disclose the factum of encashment of demand draft in his affidavit but effort was made to improve this admission, which clearly established the malafides of complainant, by again deposing that the complainant does not remember whether the two Demand Drafts have been disclosed in the complaint and affidavit. This non disclosure of the factum of receiving the Demand Drafts is a material concealment on the part of complainant which establishes that the complainant has not approached the court with clean hands.
The complainant during his cross examination volunteered that he received the two Demand Drafts against total bill whereas earlier the complainant admitted that the Demand Draft's were received in reply to his legal notice dated 03.05.2008. It is clear that the Demand Drafts issued in reply to legal notice have been misused by the complainant against the total bill amount, which is itself doubtful as discussed above, which is not permissible under law as the amount can be adjusted only against the demand made in legal notice otherwise the provisions of [SECTION] [ACT] will be rendered infructuous.
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This shows that the complainant deliberately concealed factum of receipt of two Demand Drafts in his complaint and affidavit as the disclosure of the same would have precluded the complainant from filing the present complaints. This concealment tarnishes the overall case of complaint which probabalizes the version of accused and falsifies the complainant's case.
14. Considering the above discussion, it is thus clear that the liability in respect of five cheques drawn on ICICI Bank which are subject matter of [CASE NUMBER] and [CASE NUMBER] ceased to exist upon encashment of Demand Draft for a sum of Rs. 34,903/- which is the total amount covered by the cheques in these two cases. Regarding the liability in respect of four cheques drawn on HDFC Bank which are subject matter of [CASE NUMBER]A/2010 and [CASE NUMBER]/A/2010, accused has successfully established that these cheques have been misused by the complainant as after tendering of the outstanding amount of Rs. 2,060/- in respect of these cheques to the complainant by way of Demand draft for a sum of Rs. 2,060/- which has been duly encashed by the complainant, no legally enforceable debt or liability remains due qua these cheques. Furthermore, accused has successfully raised a probable defence which creates grave doubt about the existence of legally enforceable debt or liability and on the overall version of complaint, the prosecution must fail.
15. No doubt complainant is well within his right to rely upon mandatory presumptions of law. However, the same are rebuttable even by showing a preponderance of probability and if certain defects are established by the accused, the complainant should try other ways to support his case. In the present cases, however, the complainant did not make such efforts to his own [PRECEDENT] [ENTITY] Vs M/s [ENTITY]
peril. The complainant has to bear the consequences. No blemishes in the story of the accused can give a right to the complainant to claim that his story should be preferred. It is well settled law that if from the facts and circumstances two views are possible, the one which makes no interference in life and liberty i.e. the one which goes in favour of the accused should be preferred.
16. From the above discussion, this court is of the considered opinion that accused has successfully rebutted the mandatory presumptions of law arising in favour of the complainant. Viewed from any angle, as complainant failed to discharge the burden which was shifted on him, no criminal liability could be fastened upon the accused. Accordingly, the complaint is hereby dismissed.
17. This court accordingly returns a finding of not guilty.
18. The accused is hereby acquitted. Surety is discharged. Bail Bond/Surety Bond is cancelled. Endorsement be cancelled and [ENTITY] be returned, if any. Original documents, if any be returned after retaining its photocopy on record.
File be consigned to Record Room.
Announced in the open court [ENTITY] today i.e. on 24.12.2011 Metropolitan Magistrate North/Delhi 24.12.2011