[CASE NUMBER] IN THE COURT OF Ms. NEHA GUPTA SINGH METROPOLITAN MAGISTRATE 03 (N.I. ACT) CENTRAL, TISHAZARI COURTS : DELHI M/s [ENTITY] Through proprietor Sh. Bhagwat Prasad Bansal IX/3964, Shanti Maohalla, Gandhi Nagar, Delhi COMPLAINANT Versus 1. M/s [ENTITY] 6-A shiv Mandir Gali Moujpur, Delhi 2. Sh. [ENTITY], Director M/s [ENTITY] 6-A shiv Mandir Gali Moujpur, Delhi ACCUSED [CASE NUMBER] Date of Institution. : 19.07.2003 Offence Complained Of. : U/[SECTION] [ACT] Plea of the Accused. : Not Guilty Arguments Heard On. : 2.03.2016 Final Order. : Accused no. 1 and 2 are acquitted of offence under [SECTION] [ACT]. Date of Judgment. : 05.04.2016 Page 1 of 13 [CASE NUMBER]
1. Factual matrix as brought about from the complaint is that accused no. 2 on behalf of the accused no. 1 approached the complainant and purchased fabric for a sum of Rs. 59,992 against bill no. 1172 dated 2.05.2002. Accused no. 2 in discharge of legal liability issued cheque bearing no. 757584 dated 8.04.2003 for sum of Rs 59,992 drawn on Bombay Merchantile Co operative Bank limited, New Delhi.
2. The aforestated cheques were presented by the complainant for encashment to his bank ie. Bombay Merchantile Co operative Bank limited, New Delhi. The cheque was returned back dishonored vide return memo dated 14.05.2003 with reason "Funds Insufficient". Cheque on assurance of the accused was put again for encashment. The cheque was returned back dishonored vide return memo dated 4.06.2003 with reason "Funds Insufficient". Complainant thereafter gave legal demand notice to the accused on 9.06.2003 calling upon them to make payment within 15 days from notice. The said notice was sent by the Registered AD and Speed Post. Same was replied by the accused. Despite the service the accused did not make the payment within stipulated period, hence present complaint was filed under [SECTION] of [ACT]).
3. Complaint was perused and cognizance of the offence was taken by the Ld. Predecessor. Complainant tendered pre summoning evidence by way of affidavit dated 14.08.2003 and relied on
a) Copy of bill number 1172 dated 2.05.2002 Ex.CW1/1
b) original cheque bearing number 757584 Ex. CW1/2
c) bank return memo for cheque no. 757584 dated 14.05.2003
d) bank return memo for cheque no. 757584 dated 04.06.2003
e) legal demand notice dated 9.06.2003.Ex.CW1/5
f) post receipt dated 09.06.2003 Ex. CW1/6
g) copy of reply of accused dated 26.06.2003 Ex. CW1/7.
4. Accused no. 2 was admitted on bail and notice under [SECTION] [ACT] was framed against all the accused on 4.06.2005 to which accused pleaded not guilty and claim trial.
5. Complainant adopted his pre summoning evidence. He conceded in his cross examination that he is proprietor of M/s [ENTITY]s and denied that [ENTITY] is proprietor. Accused is purchasing the clothes from complainant since 1998-99. In come from present bill is reflected in the Income Tax return. The order was given on 12.04.2002. He does not remember the exact dates when cheques were handed over but they were given in February and March 2003. Cheque was already filled when it was handed over however; it was signed in his presence. It was conceded that the details of bill and date were not mentioned in the notice. He does not recollect from whom goods were purchased for supply to accused. No purchasing register is maintained by him. He does not remember who was proprietor of M/s Krishna fab in 1996. He conceded that M/s [ENTITY] has address was 3964, Gali no. 14 [ENTITY], Gandhi Nagar. Same is owned by his wife and [ENTITY] and [ENTITY] were tenants in the property. It was conceded that bills in question bear signature of [ENTITY] who was father of [ENTITY]. It was further stated that copy of bill does not have name of [ENTITY]. He stated that he is proprietor of M/s MK Enterprises and bills were issued by employee [ENTITY]. He does not have any other invoice except the invoice in question. He denied that cheques were given as security for supply and supply was not made. He stated that he replied to the reply of accused for legal demand notice on 25.08.2004 Ex. CW1/9. He does not have any documentary proof to show what items were delivered. Delivery was taken by [ENTITY] for accused. He did not show any authority to take delivery on behalf of accused.
6. Complainant evidence was closed and the accused was examined under [SECTION] [ACT]. All the incriminating evidence were put to him in vernacular and accused stated that cheques were given as security in year 2001. However they are misused by the complainant as he does not make any delivery of goods and there is no liability towards complainant.
7. Accused lead defense evidence. The accused step in evidence box as witness and depose as defense witness. He stated on affidavit that the cheques in question were lying as security with the complainant since 2001. The complainant did not deliver any goods against the cheque in question and prepared forged bills and misused the same. On demand cheque was not returned stating that same is untraceable.
8. In his cross examination he conceded that cheques bear his signatures and same was issued for his firm, however other particulars are not filled by him. He did not receive goods on account of present invoice. No letter was written for cancellation of order to complainant. No instructions were issued to bank for stop payment.
9. Final arguments were advanced by the counsel for the parties. It was argued for the complainant that accused no. 2 on behalf of the accused no. 1 approached the complainant and purchased fabric for a sum of Rs. 59,992 against bill no. 1172 dated 2.05.2002. Accused no. 2 in discharge of legal liability issued cheque bearing no. 757584 dated 8.04.2003 for sum of Rs 59,992 drawn on Bombay Merchantile Co operative Bank limited, New Delhi.
10. The aforestated cheques were presented by the complainant for encashment to his bank ie. Bombay Merchantile Co operative Bank limited, New Delhi. The cheque was returned back dishonored vide return memo dated 14.05.2003 with reason "Funds Insufficient". Cheque on assurance of the accused was put again for encashment. The cheque was returned back dishonored vide return memo dated 4.06.2003 with reason "Funds Insufficient". Complainant thereafter gave legal demand notice to the accused on 9.06.2003 calling upon them to make payment within 15 days from notice. The said notice was sent by the Registered AD and Speed Post. Same was replied by the accused. Despite the service the accused did not make the payment within stipulated period.
11. It is further argued for complainant that there is valid presumption in favor of complainant as per [SECTION] and [SECTION]. it is to be presumed unless contrary is proved that the holder of cheque received the same in discharge of any debt or liability. Burden of rebutting the same is on the accused. He relied on [PRECEDENT].
12. Reliance is placed on [PRECEDENT] to argue that accused should have ask for return of cheques in writing. Reliance is also placed on [PRECEDENT] to argue that mere denial is not sufficient to shift burden of proof on the complainant. Accused has to prove in trial by leading cogent evidence that there was no liability. It is further submitted that there were dealings between the parties in year 2003 reliance is paced on Ex. CW1/9 and Ex.CW1/10. There is no evidence brought on record by the accused to show that goods were not delivered. Reliance is placed on [PRECEDENT]. Bills being carbon copy do not bear the name of firm. These bills were reflected in the Income tax return of the complainant.
13. Complainant has also filed orders in [CASE NUMBER] and Cr.
LP 244/2010, 249/2010, 263/2010, 265/2010 on 30.03.2016 which were not part of arguments.
14. Per contra it is argued by the counsel for the accused that there is no legal liability in respect of invoice in question. Goods were never delivered to the accused. Alleged bills were signed by [ENTITY] who was not made a witness by complainant. Moreover, complainant has not filed any bill book to prove bills. Bill in question does not bear name of complainant and it cannot be said by such bills that delivery was taken by accused and cheque was issue against the said liability. Legal demand notice dated 9.06.2003 does not talk about the invoice. Contradictions in testimony of the complainant do not generate confidence in story of complainant. Reliance is placed on [PRECEDENT] to show that if cheque is issued as an advance payment for purchase of goods and for any reason purchase order is not carried to its logical conclusion either before its cancellation or otherwise and material or goods for which purchase order was placed are not supplied by the supplier, cheques cannot be said to have been drawn for an existing debt or liability and on [PRECEDENT], Krishna Janardhan Bhatt v. Dattacharya G. Hegde 2008 (1) JCC (NI) 50 and [PRECEDENT] to show that presumption of liability is a rebuttable presumption.
15. I have heard the complainant and accused and have perused the record. Written arguments are filed by accused and both the parties have filed judgments in support of their case. Same are perused.
16. Before coming to the appreciation of the evidence and legal position, it is pertinent to mention that the trial though summary was conducted like summons trial and evidence was recorded in full with examination and cross examination of the witnesses and not in a summary manner by the predecessor court. In light of the judgment of Hon'ble Supreme Court in [PRECEDENT]. 2014 [CASE NUMBER], this court is inclined to rely on the evidence recorded by the predecessor court.
17. At the outset it is wise to discuss the legal principles involved in present matter at hand. Present complaint is filed u/[SECTION] of the Act. The object of the legislation is to encourage the culture of use of cheques and enhance the credibility of the instrument.
18. The legal regime pertaining to the offence under [SECTION] of the act has numerous components inter alia,
a) Cheque was drawn by a person on an account maintained by him
b) It was drawn for the discharge, in whole or in part, of any debt or other liability
c) Cheque was presented to the bank within a period of six month from the date it was drawn or within the period of its validity.
d) Cheque was returned by the bank unpaid due to insufficient funds or that it exceeds the amount arranged to be paid.
e) Payee or holder in due course make demand of payment of the said amount of money by giving a notice, in writing within 30 days of receipt of information by him from the bank regarding the return of cheque as unpaid.
f) The drawer of the cheque fails to make payment of the said amount of money within 15 days of the receipt of the said notice
g) Complaint was filed in writing within one month of the date on which cause of action arised.
19. Statutory and legal presumptions in favor of payee/ complainant as laid down by the Act and precedents can be summarized as follows.
a) Presumption as to liability: it shall be presumed unless contrary is proved that the holder of cheque received the same in discharge of any debt or liability ([SECTION] and 118(a
b) Presumption of dishonor: court shall presume dishonor of cheque on production of bank's slip or memo having official mark denoting that cheque has been dishonored unless such fact is disproved.(sec 146)
c) Service of legal demand notice: notice sent at correct address by making complete payments of postal expenses in advance deem to be served and drawer has to show during trial after leading evidence that same was not served .(see [PRECEDENT]).
20. Now I shall discuss components of offence in light of facts and circumstances of present case
21.Issuance of cheque Admittedly cheque was issued by the accused no. 2 on behalf of accused no.1. However, it is alleged by the accused that details on cheque were not filled by him; he only gave blank cheque after duly signing the same. [SECTION] [ACT] talks about such instruments. As per this provision, if a person gives duly signed but blank or partly written cheque then he deem to have given implied authority to the holder to fill up the particulars in it and complete it and thus make him liable for the payment mentioned in it. Further it is argued by accused that cheque was given as security. Reliance in such case be placed on [PRECEDENT] wherein the Hon'ble Supreme Court has held that the security cheques also would fall within the purview of the [SECTION] of the [ACT] and a person could not escape his liability.
22.Cheque was presented to bank for payment and it was returned back unpaid.
The aforestated cheques were presented by the complainant for encashment to his bank ie. Bombay Merchantile Co operative Bank limited, New Delhi. The cheque was returned back dishonored vide return memo dated 14.05.2003 with reason "Funds Insufficient". Cheque on assurance of the accused was put again for encashment. The cheque was returned back dishonored vide return memo dated 4.06.2003 with reason "Funds Insufficient".
23.Legal demand notice within 30 days of return of cheque and no payment by drawer within 15 days of receipt.
In present case legal demand notice Ex. CW1/E was sent on 9.06.2004 Receipt of legal demand notice is not denied by the accused and they have also replied the same. No payment was made after notice. In such circumstances facts stands proved against the accused.
24.Legally enforceable debt or liability It is a well settled position of law that when a negotiable instrument is drawn, two statutory presumptions arise in favor of the complaint, one under [SECTION] [ACT] and another under [SECTION] of the [ACT]. Further, the court will presume a negotiable instrument for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or consider 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 does not exist. For rebutting such presumption, what is needed is to raise a probable defense. Reliance is placed on [PRECEDENT].
25. In the present case main issue to be discussed is whether accused is able to rebut the presumption. It is urged by the accused that the cheques in question were lying as security with the complainant since 2001. The complainant did not deliver any goods against the cheque in question and prepared forged bills and misused the same. On demand cheque was not returned stating that same is untraceable. Per contra, complainant has stated that cheque was issued against the liability as per invoice dated 2.05.2002 on 8.04.2003.
26. It is alleged by the accused that delivery was never made against the said bill. Complainant has admitted in his cross examination that one employee of accused namely [ENTITY] took delivery of goods from his shop on behalf of accused however, he did not had any authority from accused neither did he signed on bills or give any delivery proof. It is further admitted that there are no records or bill pertaining to year except bill in question.
27. In this court's considered opinion accused has cast a shadow of doubt on the version of complainant. Invoice in question is not trustworthy to the effect that it does not contain the name of complainant firm. There is nothing on record to show that bill was generated by the complainant and delivery was made against it to the accused. Bill books are not produced in the court, only carbon copy of bill is filed on record. Moreover, it is admitted fact that bill was not prepared by the CW1 himself. Invoice is dated 2.05.2002 and cheque is dated 8.04.2003. It cannot be said that cheque was issued against the said bill. It is admitted fact that credit period was for 30-45 days, no explanation is put forward to show as to why payment was received against the bill after more than one year. Accordingly accused has successfully rebutted the presumption raised in favor of the complainant.
28. In light of above facts and circumstances, accused no. 1 and 2 are acquitted of offence under [SECTION] [ACT].
Announced in the open court [ENTITY] on 05.04.2016 [ACT]
Certified that this judgment contains 13 pages and each page bears my signature.
[ENTITY] [ACT]