M/s [ENTITY] CIS No. 631595/16 Vs M/s [ENTITY] & Anr DLSE020051602016 Presented on : 03-02-2016 Registered on : 05-02-2016 Decided on : 16.11.2019 IN THE COURT OF Metropolitan Magistrate AT ,SOUTH EAST (Presided Over by Sh. [ENTITY]) CT CASES/631595/2016 M/S STERLING INFOWAYS (P) LTD Through its Authorized Representative, 303, Sidharth Building, 96 Nehru Place, New Delhi - 110019. VERSUS 1. M/S UNIQUE INFOWAYS (P) LTD Through its Managing Director, Ms. Usha Jain, 308, Sky Lark Building, 60, Nehru Place, New Delhi - 110019. 2. VIPUL JAIN Authorised Signatory / Director of M/s [ENTITY] C-266, Street No.8, Majlis Park, Adarsh Nagar, New Delhi - 110033. CNR No:DLSE020051602016 Page No. 1 / 15 M/s [ENTITY] CIS No. 631595/16 Vs M/s [ENTITY] & Anr Argued by: Sh. [ENTITY], counsel for complainant. None for accused. JUDGMENT:
Complainant has filed the present complaint under [SECTION]/[SECTION] of [ACT] against the accused on the averments that complainant is a private limited company having its registered office at 303, Sidharth Building, 96, Nehru Place, New Delhi 110019 and deals in the services for efficient network solution, access solution, power conditioning, system integration, peripheral support and facility management services and is also an authorized distributor for computer accessories. It is the case of the complainant company that it sold various product, as per the request of the accused against various invoices and for the payment of the invoices, a cheque bearing no.019676 dated 16.11.2015 of Rs.27,30,399/ drawn on HDFC Bank, Nehru Place, Delhi 110019 (hereinafter referred to as "cheque in question") was issued by the accused no.2. However, the above cheque when deposited for encashement got dishonored with the remarks "Funds Insufficient" vide returning memo dated 18.12.2015 and 17.12.2015. Thereafter, complainant company M/s [ENTITY] CIS No. 631595/16 Vs M/s [ENTITY] & Anr sent a legal demand notice dated 31.12.2015 through speed post and courier dated 31.12.2015 at all the last known and correct addresses of the accused. The said legal demand notice was delivered to the accused on 01.01.2016 and by courier on 06.01.2016 whereas the notice to accused no.1 at Nehru Place address returned with the remarks of "refusal" on 01.01.2016. However, despite receipt of the legal demand notice, accused failed to make the requisite payment within the stipulated period and hence the present complaint.
2. After taking pre-summoning evidence, accused were ordered to be summoned in this case for commission of offence under [SECTION] of [ACT], vide order dated 05.02.2016.
3. Accused no.2 appeared and was released on bail on 18.01.2017. On finding a prima facie case, notice U/[SECTION] [ACT] was served upon the accused no.1 company through accused no.2 and on accused no.2 on 11.05.2018 to which he pleaded not guilty and opted to contest after disclosing the following defence:
"I am the signatory of the impugned cheque and also the director of accused no.1. There were business transaction between our company and complainant company and the impugned cheque was given as security. However, except for the signatures no other contents were filled. I did not receive legal notice."
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4. Despite availing number of opportunities, no application of U/[SECTION] [ACT] was filed by the accused and accordingly, the case was listed for defence evidence.
5. No defence evidence was led by the accused despite consuming number of opportunities for the same and the opportunity to lead defence evidence was closed by court order on 28.05.2019.
6. In pre summoning evidence, AR of complainant had tendered his affidavit of evidence Ex. CW1/A in which he reiterated the averments of the complaint on oath and also exhibited following documents:-
Ex. CW1/1 : Cheque bearing no.019676 dated 16.11.2015 of Rs.27,30,399/-.
Ex. CW1/2 to 2C : Original banker's memo.
Ex. CW1/3 : Legal demand notice dated 31.12.2015. Ex. CW1/4 to 6A : Original four post receipts. Ex. CW1/7 : Invoice copy (Colly). Ex. CW1/8 : True copy of the ledger account. Ex. CW1/9 : Board resolution. Ex. CW1/10-11 : Tracking receipts. Ex. CW1/12 : Return postal envelop. M/s [ENTITY] CIS No. 631595/16 Vs M/s [ENTITY] & Anr Ex. CW1/13(colly): Master Data & Signatory Details. Ex. CW1/14 : Certificate U/[SECTION] [ACT].
7. I have heard ld. Counsel for the complainant. Despite availing number of opportunities final arguments were not advanced by ld. Defence counsel. Vide order dated 01.11.2019 liberty was also granted to the ld. Counsel for accused to file written arguments but no written arguments were filed by ld. Counsel for accused and accordingly, this court proceeded to decide the case on the basis of material available on record.
8. Initiating the arguments, learned counsel for the complainant argued that, in discharge of the liability, accused issued the cheque in question (Ex. CW1/1) in favour of the complainant which got dishonoured due to the reason "Funds Insufficient". After getting the information regarding the dishonour of cheque, vide cheque returning memo Ex.CW1/2, complainant served a legal demand notice Ex.CW1/3 to the accused. However, even after having the knowledge of dishonour of cheque, the accused did not make the payment. It was further contended that no evidence is being led by the accused to rebut the presumption U/[SECTION] [ACT]. With these submissions, it was prayed that both the accused be convicted for the offence committed U/[SECTION] Negotiable M/s [ENTITY] CIS No. 631595/16 Vs M/s [ENTITY] & Anr Instruments Act, 1881.
9. After hearing Ld. Counsel for the complainant and having perused the case file carefully and meticulously this court is of the opinion that in order to bring home the guilt against the accused, complainant is duty bound to prove the following ingredients:-
a) Drawing of cheque by a person on any account maintained by him with a banker for payment to another person out of that account.
b) The cheque has been issued for the discharge, in whole or in part, of any legal and enforceable debt or other liability.
c) Presentation of the cheque by the payee or the holder in due course to the bank within a period of three months from the date on which it is drawn or within the period of its validity, whichever is earlier.
d) Returning the cheque unpaid by the drawer bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque.
e) Giving notice within 30 days of receipt of the information by the payee from the bank regarding the return of the cheque as unpaid, demanding payment of the cheque amount.
f) Failure of the drawer to make payment to the payee or the holder in due course of the amount covered by the cheque within 15 days of the receipt of notice.
10. It goes without saying that it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence U/[SECTION] of [ACT].
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11. In the case in hand, it is not in dispute that the cheque in question is drawn from the bank account of accused no.1 company. Further, it is also not in dispute that the accused no.2 is the signatory of the cheque in question and he had signed the same being one of the directors of accused no.1 company. The same has been duly admitted by the accused no.2 at the time of disclosing the defence U/[SECTION] [ACT]. Presentation of the cheque in question by the complainant is also not in dispute. Returning memo Ex. CW1/2 is also undisputed i.e., the cheque in question was returned unpaid for the reason "Funds Insufficient" on 17.12.2015. Complainant sent the legal demand notice, dated 31.12.2015 (Ex.CW1/3) to the accused on the same day through post. As per the tracking report Ex. CW1/10 and Ex. CW1/11 the legal demand notice was shown to be delivered to the accused. Though, in the defence disclosed by the accused no.2, he had mentioned that he had not received any legal demand notice but he had not disputed that the legal demand notice was sent on the correct address of the accused. As the legal demand notice, Ex. CW1/3, was sent on the correct address of the accused, therefore, a presumption of due service is drawn U/[SECTION] of [ACT] which provides that where the notice is sent to the correct address, the same shall be presumed to have been duly served. In [PRECEDENT], the Hon'ble High Court of Delhi held that a presumption of service of notice is to M/s [ENTITY] CIS No. 631595/16 Vs M/s [ENTITY] & Anr be drawn where the notice is sent through registered post as well as [ACT] on correct address. Further, the Hon'ble Supreme Court in [PRECEDENT] has held that"Any drawer who claims that he did not receive the notice by post, can, within 15 days of receipt of summons from the court in respect of the complaint U/[SECTION] of the Act, make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the court along with the copy of complaint U/[SECTION] of the Act, cannot obviously contend that there was no proper service of notice as required U/[SECTION], by ignoring statutory presumption to the contrary U/[SECTION] of the [ACT] and [SECTION] of the [ACT].". Thus, the legal demand notice Ex. CW1/3 is held to have been duly served upon the accused. Finally, the complaint has been filed within the limitation period. Therefore, essential ingredients mentioned from (a) to (f) [except point b] in para no.9 above have been duly satisfied.
12. The only question remaining for determination is whether legally valid and enforceable debt existed qua the complainant and the cheque in question was issued in discharge of said liability / debt. It is pertinent to note that [SECTION] of M/s [ENTITY] CIS No. 631595/16 Vs M/s [ENTITY] & Anr [ACT] provides a statutory presumption that the cheque was handed over in respect of the debt or other liability. Under [SECTION] of the [ACT] every negotiable instrument is presumed to have been drawn and accepted for consideration. In the case of [PRECEDENT], it was observed as follows:
"Thus in complaints under [SECTION], the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused. This Court in the case of [ENTITY]. [PRECEDENT] has also taken an identical view."
13. The Hon'ble Supreme Court, in the case of [ENTITY]. P. Dalal vs Bratindranath Banarjee (2001) 6 SCC 16, observed as follows:
"Because both [SECTION] and [SECTION] require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in [PRECEDENT], it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. It introduced an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused" (ibid).
14. Also, in the case of K.Bhaskaran vs Sankaran M/s [ENTITY] CIS No. 631595/16 Vs M/s [ENTITY] & Anr Vaidhyan Balan 1999 (4) RCR (Criminal) 309, it has been held by the Hon'ble Supreme Court as under:
"As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in [SECTION] of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. [SECTION] of the Act enjoins on the court to presume that the holder of the cheque received it for the discharge of any debt or liability."
15. Now, in the case in hand, so far as the question of existence of basic ingredients for drawing of presumption U/[SECTION] and [SECTION] of [ACT] is concerned, from the aforesaid discussion, it is apparent that the accused no.2 has not denied his signatures on the cheque in question that has been drawn in favour of the complainant on a bank account maintained by the accused no.1, for a total sum of Rs.27,30,399/-. The said cheque was presented to the bank concerned within the period of its validity and was returned unpaid for the reason mentioned in the bank returning memo. Hence, all the basic ingredients of [SECTION] as also of [SECTION] and [SECTION] are apparent on the face of record. Therefore, it is required to be presumed that the cheque in question was drawn for consideration and the holder of the cheque i.e., the complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the accused to establish a probable defence so as to rebut such a presumption.
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16. It is a settled position that when an accused has to rebut the presumption under [SECTION], the standard of proof for doing so is that of "preponderance of probabilities". In [PRECEDENT], the Hon'ble Supreme Court has observed:
"[SECTION] of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While [SECTION] the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under [SECTION] is a device to prevent undue delay in the course of litigation. However, 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 doing so is that of 'preponderance of probabilities'. Therefore, if the 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 M/s [ENTITY] CIS No. 631595/16 Vs M/s [ENTITY] & Anr his/her own."
17. In another recent judgment passed in the case of [PRECEDENT], the Hon'ble Apex Court has summarized the principle enumerated on [SECTION] of the Act, which are as under:
"23. We having noticed the ratio laid down by this court in above cases on [SECTION] and [SECTION], we now summarise the principles enumerated by this court in following manner:-
(i) Once the execution of cheque is admitted [SECTION] of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
(ii) The presumption under [SECTION] is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. 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 they rely.
(iv) That it is not necessary for the accused to come in the witness box in support of his defence, [SECTION] imposed an evidentiary burden and not a persuasive burden.
(v) It is not necessary for the accused to come in the M/s [ENTITY] CIS No. 631595/16 Vs M/s [ENTITY] & Anr witness box to support his defence."
18. In [PRECEDENT]. [PRECEDENT] Hon'ble Supreme Court has held that :
"On the aspects relating to preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead the court to conclude either that the consideration did not exist or that its non existence was so probable that the prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This court has, time and again, emphasized that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the requirements of rebuttal as envisaged U/[SECTION] and [SECTION] of [ACT]."
19. Now, in the case in hand the basic question to be answered is whether the accused have been able to rebut the presumption raised U/[SECTION]/[SECTION] of [ACT].
20. In the case in hand, the primary defence of the accused is that cheque was given as security. In the defence disclosed by accused no.2, at the time of framing of notice U/[SECTION] [ACT], it was duly admitted by the accused no.2 that he is the director of accused no.1 company and there were business transaction between his company i.e. accused no.1 company and M/s [ENTITY] CIS No. 631595/16 Vs M/s [ENTITY] & Anr complainant company. It was further the defence of the accused no.2 that the cheque in question was given as a blank signed cheque. This is no defence as the same has been held by the Hon'ble Supreme Court and Hon'ble High Courts in catena of judgments. One such judgment is [PRECEDENT] wherein it was held by the Hon'ble Supreme Court that "40. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption U/[SECTION] of the [ACT], in the absent of any cogent evidence to show that the cheque was not issued in discharge of her debt".
21. Moving ahead, it is further the defence of the accused no.2 that the cheque in question was given as security cheque. However, no evidence is being led by the accused to prove that there was no debt existed at the time of issuance of the cheque in question. Moreso, no evidence is led by the accused to rebut the presumption raised U/[SECTION] of [ACT].
22. In these circumstances and in view of the above detailed discussion, this court is of the considered opinion that as the accused have failed to rebut the presumption under [SECTION] of [ACT] in favour of the complainant and ingredients of [SECTION] of [ACT] are fully proved, therefore, both accused M/s [ENTITY] CIS No. 631595/16 Vs M/s [ENTITY] & Anr are held guilty and convicted for commission of offence punishable under [SECTION] of the [ACT]. Let accused be heard on the quantum of sentence on 23.11.2019.
ORDER: CONVICTED Announced in Open Court ([ENTITY]) 16.11.2019 [ACT]
Note: This judgment contains 15 pages and each page has been signed by me.
([ENTITY]) [ACT]