1 IN THE COURT OF MS. SNIGDHA SARVARIA : MM : NI ACT-03 (CENTRAL) : TIS HAZARI COURTS : DELHI. [CASE NUMBER] DATEOFINSTITUTION:29.08.2011 DATERESERVEDFORJUDGMENT:10.12.2018 DATEOFJUDGMENT:13.12.2018 INTHEMATTEROF: Sh.[ENTITY], Proprietor M/SUshaSwitches&CablesCo. havingitsofficeat2109/13, ChahIndara,BehindJublieeCinema, BhagirathPalace,Delhi110006 Complainant VERSUS 1.M/[ENTITY], K1,SanjayNagar, Ghazaiabad,(U.P.) 2.Ms.[ENTITY] Proprietor/AuthorisedSignatory M/[ENTITY] K1,SanjayNagar, Ghaziabad,(U.P.) Accused JUDGMENT:
a)Srl.No.ofthecase&Dateofinstitution :2424/A/11&02.09.2011
b)Dateofcommissionofoffence :onthe15thdayofservice oflegaldemandnotice
c)Nameofthecomplainant :[ENTITY]
d)Nameoftheaccused :Ms. [ENTITY], proprietor of M/s.CandidNetwork
e)Natureofoffencecomplainedof :S.138NIAct
f)Pleaoftheaccusedperson :Accusedpleadednot guilty
h)FinalOrder :Convicted
i)Dateoforder :13.12.2018 [ENTITY] COMPLAINTUNDERSECTION138OF THENEGOTIABLEINSTRUMENTSACT, BRIEFSTATEMENTOFREASONSFORDECISIONOFTHECASE: JUDGMENT:
Brief facts
1. The brief facts of the present complaint filed U/[SECTION] of the [ACT], 1881 (hereinafter referred to as "[ACT]") are that the complainant is engaged in the business of trading of Electrical Wire & Cables and all kind of Electrical goods in the name and style of firm M/s Usha Switches & Cables Co. That the accused no.2, has represented herself as Proprietor of the accused no.1 firm and as incharge of its day to day affairs and business and have dealt with the complainant for purchasing the Electrical cables, Glands etc. Of various description. That in discharge of the partial liability the accused issued a cheque bearing No. 000023 dated 05.03.2011 drawn on Bank of India, Raj Nagar, Ghaziabad (U.P.) of Rs.20,716/-. That the said cheque was presented for clearance with the bankers of the complainant i.e. HDFC Bank Ltd.
Chandni Chowk, Delhi-110 0006 but the same was returned dishonoured with remarks 'Exceeds Arrangement'. The complainant came to know about the said dishonour vide debit advice dated 17.06.2011. That there upon the complainant sent a registered notice dated 16.07.2011 to the accused through Speed Post A.D. and Courier under [SECTION] of [ACT] as amended upto date, whereby the accused was requested to make the clearance of the outstanding dues within 15 days from the date of the receipt of the notice failing which accused was notified that necessary action will be taken against him. But inspite of service of the notice the accused failed to make the payment of the cheque in [ENTITY] question. That the dishonour of the said cheque was malafide, intentional and deliberate. At the time of issuing the said cheque the accused was fully aware that the same will be dishonoured for the insufficiency of funds. But inspite of service of the notice the accused did not make the payment towards the dishonoured cheque. That the accused no.2 has issued the cheque in discharge of her legal liability and being the signatory of the said dishonoured cheque both the accused are as such liable to be proceeded against under the provisions of [ACT]. The complainant sent a legal notice dated 16.07.2011 to the accused and called upon him to pay the cheque amount within 15 days from the receipt of the said notice, through Regd./AD. The accused has not made any payment. Therefore, the accused has committed an offence, which is an offence under the provision of [SECTION] of [ACT].
Proceedings Before Court
2. In the present complaint summons were issued against the accused. The accused entered appearance and notice of accusation was framed against the accused on 04.02.2013 to which accused pleaded not guilty and claimed trial and in her defence accused stated that she has already made the payment to the complainant in respect of the cheque in question and the complainant has also filed a civil suit pertaining to the cheque in question and this case has been filed to harass her.
3. In support of his case the complainant examined himself as CW-1 and proved his affidavit in evidence as Ex.CW1/A, cheque bearing no.000023 dated 05.03.2011 for Rs.20,716/- drawn on Bank of India, Raj Nagar, Ghaziabad, U.P. as Ex.CW1/1, return memo dated 17.06.2011 as Ex.CW1/2, legal notice dated 11.07.2011 as Ex.CW1/3 and original postal and courier receipts are as Ex.CW1/4 [ENTITY] to Ex CW1/7; original acknowledgment cards are ExCW1/8 & ExCW1/9 and complaint as Ex CW1/10 and certified copies of bills dated 26.03.2011 as Ex CW1/D1 (colly.). Complainant was also cross-examined at length. The complainant closed his complainant evidence on 01.04.2015.
4. Statement of accused u/[SECTION] [ACT] was recorded on 01.04.2015 wherein accused stated that the cheque in question bears her signature but the particulars have not been filled up by the accused. She stated that she has not received any legal demand notice. She stated that she gave the cheque in question to one Mr. [ENTITY], who is her employee. She stated that she has no legally enforceable liability towards the complainant. She stated that she does not remember the date on which the cheque in question was given.
5. The accused examined Sh. [ENTITY] as DW1. He proved statement of account Ex DW1/1. DW1 was also cross-examined at length. The accused closed defence evidence on 26.11.2018.
6. I have heard counsel for the parties, perused the record and have gone through the relevant provisions of the law.
Findings
7. The following are the components of the offence punishable under [SECTION] of [ACT]
(1) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/part any debt or liability, (2) presentation of the cheque by the payee or the holder in due course to the bank, (3) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any [ENTITY] arrangement with the banker to pay the sum covered by the cheque, (4) giving notice in writing to the drawer of the cheque within 15 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount, (5) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice.
8. The accused denied receiving of legal demand notice. Considering that the legal demand notice was sent at K-1, Sanjay Nagar, Ghaziabad, U.P. and in the bail bonds furnished by the accused her address is K-1, Sanjay Nagar, Ghaziabad, U.P. thus clearly the said defence of the accused is without any merits and contrary to the record. Also, the defence of the accused that she did not receive legal demand notice Ex CW1/3 is without any merits as in the decision in [ENTITY] v Palapetty Muhammad & Anr. (2007) 6 SCC 555, which states that in case, drawer of the cheque raises an objection that he never received Legal Notice U/[SECTION] of [ACT], he can within 15 days of the receipt of summons make payment of the cheque amount and in case, he does not do so, he cannot complain that there was no proper service of Legal Notice U/[SECTION] of [ACT]. Hence, in view of the Judgment in [ENTITY] (supra) the presumption of service of Legal Notice has arisen if not of the legal notice Ex CW1/3 sent vide registered post then through issuance of summons by the court.
9. As regards the defence raised by the accused that she did not fill the details in the cheque himself and had handed over blank signed cheque to the complainant, at this juncture it would be worthwhile to discuss the provisions under [SECTION] and [SECTION] of the [ACT], which is as under:
[ENTITY]
20.Inchoatestampedinstruments. Whereonepersonsignsanddeliverstoanotherapaperstamped inaccordancewiththelawrelatingtonegotiableinstrumentsthen inforcein[India],andeitherwhollyblankorhavingwrittenthereon anincompletenegotiableinstrument,hetherebygivesprimafacie authoritytotheholderthereoftomakeorcomplete,asthencase may be, upon it a negotiable instrument, instrument, for any amountspecifiedthereinandnotexceedingtheamountcovered by thestamp. Theperson sosigning shallbe liableupon such instrument,inthecapacityinwhichhesignedthesame,toany holderinduecourseforsuchamount,providedthatnoperson otherthanaholderinduecourseshallrecoverfromtheperson delivering the instrument anything in excess of the amount intendedbyhimtobepaidthereunder.
118. Presumptions as to negotiable instruments of consideration Until the contrary is proved, the following presumptions shall be made:
(a)ofconsiderationthateverynegotiableinstrumentwasmadeor drawnforconsideration,andthateverysuchinstrument,whenit has been accepted, indorsed, negotiated or transferred, was accepted,indorsed,negotiatedortransferredforconsideration;
(b)astodatethateverynegotiableinstrumentbearingadatewas madeordrawnonsuchdate;
(c)astotimeofacceptancethateveryacceptedbillofexchange wasacceptedwithinareasonabletimeafteritsdateitsdateand beforeitsmaturity;
(d) as to time of transfer. that every transfer of a negotiable instrumentwasmadebeforeitsmaturity;
(e)astoorderofendorsementsthattheendorsementsappearing uponanegotiableinstrumentweremadeintheorderinwhichthey appearthereon;
(f)as tostampsthat alost promissorynote, billof exchangeor chequewasdulystamped;
(g) that holder is a holder in due course that the holder of a negotiable instrument is a holder in due course; provided that, wheretheinstrumenthasbeencontainedfromitslawfulowner,or formanypersoninlawfulcustodythereof,bymeansofanoffence orfraud,orforunlawfulconsideration,theburdenofprovingthat theholderisaholderinduecourseliesuponhim.
10. Further, in [PRECEDENT], the Hon'ble Delhi High Court had observed as under :-
7.Evenotherwise,primafacie,itwasthepetitionerswhohadhanded overtheundatedchequeforacertainamounttothe respondentin terms of a contract between the parties. Since an undated cheque cannot be encashed, it can only mean that the petitioners had authorized the complainant to enter an appropriate date on it. In YoungVs.Grote(1827)4Bing.253 itwasheldthat whenablank chequeissignedandhandedover,itmeansthepersonsigningithas given an implied authority to any subsequent holder to fill it up.
Similarly,in ScholfieldVs.Lord Londesborough(18951899)All ERRep282itwasheldthatwhoeversignsachequeoracceptsabill [ENTITY] inblank,andthenputsitintocirculation,mustnecessarilyintendthat eitherthepersontowhomhegivesit,orsomefutureholder,shallfill uptheblank whichhehasleft.Thiscommonlawdoctrinewasalso affirmedbyJusticeMacnaghteninGriffithsVs.[PRECEDENT] whereitwasheldthatthedrawerofanundatedchequegivesa prima facie authority to fill in the date. This aspect has also been [ACT] which deals with Inchoate Stamped Instruments. The Supreme Court in [PRECEDENT] discussing thescopeofSection20heldthatbyreasonofthisprovision,aright hasbeencreatedintheholderofthecheque.Primafacie,theholder thereof is authorized to complete the incomplete negotiable instrument.Inthatviewofthematter,all furtherissuesthatmaybe raised by the petitioners regarding the nature and scope of the authorityoftherespondenttoputanyparticulardateonthechequein question,areallmattersfortrial.
8. It is not as if the cheque came to be issued without any considerationwhatsoeverinthefirstplaceorthattherewassucha glaringdefectinthecomplaintthatthedecisionoftheTrialCourt to issuesummonshasexfacieresultedinmiscarriageofjusticeoran abuse of the process of Court, and therefore interference under [SECTION] [ACT] to quash the proceedings is warranted in the interestofjustice.Thequestionwhethertheconsiderationfor which thechequewasissuedwasultimatelysatisfiedorwhetherthecheque waswronglysoughttobeencashed,areallissuesthatmustalsobe decidedatthetrial.TheSupremeCourtinthecaseof M.M.T.C.Ltd. andAnotherVs.[ENTITY]
"13 the wellsettled law that the power of quashing criminal proceedings should be exercised very stringently and with circumspection. It is settled law that at this stage the Court is not justified in embarking upon an enquiry as to the reliability or genuinenessorotherwiseofthe allegationsmadeinthecomplaint. Theinherentpowersdonotconferanarbitraryjurisdictiononthecourt toactaccordingtoitswhimorcaprice.AtthisstagetheCourtcould nothavegoneintomeritsand/orcometoaconclusionthattherewas noexistingdebtorliability."
TheCourtfurtherheldthat:
"17. There is therefore no requirement that the complainant must specificallyallegeinthecomplaintthattherewasasubsistingliability. Theburdenofprovingthattherewasnoexistingdebtorliabilitywason therespondents.Thistheyhavetodischargeinthetrial.Atthisstage, merelyonthebasisofavermentsinthepetitionsfiledbythemtheHigh Court could not have concluded that there was no existing debt or liability."
11. From the aforesaid discussion, it is manifest that by reason of the provision under [SECTION] [ACT], a right has been created in the holder of the cheque. Prima facie, the holder thereof is authorized to complete the incomplete negotiable instrument. Mere averment to the effect that the accused/drawer of the cheque did not fill in the details on the cheque except for [ENTITY] signing on the cheque is not sufficient. Thus, merely that allegation of issuance of incomplete negotiable instrument does not create absolute defence in favour of the accused unless corroborative evidence exists to show that by threat or fraud, a cheque was taken. There is no law that a person drawing the cheque has to necessarily fill it up in his own handwriting. Respondent has not denied his signatures on the cheques. Once he has admitted his signatures on the cheques he cannot escape his liability on the ground that the same has not been filled in by him. When a blank cheque is signed and handed over, it means that the person signing it has given implied authority to the holder of the cheque, to fill up the blank which he has left. A person issuing a blank cheque is supposed to understand the consequences of doing so. He cannot escape his liability only on the ground that blank cheque had been issued by him.Thus, this defence is of no assistance to the accused. (See also:[PRECEDENT] decided on 16.11.2016 by Hon'ble High Court of Delhi in [CASE NUMBER]; [PRECEDENT] & Ravi Chopra vs State and Anr. - 2008 (2) JCC (NI)
12. At the time of recording of statement under [SECTION] [ACT] the accused admitted the issuance of the cheque in question. Since issuance of cheque in question by the accused is not disputed, hence, presumption U/[SECTION] of the [ACT] is raised.
13. In [ENTITY] v. Sri Mohan AIR 2010 SC 1898 it was observed by the Hon'ble Supreme Court as under :
"14. In light of these extracts, we are in agreement with the respondentclaimantthatthepresumptionmandatedbySection139of theActdoesindeedincludetheexistenceofalegallyenforceabledebt or liability. To that extent, the impugned observations in Krishna [ENTITY] JanardhanBhat(supra)maynotbecorrect.However,thisdoesnotin anywaycastdoubtonthecorrectnessofthedecisioninthatcase sinceitwasbasedonthespecificfactsandcircumstancestherein.As notedinthecitations,thisisofcourseinthenatureofarebuttable presumptionanditisopentotheaccusedtoraiseadefencewherein theexistenceofalegallyenforceabledebtorliabilitycanbecontested. However,therecanbenodoubtthatthereisaninitialpresumption whichfavoursthecomplainant.Section139oftheActisanexampleof a reverseonus clausethat hasbeen includedin furtheranceof the legislative objective of improving the credibility of negotiable instruments.WhileSection138oftheActspecifiesastrongcriminal remedy in relation to the dishonour of cheques, the rebuttable presumptionunderSection139isadevicetopreventunduedelayin the course of litigation. However, it must be remembered that the offencemadepunishablebySection138canbebetterdescribedasa regulatory offence since the bouncing of a cheque is largely in the natureofacivilwrongwhoseimpactisusuallyconfinedtotheprivate partiesinvolvedincommercialtransactions.Insuchascenario,thetest of proportionality should guide the construction and interpretation of reverseonusclausesandtheaccused/defendantcannotbeexpected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiaryburdenandnotapersuasiveburden.Keepingthisinview, it is a settled position that when an accused has to rebut the presumptionunderSection139,thestandardofprooffordoingsois that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existenceofalegallyenforceabledebtorliability,theprosecutioncan fail.Asclarifiedinthecitations,theaccusedcanrelyonthematerials submittedbythecomplainantanditisconceivablethatinsomecases the accused may not need to adduce evidence of his/her own. "
(emphasisadded)
14. In view of the decision in [ENTITY] laid down by the Supreme Court, the presumption raised under [SECTION] of the [ACT] is of legally enforceable debt or liability and it is for the accused persons to raise a probable defence to rebut the presumption.
15. [SECTION] [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] of the [ACT] specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under [SECTION] Act is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by [SECTION] [ENTITY] Act can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong those 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 defendant accused cannot be expected to discharge an unduly high standard of proof.
16. The 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] [ACT], 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. 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.
17. As discussed herein above, under [SECTION] [ACT] strong rebuttable presumptions in favour of the complainant arise but same can be rebutted by the accused by way of credible defence.
a. As regards the defence of the accused that the cheque in question was a security cheque and thus the complaint is not maintainable under [SECTION] [ACT], the same is without any merits in view of the decision of the Hon'ble Apex Court in [PRECEDENT] and [PRECEDENT]. Of Hon'ble High Court of Delhi decided on 29/06/2015 in Crl LP No. [ENTITY] 558/2014 and [PRECEDENT] decided on 14/05/2015 and [PRECEDENT]. Of Hon'ble High Court of Delhi the security cheques fall within the purview of [SECTION] [ACT] .
18. As per decision in [PRECEDENT]. Of Hon'ble High Court of Delhi decided on 29/06/2015 in [CASE NUMBER] it has been held that the scope of [SECTION] would cover cases where ascertained and crystallized debt or other liability exists on the date when the cheque is presented and not only to the cases where ascertained and crystallized debt or other liability exists on the date on which it was delivered to the seller as a post dated cheque or as a current cheque with a credit period.
19. The defence raised by the accused is that she has already made the payment to the complainant in respect of the cheque in question and the complainant has also filed a civil suit pertaining to the cheque in question and this case has been filed to harass her. She stated that she gave the cheque in question to one Mr. [ENTITY], who is her employee. She stated that she has no legally enforceable liability towards the complainant. She stated that she does not remember the date on which the cheque in question was given.
20. The Hon'ble Supreme Court in [PRECEDENT] held, that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden [ENTITY] of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist.
21. In the facts of the present case, the accused had to adduce evidence of his own as he has alleged that he has no liability towards the complainant and denied receiving of goods and that cheque in question was not issued to the complainant and that he has already repaid for the goods received by the complainant from the accused and as per [SECTION] of [ACT] burden of proof means that a party has to prove an allegation before he is entitled to a judgment in his favour. [SECTION] of [ACT] provides that burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any special law that the proof of that fact shall lie on any particular person. The provision of [SECTION] of [ACT] amplifies the general rule of [SECTION] of [ACT] that the burden of proof lies on the person who asserts the affirmative of the facts in issue.
22. In defence of the accused recorded while framing of notice under [SECTION] [ACT] she had stated that she has already made the payment to the complainant in respect of the cheque in question and the complainant has also filed a civil suit pertaining to the cheque in question and this case has been filed to harass her. But in her statement under [SECTION] [ACT] she stated that she gave the cheque in question to one Mr. [ENTITY], [ENTITY] who is her employee. She stated that she has no legally enforceable liability towards the complainant. She stated that she does not remember the date on which the cheque in question was given. In the deposition of DW1 he had stated that earlier cheque no. 108 of Rs. 50,000/- was given to the complainant for goods received and the cheque in question was issued as security for goods to be sent by the complainant. Clearly, neither while putting forth her defence accused recorded while framing of notice under [SECTION] [ACT] nor while her statement under [SECTION] [ACT] the accused had ever stated that she had not received the goods from the complainant. Mere putting of question/suggestion to CW1 that the goods were not sent vide bills Ex CW1/D1 colly will not disprove the said bills raised by the complainant and will not conclude the said bills to be forged and fabricated. The accused should have placed on record and proved her ledger statement to show whether or not the goods mentioned in invoices/bills ExCW1/D1 colly. Were received by the accused. The DW1 has placed on record bank statement Ex DW1/1. But the said bank statement has not been proved as per rules.
23. In view of the aforesaid reasons, the court finds that the accused has not been unable to prove any probable defence and has failed to rebut the presumption raised U/[SECTION] of the [ACT].
24. Since the accused has failed to rebut the presumption raised U/[SECTION] of the [ACT], there is no need to go into complainant's evidence for proving the complainant's case. There is nothing coming out in the cross examination of complainant's witness which would probabilise the defence raised by the accused or falsify the case of the complainant. Therefore, the complainant [ENTITY] has been able to prove his case beyond reasonable doubt.
25. The complainant has been able to prove that the cheque in question i.e cheque bearing no.000023 dated 05.03.2011 for Rs.20,716/- drawn on Bank of India, Raj Nagar, Ghaziabad, U.P. as Ex.CW1/1 was issued in discharge of legally recoverable liability owed to the complainant by the accused.
26. Therefore, the accused [ENTITY] is convicted for the offence punishable U/[SECTION] of the [ACT] in respect of cheque Ex CW1/1.
SNIGDHA SARVARIA (Announced in open SARVARIA Date: 2018.12.13 15:38:15 +0530 Court on 13.12.2018 ) ([ENTITY]) [ACT]Central. 13.12.2018 Judge Code: 0530 [ENTITY]