1 [CASE NUMBER] IN THE COURT OF SH. [ENTITY]: METROPOLITAN MAGISTRATE, DELHI Sh. [ENTITY] Complainant Versus Sh. [ENTITY] Accused (a) Complainant [CASE NUMBER] (new no.) (b) Date of offence : After fifteen days of service of notice dated 12.09.98 (c) Complainant : Sh. [ENTITY], S/o Sh. [ENTITY] R/o 184/D-4, Railway Colony, Vasant Lane, Pahar Ganj, New Delhi (d) Accused : Sh. [ENTITY], Proprietor, M/s Western Express (Services), Kohli Building, Multani Danda, Pahar Ganj, New Delhi. (e) Offence : Under [SECTION] of [ACT] (f) Plea of the accused : Not guilty (g) Final order : Accused is convicted of the offence under [SECTION] of [ACT] (h) Date of institution : 15.10.98 (i) Date of Judgment : 28.07.2008 2 [CASE NUMBER]
1. This is a complaint filed against the accused namely Sh. [ENTITY] under [SECTION] of [ACT]. According to the complaint, the complainant was, at the relevant time, engaged in the business of providing labour service for loading and unloading of goods from goods train. The accused was in the business of transportation of goods. The accused used to avail services of the complainant for loading and unloading of goods from railway wagons. The accused had entered into a contract with M/s Hindustan Paper Corporation Ltd. and to execute the said contract, the accused engaged the complainant. The complainant undertook and completed various assignments at the instance of the accused. However, accused failed to pay labour charges on the ground that he was facing financial difficulties. Finally, on the request of the complainant, the accused issued two cheques for a total sum of Rs.5,35,000/- for discharging his liability, the details of which are as under:-
a. Cheque bearing no. 412605 dated 14.02.98 for a sum of Rs.2,00,000/- drawn on Vijaya Bank, Ramnagar, Paharganj, Delhi.
b. Cheque bearing no.4[SECTION]47 dated 03.04.98 for a sum of Rs.3,35,000/- drawn on Vijaya Bank, Ramnagar, Delhi.
The cheques were presented in the month of June, 1998 and were returned unpaid vide memo dated 26.06.98 with the reason "insufficient funds". The dishonour of cheques was brought to the notice of the accused, who requested the complainant to again present the cheque dated 03.04.98. The accused also promised that he will issue another cheque in lieu of the cheque dated 14.02.98 whose validity had, by then, expired. At the request of the accused, the complainant again presented the cheque dated 03.04.98 which was returned unpaid vide memo dated 01.09.98 with remarks "Refer to drawer". Legal demand notice dated 12.09.98 was served upon accused. The accused replied to the notice vide letter dated 28.09.98. The cheque amount was not paid by the accused within fifteen days from the date of service of the notice and therefore, according to the complainant, the accused is guilty of offence under [SECTION] of [ACT].
2. Upon perusal of the complaint and evidence of complainant, the accused was summoned for the offence under [SECTION] of [ACT] vide order dated 05.02.2000. After appearance of the accused, notice under [SECTION] of [ACT] was served upon the accused vide order dated 02.04.05, to which he pleaded not guilty and claimed trial.
3. To prove its case, the complainant examined himself as CW1. He tendered his affidavit Ex C-1 in evidence on 03.10.06. In his affidavit Ex C-1, the complainant reiterated the allegations mentioned in the complaint. The following documents were relied upon and have been identified :-
a) Original cheque bearing no. 4[SECTION]47 dated 03.04.98 as Ex CW1/A;
b)Cheque returning memo dated 03.04.98 as Ex CW1/B;
c) Legal notice dated 12.09.98 and its postal record as Ex CW1/G to Ex CW1/K. CW1 was cross-examined and discharged. Complainant's evidence was closed.
4. Statement of accused was recorded under [SECTION] of [ACT] on 27.02.07. In his statement under [SECTION] of [ACT], the accused admitted that he had issued cheque Ex CW1/A. He, however, stated that after issuance of cheque he had made payment in cash. The accused also admitted that the cheque issued by him got dishonoured. He further stated that he does not remember whether legal demand notice was served upon him. He admitted that he had replied to the legal notice vide reply dated 28.09.98. He also admitted that he had not paid the cheque amount pursuant to notice and explained this by stating that he had already made payment in cash. The accused also stated that the cheque was issued in the month of May, 1998 and that theft took place in his house with the connivance with the complainant. An FIR was lodged and one of the accused in that case was arrested. The complainant was not arrested. According to the accused, he had made payment in the month of March, 1998.
5. The accused adduced evidence in his defence and examined himself as DW1 on 05.09.07. In his examination-in-chief, the accused admitted that the complainant was working as labour contractor in respect of consignment of Hindustan Paper Corporation Ltd. and had been engaged by the accused. He stated that during the month of January, 1998, there was scarcity of funds to make payment for labour and lorry. The complainant had requested the accused to issue a cheque for Rs.2,00,000/- so that he could show the cheque to lorry owners and head of labourers. The second cheque was also similarly issued with the understanding that the cheques will not be encashed. Later the accused asked the complainant to return the cheques. The complainant responded that the cheques were not traceable. The letters dated 01.01.98 Ex DW1/A and 18.05.98 Ex DW1/B were executed by the complainant. The material contained in a wagon which had to be unloaded and cleared by the complainant was reportedly stolen, in respect of which an FIR was lodged against the complainant on the basis of affidavit of Mr. [ENTITY]. Photocopy of FIR and affidavit of Mr. [ENTITY] were identified as Mark A and B respectively. After two days, the accused received notice from the complainant regarding bouncing of the cheque which is replied to on 28.09.98. Copy of reply is mark C and copy of UPC receipt is Ex DW1/C. The accused further stated that he has already made payment in respect of the cheque. Statement of account was identified by the accused as mark D. DW1 was cross-examined and discharged on 05.09.07. Later, with the permission of the court, the accused led additional evidence and produced twenty-four debit vouchers marked as Ex DW1/D (collectively). DW1 was further cross- examined on 28.01.08 and discharged. Defence evidence was closed on 28.01.08.
6. The record has been perused. Arguments advanced by Ld. Counsels for the parties have been heard.
7. In order to ascertain whether the accused has committed an offence under [SECTION] of [ACT], it is necessary to examine separately as to whether all the indispensable ingredients constituting the offence have been proved by the complainant. The offence under [SECTION] of [ACT] has the following ingredients:-
I. Existence of legally enforceable debt or liability and issuance of cheque in discharge of said debt or liability.
II. Dishonour of cheque in question. III. Service of demand notice seeking payment of
cheque amount within fifteen days from the date of service.
IV. Non-payment of cheque amount despite service of notice.
I. Existence of legally enforceable debt or liability and issuance of cheque in discharge of said debt or liability. The complainant has affirmed in his affidavit Ex C-1 that the cheque had been issued in discharge of liability which arose on account of services rendered by the complainant to the accused of loading and unloading of goods and transportation. The complainant has contended that the accused has admitted the existence of contract in the document Ex DW1/A which has been filed by the accused. The document Ex DW1/A is the letter of appointment of the complainant by the accused as labour contractor. Thus the relationship between the complainant and the accused as contracting parties is established. The complainant has also identified the cheque Ex CW1/A and has placed reliance upon the statutory presumption under [SECTION] of [ACT].
On the other hand, counsel for the accused has contended that the cheque had not been handed over to the complainant as payment of any debt of liability. According to the accused, the cheque had been given to the complainant only to show to labour leaders and lorry owners that payment has been received from the accused so that they continue to work feeling reassured that they would be paid their due. It is contended that the cheque has been misused by the complainant. According to the accused, he has already made payment of a substantial portion of the dues of the complainant. The remaining sum is different from that mentioned in the cheque and therefore the cheque cannot be stated to be issued in respect of a debt or liability. To support his contentions, the accused has stated that he had never made any payment to the complainant by way of cheque. The accused has also placed reliance upon vouchers Ex DW1/D (colly) to support his contention that substantial amount of dues have been paid and that the sum outstanding is less than the cheque amount. The accused has also relied upon the said vouchers to establish that payment was always made by the accused to the complainant by cash and never by way of cheque. The accused has further contended that it is the complainant who is liable to make payment of the goods stolen by him amounting to Rs.18,00,000/-.
[SECTION] of [ACT] provides a statutory presumption that the cheque was handed over in respect of a debt or other liability. Needless to state, the presumption is rebuttable by the accused.
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 [PRECEDENT] has also taken an identical view.
7. In this case admittedly the 1st Respondent has led no evidence except some formal evidence. The High Court appears to have proceeded on the basis that the denials/ averments in his reply dated 21st May, 1993 were sufficient to shift the burden of proof onto the Appellant /Complainant to prove that the cheque was issued for a debt or liability. This is an entirely erroneous approach. The 1st respondent had to prove in the trial, by leading cogent evidence, that there was no debt or liability. The 1st Respondent not having led any evidence could not be said to have discharged the burden cast on him. The 1st respondent not having discharged the burden of proving that the cheque was not issued for a debt or liability, the conviction as awarded by the Magistrate was correct. The High Court erroneously set aside that conviction."
In the case of [PRECEDENT], it was 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 State of Madras v. A. Vaidyanatha Iyer, AIR 1958 SC 61, 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). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the Court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact.(1958 CriLJ 232) xxx xxx xxx xxx The words 'unless the contrary is proved' which occur in this provision make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted".
Under [SECTION] of [ACT] every negotiable instrument is presumed to have been drawn and accepted for consideration.
Thus onus lies upon the accused to rebut the presumption and to establish that the cheque in question was not given in respect of any debt or liability. The accused has sought to discharge this onus by explaining that the cheque issued by him was given to the complainant only to show to heads of labour and lorry owners as to his sound financial condition. It is this version of the accused, the correctness of which has to be tested.
Upon careful assessment, the defence set out by the accused is found unreliable and not tenable. The reasons are summarised as under:-
A. The accused has neither pleaded nor proved any written document to indicate that the cheque had been handed over merely to show to lorry owners and heads of labourers. This averment, which is controverted by oral evidence of the complainant, is difficult to believe in absence of any written document.
B. Different, inconsistent and contradictory pleas have been taken by the accused. Cross-examination of CW1 dated 03.10.06 (second paragraph) indicates that according to the case of the accused the cheque of Rs.3,35,000/- was given in lieu of the dishonoured cheque of Rs.2,00,000/- . In his statement under [SECTION] of [ACT], accused has stated that after issuance of the cheque, he made payment in cash. In his examination-in-chief, DW1 has stated that the cheque had been given to the complainant only to show to heads of labourers and lorry owners. If the cheque had been given only to show to heads of labourers and lorry owners with the intention that the cheque would not be encashed, there was no occasion for the accused to make payment in cash in respect of the cheque. Similarly there was no reason for the accused to issue a cheque of Rs.3,35,000/- in lieu of cheque of Rs.2,00,000/-.
C. It was orally contended by counsel for accused that the cheque, when handed over, was blank. The contention contradicts the other submission made by the accused that the cheque was issued to show solvency to lorry owners and heads of labourers. A blank cheque is not proof of solvency or financial condition. Moreover, it is nowhere stated by the accused in his examination-in-chief that the cheque issued by him was blank. Not even a suggestion to this effect was put to the complainant in cross- examination.
D. It is the case of the accused that he had made payment of substantial amount of dues to the complainant. In this behalf, vouchers Ex DW1/D (colly) have been relied upon. However, the production of vouchers does not advance the case of the accused. The vouchers do not indicate that they have been issued with regard to the payment due on account of the services of the complainant availed by the accused which are subject matter of the complaint. Some of the vouchers are not signed by the complainant. In absence of the signatures of the complainant, the said vouchers cannot be relied upon and cannot be used to contradict the complainant. The vouchers do not tally with the payment, which according to the accused himself as mentioned in his statement of account Mark D, has been made by the accused to the complainant. According the statement of account, the accused had been paid a sum of Rs.21,83,848/- while according to the vouchers, payment of only Rs.13,13,500/- had been made to the complainant. The vouchers have also not been put to the complainant in cross-examination though they purportedly bear his signatures. As the complainant had stated in his examination-in-chief that the cheque was issued to discharge the liability of the accused, it was obligatory upon the accused to cross-examine and contradict the complainant by confronting him with the vouchers, which was not done.
Even if it is assumed that the payment mentioned in the vouchers was made in cash, it does not imply that as a rule the accused cannot make payment by cheque. The very existence of cheque implies that the accused was not averse to issuance of cheque as a mode of transfer of money. Hence the contention of the accused that he always used to make payment by cash is liable to be rejected.
E. The statement of account Mark D furnished by the accused does not bear the signatures of the complainant in token of acceptance of its contents. Therefore, the statement of account cannot be used to contradict the allegations leveled by the complainant. The onus to prove payment of dues is upon the accused who has failed to produce any document which could satisfactorily discharge the onus.
F. The contention of the accused that the complainant was involved in theft of goods cannot be accepted. There is no cogent or convincing evidence to show the complicity of the complainant in theft. Even if it is assumed that the complainant indeed indulged in theft, this is no ground to believe that the present complaint is a counter-blast to the case of theft or that the present complaint has been filed only to force the accused to withdraw that case. The complainant has not been held to be guilty in the case of theft and he is entitled to a presumption of innocence unless proven to the contrary. According to the affidavit Ex C-1, the cheque in question was first presented in the month of June, 1998 and had been dishonoured vide cheque returning memo dated 26.06.98. The FIR regarding theft had been lodged against the complainant on 10.09.98 i.e. much after the presentation of cheque. Had the cheque been presented with a view to initiate proceedings against the accused to pressurise him to withdraw the criminal case, this ought to have been done after lodging of the criminal case and not prior thereto. According to the accused, he had handed over a cheque of Rs.2,00,000/- to the complainant on 14.02.98. This cheque was also dishonoured on presentation. When the first cheque had been dishonoured, the accused must have received information of the same. Had the presentation of first cheque amounted to misuse, the accused ought not to have issued another cheque (cheque in question) on 03.04.98, which also got dishonoured on presentation.
G. The first cheque was dishonoured. The second cheque, when first presented was also dishonoured. The accused ought to have known of the alleged misuse of the cheques. According to the case of the accused himself, the complainant had avoided return of the cheque by claiming that they have been untraceable. In these circumstances, the accused should have issued instructions to his bank to stop payment. However, the cheque got dishonoured for the reason "refer to drawer", which is due to insufficiency of funds, and not for stopping payment.
H. The plea that the cheque in question had been given only to show availability of credit to lorry owners and heads of labourers has not been taken in the reply to legal notice dated 28.09.98 Mark C. On the contrary, it is stated by the accused in the reply that payment in respect of the dishonoured cheque had been made in cash.
I. The accused has contended that the complainant has failed to explain as to why he continued to work after and despite dishonour of cheque of Rs.2,00,000/-, which according to the complainant, had been given as consideration for services rendered by him. The contention cannot be tested since no such question was put to the complainant in his cross-examination. The accused ought to have granted an opportunity to the complainant to explain this fact before he can draw any advantage on this account. Having failed to do so, the mere contention of the accused cannot be accorded any force.
Since in the instant case the accused has failed to lead any convincing evidence to aid him in discharge of his onus, the presumption of law operates in favour of existence of debt or liability.
II. Dishonour of cheque in question.
The complainant, in his affidavit Ex C-1, has stated that cheque issued by accused stood dishonoured with remarks "Refer to drawer". The cheque returning memo has also been identified as Ex CW1/B. The accused has admitted in his statement under [SECTION] of [ACT] that the cheque in question stood dishonoured. This has been maintained by the accused in his examination-in-chief. Thus it is proved that the cheque issued by the accused was dishonoured.
III. Service of demand notice seeking payment of cheque amount within fifteen days from the date of service. The complainant has proved service of demand notice by stating in his affidavit Ex C-1 that the legal notice dated 12.09.98 was duly served upon the accused. He has identified the legal demand notice and its postal record as Ex CW1/G to Ex CW1/K. Demand notice dated 12.09.98 seeks payment of cheque amount within fifteen days from the date of service upon accused.
In his statement under [SECTION] of [ACT] dated 27.02.07, the accused submits that he does not remember whether notice was received by him or not. Receipt of legal notice has not been denied by the accused in his evidence. In his examination-in-chief, the accused has identified reply to the legal notice as Mark C. The document Mark C is the reply issued on behalf of the accused to the counsel for complainant. The document clearly refers to the notice dated 12.09.98 issued on behalf of the complainant. It is thus established that the accused was duly served with a valid demand notice.
IV. Non-payment of cheque amount despite service of notice.
The complainant has stated in his affidavit Ex C-1 that accused failed to make payment in respect of the cheque despite service of the legal demand notice. The accused has stated in his statement under [SECTION] of [ACT] that payment had already been made in cash. However, the accused has, in his evidence, failed to produce any receipt or other document showing such payment. The accused has, on the contrary, in his evidence, denied his very liability to make any payment in respect of the cheque. The defence of the accused is that the cheque was issued only in order to enable the complainant to show proof of financial condition to the lorry owners and heads of labourers. According to the accused, it was understood between the accused and the complainant that the cheque would not be encashed. As per the defence of the accused, the cheque was a sham and a mere pretense and that the accused did not owe any payment to the complainant. Thus, read as a whole, the defence of the accused is that he owes no money in respect of the dishnouored cheque and he has accordingly not made any payment against the cheque. There is no reason to disbelieve the uncontroverted testimony of complainant which has proved that the accused failed to make payment of cheque amount within fifteen days from the date of service of demand notice.
8. In view of the aforesaid facts and circumstances, the complainant has succeeded in proving that the accused has issued the dishonoured cheque in discharge of his legally enforceable liability and that he has failed to make payment of the cheque amount after fifteen days from the date of service of the demand notice. The demand notice had been issued within the period stipulated by law. The complaint has been filed within the period of limitation.
All the ingredients required to make out a case under [SECTION] of [ACT] have been proved beyond reasonable doubt. The accused is accordingly convicted of the offence under [SECTION] of [ACT].
Announced in open court ([ENTITY]) today on 28th day of July, 2008 MM, DELHI