In the Court of Sh. [ENTITY] Senior Civil JudgecumRent Controller, New Delhi District Patiala House Courts, New Delhi [CASE NUMBER] In the matter of: M/s. [ENTITY]. Through: Sh. [ENTITY] S/o. Late Sh. L R Soni R/o. G16, Old Double Story, Lajpat Nagar4, New Delhi. Complainant VERSUS M/s. [ENTITY]: Mr. [ENTITY] 6159, Nabi Karim, Paharganj, New Delhi55. Accused [CASE NUMBER] Amit Electricals v. [ENTITY] Page no. 1 of 19 Date of Institution : 08.09.2008 Date of Arguments: 02.09.2013 Date of Judgment : 16.09.2013 COMPLAINT UNDER SECTION 138 NAD [SECTION] OF THE NEGOTIABLE INSTRUMENTS ACT, 1881. JUDGMENT :
This complaint under [SECTION] and [SECTION] of the [ACT] ( hereinafter called the Act) is made by the complainant against the accused. The brief and relevant facts for filing this complaint is as below.
2. As contended, the complainant is the sole proprietor of M/s. Amit Electricals engaged in carrying business of electrical goods. The accused is engaged in the business and maintained a running account with the complainant. The accused has issued the cheque of Rs. 15,000/ dated 28.03.2008 drawn on Oriental Bank of Commerce Ltd. towards part payment of the outstanding dues which dishonoured on presentation for Amit Electricals v. [ENTITY] Page no. 2 of 19 encashment due to reasons insufficient funds vide return memo dated 29.07.2008. Legal notice dated 07.08.2008 was issued to the accused by the complainant and as the accused have not paid the due and outstanding amount towards cheque despite service of the legal notice sent through speed post, this complaint is filed by the complainant against the accused.
3. After examination of the complainant under [SECTION] of the [ACT] by way of an affidavit and having considered the contents of the affidavit and the documents filed alongwith the same, the accused was summoned to face accusation under [SECTION] of the Act in respect of cheque in question.
4. In pursuance of the process issued by the court, the accused appeared and notice of accusation under [SECTION] of [ACT] was framed against the accused whereby the accused was charged with the commission of offence punishable under [SECTION] of the Act in respect of cheques in question. The notice of accusation was read over and explained to the accused to which he did not plead guilty and submitted that he had defence to make.
Amit Electricals v. [ENTITY] Page no. 3 of 19
5. In view of of the judgment dated 28.7.2010 passed by the Hon'ble Delhi High Court in [CASE NUMBER] entitled [PRECEDENT], the accused is called upon to disclose his defence and in pursuance of the direction of the court the accused has disclosed his defence which is as mentioned below: " I had given cheque to the complainant on the basis that I had to recover a sum of Rs.
4,50,000/ from M/s. Northern Gold. Further, I requested the complainant to present the cheque only when I recover the amount due to me from M/s. Northern Gold and I have not mentioned any date on the cheque in question. I cannot recollect whether any notice dated 07.08.2008 was served upon me or not."
6. The complainant examined himself by way of affidavit Ex.CW1 who reiterated the facts disclosed in the complaint and proved the documents i.e. cheque Ex.CW1/A, return memo dated 29.07.2008 dated Ex.CW1/B, legal demand notice Ex.CW1/C sent through speed post receipt Ex.CW1/D. The witness deposed that the accused failed to make the payment despite service of the legal notice and this complaint is true and correct. As no other witness is examined by the complainant, the CE Amit Electricals v. [ENTITY] Page no. 4 of 19 was closed.
7. The accused was examined under [SECTION] [ACT] wherein the accused admitted carrying on the business by the complainant as well as accused as disclosed in the complaint, the receipt of the legal notice but not replying the same, the issuance of the cheque by him contending that the cheque was issued by way of security as he has business transactions with the complainant. Regarding dishonour of the cheque after presentation for encashment, the accused shown his innocence accepting that he has not made any payment to the complainant till the filing of the present complaint. The accused under examination U/[SECTION] [ACT] has taken altogether different defence as taken at the time of framing of the notice that " Mr. [ENTITY] used to get business at his shop and used to engage me to provide the electrical services to his client. In return of which he used to take cheques in question was issued as security by me to the complainant and he misused the same and filed a false complaint against me. I do not have any liability towards the complainant. I am innocent." Amit Electricals v. [ENTITY] Page no. 5 of 19
8. I have heard counsel for the parties and gone through the materials on record.
9. Ld. Counsel for the complainant has argued that the accused has failed to pay the due and outstanding amount to the complainant despite service of the legal notice Ex.CW1/C against the cheque Ex.CW1/A which was issued towards consideration. It is further argued that the defence of the accused that the said cheques were issued by him in favour of the complainant as security against the services is false and a concocted story in contradiction to his earlier defence. It is further argued that the complainant has proved beyond reasonable doubt that the cheque in question was issued by the accused to the complainant towards liability and the complainant has also proved the relevant documents in this respect. It is further argued that as the accused has failed to pay the outstanding due amount despite service of the legal notice Ex. CW1/C, the accused is liable to be punished in accordance with law.
10.Having drawn my attention on the materials on record, it is submitted by counsel for the accused that no offence has been proved against the accused and therefore, the accused is entitled Amit Electricals v. [ENTITY] Page no. 6 of 19 to be acquitted. It is further mentioned that the cheque in question was issued towards security and the accused is not liable to make any payment. Ld. Counsel for the accused has relied upon the judgment reported as [PRECEDENT] contending that the complainant failed to prove the case beyond reasonable doubt and prayed to dismiss the complaint.
11.I have given my thoughtful consideration to the submissions made on behalf of the parties and considered the relevant provisions of law.
[SECTION] of the Act which pertains to dishonour of cheque for insufficiency, etc., of funds in the account, at the relevant time, read as follows:
138. Dishonour of cheque for insufficiency, etc., of funds in the account Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either Amit Electricals v. [ENTITY] Page no. 7 of 19 because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within Amit Electricals v. [ENTITY] Page no. 8 of 19 fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
13.From a reading of [SECTION] of the Act, it can be discerned that to render a drawer of a cheque liable under the said section, it is essential that the cheque must be drawn to discharge a legally enforceable debt or liability. If such cheque is drawn not to discharge any legally enforceable debt or liability, the drawer of such cheque cannot be held liable for commission of offence punishable under [SECTION] of the Act. From a reading of proviso to [SECTION] of the Act it can also be discerned that after dishonour of the cheque unless and until a notice as Amit Electricals v. [ENTITY] Page no. 9 of 19 required by clause (b) of the said proviso is served upon the drawer of the cheque whereby he is called upon to make payment against the cheque, such drawer cannot be held liable for the commission of offence punishable under [SECTION] of the Act.
14. In re Hon'ble Supreme Court of India [PRECEDENT] referred the ingredients of the offence under [SECTION]. Paragraph 29 reads thus:
"29. [SECTION] of the Act has three ingredients viz.:
(i) that there is a legally enforceable debt;
(ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt; and
(iii) that the cheque so issued had been returned due to insufficiency of funds."
15.In paragraphs 30 and 31 the Apex Court dealt with the presumption under [SECTION] of the said Act. Paragraphs 30 and 31 read thus:
Amit Electricals v. [ENTITY] Page no. 10 of 19 "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.
31. The courts below, as noticed hereinbefore, 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." (Emphasis added).
16.Further para 13 of the judgment reported as 2009(3) (Supra) reads as under: "13. In the present case, there is a categorical admission that the amount Amit Electricals v. [ENTITY] Page no. 11 of 19 allegedly advanced by the applicant was entirely a cash amount and that the amount was "unaccounted". He admitted not only that the same was not disclosed in the Income Tax Return at the relevant time but till recording of evidence in the year 2006 it was not disclosed in the Income Tax Return. By no stretch of imagination it can be stated that liability to repay unaccounted cash amount is a legally enforceable liability within the meaning of explanation to [SECTION] of the said Act. The alleged debt cannot be said to be a legally recoverable debt."
17. As held in [PRECEDENT], under [SECTION] of the Act there is a legal presumption that the cheque was issued for discharging an antecedent liability and this presumption can be rebutted by the person who gives the cheque. The presumption is for casting the burden of proof as to who should adduce evidence in a case. It Amit Electricals v. [ENTITY] Page no. 12 of 19 is open to the accused to adduce evidence to rebut the said presumption. As further held in [PRECEDENT], the presumption available under [SECTION] can be rebutted by the accused by adducing evidence. So the evidence available on record will have to be appreciated by bearing in mind the above fact regarding burden of proof.
18.We have to examine the matters in issue in the context of [SECTION] and [SECTION] of the [ACT] and decide whether the accused has been able to rebut the presumptions. The Act raises two presumptions, first in regard to the passing of consideration as contained in [SECTION] therein and second, a presumption that the holder of cheque receiving the same of the nature referred to in [SECTION] discharged in whole or in part any date or other liability. Presumptions both U/[SECTION] and [SECTION] are rebuttable in nature.
19. In the case of Bharat Barrel and Drumb Manufacturing Company v. Amin Chand Pyare Lal (1999) 3SSC 35 interpreting [SECTION] of the Act, it was opined :
Amit Electricals v. [ENTITY] Page no. 13 of 19 "Upon consideration of various judgment as noted herein above, the position of law which emerges is that once execution of the promissory note is admitted the presumption U/[SECTION] would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initials onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non existence of the consideration can be either direct or by bringing on record the preponderance by probabilities by reference of the circumstances upon which he relies.
20.In the complaint in hand, the accused has not denied the Amit Electricals v. [ENTITY] Page no. 14 of 19 issuance of cheque in question but have denied the liability simply contending that the cheque was issued towards security for performance of the work assigned to him by the complainant. It is necessary to note that the defence of the accused remains changing throughout the trial and the accused in one way or the other at the time of explaining the notice of accusation admitted his liability for the issuance of the cheque though later on accused taken [ENTITY]. The version of the accused cannot be accepted and the defence of the accused is also not acceptable. It is interesting to note that on the one hand, the accused is tendering his services to the complainant and in lieu of taking security cheques from the complainant, he himself is issuing a cheque to the complainant towards security. This is very absurd contention which cannot be considered as true by stretch of any imagination.
21.As mentioned in the complaint itself, the accused has issued the cheque towards part payment and discharge of his legally payable debt. The transaction between the parties is admitted by the accused. The legal notice of the complainant was received by the accused but not replied. It is further necessary to note Amit Electricals v. [ENTITY] Page no. 15 of 19 that accused has not produced any evidence in support of claim and contention to rebut the presumption as mentioned by virtue of [SECTION] and [SECTION] of the [ACT]. There is nothing in the testimony of the complainant to rebut the presumption and the testimony of CW remained in one way or the other unimpeached and unrebutted. The contention for Ld. Counsel for the accused that no bill or invoice is placed by the complainant on record is not acceptable as the complainant has proved that cheque Ex.CW1/A was issued by the accused which dishonoured upon presentation vide memo Ex.CW1/B: the legal notice Ex.CWE1/C was served upon accused and accused despite service of the legal notice failed to pay the amount. As mentioned the accused failed to rebut the presumption nor lead any evidence in support of claim and contention. Merely contending that the cheque in question was issued towards security is not acceptable and sufficient to discharge the accused from liability. The judgment relied by the accused reported [PRECEDENT] is not application in the facts and circumstances of the case at all.
22.I have gone through the relevant provisions of the Indian Amit Electricals v. [ENTITY] Page no. 16 of 19 [ACT] . [SECTION] deals with the facts which need not be proved. [SECTION] mentioned that no fact needs to be proved in any proceeding which the party to or their agent agree to admit at the hearing, or which, before the hearing, they agree to admit by any writing under their hands, or which by any rule of pleading in force at the time they are deemed to have admitted by their pleadings. As mentioned, the accused has admitted the issuance of cheque in question, receipt of legal notice issued by the complainant and non payment of the due amount despite service of the legal notice. Moreover the accused has failed to rebut the presumption U/[SECTION] and [SECTION] of the [ACT]. Needless to mention, nothing as such is placed on record or proved by the accused in accordance with law to rebut the presumption or liability. It is reiterated that the accused was bound to prove and rebut the presumption that the cheque in question was not issued towards legal liability and for enforcement of debt but the accused failed to prove this fact. On the other hand, the complainant has proved that the cheque in question was drawn by the accused for payment of the amount towards discharge of debt/liability, the cheque was Amit Electricals v. [ENTITY] Page no. 17 of 19 dishonoured upon presentation, legal notice was served upon the accused but the accused failed to pay the outstanding dues despite service of the legal notice and therefore, the accused is liable. Examining the case of the complainant from the point of reasonability and preponderance of probabilities also, the complainant proved the case against the accused beyond reasonable doubt. The testimony of the complainant remained unrebutted and uncontroverted and nothing came out during the cross examination of CW1. Infact the accused had not denied issuance of the cheque, receipt of legal notice, non payment of the due amount despite service of the notice. I do not find any ground to doubt the testimony of CW1. As the accused has failed to make the payment towards liability within the prescribed period as mentioned u/[SECTION] of [ACT], he is liable to be held guilty and committed for offence under [SECTION] of [ACT].
23.In view of the aforementioned discussed, accused [ENTITY] is found guilty and convicted for having committed offence punishable under [SECTION] of [ACT] in respect of cheques Ex. CW1/A. Amit Electricals v. [ENTITY] Page no. 18 of 19
24.Let the convict be heard on the question of sentence on 23.09.2013.
Announced in the open court on this 16th day of September, 2013 ( [ENTITY]) Senior Civil JudgecumRent Controller New Delhi Amit Electricals v. [ENTITY] Page no. 19 of 19