1 IN THE COURT OF SH [ENTITY] : METROPOLITAN MAGISTRATE - 03 : SOUTH : SAKET COURT : NEW DELHI M/s [ENTITY] vs M/s [ENTITY] CC No 193/1 U/[SECTION] [ACT] [CASE NUMBER] JUDGMENT
(1) Serial number of the case : 193/1 (2) Name of the complainant : M/s [ENTITY] 37, Sukhdev Vihar, New Delhi (3) Name of the accused, 1. M/s [ENTITY] parentage & residential address : B-125-B, Freedom Fighter Enclave, Gate No. 3, Neb Sarai, New Delhi 2. [ENTITY] Proprietor of M/s [ENTITY] B-125-B, Freedom Fighter Enclave, Gate No. 3, Neb Sarai, New Delhi (4) Offence complained of or proved : 138 [ACT] (5) Plea of the accused : Pleaded not guilty (6) Final Order : ACQUITTED (7) Date of Institution : 12/07/2007 (8) Date on which reserved for judgment : 04/09/2013 (9) Date of Judgment : 04/09/2013
BRIEF STATEMENT OF THE REASONS FOR THE DECISION The material facts as carved out from the complaint are that the complainant is a partnership firm and is in the business of fabrication of clothes, export of readymade garments, handicrafts and any other item having its factory at 109, Udyog Vihar, Phase IV, Gurgaon, Haryana and office at 37, Sukhdev Vihar, New Delhi. The complaint is being filed through the partner of complainant company [ENTITY] and another partner is wife of [ENTITY]. Accused no. 2 on behalf of accused no. 1 had placed orders for doing the fabrication work in various styles and designs vide various challans and during the business transaction, various invoices totalling to Rs.14,03,867/- were raised by the complainant. After certain payments, a sum of Rs.8,42,043/- remained as outstanding and in order to make part payment, accused no. 2 on behalf of accused no. 1 issued cheque no. 928665 dated 10/04/2007 for Rs.1,36,839/- and cheque no. 928649 dated 17/03/2007 for Rs.2,00,000/- (totalling Rs.3,36,839/-) both drawn on Corporation Bank, Vasant Kunj, New Delhi in favour of the complainant. The complainant presented the aforesaid cheques for encashment through his banker. However, the same were returned dishonoured by the banker of accused with the remarks "Insufficient Funds" vide memo dated 31/05/2007. Thereafter, the complainant made a demand for payment of the said amount of money by giving a Demand Notice dated 09/06/207 to accused. Statutory notice of demand was duly served upon accused but he failed to make the payment of the said amount to complainant within stipulated time. Thereafter, the complainant has filed this complaint U/[SECTION] of [ACT] (hereinafter "the Act") against the accused.
2. On 12.07.2007 after being satisfied that the complainant has a prima facie case against the accused, the court summoned accused for offence U/[SECTION] of the Act.
3. Accused appeared pursuant to the process issued by the court and on 22/11/2007, the particulars of the offence were read over and explained to the accused, to which he pleaded not guilty and claimed trial.
4. In order to substantiate its case, the complainant examined himself as the only complainant witness by way of evidence affidavit.
5. All the circumstances appearing in the evidence against the accused were put to him in order to enable him to offer his explanation. In his statement U/[SECTION] [ACT] recorded on 30/04/2012, accused stated that these cheques were issued as security against which cash payment was done and still these cheques were presented in the bank against an understanding. Accused further stated that the statement of accounts are not correct as is not reflecting all their payments and in process they had stopped payment for couple of other cheques also, for which another case bearing CC No. 193/1 has been filed and is being decided simultaneously in this court.
6. Accused examined himself in his defence evidence.
7. Arguments have been advanced by both the parties at length. It has been argued by Ld. counsel for the complainant that from evidence, he has proved that the cheque in question was signed by accused which was dishonoured and despite service of legal notice, accused did not make payment. It is argued that during cross examination of witnesses, no material contradictions have come out and the complainant has been able to prove his case to the hilt. It has been argued that accused has failed to rebutt the statutory presumption .
8. Per contra, for knocking down the edifice of complainant case, it has been argued vehemently by Ld. counsel for defence that no case is made out against accused as he is innocent and complainant has misused the cheque in question. It has further been argued that accused has been able to successfully rebutt the presumption raised against him.
9. I have heard both the parties at length and perused the record. Before entering into factual matrix of the present case, I deem it fit to discuss certain statutory provisions of [ACT]. [SECTION] of [ACT] provides for presumptions regarding consideration for a Negotiable Instrument. It reads as under :
"That every negotiable instrument was made or drawn for consideration and that every such instrument when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration".
10. [SECTION] of the [ACT] provides for presumption in favour of a holder. It reads as under :
"It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in [SECTION] for the discharge, in whole or in part, or any debt or other liability".
11. Apex court in [PRECEDENT] while overruling the judgment titled [PRECEDENT] observed in para 14 that :
"the presumption mandated by [SECTION] of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observation in [PRECEDENT] (supra) cannot be correct This is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested".
12. Therefore, in view of the statutory provisions and Apex Court's judgments, there is a presumption in favour of holder of the cheque that he has received the same for discharge in whole or in part of any legally enforceable debt or other liability. It is a well settled principle of law that the presumption available U/[SECTION] [ACT] can be rebutted by the accused by adducing evidence. Therefore, the burden of proof is on the accused to rebutt this statutory presumption. The accused can prove the non existence of consideration by raising a probable defence and if he proves the same, then only the onus would shift upon complainant, who has to prove it as a matter of fact and his failure to prove would dis-entitle him to grant the relief.
13. Apex Court in [PRECEDENT] has held as follows :
"23. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different".
14. I shall now appreciate the testimony of complainant witnesses to see whether the accused has discharged the burden of mandatory presumption or whether the guilt of accused has been proved beyond reasonable doubt by the complainant in the present case. It has been argued by Ld. counsel for the complainant that from evidence, he has proved that the cheque in question was signed by accused which was dishonoured and despite service of legal notice, accused did not make payment. Counsel for complainant has further submitted that the complainant has been able to prove his case to the hilt. It has been argued that accused has failed to discharge the burden cast upon him to rebut the presumption.
15. CW-1 is complainant himself who has reiterated the averments of complaint in his affidavit of evidence. Complainant was cross examined by the Ld. Counsel for accused. Although there are presumptions in favour of the complainant in a case under [SECTION] [ACT] but the onus is upon the complainant to prove the facts alleged by him. The cross examination of complainant is not in consonance with the evidence affidavit. On the whole, after reading cross examination of complainant along with material available on record, the court is of the opinion that complainant has not been able to prove liability of accused to the tune of the cheque amount and the version given by the accused appears to be more genuine.
16. For the sake of giving this present judgment, the cross examination of accused is reproduced as under :
"Q. Could you remember the transaction period with complainant? A. I do not exactly remember the transaction
period between the complainant and the accused but it was in the year 2007.
I had given the fabric & trims for the purpose of manufacturing. It is correct that rates for the manufacturing of the garments were settled at the beginning of the transaction. Vol : Later on complainant changed the rates. It is incorrect to suggest that the invoices raised by the complainant have not been supplied. I do not remember the exact amount in rupees of invoices. I do not remember the exact figure of payment that we have made to the complainant against the invoices raised by them. Yes, I had maintained a register which contained all the name of my employees and their relevant details. Now, it is no longer available with me as I had closed down my business way back in the year 2007.
Q. Is it correct that you had issued cheques ExCW1/1 & ExCW1/2 with respect to the order of manufacturing which you had placed in February 2007?
A. These cheques were issued for the security purpose only. Vol : Against all the transactions, we had paid cash with an understanding that the security cheques issued by us shall be returned back to us by the complainant.
I do not remember whether I gave any notice to the complainant or asked the complainant through some other mode to return the security cheques. Yes, I used to maintain accounts of my transactions with all my clients. Yes, I had maintained an account of my transactions with SP Holdings i.e. the complainant. Vol But the said account has gotten destroyed because of computer virus. I did not file income tax returns for the year 2006 2007 or thereafter. Vol : It is because the company had dissolved in the year 2007 itself. It is incorrect that we had to pay an outstanding amount of Rs. 8,42,0434/ to the complainant. It is correct that statement of accounts had been supplied by the complainant to us. Vol : As per which we have to pay an outstanding amount of Rs.4,42,000/ to the complainant.
Q. At this stage witness has been confronted with document ExCW1/DA and asked whether there is signature or rubber stamp of the complainant on the document?
A. It is correct. Vol : Even the statement of accounts Mark C which has been filed and relied upon by the complainant himself has neither been signed nor stamped. This document mark C only bears an attestation mark in the form of initial.
It is incorrect that I have not given any cash payment to Sh [ENTITY] who was the manager of the complainant at that time. Vol : In their (complainant's) statement of accounts Mark C, the complainant has shown the cash payments received by Sh [ENTITY] which were paid by me. It is incorrect to suggest that payments made vide ExCW/D1 to ExCW1/D4 have not been paid to complainant through Sh [ENTITY]. It is further incorrect to suggest that these exhibits have been forged & fabricated later on in order to avoid the payments. Yes, I did receive a legal notice with respect to bouncing of cheques exhibited in the complaint. Yes, I replied to the said legal notice in writing. No, I have not filed the reply to the said legal notice. Yes, it is correct that both me and the complainant tried to have conciliatory meetings to settle our accounts with each other. Vol : But we never came to any concrete understanding.
Witness is confronted with ExCW1/3 & ExCW1/4 and shown the reason of the return of the cheque which shows the reason for return of cheques as "Insufficient Funds" and has not been returned with the reason "Stop Payment". What have you to say?
A. It is correct that the cheques got dishonoured because of the reason "Insufficient Funds". Vol : These cheques were only issued for security purposes and were not for presentation and the payment was made in cash to the complainant.
It is incorrect to suggest that the cheques in question have been given against the outstanding part payment of Rs.8,42,043/. It is incorrect to suggest that I have deposed falsely in order to defend myself."
17. After considering the facts and circumstances of the case, and in light of the evidence brought on record, I am of the considered view that accused has been able to successfully rebutt the statutory presumption because the defence of accused during the whole trial has remained consistent and looks probable. Further, there are material contradictions in the testimony of complainant. Counsel for accused has submitted that and none of the challans have been filed in original by the complainant and they are merely copies which have been marked and they have also not been countersigned by the accused or any of his employees. Counsel for accused has further submitted that these are unilateral documents and even the statement of accounts of complainant is also a unilateral document which the complainant can manufacture and forge & fabricate at its own end as they were never countersigned by the accused. Further the complainant failed to produce the originals of the invoices and challans in view of the judgment passed by Hon'ble Mr Justice [ENTITY] and Justice [ENTITY] in [PRECEDENT] cited as [PRECEDENT]. Even during the cross examination of accused as witness, the question was put to him that the challans were not original and despite question about the authenticity of the challans, the challans were not produced by the complainant. Moreover, none of the copies filed by the complainant marked as C-1 to C-24 bear the signatures of either the accused or any of his employees. Accused had examined himself in his defence evidence and submitted that the goods were received by Sh [ENTITY], Manager of complainant vide receipts ExDW1/D-1 to ExDW1/D-4 and when the sums of these receipts are added, they total up to the cheque amount in question i.e. Rs.3,36,839/- of the other connected case bearing CC No. 192/1 and the statement of accounts admittedly furnished by the complainant in which these amounts have been shown to be received by the Manager of the complainant Sh [ENTITY] and have been encircled in red ink. The defence stand taken by the accused has remained consistent throughout, at the time of framing of notice U/[SECTION] [ACT], during cross examination of complainant witnesses, his statement U/[SECTION] [ACT] as well as his examination in chief and cross examination. None of these times, the defence of the accused is evasive. Accused had proved the document of stop payment instructions to his banker and that document has been counter signed by the banker which further lends credibility to the defence theory of the accused. Accused had submitted that this was his only first dealing with the complainant in which he was defrauded by the complainant as complainant never believed the accused right from the very start and after taking orders, complainant used to send invoices before dispatch of the consignment of goods for which the work order was placed by the accused after which the accused was supposed to pay by way of a security cheque and after those goods were sold by the accused and their payment collected in cash, accused had to make the payment to the complainant in cash as per demand of complainant and those cheques which were sent for earlier invoices were supposed to be returned back to the accused but have been misused in this and other complaint. The stand of the accused is that after sending the consignment of goods, complainant raised/altered the work order without the consent of the accused and inflated the bills to the tune of approx. Rs. 08 lacs which was never legally payable to the complainant. When the cross examination of CW-1 is read in consonance to the defence evidence, it appears that the story of accused is proved and believable. Despite the fact that accused raised a question during cross examination that the cheque amount was paid to the Manager of the complainant i.e Sh [ENTITY], he was never examined by the complainant for reasons best known to the complainant when it would have been in the interest of the complainant to examine Mr [ENTITY] also if the deposition given by the accused is false.
18. Apex Court in [PRECEDENT]'s case (supra) has also held at para 25 that :
"25. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is "preponderance of probabilities". Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to the circumstances upon which he relies".
19. Therefore, what has been upheld by Apex Court in [PRECEDENT]'s case (supra) that accused can prove his defence by "preponderance of probabilities" whereas prosecution has to prove the guilt of accused beyond all reasonable doubts. It was also held by Apex Court in the said case that :
"26. A statutory presumption has an evidentiary value. The question as to whether the presumption stood rebutted or not, must, therefore, be determined keeping in view the other evidences on record. For the said purpose, stepping into the witness box by the appellant is not imperative. In the case of this nature, where the chances of false implication cannot be ruled out, the background fact and the conduct of the parties together with their legal requirements are required to be taken into consideration".
20. In totality of the facts and circumstances of the case, from the evidence brought on record and after going through the relevant paras of the judgments relied upon by the accused, I am of the considered view that accused has successfully proved their defence on the scale of preponderance of probabilities. The complainant has failed to prove the guilt of accused beyond all reasonable doubts and accused has successfully rebutted the presumption drawn under [SECTION] as well as [SECTION] of [ACT] on the scale of preponderance of probabilities.
21. In view of above discussion, accused no. 1 M/s [ENTITY]s through accused no. 2 [ENTITY] and accused no. 2 [ENTITY] stand acquitted of offence U/[SECTION] [ACT]. Bail bond & surety bond in terms of [SECTION] [ACT] be furnished. File be consigned to record room. Announced in the open court on 04/09/2013 ([ENTITY]) Metropolitan Magistrate -03/[ACT]/South Saket Court/New Delhi Certified that this judgment contains 13 pages and each page bears my signature.
([ENTITY]) Metropolitan Magistrate -03/[ACT]/South Saket Court/New Delhi