IN THE COURT OF SH. [ENTITY], ADDL.SESSIONS JUDGE02 (EAST) KARKARDOOMA COURTS, DELHI [CASE NUMBER] In the matter of: Sh. [ENTITY] S/o Sh. Puran Singh R/o 135, Harkesh Nagar, Okhla, PhaseII, New Delhi Appellant versus Sh. [ENTITY] M/s [ENTITY] X/4000, Gali No.14, Shanti Mohalla, Gandhi Nagar, Delhi110031 Respondent Date of institution 21.02.2019 Arguments heard 13.03.2019 Date of order 03.04.2019 JUDGMENT
1. The present appeal has been filed against the judgment dated 21.01.2019 and also against the order on sentence dated 23.01.2019 passed by Sh. [ENTITY], Ld. MM (East), Karkardooma Courts, Delhi, in complaint case bearing [CASE NUMBER] titled as [PRECEDENT] filed u/[SECTION] of [ACT] (hereinafter referred as [ACT]). Vide the aforesaid judgment Ld. MM has convicted the appellant u/s [PRECEDENT] 138 [ACT] and vide order dated 23.01.2019, the appellant has been sentenced to TRC and to pay fine of Rs.1,25,000/ out of which Rs.1,20,000/ is payable to complainant as compensation and remaining Rs.5000/ is to be deposited with State and in case of default of payment of fine, the convict is to undergo Simple Imprisonment of four months.
2. The brief facts of present case are that the respondent/complainant filed a complaint u/[SECTION] of [ACT] against the appellant/accused (hereinafter both the parties have been referred as per their nomenclature in the complaint) on the basis of the following allegations:
(a) that the accused and the complainant are known to each other and having business relation since long and the complainant supplied clothing material to the accused at different points of time under receipt during the period from November, 2014 to April, 2016 for a total sum of Rs.5,61,799/. Out of the said amount, accused paid a sum of Rs.3,92,262/ and Rs.1,69,537/ remained due from the accused.
(b) In discharge of his liability, the accused issued a cheque bearing No.128375 dated 25.05.2016 amounting to Rs.1,00,000/ drawn on Punjab National Bank, New Custom House, IGAI, New Delhi. That the complainant presented the said cheque for encashment however, aforesaid cheque got dishonoured vide returning memo dated 12.08.2016 with the remarks 'Funds Insufficient'.
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(c) That complainant sent a legal demand notice dt. 26.08.2016 on at address of the accused through Speed Post and same was delivered to him on 29.08.2016 as per the tracking report generated through internet. However, despite service of legal notice, accused did not pay the amount of dishonoured cheque. Thus, it was prayed that accused be summoned for the offence u/[SECTION] of [ACT].
3. On 16.04.2018, a notice u/[SECTION] [ACT] for commission of the offence u/[SECTION] [ACT] was served upon the accused to which he pleaded not guilty and replied as under: Plea of defence of the accused
1. It is correct that cheque in question bears my signature, name of my bank and my account number. However, I did not fill the body of cheque in question.
2. I know the complainant as I used to purchase fabric from the complainant. I had handed over cheque in question to the complainant to make some payment for purchase of fabric from him. However, I have paid interest @ 3% per month to the complainant over billing amount. I have also paid Rs.40,000/ to the complainant in course of trial of the case.
3. I received legal notice issued by the complainant but I did not reply to the same.
4. In support of his case, complainant examined himself as sole witness (CW1) and he brought on record the following documents:
a) Original cheque no.128375 Ex.CW1/1.
b) Cheque returning memo Ex.CW1/2.
c) Legal notice Ex.CW1/3.
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e) Copy of postal tracking report Ex.CW1/5.
5. After completion of complainant's evidence, the statement of accused was recorded under [SECTION] [ACT] wherein all incriminating evidence was put to him. Accused denied the allegations and submitted that the cheque in question bears his signature and bank account of his proprietorship firm namely Specific Fashion. Someone from bill section of his firm would have filled the body of the cheque in question. Accused also stated that He knows complainant and he had given the cheque in question to him as complainant had supplied fabrics to him. However, the supplied goods of the complainant was defective. He informed the complainant about the same. He had returned 30% material of supplied goods of approximately Rs.30,000/ to Rs.40,000/ to the complainant. Thereafter, the complainant did not supply the suitable substitute of said fabrics so far. He had paid interest to the complainant at the rate of 3% per month over billing amount. Accused also stated that he had paid about Rs.3.5 lacs to the complainant in respect of the previous bills. He had paid some amount in respect of transaction in question during the course of trial of the case after settlement.
6. In his defence, the accused examined himself as DW1. As DW1, accused deposed that he had issued cheque in question to the complainant against the supply of fabrics of Rs.1.5 lacs in year 2016. He had already paid all previous due amount to the [PRECEDENT] 4 of 17 complainant except said amount of Rs.1.5 lacs as he had regular business transaction with the complainant. He had returned 30% of said supplied fabrics to the complainant as same were defective. The complainant did not supply suitable substitute of said defective returned fabrics and his client had cancelled his order with him in respect of supply of said fabrics due to which he suffered loss and therefore, he could not pay the due amount to the complainant. During the course of trial, he had paid Rs.80,000/ to Rs.90,000/ to the complainant so far.
7. On completion of the trial, Ld. Trial Court convicted the accused thereby holding that accused failed to prove his defence and rebut the presumption of [SECTION] of [ACT].
8. Now the present appeal has been filed by the appellant/accused mainly on the following grounds:
a) That the appellant and respondent were having business relation and respondent had supplied cloths to the appellant on different point of time. He had issued cheque in question against the supply of fabrics of Rs.1.5 lacs in year 2016 and he had already paid all previous due amount to the respondent.
b) The appellant had returned 30% of supplied fabrics to the respondent and same were defective and respondent did not supply suitable substitute of said defective fabrics due to this reason his client had cancelled his order.
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c) The complainant has concealed the factum that the impugned cheque was a security cheque which was given to the respondent. Ld. Trial Court failed to appreciate the fact that there are number of contradictions in the evidence produced by respondent. The respondent failed to prove the liability upon the appellant.
d) The appellant has paid Rs.80,000/ to the respondent before the Ld. Trial Court. The impugned judgment and order on sentence have been passed in contrary to the law and facts. On these grounds, it is prayed that the accused may be acquitted.
9. I have heard the submissions of Ld. counsel for the appellant/ accused and also Ld. counsel for the respondent/complainant and gone through the record of the case.
10.It is held by Hon'ble Supreme Court in the case of [PRECEDENT] titled as [PRECEDENT] that to constitute an offence u/[SECTION] of [ACT] the following requirements are to fulfilled:
a) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;
b) that 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;
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c) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the 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 the bank;
d) the payee or the holder in due course of the cheque 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 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
e) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
11.In view of the law laid down by the Hon'ble Supreme Court in the aforesaid case, it is to be seen, if the aforesaid requirements have been fulfilled in the present case.
12.It is undisputed that subject cheque was issued by the accused to the complainant and the same got dishonoured due to insufficient funds. It is also clear that the statutory notice Ex.CW1/3 was issued to the accused well within 30 days from the dishonour of the cheque. It is further clear from the reply of the accused given by him at the time of framing of notice that he categorically admitted the service of the legal notice. It is also clear that the accused did not dispute the service of legal notice during crossexamination of complainant. Even otherwise, it is clear from the records that the notice was sent at the correct address of the accused as the accused has also furnished on record the same very address upon which the notice was issued thus, in view of the judgment of [PRECEDENT] [PRECEDENT], it is to be presumed that the notice was duly served upon the accused as it was sent at the correct address.
13.The complainant has claimed that he had supplied the accused the goods worth Rs.5,61,799/ from November 2014 to April 2016 and out of the said amount, in total accused paid a sum of Rs.3,92,262/. Complainant stated that accused paid Rs.2.7 lacs by cash and Rs.50,000/ by RTGS transfer and also returned goods worth Rs.72,262/ and after that a sum of Rs.1,69,537/ remained outstanding. It is also stated that in discharge of said liability, the accused had issued the subject cheque bearing no.128375 and accused has endeavoured to dispute the claim of the complainant by raising vague pleas. It is further clear from the aforesaid discussions that accused did not pay the cheque amount neither within 15 days of the service of the legal notice nor thereafter. Thus, it is clear from the record that all necessary requirements to constitute the offence u/[SECTION] [ACT], have been fulfilled except that whether on the date of presentation of cheque by the complainant, the cheque was against due debt or was without consideration as claimed by the accused. This point will be discussed in the later part of the order and before making further discussions on the factual aspects of the case, it is deemed necessary to firstly discuss the relevant provisions of [ACT] and the [PRECEDENT] 8 of 17 legal position which is required to be taken into consideration for appropriate disposal of the complaint U/[SECTION] of [ACT].
14.The claim based under the provisions of [ACT] is an exception to the general rule of law that burden of proof lies on the prosecution. There are two specific provisions in negotiable instruments acts i.e. [SECTION] and [SECTION] of [ACT] which contemplates that a presumption is attached in regard to each and every negotiable instrument that the same was drawn and issued against due discharge of the liability and thus, whenever any claim is made on the basis of a negotiable instrument, the presumption has to be drawn in favour of the holder of the cheque (drawee) and the law has put the burden to rebut the presumption on the accused that the cheque was not issued by him against discharge of a debt or a liability. In case, the accused is not able to rebut the presumption and fails to prove his defence, the presumption becomes absolute and it has to be assumed that the cheque was issued by the accused in discharge of debt or liability and consequently, accused has to be assumed guilty of the offence. The relevant provisions of [SECTION] and [SECTION] of [ACT] reads as under: [SECTION] Presumptions to negotiable instruments.Until the contrary is proved, the following presumption shall be made:
(a) of consideration that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, [PRECEDENT] 9 of 17 negotiated or transferred, was accepted, endorsed, negotiated, or transferred for consideration.
[SECTION]. Punishment in favour of holder: It shall be presumed, unless the contrary is provided, that the holder of a cheque received the cheque of the nature referred to in [SECTION] for the discharge, in whole or in part, of any debt or other liability.
15.It has been held by Hon'ble Supreme Court in the case reported as [PRECEDENT] titled as [PRECEDENT] that the presumption mentioned in the [SECTION] of [ACT], is a presumption of law and not the presumption of fact and thus, this presumption has to be drawn in favour of the drawee and burden to rebut the presumption with the probable defence is on the accused. The relevant para of the aforesaid case law reads as under:
21. In other words, provided the facts required to form the basis of a presumption of law exist, no discretion is left with the Court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, "after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists"
[[SECTION] : [ACT]]. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the 'prudent man.
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16.It has been held by the Hon'ble Supreme Court in the case of [PRECEDENT] titled as [PRECEDENT] that presumption of [SECTION] of [ACT] also includes the existence of legal enforceable debt. The relevant para of the said judgment reads as under:
14. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by [SECTION] of the Act does indeed include the existence of a legally enforceable debt or liability.
17.In [PRECEDENT], the Hon'ble Supreme Court held that the accused has to rebut the presumption and mere denial of passing of consideration is no defence.
18.Thus, in view of the law laid down by the Hon'ble Supreme Court in the aforesaid cases, the presumption as contemplated under [SECTION] [ACT] has to be drawn in favour of the drawee that the cheque in question was issued in discharge of legally enforceable liability. Thus, in the present case also complainant was not required to prove that the subject cheque was issued by the accused towards the payment of the goods supplied and initially, the claim of the complainant was to be assumed to be correct by drawing the presumption of [SECTION] of [ACT] and burden to rebut the presumption with his probable defence was on the accused.
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19.The accused has not taken any specific defence and has made endeavour to dispute his liability on the basis of some vague pleas which are necessary to be reproduced for the sake of ready reference. In regard to his liability, the defence taken by the accused at the time of framing of notice and statement u/[SECTION] [ACT] read as under: Defence taken at the time of framing of notice
1. It is correct that cheque in question bears my signature, name of my bank and my account number. However, I did not fill the body of cheque in question.
2. I know the complainant as I used to purchase fabric from the complainant. I had handed over cheque in question to the complainant to make some payment for purchase of fabric from him. However, I have paid interest @ 3% per month to the complainant over billing amount. I have also paid Rs.40,000/ to the complainant in course of trial of the case.
3. I received legal notice issued by the complainant but I did not reply to the same.
Defence taken in the statement recorded u/[SECTION] [ACT] Q1. All the incriminating evidence has been put to the accused that he had issued one cheque bearing no.000083 dated 25.05.2016 for an amount of Rs.47,946/ drawn on HDFC Bank, Okhla, New Delhi, in favour of the complainant in order to discharge his part liability towards supply of cloth material by the complainant to him. On presentation, the cheque was dishonoured with the remarks "Insufficient Funds" and the legal notice dated 26.08.2016 was sent by the complainant. The cheque in question is Ex. CW1/1, cheque returning memo is Ex.CW1/2, legal/demand notice is Ex.CW1/3, postal receipt is Ex.CW1/4. The affidavit of the [PRECEDENT] 12 of 17 complaint is Ex.CW1/A. Complainant deposed against you. What do you have to say?
Ans. It is correct that the cheque in question bears my signature and bank account of my proprietorship firm namely Specific Fashions. Someone from bill section of my firm would have filled the body of the cheque in question.
2. I know complainant and I had give the cheque in question to him as he had supplied fabrics to me. However, the supplied goods of the complainant was defective. I formed the complainant about the same. I had returned 30% material of supplied goods of approximately Rs.30,000/ to Rs.40,000/ to the complainant. Thereafter, the complainant did not supply the suitable substitute of said fabrics so far. I had paid interest to the complainant at the rate of 3% per month over billing amount. I had paid about Rs.3.5 lacs to the complainant in respect of the previous bills. I had paid some amount in respect of transaction in question in course of trial of the case after settlement.
3. I do not remember whether I had received the legal notice or not.
20.In defence evidence, accused examined himself as DW1. In his evidence as DW1, accused stated that he had issued cheque in question to the complainant against supply of fabrics of Rs.1.5 lacs in year 2016; he had already paid all previous due amount to the complainant except said amount of Rs.1.5 lacs as he had regular business transaction with the complainant; he had returned 30% of said supplied fabrics to the complainant as the same were defective; the complainant did not supply suitable substitute of said defective returned fabrics and his client had cancelled his order with him in respect of said fabrics due to which he suffered loss and therefore, [PRECEDENT] 13 of 17 he could not pay the said amount to the complainant; during trial of the case, he had paid Rs.80,000/ to Rs.90,000/ to the complainant so far.
21.It is clear from the aforesaid defence that accused did not specifically disputed the factum of supply of goods worth Rs.5,61,799/ and his liability qua the subject cheque and has raised vague pleas. The accused stated that the goods supplied were defective and he had returned 30% material of the supplied goods approximately worth Rs.3040,000/, however, it is clear from the evidence of complainant that he has already given credit of Rs.72,262/ for the goods returned by the accused and accused has not brought on record any material to show that he had returned the goods over and above the amount of which adjustment was already given by the complainant. Furthermore, the complainant has supplied him the goods worth Rs.5,61,799/ and the plea of the accused is that he had returned about 30% of the supplied material which comes about Rs.1,65,000/ and this amount does not match with the amount he mentioned as he stated that he returned the goods worth Rs.3040,000/. The accused has claimed that he had paid Rs.3.5 lacs in cash, however, he has not brought on record any document to show that he had paid the cash amount Rs.3.5 lacs to the complainant qua the present transaction.
22.During crossexamination of complainant, accused put up another defence that the subject cheque was issued by the accused as [PRECEDENT] 14 of 17 security and no goods were supplied in respect to the subject cheque. The defence raised by the accused is not trustworthy as it is clear from his testimony that he himself admitted that he could not pay the sum of Rs.1.5 lacs, however, he took a plea that he had returned 30% of supplied defective fabrics and complainant did not supply new material against defective fabrics due to which, the order which he had received for supply of fabrics, could not be executed and he suffered loss and thus, he could not pay the due amount. The perusal of his crossexamination further clarifies that he has categorically admitted that he had issued the cheque in discharge of his liability and complainant had provided credit note to him for the defected goods returned by him. Thus, from the evidence of the accused, it is clear that he has categorically admitted his liability towards the subject cheque and therefore, the claim of the complainant that the accused had issued the cheque against the supply of fabrics and he did not make the payment despite service of legal notice stands proved.
23.In view of aforesaid discussions, it is held that the accused has miserably failed to establish on record any of the defence taken by him. Moreover, since the accused has taken contradictory defences, therefore, this fact itself is sufficient to show that there is no substance in the defence taken by the accused and he had taken the same for the sake of defence and with the sole purpose to evade the claim of the complainant regarding the subject cheque.
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24.It has been held by the Hon'ble Delhi High Court in the case reported as "[PRECEDENT]" that the onus is on the accused to rebut the presumption either by direct evidence or by bringing on record the required material, however, the simple denial of liability is not sufficient to rebut the presumption.
25.It is pertinent to mention here that complainant has filed three complaint cases bearing [CASE NUMBER] against the accused with identical allegations and during the course trial, vide order dated 24.05.2017, at joint request, all these three matters were referred to Mediation Cell, KKD Courts, Delhi. In the Mediation Cell, vide mediation proceedings dated 06.06.2017, it was agreed between the parties that accused shall pay a total sum of Rs.1,88,946/ to the complainant as full and final settlement of all these three complainant cases which shows that accused owed the amount towards the subject cheques else he would not have agreed for the settlement and making payment of Rs.1,88,946/ to the complainant. Furthermore, during the course of trial, on three dates, he made certain payments amounting to Rs.80,000/ which further shows that amount claimed by the complainant, was due from the accused.
26.Thus, it is held that the accused has failed to rebut the presumption and complainant by way of his evidence and admissions made by accused during trial that accused has established that accused had [PRECEDENT] 16 of 17 issued the subject cheque for the payment of the goods supplied by the complainant.
27.Since, the appellant/accused has failed to repay the cheque amount despite service of legal notice, thus, he is guilty of commission offence u/[SECTION] [ACT]. In view the aforesaid discussions, this court does not find any infirmity in the order passed by Ld. MM. and holds that the appellant/accused has been rightly convicted u/[SECTION] [ACT]. Hence, the present appeal is liable to be dismissed and accordingly, the same is dismissed. [ENTITY] Date: 2019.04.03 ([ENTITY]) ASJ02/KKD/East/Delhi Announced in open court on 03.04.2019 [PRECEDENT] 17 of 17