[PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 1 /15 IN THE COURT OF SH. [ENTITY] METROPOLITAN MAGISTRATE, KKD, EAST, NEW DELHI Complaint No. 10/2011 Unique ID No. 02402R083962011 PS. Shakar Pur M/s Call Soft Technology (P) Ltd. Through its director Sh. [ENTITY] S/o Sh. Rajendra Prasad Agarwal R/o C1/602, Milan Vihar Apartment, Patparganj, I.P. Extension, Delhi92 Complainant. Versus 1. M/s [ENTITY] 305, [ENTITY], 78, Nehru Place, New Delhi19 2. Sh. [ENTITY] S/o Sh. [ENTITY], R/o Flat No.103, Aspire1, Supertech Emerald, Sector 93A, Noida (U.P.). Accused. COMPLAINT U/[SECTION] OF THE [ACT] Offence complained of : U/[SECTION] [ACT] Date of commission of offence : 24.02.2011 Plea of Accused : Not guilty Complaint filed on : 15.03.2011 Final Arguments heard & Concluded on : 25.06.2012 Date of decision of the case : 29.06.2012 Final order : Conviction [PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 2 /15 BRIEF FACTS AND REASONS FOR DECISION OF THE CASE
1. By way of the present judgment, this court shall decide the complaint case U/[SECTION] [ACT] (as amended up to date) filed by the complainant M/s Call Soft Technology (P) Ltd through its director Sh. [ENTITY], against the accused M/s [ENTITY] & Sh. [ENTITY] (CEO & Director of the accused company).
2. The facts in brief necessary for the disposal of the present case are that, On 14.09.2010 the accused company placed an order to the complainant company for hiring equipments (PC's , UPC & Server) on rental basis accordingly an agreement dated 15.09.2010 was executed between the parties and accordingly the complainant company supplied equipments to the accused company on rental basis for three months locking period. To discharge the part liability under the agreement the accused issued cheque bearing no. 174664 dated 03.12.2010 for the sum of Rs.84,000/ & cheque bearing no. 174666 dated 03.12.2010 for the sum of Rs.80,000/ both drawn on Corporation bank, Noida branch in favour of the complainant company. However on presentation the said cheques were returned back dishonored with the remark "INSUFFICIENT FUND" vide dishonour memos dated 17.01.2011. Thereafter a legal notice was sent to the accused on 07.02.2011 by way of regd AD and UPC. It is further alleged that despite service of legal notice accused has not paid any thing to the complainant till the filling of the case. [PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 3 /15
3. After the complaint was filed, the complainant led the pre summoning evidence by way of an affidavit and after hearing the counsel for the complainant and considering the entire material and documents on record, summons were issued against the accused vide order dated 15.03.2011 for the offence U/[SECTION] [ACT]. On appearance of the accused a separate notice U/[SECTION] [ACT] dated 23.07.2011 was framed upon the accused to which he pleaded not guilty and claimed trial.
4. In order to prove the case, the complainant at pre summoning stage filed his affidavit and exhibited Authorization / Resolution as Ex. CW1/1, original cheque bearing No. 174664 dated 03.12.2010 for the sum of Rs.84,000/ as Ex. CW1/2, cheque bearing no. 174666 dated 03.12.2010 for the sum of Rs. 80,000/ as Ex. CW1/3, the cheque returning memos are Ex. CW1/4, & Ex. CW1/5, the legal notice of demand dated 07.02.2011 is exhibited as Ex. CW1/6, the original receipts of registered post are Ex. CW1/7 to Ex. CW1/11.
5. After framing notice U/[SECTION] [ACT] the matter was state away fixed for Defence evidence as the application of the accused U/[SECTION] [ACT] was dismissed. The accused examined himself as defence witness as DW1. He also exhibited delivery receipts issued by the complainant as Ex. DW1/C1 to Ex. DW1/C11, copy of agreement as Ex. DW1/A, copy of cheque scroll register [PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 4 /15 as Ex. DW1/B & Ex. DW1/C, Machines returning challans as Ex. DW1/B1 to Ex. DW1/B5, copy of reply of legal notice by way of Email as Ex. DW1/D. In his cross examination following documents were put to him and exhibited, Purchase order as Ex. DW1/X1, Agreement as Ex. DW1/X2, Cheque bearing no. 188019 dated 13.09.2010 as Ex. DW1/X3. No other witness was examined and Defence Evidence was closed and the matter was fixed for final arguments.
6. I have heard Ld. counsels and perused the entire record of the case file and the evidence on record. Both the counsel have referred to a number of cases, I have discussed them at the relevant place.
7. Before proceeding further let us go through the relevant provisions of law. The main ingredient of [SECTION] of the [ACT] are as follows:
(a) The accused issued a cheque on an account maintained by him with a bank.
(b) The said cheque has been issued in discharge of any legal debt or other liability.
(c) The cheque has been presented to the bank within the period of six months from the date of the cheque or within the period of its validity.
(d) When the aforesaid cheque was presented for encashment, the same was returned unpaid/ dishonoured.
(e) The Payee of the cheque issued a legal notice of demand [PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 5 /15 within 30 days from the receipt of information by him from the Bank regarding the return of the cheque.
(f) The Drawer of the cheque failed to make the payment within 15 days of the receipt of the aforesaid legal notice of demand.
If the aforesaid ingredients are satisfied then the drawer of the cheque shall be deemed to have committed an offence punishable u/[SECTION] [ACT].
8. Now let us deal with the each ingredient of the [SECTION] of [ACT] to see whether the case against the accused has been proved or not.
9. WHETHER THE CHEQUES WERE ISSUED OR NOT:
CW1 has stated in his examine in chief that cheques in question were issued by the accused. In his examination under [SECTION] [ACT], it was accepted by the accused that the cheques in question were issued by him, however the same were undated as given for the purpose of security only. Thus it stands proved that the cheques in question were signed by the accused. Further the legal position in respect to the blank signed/ undated cheques is as under:
In [PRECEDENT] it was held by Delhi High Court that "by putting the amount and the name of payee there is no material alteration on the cheque U/[SECTION] of the [ACT]. In fact there is no alteration but only adding the amount and the date. [PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 6 /15 It was further observed in the aforesaid judgment that there is no rule of banking business that the name of the payee as well as the amount should be written by the drawer himself. No law provides that in case of cheques the entire body has to be written by the drawer only. "
In Ravi Chopra v. State & another (2008 (2) LRC [SECTION] del) it was held by the Hon'ble high court that "it is possible for drawer of a cheque to give a blank cheque signed by him to the payee and consent either implidely or expressly to the said cheque being filed by the payee at a subsequent point of time".
Similarly it was held by the kerala high court in [PRECEDENT], that there is no rule in banking business that payee's name and the amount should be written by drawer himself. Further the burden is on the accused to establish that the date, amount and payee's name are written by somebody else without the knowledge and consent of the drawer.
From the above stated cases it is clear that in a case where cheque is handed over without filling the name of the payee or other particulars, it is upon accused to prove by positive evidence that he/she did not give implied or express consent to the complainant to fill in the name of the payee and the other particulars. However in the present case no such cogent evidence have been adduced by the accused.
In view of the aforesaid discussion and the evidence [PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 7 /15 on record it stands proved that the cheques in question were issued by the accused.
10. WHETHER THE CHEQUES IN QUESTION HAVE BEEN ISSUED IN DISCHARGE OF ANY LEGAL DEBT OR OTHER LIABILITY:
It is submitted by the CW1 that on 14.09.2010 the accused company placed an order to the complainant company for hiring equipments (PC's, UPC & Server) on rental basis accordingly an agreement dated 15.09.2010 was executed between the parties and accordingly the complainant company supplied equipments to the accused company on rental basis for three months locking period. To discharge the part liability under the agreement the accused issued the cheques in question Ex. CW1/2 & Ex. CW1/3.
At this stage let us go through the relevant provisions of law. There is a presumption in favour of the complainant u/[SECTION] [ACT] that until the contrary is proved, it will be presumed that every negotiable instrument was drawn for consideration and every such instrument when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration.
Further [SECTION] of the [ACT] provides that it shall be presumed until the contrary is proved that the holder of the cheque received the cheque of the nature referred in the [SECTION] for the discharge [PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 8 /15 in whole or in part of his debt or liability.
Now it will have to be examined whether the accused has rebutted the presumption as contemplated by Section [SECTION]
(b) and [SECTION] of [ACT].
It has been observed by the Hon'ble High Court of Delhi in [PRECEDENT] that the offence u/[SECTION] [ACT] is a technical offence and the complainant is only supposed to prove that the cheques issued by the respondent were dishonored, his statement that cheques were issued against liability or debt is sufficient proof of the debt or liability and the onus shifts to the respondent / accused to show the circumstances under which the cheques came to be issued and this could be proved by the respondent only by way of evidence and not by leading no evidence. It was further observed that in order to rebut the presumption u/[SECTION] of the [ACT], the accused, by cogent evidence, has to prove the circumstance under which the cheques were issued. It was for the accused to prove if no loan was taken why he did not write a letter to the complainant for return of the cheques. Unless the accused had proved that he acted like a normal businessman / prudent person entering into a contract he could not have rebutted the presumption u/[SECTION] [ACT]. If no loan was given but cheques were retained he immediately would have protested and asked the cheques to be return and still cheques were not returned he would have served a notice as complainant.
[PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 9 /15 Similarly in the present case it was for the accused to prove why he did not write a letter to the complainant for return of the cheques in question. Unless the accused had proved that he acted like a normal businessman / prudent person entering into a transaction he could not have rebutted the presumption u/[SECTION] [ACT]. It was for the accused to have protested and asked the complainant to return the cheques and if still cheques were not returned he would have served a notice as complainant.
Therefore after the establishment of the fact that the cheque was issued by the accused and specific statement of the complainant as stated above regarding liability of the accused the burden to rebut the presumption shifted to the accused. It is established principle of law that presumption of law as raised Under [SECTION] & [SECTION] of the [ACT] can be rebutted only by cogent evidence and not by mere plea taken in the statement of the accused recorded under [SECTION] of [ACT] Further such cogent evidence can be the cross examination of the complainant or his witnesses (as held in [PRECEDENT].
In a similar case, [PRECEDENT], it was submitted by the accused that the cheque in question was given by the accused to the complainant as a security. Though the liability was settled as evidenced by Ex. D1 & Ex. D1(a) the cheque was not returned, inspite of requests. Therefore a stop memo was issued to the bank by the [PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 10 /15 accused. He also gave a criminal complaint against the complainant which was taken on file as [CASE NUMBER] ( Ex. D2).
On these cogent evidences and the fact of issuing stop memo to the bank and filling a criminal complaint against the complainant the presumption under [ACT] stood rebutted.
In the present matter there are mainly two defences of the accused:
a) The cheques in question were given as security along with another cheque of Rs. 28,000/ at the time of entering into the agreement with the complainant and these cheques were never meant to be encashed.
b) The accused had the equipments supplied by the complainant only for a period of 45 days, hence the rent for the third month never accrued.
The accused have not brought on record any document issued or signed by the complainant accepting that the cheques in question were issued as security only. Further from the stamps put on the cheques its very much clear that they were first presented for encashment on 04.12.2010 and they were again presented for encashment on 15.01.2011. Had these cheques were for the purpose of security only then after termination of the contract between the parties accused should have sent a letter to the complainant for return of the cheques in question, further even if in good faith he failed to sent any such letter he must have protested and written a letter to the complainant after first presentation of these cheques on [PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 11 /15 04.12.2010. Unless the accused had proved that he acted like a normal businessman / prudent person entering into a transaction he could not have rebutted the presumption u/[SECTION] [ACT]. But the accused have not written any such letter, he had not even got the payment of these cheques stopped, as even on the second occasions the cheques were dishonored due to insufficient funds. The accused has not started any legal proceedings against the complainant.
It is submitted on behalf of the accused that though the agreement was entered on 15.09.2010, however it was mutually agreed between accused and one Mr. [ENTITY] who used to represent himself as Director of the complainant company that billing cycle would start from 25th September only, it is further submitted by the accused that by 20.11.2011 the equipments were taken back by the complainant and hence the rent was accrued only from the period September 25th to November 10th 2010 i.e. only for a period of 45 days. The agreement between the parties is in writing and contained signatures with stamps of both the parties and the same has been admitted by the accused as well. This agreement does not contain any stipulation that the billing cycle would start from 25th September. The accused had not shown any written agreement between him and said Mr. [ENTITY] to show that it was agreed between them that billing cycle would start from 25th September. The accused had not even called Mr. [ENTITY] as defence witness. Thus the accused failed to [PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 12 /15 prove this defence.
Thus the bald pleas of the accused having not been substantiated by any cogent, convincing and clear evidence would not be sufficient to rebut the presumption of law.
In the present matter there appears to be a contradiction in the case of the complainant as in the complaint it has been submitted that the cheques in question were given towards part liability under the agreement, on the other hand in the cross examination of defence witness it was suggested by the counsel for the complainant that the cheques in question along with one more cheque for an amount of Rs.28,000/ were issued towards payment of the rent for third month. However the contradiction as to whether the cheques in question were towards payment of the rent for the last month or towards balance under the agreement is not significant enough to rebut the statutory presumption arisen in favor of the complainant. The presumption U/[SECTION] & [SECTION] of [ACT] are mandatory presumptions in favor of the complainant and the same can not be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one.
The counsel for the accused cited the decision of the Supreme court in his favour titled as [ENTITY] v. Dattataraya G. Hegde (2008) 4 SCC 54, however the ratio of this case that existence of legally recoverable debt is not a matter of presumption under [SECTION] of the [ACT], has been overruled [PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 13 /15 by the Hon'ble Supreme Court itself in [PRECEDENT] where in it was held:
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. To that extent, the impugned observations in [ENTITY] (supra) may not be correct.
Thus from the above stated discussion it is clear that the accused has failed to rebut the presumptions U/[SECTION] and [SECTION] of [ACT].
Considering the entire evidence on record, it stands duly proved that the cheques in question which are Ex.CW1/2 & Ex. CW1/3 were issued and drawn in discharge of legal liability of the accused and for consideration.
11. WHETHER THE CHEQUES WERE PRESENTED WITHIN THE PERIOD OF VALIDITY:
Perusal of the record reveals that the cheques in question Ex. CW1/2 & Ex. CW1/3 are bearing the date 03.12.2010. The same were got dishonoured for the last time vide cheque returning memos which are Ex. CW1/4 & Ex. CW1/5 both are dated 17.01.2011 which clearly shows that the cheques have been presented within period of their validity i.e. within six [PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 14 /15 months from the date of the cheques. The accused has not objected to or denied this fact. Thus this fact stand proved beyond doubt that cheques were presented for encashment within time.
12. DISHONOUR OF CHEQUES IN QUESTION:
In this case CW1 has got exhibited the cheque returning memos as per [SECTION] of [ACT] which are Ex. CW1/4 & Ex. CW1/5, as per which the cheques in question were dishonoured on the ground of "Insufficient Funds". The accused has not objected to or denied this fact. Thus this fact stand proved beyond doubt that cheques were dishonoured on the ground of "Insufficient Funds".
13. SERVICE OF LEGAL NOTICE OF DEMAND UPON THE ACCUSED:
CW1 has specifically stated in his examination in chief that the complainant got issued the legal notice of demand dated 07.02.2011 which is Ex. CW1/6 and it was sent to the accused on the same day (within 30 days of knowledge of dishonour of cheque) vide Registered Post which are Ex. CW1/7 to Ex.
CW1/11. It was accepted by the accused at the time of framing notice U/[SECTION] [ACT] that he had received the legal notice from the complainant and duly replied the same. Thus it stand proved that the notice was sent at the correct address of the accused.
14. THE DRAWER OF THE CHEQUES HAVE FAILED TO MAKE THE PAYMENT WITHIN 15 DAYS OF THE RECEIPT OF [PRECEDENT] CALL SOFT TECHNOLOGY (P) LTD v. [ENTITY] Page no. 15 /15 SAID NOTICE:
CW1 has deposed in his examination in chief that despite service of legal notice of demand accused has failed to pay the cheques amount to the complainant. Accused has submitted in his examination that there was no question of making any payment to the complainant in respect of the cheques in question as he was not legally liable to pay in respect of the cheques in question. Therefore this fact also stands proved.
15. In view of the aforesaid discussion, I am of the considered opinion that the complainant has proved his case against the accused beyond shadow of reasonable doubts. All the ingredients of [SECTION] of [ACT] have been duly proved on record. Accordingly accused No.1 M/s [ENTITY], 305 [ENTITY], 78, Nehru Place, New Delhi19 & accused no.2 Sh. [ENTITY], S/o Sh. [ENTITY] (CEO & Director of the accused company), R/o Flat No. 103, Aspire1, Supertech Emerald, Sector 93A, Noida (U.P.). stands convicted of the offence u/[SECTION] [ACT].
Let the copy of this judgment be supplied to the accused free of cost.
Announced in the open court today i.e. 29.06.2012 ([ENTITY]) (Contain 15 pages only) MM: KKD: DELHI: 29.06.2012