2020 (1) TMI 551 - HC - Indian Laws

Dishonor of cheque - the notice was issued against the accused and he did not plead guilty and claimed trial - grounds urged in the appeal are that the learned Magistrate failed to consider both oral and documentary evidence on record - Drawing of presumption - principles of natural justice - Whether the Court below has committed an error in dismissing the complaint in coming to the conclusion that the transaction was not proved by the complainant? - HELD THAT - The learned counsel appearing for the complainant relied upon the document Ex.P5 and also bank statement produced by the complainant which shows the address as shop No.5, Raghu buildings behind Bharat Motors, Banaswadi, Bengaluru. But the question before this Court is that when the VAT certificate produced as Ex.D4 discloses the commencement of business and the business address, the complainant has to discharge his burden to prove that notice was served on the accused. The same has not been done - even the complainant did not get the endorsement from the postal department to confirm that the legal notice was served on the accused and hence, first of all for having served the notice on the accused, there is no material before the Court. The second contention of the complainant is that in respect of the material supplied in terms of Exs.P9 to P29, the accused did not put any amount - HELD THAT - In order to show that supply of cement bags was made by the complainant to the accused, there must be an acknowledgment on the part of the accused for having received the said bags. No such material is placed before the Court. In order to prove the same, the complainant has also not placed any document to show that 9040 cement bags were supplied to the accused. The claim is to the extent of ₹ 24,20,250/- and only invoices of Exs.P9 to P29 are relied upon with regard to the supply of cement bags and when such being the case, the Court below after considering the oral and documentary evidence, has rightly come to the conclusion that the complainant has not proved the very supply of cement bags to the accused - there are no error committed by the Court below in dismissing the complaint. The burden is on the complainant to prove that cement bags were supplied to the accused and the same has not been discharged by him by placing the material before the Court. Drawing of presumption - HELD THAT - No doubt, the Court can draw presumption, but in order to draw presumption, the complainant has to discharge his burden to prove the transaction between himself and the accused. When such being the case and when specific contention was taken by the accused that the cheque was taken as a security and the same has been misused, the complainant ought to have explained the same and the same has not been done - Hence, the question of drawing presumption under section 139 of the Act also does not arise. Appeal dismissed.

Summary

Issues Involved:
1. Whether the Court below committed an error in dismissing the complaint by concluding that the transaction was not proved by the complainant.
2. Whether the impugned judgment requires interference by this Court.
3. What order should be passed.

Issue-Wise Detailed Analysis:

1. Error in Dismissing the Complaint:
The complainant filed a complaint under Section 138 of the Negotiable Instruments Act, 1881, alleging that the accused issued a cheque for ?24,20,250/- which was dishonored due to "insufficient funds." The complainant claimed to have supplied 9040 bags of cement to the accused, substantiated by 21 tax invoices. However, the Magistrate dismissed the complaint, doubting the authenticity of the invoices and the actual supply of cement. The complainant argued that the Magistrate failed to appreciate the documentary evidence, including tax invoices and stock statements, and wrongly accepted the accused's VAT registration as proof that the business commenced after the alleged supply date.

2. Impugned Judgment and Presumption under Section 139:
The complainant contended that the Magistrate did not draw the presumption under Section 139 of the Act, which assumes the existence of a legally enforceable debt or liability when a cheque is issued. The complainant argued that the cheque was dishonored due to insufficient funds and that the legal notice was sent to the accused's address as per the bank statement. The accused, however, claimed that no notice was served and that the invoices were fabricated. The accused also argued that the cheque was given as security and was misused by the complainant.

3. Court's Evaluation and Order:
The Court evaluated the evidence, noting discrepancies in the invoice numbers and dates, and the lack of acknowledgment for the supply of cement. The Court observed that the complainant failed to produce any material proof of the supply of cement bags to the accused. The Court also noted that the complainant did not obtain an endorsement from the postal department to confirm that the legal notice was served on the accused. Given these discrepancies and the lack of substantial evidence, the Court found no error in the Magistrate's dismissal of the complaint.

Conclusion:
The Court concluded that the complainant did not discharge the burden of proving the transaction and the supply of cement bags to the accused. The invoices presented were inconsistent and did not match the ledger entries. The Court upheld the Magistrate's decision, dismissing the appeal and ruling that the presumption under Section 139 could not be drawn in favor of the complainant due to the lack of credible evidence.

Order:
The appeal is dismissed.