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TMI Blog2025 (2) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... ities, and it is not incumbent upon the accused to conclusively prove the non-existence of the debt or liability. In the present case, the Respondents have not denied signing the cheques in question, however, they have established a probable defence by demolishing the case of the Petitioner that there was a liability of INR 1.10 Crores payable by the Respondents. Accordingly, since no liability was established for the principal amount, any alleged obligation to pay profit or interest on the purported investment also stood negated. The Respondents have, by their own evidence and through the effective cross-examination of the Petitioner's witness, succeeded in rebutting the statutory presumptions under Sections 118 and 139 of the NI Act. The Court examined the statement of accounts purportedly furnished by the Respondents. During cross-examination, the sole witness (CW-1) conceded that this statement did not bear the name of the Respondents' company, nor did it include the company's stamp or the signature of any of its directors. The Court, thus, rightly observed that these documents appeared to be mere, vague, and unsubstantiated computer-generated Excel sheets, falling short of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in these appeals are substantially identical, the present leave to appeals are being decided through this common order. For ease of reference, the evidence led by the parties is cited hereinafter based on the documents marked in CC No. 22707/2016 (impugned in CRL.L.P. 72/2020). FACTUAL MATRIX 3. Briefly, the essential background facts set up by the Petitioner before the Trial Court, are as follows: 3.1 The Petitioner, a registered partnership firm is represented by Authorised Representative/Partner of the firm, Mr. Bhim Sain Wadhwa, who is well conversant with the facts of the case. 3.2 The Respondent No.1 (identified as Accused no. 1 in the impugned order), M/s Punjab Freight Carriers Pvt. Ltd. and its directors, Respondents No. 2 to 6 (identified as Accused no. 2 to 6 in the impugned order) have maintained a longstanding and cordial business relationship with the Petitioner spanning over three decades. Mr. Bhim Sain Wadhwa, being engaged in the same line of business, was well acquainted with the Respondent firm. 3.3 On the basis of this established relationship, Respondents No. 2 to 6 secured the trust and confidence of Mr. Bhim Sain Wadhwa, thereby inducing and persuading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... informing the Respondents of the dishonour, the latter failed to remedy the default. Consequently, the Petitioner firm issued a statutory notice dated 2nd August, 2016 under Section 138 of the Negotiable Instruments Act, and subsequently lodged a written complaint on 4th August 2016, with both the Commissioner of Police, New Delhi, and the SHO of District VI, Jalandhar, Punjab. 3.7 Following the receipt of the legal notice, Respondent No. 3, Mr. Parminder Singh Gill, personally visited the Petitioner firm on 8th August 2016 and met with Mr. Bhim Sain Wadhwa. During this meeting, Mr. Gill, on behalf of the other Respondents, assured that the cheque amounts would be remitted to the Petitioner firm within ten days. In furtherance of this assurance, Respondent No. 2 also provided a written confirmation dated 8th August, 2016 to the Petitioner firm [Exhibit marked as 'E']. 3.8 Contrary to the foregoing assurances, the Respondents later sent an undated, false and frivolous reply, received by the Petitioner firm on 27th August, 2016 [marked as Exhibit - CW-1/10(Colly)]. In this correspondence, the Respondents not only contradicted the prior written assurance but also alleged that the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the Petitioner firm for FY 2016-2017 indicates that during FY 2013-14, the Petitioner firm was incurring a loss of over INR 2 Crores. However, the Petitioner alleges that during the same period of time - i.e., from 10th September, 2013 to 30th June, 2014 (FY 2013-14 and FY 2014-15), they made the alleged investment of INR 1.10 Crores in the Respondent company. The Petitioner has also not examined any other witness apart from Mr. Bhim Sain Wadhwa to show that there existed a liability of the Respondents towards the Petitioner firm. 7.2 There is no document on record to show that any such investment was ever made by the Petitioner firm in the Respondent company. The statement of accounts [Exhibit CW-1/2(Colly)] which is heavily relied upon by the Petitioner firm to establish that a liability existed, has not been proved by them and thus, the document cannot be considered as a piece of evidence. Purportedly, the said statements of accounts as well as the cheques in question were signed by Respondent No. 6, however, while the signatures on the cheques are admitted, the signatures on the statements of accounts are denied. Additionally, the signatures on these documents do not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced or stolen from their office, thereby rebutting the presumption under Section 139 of the NI Act. SUBMISSIONS OF THE PARTIES IN THE PRESENT LEAVE TO APPEAL 9. Aggrieved by the impugned decision of the Trial Court, Counsel for the Petitioner argues that the Trial Court erred in its factual and legal analysis, particularly in light of established precedents under Section 138 of the Negotiable Instruments Act. He advances the following contentions to challenge the impugned order: 9.1 The parties are well-known to each other and had a relationship for the last 30-35 years, during which the Petitioner firm rendered transportation services to Respondent No. 1. Over time, significant dues remained unsettled, culminating in an outstanding amount of INR 1.10 Crores owed to the Petitioner firm by Respondent No. 1. The parties had mutually agreed to treat this amount as an investment by the Petitioner, to be repaid with a fixed profit. The cheques in question, issued to discharge of the Respondents liability, bear signatures that have been acknowledged as genuine by the authorized signatory, Respondent No. 6. Consequently, a legal presumption in favour of the Petitioner arises under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 18 SCC 106 and Pavan Diliprao Dike v. Vishal NarendraBhai Parmar Arising out of SLP (Crl.) No. 3858/2019. 9.6 Admittedly, the Partner of the Petitioner firm, Mr. Bhim Sian Wadhwa was a Director in Respondent No. 1 company from the year 1999 to 2007. The continued good relations of the parties were due to the fact that the Petitioner firm owned 16 trucks that were being used in the operations of the Respondent company. This fact has been admitted by Respondent No. 6 in his cross examination dated 06th March, 2019. Respondent No. 6 - Anil Kotach, has also admitted in his testimony that during the time when Mr. Bhim Sain Wadhwa was a Director of Respondent No. 1 from 1997 to 2007, there were no complaints of missing or stolen cheques, which indicates that the story of theft/ stolen cheques is not reliable and is concocted. 9.7 As regards the contention that the loan/investment amount were not reflected in the ITR returns of the Petitioner firm, the Trial Court has overlooked a catena of judgements holding that there is no mandatory requirement under Section 138 of the Negotiable Instruments Act to record debts, loans, or investments in IT returns. Instead, the Court improperly rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o options. The first option--of proving that the debt/liability does not exist--is to lead defence evidence and conclusively establish with certainty that the cheque was not issued in discharge of a debt/liability. The second option is to prove the non-existence of debt/liability by a preponderance of probabilities by referring to the particular circumstances of the case. The preponderance of probability in favour of the accused's case may be even fifty-one to forty-nine and arising out of the entire circumstances of the case, which includes : the complainant's version in the original complaint, the case in the legal/demand notice, complainant's case at the trial, as also the plea of the accused in the reply notice, his Section 313CrPC statement or at the trial as to the circumstances under which the promissory note/cheque was executed. All of them can raise a preponderance of probabilities justifying a finding that there was "no debt/liability". [Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513] 42. The nature of evidence required to shift the evidential burden need not necessarily be direct evidence i.e. oral or documentary evidence or admissions made by the opposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d meets this threshold, the evidentiary burden shifts to the complainant, who must then prove the existence of the debt or liability as a matter of fact. In the present case, the Respondents have not denied signing the cheques in question, however, they have established a probable defence by demolishing the case of the Petitioner that there was a liability of INR 1.10 Crores payable by the Respondents. Accordingly, since no liability was established for the principal amount, any alleged obligation to pay profit or interest on the purported investment also stood negated. The Respondents have, by their own evidence and through the effective cross-examination of the Petitioner's witness, succeeded in rebutting the statutory presumptions under Sections 118 and 139 of the NI Act. 14. It is pertinent to note that in the proceedings before the Trial Court, it has been the specific case of the Petitioner that because of long relationship with the Respondents and their alleged inducement, the Petitioner firm, through its partner Mr. Bhim Sain Wadhwa, was induced to make the alleged 'investments' in the Respondent company from time to time. However, before this Court, counsel for Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To this effect the trial Court records: "CW-1 further in his cross-examination admitted of not showing the investment of Rs. 1.10 Crore with the accused company in his statement of account for the financial year 2016-2017". 18. In a feeble attempt to mitigate this discrepancy, CW-1 asserted that the accused company had been shown as a debtor in previous income returns, yet he promptly conceded that no such returns had been filed. The Trial Court's findings, as extracted below, reinforce this deficiency: ''The complainant/CW-1, as stated above, has also admitted in his cross-examination that he has not filed any ITR or other accounts of his firm showing the investment made by him to the tune of one crore ten lakh rupees from 10-09-13 to 30-06-14 or showing the grant of the alleged loan of Rs. 50,70,533 from 11-02-15 to 31-01-16." 19. Moreover, CW-1 was unable to specify the precise dates on which either the cash payments were made or the purported cheques were issued to discharge any liability. These deficiencies, in the Court's opinion, are fatal to the Petitioner's case. 20. In light of the evidence adduced by the parties, coupled with the cross-examination of the witnesses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent No. 3, as evidence of an acknowledgment of liability. However, a closer examination of the circumstances reveal significant anomalies that undermine the credibility of the said document: 22.1. First, during cross-examination, CW-1 admitted that the letter was handed over in person by Respondent No. 3 on 8th August, 2016 at approximately 12:00 noon in CW-1's office in New Delhi. Furthermore, CW-1 acknowledged that Respondent No. 3 was merely carrying the letter on that day; the document was neither prepared, stamped, nor signed in his presence. 22.2 The letter itself references a legal notice dated 2nd August, 2016, which Respondent No. 3 had already received. 22.3 In stark contrast, postal receipts and tracking reports adduced by the Respondent to show that two copies of the legal notice were received by Respondent No. 3 on 8th August, 2016, but only at 3:36 pm and 5:03 pm, respectively, at his residence in Jalandhar, Punjab. 22.4 These discrepancies make it virtually impossible for Respondent No. 3 to have simultaneously: (i) Received the legal notices in Jalandhar at 3:36 pm and 5:03 pm on 8th August, 2016, (ii) Prepared the letter dated 8th August, 2016 [Exhibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bability that the Petitioner does not have a legally enforceable debt due from the Respondents. The Trial Court rightly held that the burden of proof to establish such a liability shifts on the Petitioner, which burden they were not able to discharge. In this regard, it must also be noted that the Petitioner's reliance on the cases of Kalamani Tex and Another v. P. Balasubramanian (2021) 5 SCC 283, Rohitbhai Jivanlal Patel v. State of Gujarat (2019) 18 SCC 106 and Pavan Diliprao Dike v. Vishal NarendraBhai Parmar is misplaced. In the said judgments, the Supreme Court, while noting that the presumptions under Section 118 and 139 of the NI Act are rebuttable, on the basis of the facts and circumstances of the particular cases, held that the accused therein failed to rebut the said presumptions and therefore, the shifting of the burden of proof on the Complainants was not valid. 26. Once it is established that no legally enforceable debt was payable by the Respondents to the Petitioner firm, any claim for returns or interest on such a debt becomes untenable. 27. Thus, the decision of the Trial Court is based on meticulous examination of the facts of the case, documents on record as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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