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TMI Blog2025 (2) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... here the complainant (respondent therein) did not produce any books of account or stock register maintained in the course of regular business or any acknowledgement for delivery of goods to establish that as a matter of fact woolen carpets were sold to the appellant therein (accused), it was opined that the complainant has failed to establish its case under section 138 of NI Act as required under law. This Hon'ble Court in Pine Product Industries & Another v. R.P. Gupta & Sons & Another [2006 (12) TMI 553 - DELHI HIGH COURT] has held that if the complaint itself is vague about the nature of liability in discharge of which the cheques were issued and no details as to how the amount in question was arrived at, mere liability of the respondent to pay her dues towards purchase of goods is not enough to proceed under section 138 of NI Act. It is now well settled that the accused can always rely upon the material and circumstances brought on record by the complainant. It is also well settled law that the accused is not required to prove innocence by establishing the defence beyond all reasonable doubts as accused can always prove his innocence on basis of preponderance of probabilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against bills. The respondent issued the following cheques for making part payments against the said purchases:- S.No. C.C. No. Cheque No. Cheque Date Cheque Amount Drawn on 1. 2894/2017 092288 22.07.1997 Rs. 9,79,151/- Corporation Bank, Greater Kailash, New Delhi 2. 2895/2017 092285 01.08.1997 Rs. 8,00,000/- Corporation Bank, Greater Kailash, New Delhi 3. 2896/2017 092284 25.07.1997 Rs. 8,00,000/- Corporation Bank, Greater Kailash, New Delhi 4. 2900/2017 092286 15.07.1997 Rs. 8,00,000/- Corporation Bank, Greater Kailash, New Delhi 3. On presentation of these cheques, the same were returned dishonored with endorsement "account closed" (wrongly mentioned as "payment stopped by drawer" in LP No. 16 of 2018). Thereafter, legal demand notice was issued by the petitioner to the respondent. As the respondent failed to pay within the stipulated time, the petitioner filed four (4) separate complaints against the respondents. 4. The petitioner in support of his complaints examined three witnesses to prove its version of the case, namely:- A. Authorized Representative (AR) Sh. G. K. Pachauri (CW1), B. Managing Director (MD) Rajesh Kumar Sharma (CW2), and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 20.08.1997 respectively under pretest. The explanation of CW2 Rajesh Kumar Sharma cannot be believed because such facts v/ere never disclosed by the complainant and if the payment was not against the cheques, it would be hard to believe that amount, which were exactly the same as mentioned in two dishonoured cheques of connected case between same parties. It shows that complainant did not approach the court of law with clean hand and truthful facts with reasonable details. ............. ................ ............... 15. The complainant has not produced anything to prove that the goods in question were delivered to the accused firm against which the cheque in question was allegedly issued in favour of Complainant Company. CW2 in cross examination accepted that no receipt of delivery was filed and no Civil Recovery Suit has been instituted against the accused firm by the complainant company in respect to cheques in question. In a particular case, non-filing of civil suit for recovery of due amount may give some credence to the claim of the accused that goods were not supplied for which cheques were issued as advance payment. Here, it is noteworthy that the complainant is hot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same, I return the finding of acquittal of accused for offence u/s 138 of N1 Act in the case." SUBMISSIONS ON BEHALF OF THE PETITIONER 8. Mr Pandey, learned counsel appearing for the petitioner submits as under:- A. The impugned judgments and orders are erroneous and unsustainable on both facts and law because the learned Trial Court did not appreciate section 118 and 139 of NI Act that there is a presumption in the favour of the petitioner that the cheques were given for a valid legally enforceable debt. The burden of proof lies solely on the respondent who was duty bound to discharge the same only by adducing reliable, cogent, unimpeachable evidence. Reliance is placed on Rangappa v. Sri Mohan (2010) 11 SCC 441. B. Learned Trial Court also did not appreciate that the NI Act imposes on the drawer of a cheque very strict liability so as to deter, discourage the drawer from not honoring the cheque after issuance. C. He further states that as per the ledger account of the respondent, a sum of Rs. 1,09,71,948.02 is due and payable by the respondent to the petitioner and the cheques were issued for repayment of the said amount. D. The impugned judgments and orders are pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veracity of the story of the petitioner. 12. The petitioner herein has argued that in view of the facts and evidence on record, the statutory presumption under Section 118 (a) read with Section 139 of NI Act has to be drawn in favour of the petitioner and it was the respondent who has to rebut the same. 13. It is pertinent here to discuss the law regarding the nature and extent of legal presumption in favour of complainant under NI Act and the possibility and manner of rebuttal of the same by the accused while balancing reverse onus of proof under the NI Act and presumption of innocence of accused under normal criminal jurisprudence. 14. The nature and extent of such presumption came up for consideration before the Hon'ble Supreme Court in the case of M.S. Narayana Menon @ Mani v. State of Kerala & Another, (2006) 6 SCC 39 wherein it was observed as under:- "30. Applying the said definitions of 'proved' or 'disproved' to the principle behind Section 118 (a) of the Act, the court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumption is over. 20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To dispr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute that this presumption is a rebuttable presumption. The presumption has to be rebutted in the course of the trial and once rebutted the onus would shift on the complainant to establish and prove beyond reasonable doubt that the cheque was, in fact, issued for the discharge, in whole or in part, of any debt or other liability. Once this presumption is rebutted then the case has to be considered from the standpoint of the explanation contained in Section 138 which says that for the purposes of that Section, "debt or other liability" means a legally enforceable debt of other liability. So, once the presumption is rebutted, the onus shifts on to the complainant to not only establish that the cheque was issued for the discharge of a debt of other liability but that such debt or liability was legally enforceable." 17. It is now well settled that the accused can always rely upon the material and circumstances brought on record by the complainant. It is also well settled law that the accused is not required to prove innocence by establishing the defence beyond all reasonable doubts as accused can always prove his innocence on basis of preponderance of probabilities. It is also not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of his cross examination is cited as below:- "I am looking after the legal matters of the complainant company. I do not have any connection with the purchases, sales, supply of material or recovery of the material sold of the complainant company. I do not have any personal knowledge regarding transactions held by the Complainant Company with the accused." ... "The original cheque was never handed over to me and the same was never presented for payment by me. Whatever I have said in my affidavit is based upon the record given to me by the Complainant Company and I do not have the personal knowledge of the same." 21. The absence of proof regarding the delivery of goods is a critical weakness in the petitioner's claim. The discrepancies in the balance sheet, particularly the absence of the specific amount owed by the respondent, weakens the petitioner's case. The Trial Court finds that the petitioner's financial records are insufficiently detailed. Further, the MD's admission that no civil recovery suit has been filed against the respondent further undermines the petitioner's position, as a civil suit would be a standard procedure to recover dues as in the present case, goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.4 lacs and Rs. 6,56,633/- respectively received by our company on account but not against Exh.CW2/2 and Ehx.CW2/3. It is wrong to suggest that the aforesaid two payments were made by the accused/accused firm under protest against the dishonoured cheques Exh.CW2/2 and Exh.CW2/3 vide letters dated 08.08.1997, 20.08.1997 and letter dated 22.08.1997 to your counsel Sh. H.K. Chaturvedi." 22. The MD's admission of receiving amounts from the respondent via cheques, while claiming they were not in relation to the dishonored cheques, creates a contradiction. Further, his failure to disclose relevant facts about the payments and their connection to the dishonored cheques leads the Trial Court to question the bonafide of the petitioner's case. 23. The testimony of the accounts officer of the petitioner indicates that the Sales Tax Office issues forms specific to assessment years. If the forms in question relate to 1997-98 and 1998-99, it is impossible for a government office to issue forms for those years in 1992. This discrepancy casts doubt on the authenticity and relevance of the documents presented by the petitioner. The absence of evidence or established practice by the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, which were relevant to the pending six cases between the same parties." (Emphasis added) 25. Furthermore, the VAT Inspector from the VAT Office Silvassa has categorically stated that the respondent was registered with the sales tax office on 29.08.1995 and the said sales tax form was never issued to the respondent as the same has been issued to some other firm namely M/s Avon Agencies on 02.01.1992. The same is cited below:- "The witness has been confronted with the original sales tax form bearing no 0OJJ029425 dated 02.01.1992 which is already Ex.CW3/3 / A-1. which he confirms that this form was never issued to M/s Tarun Engineering Syndicate. The witness further clarifies that as per our letter DW1/A, issued by Value Added Tax Officer, Silvassa, it has been clarified that point 5 that the form no JJ0029425 dated 02.01.1992 was issued to Avon Agencies on 02.01.1992 as per record available in their office. Certified copy of the register containing record of C forms issued is Ex.DW1/7, which shows that point A that the aforesaid sales tax form has been issued to M/s Avon Agencies. It is correct that the sales tax forms can only be issued to a party after registration of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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