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TMI Blog2025 (3) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... more, the learned Magistrate has, in so many words, also recorded that the respondent admits to the issuance of the subject cheques and the signatures appearing thereon. However, in what is evidently a complete misinterpretation, misconstruction and misapplication of the statutory presumption contained in sections 118 (a) and 139 of the NI Act, and as interpreted by the courts, the learned Magistrate then proceeds to hold that the appellant (complainant) had failed to establish that there was a legally enforceable debt. In the opinion of this court, this inference drawn by the learned Magistrate is at complete odds with the foundational presumptions contained in sections 118 (a) and 139 of the NI Act, which presumptions hold good unless and until the contrary is proved by the accused person. The fact that the cheques were issued as 'security' is answered in the MoM dated 17.10.1997 and letter dated 08.11.1997, whereby the respondent has admitted to owing a debt of about Rs. 94 lacs to the appellant, which would entitle the appellant to encash the subject cheques for the sum of Rs. 30 lacs towards part-payment of the debt. Therefore, the respondent cannot be heard to say that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that they had issued the said cheques; but, after dealing with the various defences raised on behalf of the respondent, the learned Magistrate proceeds to dismiss the complaints on an incorrect application of the principles of law. It is submitted, that having first correctly enunciated the position of law, the learned Magistrate has subsequently proceeded on the basis that it was the appellant who was required to prove that there was a legally recoverable debt from the respondent, and in doing so, the learned Magistrate has completely misinterpreted and misapplied the statutory presumption contained in sections 118 and 139 of the NI Act. 6. Learned counsel draws attention to the following portion of the impugned judgment where the learned Magistrate has correctly articulated the statutory presumption in favour of the appellant : "16. In the present case, the accused has admitted that the cheque in question (Ex.CW1/13) is his cheque and bears his signature. It was dishonoured for reason "Funds Insufficient" vide cheque returning memo (Ex.CW1/15). As per record, the legal demand notice had been sent to the accused within 15 days from receipt of intimation of dishonor of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Perusal of record reveals that vide order dated 29.08.2000, an application seeking change of name of complainant company (DLF Cement Ltd.) to 'Ambuja Cement Rajasthan Ltd.', filed on behalf of the complainant, was allowed. As such, simple name change of the complainant does not affect the rights and liabilities of the parties. Further, since application had already been allowed and the said order attained finality, the court is not inclined nullify the locus of the complainant at this stage. Thereafter, vide order dated 09.08.2004, an application seeking amendment in the name of complainant company due to its amalgamation with 'Gujarat Ambuja Cements Ltd.', filed on behalf of the complainant, was allowed. Copy of order of BIFR (Mark R) had been filed on behalf of the complainant along with the same. No objection was raised on behalf of the accused qua the order. As per the general law of amalgamation, rights and liabilities of transferor company are vested in transferee company as per the scheme of amalgamation. No inference can be drawn from the documents filed that right to prosecute the accused had been foregone on behalf of the complainant. Further, since application had alre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt appeal, in the following manner : "II. There is no legal liability upon the accused qua the cheque in question. Ld. Counsel for the accused has argued that accounts of the accused were never settled by the complainant. As per the agreement dated 21.01.1997 (Ex.CW1/10), no intimation was given to the accused to entail any liability upon him. The account statement (Ex.CW1/12) is not the original statement of account, is not a finalized one and had not been filed along with the complaint. Accordingly, the cheque in question could not have been issued to the complainant for discharge of any legal liability or part thereof. Per contra, Ld. Counsel for the complainant has argued that Minutes of Meeting dated 17.10.1997 (Mark X) show that the accused was intimated about his liability. His signatures are available on the same. Further, accused had acknowledged his dues towards the complainant vide letter dated 08.11.1997 (Ex.CW1/11). Hence, no further document was required to prove his liability. Since there is an admission of liability of the accused by the accused himself and the cheque in question having been issued in pursuance of the same, the ingredients of Section 138 of NI A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Evidence Act has been filed along with the same. AR of the complainant is neither the author of the same nor was able to answer any question regarding the entries on the same. Furthermore, the figures mentioned on the said statements do no corroborate with the Mark X and Ex.CW1/11. Even the same are not the finalized statements or pertain to settled accounts as the words "TO BE RECONCILED" are mentioned on the same. Accordingly, the said statements cannot be used to establish/prove any liability upon the accused. * * * * * "Coming to the mode of imposing liability upon the accused, the same could have been imposed only as per agreement dated 21.01.1997 (Ex.CW1/10) as admittedly, cement was not sold to the accused for his personal consumption/use/purpose. Admittedly, the complainant has not filed on record any document to show how many dealers were concerned with the accused as their C&F Agent, how much material (cement) was sold to such dealers and what was their outstanding against supply, how many of them defaulted in payment and how much was the total defaulted amount, what steps were taken by the complainant to recover the amount from dealers, when was the defaulted liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of taking any blank cheque from the accused. Further, the circular Mark X and other such circulars, relied upon by the accused, mention only about security cheques to be taken from dealers and not from C&F agents. Hence, the defence of the accused with respect to possession of cheques being with the complainant by way of security and having been given prior in time, is a sham defence. * * * * * "... ... Furthermore, a consistent defence has been taken by the accused in his reply to legal demand notice, cross-examination of the AR of the complainant, statement under Section 313 Cr.P.C. and his own evidence. Accused has deposed that the cheque in question was issued as security cheque along with other cheques on demand of the management of the original complainant. The same have been misused in the two connected matters without any settlement of account. Accused has not contested the trial by taking various or inconsistent defences and has not tried to settle the matter on any other ground. Reliance can be placed upon his testimony lead in defence evidence. In the considered opinion of the court, the accused has been able to rebut the presumption and raise a probable defen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after they clear the outstanding upto 30.09.1997. 10. Mr. Rashid submits, that it was in this backdrop that against a total outstanding debt of more than Rs. 76 lacs, the subject cheques, in the aggregate sum of Rs.30 lacs, were presented towards part-payment of the debt recoverable from the respondent. 11. It is argued, that as recorded in the impugned judgment, DW-2 who was formerly a Vice-President of the original complainant and the signatory to MoM dated 17.10.1997, had admitted that the said document was signed, though he had said that it was not the conclusive document of liability of the respondent, since the respondent owed much more than what had been indicated in the said document. 12. Furthermore, it is pointed-out that while the MoM dealt with the case of 'dealers', in a subsequent letter dated 08.11.1997 issued by the respondent to the appellant, they admitted to a further liability of the 'institutional parties' in the sum of about Rs.18 lacs, which document was duly proved and acknowledged by the respondents as Ex. CW1/11. 13. Accordingly, it is submitted that the learned Magistrate has erred on the point of law by misconstruing the provision of sections 118 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- made part payment towards the outstanding amount in its account." Mr. Mehra submits that therefore, there is discrepancy in the amount alleged to be due from the respondent to the appellant and the amount comprised in the said two cheques. 20. Mr. Mehra argues, that as correctly recorded by the learned Magistrate in the impugned judgment, the complainant had failed to prove the exact amount claimed to be due from the respondent; and therefore the learned Magistrate had correctly dismissed the criminal complaint on that score. ANALYSIS & CONCLUSIONS 21. The court has considered the rival submissions made by learned counsel for the parties, in the context of the record before it. 22. At the outset, it must be observed that insofar as the issues (i) whether the criminal complaint filed by the present appellant, namely M/s Gujarat Ambuja Cements Ltd., was maintainable and (ii) whether the AR of the complainant was competent to depose in relation to the matter are concerned, those issues have been decided by the learned Magistrate in favour of the appellant and against the respondent. 23. Before delving into the other issues decided by the learned Magistrate, this court co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in its very recent order dated 09.12.2024 passed in K. Ramesh vs. K. Kothandaraman SLP (Crl.) No. 3377/2019 in the following words : "5. In this regard our attention was drawn to paragraphs 32, 33, 34 and 36 of the judgment in Bir Singh, wherein it has been observed that even if a blank cheque leaf is voluntarily signed and handed over by the accused towards some payment would attract the presumption under Section 139 of the Act and in the absence of any cogent evidence to show that the cheque was not issued in discharge of the debt, the presumption would hold good. The said paragraphs are extracted below: "32. The proposition of law which emerges from the judgments referred to above is that the onus to rebut the presumption under Section 139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post-dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Negotiable Instruments Act. 33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmittedly the 1st respondent has led no evidence except some formal evidence. The High Court appears to have proceeded on the basis that the denials/averments in his reply dated 21-5-1993 were sufficient to shift the burden of proof on to the appellant complainant to prove that the cheque was issued for a debt or liability. This is an entirely erroneous approach. The 1st respondent had to prove in the trial, by leading cogent evidence, that there was no debt or liability. The 1st respondent not having led any evidence could not be said to have discharged the burden cast on him. The 1st respondent not having discharged the burden of proving that the cheque was not issued for a debt or liability, the conviction as awarded by the Magistrate was correct. The High Court erroneously set aside that conviction." (emphasis supplied) 28. As noticed above, the learned Magistrate has opined that the defence sought to be raised by the respondent that the subject cheques were being held by the appellant as 'security' was "a sham defence". Furthermore, the learned Magistrate has, in so many words, also recorded that the respondent admits to the issuance of the subject cheques and the signatur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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