TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 855
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.... counsel for the applicant that the present matter relates to dishonour of cheque and the said matter can be well considered by Mediation Centre of this Court. It is directed that applicant shall deposit a sum of Rs. 15,000/- within two weeks from today with the Mediation Centre of which 50% shall be paid to the opposite party no. 2 for appearance before the Mediation Centre. The matter is remitted to the Mediation Centre with the direction that same may be decided after giving notices to both the parties. It is directed that Mediation Centre shall decide the matter expeditiously preferably within a period of three months. Thereafter the case shall be listed before appropriate Bench in the second week of September, 2019. Till the next date of listing, arrest of the applicant in Complaint Case No.14 of 2019, (Smt. Gyan Devi Vs. Ashok Ram Dular Vishwakarma), under Section 138 of Negotiable Instrument Act, Police Station Auraiya, District Bhadhoi, pending in the Court of the Additional Chief Judicial Magistrate, Bhadohi, Gyanpur, shall be kept in abeyance. After depositing the amount, aforesaid, notice shall be issued to the parties and in the case the aforesaid amount is no....
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.... passed over but the interim order granted earlier on 28.06.2019 stands vacated. The concerned court below may proceed with the case in accordance with law. List this matter on 25th November, 2020. " 4. This Bench heard Mr. Sarveshwari Prasad, Advocate assisted by Mrs. Ushma Mishra, learned counsel for the applicant, Sri Ganesh Shanker Srivastava, learned counsel for complainant/opposite party no.2 and Mr. Pankaj Srivastava, learned A.GA. for the State as well as perused the entire material available on record. 5. The relevant facts, as are borne out from the records of the present application are as follows: "A complaint case has been moved by opposite party no.2, namely, Mrs. Gyan Devi Brijlal Bharti on on 3rd January, 2019 before the Court of Additional Chief Judicial Magistrate, Bhadohi at Gyanpur under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the "N.I. Act"). In the said complaint case, it has been alleged by the complainant that the accused-applicant was running a business in the name and style of "M/s. Vishwakarma Dish Ends Work" (for short "firm"), which was a partnership firm having its address at 81-B, General Block, MIDC, Bh....
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....pplicant also promised the complainant that he would pay her Rs. 1,00,000/- (rupees one lac only) per month from April, 2016 but the accused-applicant failed to pay the aforesaid money. Further the accused-applicant was not loyal in disclosing the day to day working towards complainant, hence she used to request the accused-applicant to disclose the books of accounts, balance-sheet, profit but he always refused to disclose the same to her and also used to abuse her with wrong words. The accused-applicant had also refused to give 25% share in the land of the firm and value of the machinery of the said firm, due to which a dispute was arisen between the complainant and accused-applicant. Thereafter due to non-fulfillment of the terms and conditions of the memorandum of understanding so introduced between them, the complainant threatened the accused-applicant that she will file police complaint against him and she will also go to the court for the wrongful acts and cheating done by him. It has further been alleged that for settling the disputes, which had arisen between the accused-applicant and the complainant, the accused-applicant promised the complainant that he will return init....
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....d to make payment of cheques as demanded by the legal notice, hence a case for the offence punishable under Section 138 N.I. Act is made out against him. After filing of the aforesaid complainant in the court of Additional Chief Judicial Magistrate, Bhadohi at Gyanpur under Section 138 N.I. Act, complainant/opposite party no.2 filed an affidavit under Section 200 Cr.P.C. on 2nd January, 2019. Thereafter, witnesses, namely, Devashish Bharti and Sant Lal, in support of the aforesaid complaint, have also filed their affidavits under Section 202 Cr.P.C. on 28th January, 2019. The said complaint case has been registered as Complaint Case No. 14 of 2019 (Smt. Gyan Devi Vs. Ashok Ram Dular Vishwakarma) under Section 138 of Negotiable Instrument Act, Police Station-Aurai, District-Bhadohi, pending in the Court of Additional Chief Judicial Magistrate, Bhadohi, Gyanpur. Considering the complaint and the affidavits of the complainant and her witnesses under Sections 200 and 202 Cr.P.C. respectively, the concerned Magistrate has taken cognizance and summoned the applicant to face trial under Section 138 N.I. Act vide order dated 13th March, 2019. It is against the summoning order dated 13th ....
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....allel proceedings were initiated by her against the applicant by means of Complaint Case No. 2917 of 2018 before the Judicial Magistrate, First Class Pimpri at Pimpri, Pune (Maharashtra). V. Prior to even establishing the right to recovery from the cheques in contention, it is disclosed that the entire amount of Rs. 80 lacs had already been paid to opposite party no.2 by the applicant through four cheques i.e. (i) cheque no. 111185 amounting to Rs. 14,00,000/-, (ii) cheque no. 36963 amounting to Rs. 25,00,000/-, cheque no. 36974 amounting to Rs. 16,00,000/- and cheque no. 123523 amounting to Rs. 25,00,000/-, which were issued from Dena Bank. (VI) The agreement in the form of memorandum of understanding dated 16/17th August, 2017 entered into between the applicant and opposite party no.2, which has been so heavily relied upon by opposite party no.2 in support of her case is mere a waste paper and has no relevance in the eyes of law, as the same is an unregistered document. The opposite no.2 has not been appointed as a Director of the company either by any registered document or by the minutes of the meeting of the Board of Directors of the Company. (VII) Even if it is accepted....
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....s no illegality or infirmity in the impugned summoning order and the proceedings initiated by opposite party no.2 against the applicant under Section 138 N.I. Act. He, therefore, submits that the present application is liable to be rejected. 8. On the other-hand, learned counsel for opposite party no.2 raised following contentions for rejecting the present application under Section 482 Cr.P.C.: (i) The accused-applicant is carrying business under the name and style of "M/s. Vishwakarma Dish Ends Works", which is a partnership firm and "M/s. Proficient Industries India Pvt. Ltd.", which is a private company. Both the firms are running at 81-B, General Block, MIDC Bhosari, Pune. The accused-applicant, who is one of the partner of the said firm and company, is a director and another director of the firm and company. The accused-applicant was in need of some finance for development of the said firm and company. Therefore, accused-applicant approached opposite party no.2, who was his family friend and well known to him. The accused-applicant requested opposite party no.2 to invest money in the said firm and company. The accused-applicant promised opposite party no.2 that if she inves....
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.... by the accused-applicant, he gave four cheques to her amounting to Rs. 80,00,000/- which were duly signed and issued by the accused-applicant in favour of opposite party no.2 in the capacity of one of the Director of the said firm and company. The accused applicant also accepted his legal liability to Rs. 87,00,000/- to opposite party no.2 against legal debt and against the said liability, he had issued and handed over various cheques amounting to Rs. 87,00,000/- to opposite party no.2 for discharging his legal liability. When the aforesaid four cheques amounting to Rs. 80,00,000/- were deposited by opposite party no.2 on 20th October, 2018 for encashment of the same in Kashi Gomti Smyut Gramin Bank, Branch Ugapur, Bhadohi where her bank account was maintained, the aforesaid four cheques were dishonoured and returned from the said bank with reasons "Funds Insufficient" as on 31st October, 2018 and intimation in that regard was duly received by opposite party no.2 on 16th November, 2018 from the said bank. Thereafter, on 22nd November, 2018, opposite party no.2 had issued legal notice through her advocate by registered A.D. to the accused-applicant at his official address as mentio....
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....r dated 13th March, 2019, which is legal and justifiable in the eyes of law. (iv) Opposite party no.2 has also filed another complaint bearing Complaint Case No. 2917 of 2018 before Judicial Magistrate, First Class, Pimpri, at Pimpri, Pune for dishnouring of cheque no. 000015 dated 31st August, 2018 amounting to Rs. 7,00,000/- which was also duly signed and issued by accused-applicant in favour of opposite party no.2, a copy of the complaint no. 2917 of 2018 has been enclosed as Annexure No.-C.A-6 to the counter affidavit filed on her behalf. In the said complaint case, non-bailable warrant has also been issued against the accused-applicant by the Judicial Magistrate, First Class, Pimpri. The said complaint case has been filed by the complaint at Pimpri Pune because the cheque no. 000015 amounting to Rs. 7,00,000/- drawn on 4111485003 Kotak Mahindra Bank Ltd. and as per the Bank rules, the jurisdiction of the Kotak Mahindra Bank is limited to territory of Maharashtra. Kotak Mahindra Bank is a private Bank. (v) After selling properties, opposite party no.2 invested Rs. 80,00,000/- in the firm and company of the accused-applicant on his promise and the total liability is of Rs. 8....
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....t the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon; (f) as to stamps --that a lost promissory note, bill of exchange or cheque was duly stamped; (g) that holder is a holder in due course --that the holder of a negotiable instrument is a holder in due course: Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him. 138. Dishonour of cheque for insufficiency, etc., of funds in the account. --Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that accou....
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....s to make the payment within 15 days of the receipt of the aforesaid legal demand notice, cause of action under Section 138 NI Act arises. 12. From the Chapter XVII comprising Sections 138 to 142 of the Negotiable Instruments Act, which was introduced in statute by Act 66 of 1988, it is also apparently clear that the object underlying the provision contained in the said Chapter was aimed at inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business and day to day transactions by making dishonour of such instruments an offence. A negotiable instrument, whether the same is in the form of a promissory note or a cheque is by its very nature a solemn document that carries with it not only a representation to the holder in due course of any such instrument but also a promise that the same shall be honoured for payment. To that end Section 139 of the Act raises a statutory presumption that the cheque is issued in discharge of a lawfully recoverable debt or other liability. This presumption is no doubt rebuttable at trial but there is no gain saying that the same favours the complainant and shifts the burden to the drawer of the in....
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....ases is upon the prosecution to prove the existence of facts which have to be present before the presumption can be drawn. Once those facts are shown by the prosecution to exist, the Court can raise the statutory presumption and it would, in such an event, be for the accused to rebut the presumption. The onus even in such cases upon the accused is not as heavy as is normally upon the prosecution to prove the guilt of the accused. If some material is brought on the record consistent with the innocence of the accused which may reasonably be true, even though it is not positively proved to be true, the accused would be entitled to acquittal." 15. Further the Apex Court in Bharat Barrel & Drum Manufacturing Company Vs. Amin Chand Pyarelal, reported in (1999) 3 SCC 35 had considered Section 118(a) of the Act and held that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable and defendant can prove the non-existence of a consideration by raising a probable defence. In paragraph No.12 following has been laid down:- "12. Upon consideration of various judgments as note....
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....sions "may presume" and "shall presume" referring to an earlier judgment, following was held in paragraph No.28:- "28. What would be the effect of the expressions "may presume", ''shall presume" and "conclusive proof" has been considered by this Court in Union of India v. Pramod Gupta, (2005) 12 SCC 1, in the following terms: (SCC pp. 30-31, para 52) "It is true that the legislature used two different phraseologies ''shall be presumed' and ''may be presumed' in Section 42 of the Punjab Land Revenue Act and furthermore although provided for the mode and manner of rebuttal of such presumption as regards the right to mines and minerals said to be vested in the Government vis-à-vis the absence thereof in relation to the lands presumed to be retained by the landowners but the same would not mean that the words ''shall presume' would be conclusive. The meaning of the expressions ''may presume' and ''shall presume' have been explained in Section 4 of the Evidence Act, 1872, from a perusal whereof it would be evident that whenever it is directed that the court shall presume a fact it shall regard such fact as prov....
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.... of an accused and that of the prosecution in a criminal case is different." 20. The Apex Court again reiterated that whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is "preponderance of probabilities". In paragraph No.34, following was laid down:- "34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is "preponderance of probabilities". Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies." 21. In Kumar Exports Vs. Sharma Carpets, reported in (2009) 2 SCC 513, the Apex Court again examined as to when complainant discharges the burden to prove that instrument was executed and when the burden shall be shifted. In paragraph Nos. 18 to 20, following has been laid down:- "18. Applying the definition of the word "proved" in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident tha....
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....xist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist..............." 22. A Three-Judge Bench of the Apex Court in Rangappa Vs. Sri Mohan, reported in (2010) 11 SCC 441 had elaborately considered provisions of Sections 138 and 139. In the above case, trial court had acquitted the accused in a case relating to dishonour of cheque under Section 138. The High Court had reversed the judgment of the trial court convicting the accused. In the above case, the accused had admitted signatures on the cheque. This Court held that where the fact of signature on the cheque is acknowledged, a presumption has to be raised that the cheque pertained to a legally enforceable debt or liability, however, this presumption is of a rebuttal nature and the onus is then on the accused to raise a probable defence. In Paragraph No.13, following has been laid down:- "13. The High Court in its order noted that in the course of the trial proceedings, the accused had admitted that the signature on the impugned cheque (No. 0886322 dated 8-2- 2001) was indeed his own. Once this fact has been acknowledged, Section 139 o....
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....cing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof. 28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own." 25. Now this Court comes on the merits of the cases set up by the learned counsel for the appl....
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....nuary, 2019. From the aforesaid it is clear that all the ingredients provided under Section 138 N.I. Act are fully satisfied in filing of the complaint by opposite party no.2 against the accused-applicant. Therefore, a case for the offence punishable under Section 138 N.I. Act is made out against the accused-applicant. 28. The contention of opposite party no.2 that Additional Chief Judicial Magistrate, Bhadohi, Gyanpur has every right to try the complaint case filed by opposite party no.2 under Section 138 N.I. Act, has force, as her bank account has been maintained at Kashi Gomti Sanyukt Gramin Bank, Branch-Ugapur, District Bhadohi in which she had submitted the aforesaid four cheques issued and signed by the applicant in her favour and the same has been dishonoured and returned to her with remark "FUNDS INSUFFICIENT". Therefore, the territorial jurisdiction is limited to Judgeship Bhadohi at Gyanpur. It may also be noticed that the permanent addresses of opposite party no. 2 is Village-Jakkhini, Jakkhini Anish Tehsil, Rajatalab, District-Varanasi and Village-Jaddupur, Police Station-Aurai, District-Bhadohi-221201. It is, thus, clear that the Additional Chief Judicial Magistrate,....
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....ur takes place except in situations where the offence of dishonour of the cheque punishable under Section 138 is committed along with other offences in a single transaction within the meaning of Section 220(1) read with Section 184 of the Code of Criminal Procedure or is covered by the provisions of Section 182(1) read with Sections 184 and 220 thereof." 29. The contention of the learned counsel for the applicant that the present proceedings initiated by opposite party no.2 against the applicant under Section 138 N.I. Act in the court of Additional Chief Judicial Magistrate, Bhadohi, Gyanpur, are res judicata proceedings, as opposite party no.2 has already filed complaint case before the court of Judicial Magistrate, First Class-Pinpri at Pinpri (Pune) on 6th December, 2018, which is still pending consideration, has only been stated to be rejected on the ground that 'Res Judicata' means a case or suit involving a particular issue between two or more parties already decided by a court. Perusal of the both the complaint cases filed by opposite party no.2 against the applicant under Section 138 N.I. Act before the Court of Additional Chief Judicial Magistrate, Bhadohi, Gyanpu....
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.... to Rs. 80,00,000/- drawn on Dena Bank, Bhosari Branch-Pune have been issued by the accused-applicant in favour of opposite party no.2, which have duly been signed by him and the same have been dishnoured and returned to her. Therefore, a prima facie case for the offence under Section 138 N.I. is made out against the applicant. However, it is open for the applicant to initiate such proceedings as he may be permissible under law for recovery of entire amount paid by him, if any, like he has already filed a suit in the Court Civil Judge (Senior Division), Pune against opposite party no.2 for payment of Rs. 38 lacs along with interest @ 8% per annum, a copy of plaint has been enclosed as Annexure-6 to the affidavit accompanying the present application. 32. So far as the last contention of the learned counsel for the applicant that the present proceedings initiated by opposite party no. 2 against the applicant are mala fide based on false and frivolous allegation, this Court finds that the contention made by the applicant's learned counsel call for adjudication on pure questions of fact which may adequately be adjudicated upon only by the trial court and while doing so even the su....