TaxTMI 
TaxTMI 
2025 (2) TMI 137
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....the complaint Date of order of Impugned order Cumulative Amount of the cheques (INR) Allegedly Issued towards CRL.L.P. 72/2020 CC No. 22707/2016 1 31.10.2019 30,00,000/- Principal Amount CRL.L.P. 73/2020 CC No. 22706/2016 3 31.10.2019 80,00,000/- Principal Amount CRL.L.P. 74/2020 CC No. 23435/2016 14 31.10.2019 30,80,000/- Interest/profit 2. Since all the aforementioned criminal complaints stem from the same underlying transaction, and the factual matrix as well as the grounds of challenge 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 a....
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.... Petitioner's persistent demands for repayment, the Respondents subsequently issued 4 cheques toward the principal amount (INR. 1.10 Crores) and an additional 14 cheques representing the fixed profit (Cumulatively amounting to INR 30.8 Lakhs), for the period from February 2015 to March 2016. 3.6 All of the aforementioned cheques bore the signatures of the Manager/Authorised Signatory - Mr. Anil Katoch (Respondent No.6). However, upon presentation, each of the four cheques was dishonoured with the notation "PAYMENT STOPPED BY DRAWER." Despite the Petitioner firm duly 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 Re....
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.... Khan, Deputy Manager, ICICI Bank Ltd., DW2 - HC Surender as a formal witness to bring on record roznamcha dated 16th November, 2017 - i.e., the complaint filed by them in terms of the theft of cheques in question, and DW3 - Anil Katoch (Respondent No. 6) the purported signatory of the cheques in issue. 7. Briefly stated, the case of the Respondents before the Trial Court was as follows: 7.1 There was no transaction as alleged between the parties. The Petitioner has not established their financial capacity to make such a large investment in the Respondent No. 1 company. The ITR filed 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 inv....
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....vestment or loan as alleged by the Petitioners and such investment or loan amount of INR 1.10 Crores was not even shown in the ITR return of the Petitioner firm. Moreover, with respect to the 14 cheques issued towards interest/profit on the alleged investment, the Trial Court held that since the foundational claim of an initial investment of INR 1.10 crores was not established, the question of discharging any liability towards returns or profit on such an investment did not arise. Thus, the Cort concluded that the Respondents have raised a probable defence that the cheques in question were misplaced 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 whi....
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....lice complaint is vague, suggesting that the complaint was a mere afterthought, contrived to furnish a frivolous defence. 9.5 The Trial Court has failed to consider these discrepancies in the story of the Respondents' account regarding the alleged theft of the cheques. By placing undue reliance on Respondents' narrative, the Trial Court has wrongly shifted the onus of proof on Petitioner and placed heavy burden on them to prove the debt, which is contrary to the law on this issue, as held by the Supreme Court in 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 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....
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....e of a legally enforceable debt or liability can be contested. The words "until the contrary is proved" occurring in Section 139 do not mean that the accused must necessarily prove the negative that the instrument is not issued in discharge of any debt/liability but the accused has the option to ask the Court to consider the non-existence of debt/liability so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist. [Basalingappa v. Mudibasappa, (2019) 5 SCC 418; see also Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513]. 41. In other words, the accused is left with two 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, whi....
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.... fact and his failure to prove would result in dismissal of his complaint case. Thereafter, the presumption under Section 139 does not again come to the complainant's rescue. Once both parties have adduced evidence, the Court has to consider the same and the burden of proof loses all its importance. [Basalingappa v. Mudibasappa, (2019) 5 SCC 418]; see also, Rangappa v. Sri Mohan, (2010) 11 SCC 441] [Emphasis added] 13. The foregoing exposition clarifies that the onus on the accused is not to prove conclusively the non-existence of a debt or liability, but rather to establish, on a preponderance of probabilities, that no such debt or liability exists. Once the accused 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 ....
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....ble business relations between the Petitioner and the Respondents, it is entirely implausible that the Petitioner would have remitted an aggregate sum as substantial as INR 1.10 Crores in cash to a legally constituted company without producing any corroborative documentary evidence. In this regard, Mr. Bhim Sain Wadhwa failed to adduce any ITRs or financial accounts evidencing such an investment. Confronted with these facts, the lead witness, Mr. Bhim Sain Wadhwa, designated as CW-1, admitted during his cross-examination that the purported investment of INR 1.10 Crores was not reflected in the firm's taxable income or the profit and loss account submitted for the financial year 2016-2017. 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, reinforc....
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....to be a simple piece of handwritten paper showing some calculations of loss/net balance, which does not prove any legally enforceable debt. The evidence was also not corroborated by any other documentary or oral evidence to prove the investment. In light of these deficiencies, the Trial Court rightly held that the statement of accounts and the other materials placed on record by the Petitioner failed to discharge the shifted burden of proof regarding the existence of the alleged investment or loan. 22. In their effort to discharge the burden shifted back upon the Petitioner, during cross-examination of CW-1, reliance was placed on a letter dated 8th August, 2016 [Exhibit marked as 'E'], purportedly issued by Respondent 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 ....