TaxTMI 
TaxTMI 
2025 (2) TMI 795
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....Officer. FACTUAL BACKGROUND 2. The brief facts of the case are that the petitioner is a company engaged in the business of selling power generators and related equipment and has claimed that the respondent namely M/s Tarun Engineering Syndicate has purchased materials related to Diesel Generator Sets etc. 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....
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.... 13. Let us examine the credibility of the witness. CW2 Rajesh Kumar Sharma admitted receiving of Rs. 4 lacs and Rs. 6,56,663/- from the accused firm vide cheques but claimed to have received from the accused on account and not against the dishonoured two cheques, the subject matter of other related matter. Accused stated that he had paid the said amount to the complainant through cheques dated 08.08.1997 and 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 acce....
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....bt over the veracity of story of complainant with standard of balance of probabilities and complainant failed to prove his case beyond all reasonable doubts thereafter as matter of fact before the court. The court is also mindful of basic tenant of criminal jurisprudence as to benefit of doubt must go in favour of accused and in case of two possible version, the version favouring the innocence of accused should be opted by the court. Accordingly, in upshot of the 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 SC....
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....respondent has been registered only in 1995. Accordingly, it is submitted that petitioner has filed forged and fabricated sale tax and C-form to give credence to his bogus claims. ANALYSIS AND FINDINGS 10. I have heard the submissions advanced by the learned counsel for the parties and perused the material available on record. 11. In the present case, learned Trial Court has categorically observed that the petitioner herein failed to prove its case beyond reasonable doubt and the respondent has created reasonable doubt over the 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. Th....
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....ontrary is proved' in Section 118 of the Act and use of the words 'unless the contrary is proved' in Section 139 of the Act read with definitions of 'may presume' and 'shall presume' as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption 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 no....
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....ere 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. Relevant portion of the above judgement is extracted below:- "11. Considering the arguments advanced on behalf of the counsel for the parties, I find that there is no difficulty with the proposition that Section 139 of the Negotiable Instruments Act, 1881 raises a presumption that the holder of the cheque, received the cheque for the discharge, in whole or in part, of any debt or other liability. There is also no 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 enforceabl....
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....e through his Banker on 19.11.97 he issued a Registered AD/UPC, a demand/Legal Notice dt.3.12.97 to the Accused for making the payment of above dishonoured amount of Rs.8,00,000/-. 8. That the Accused received the complainant's Legal Notice for making the payment within 15 clays after receiving the Notice on 10.12.97 and failed to make the payment of above dishonoured Cheque within clear 15 days as statutory time." 20. The AR of the petitioner, through whom the complaints have been filed, has stated nothing regarding his personal knowledge about the transactions or about his witnessing the transactions, if any, between the parties herein. The relevant part 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 af....
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....cted in the balance sheet for the year 2010-11 but are reflecting in the company debtors. ................. ................ .................. Our company has not filed any suit for civil recovery for recovery of the amount of the dishonored cheque against the accused/accused firm. ................. ................ .................. Q. Is it correct that the payment of Rs.4 lacs that is against the dishonoured cheque Exh.CW2/3 was made by the accused/accused firm vide Cheque No.512859 dated 08.08.1997 and the payment of the dishonoured cheque Exh. CW2/2 of Rs. 6,56,633/- was made by the accused/accused firm vide Cheque No.512668 dated 20.08.1997 under protest to complainant company ? Ans. The payment received for 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 re....
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....fidavit filed by the CW3, no explanation has been given about non-filing of such documents at earlier stage or as to how those documents were traced later on by the petitioner. However, in its application under Section 311 CrPCa reason was provided i.e. the sale tax forms were not available/misplaced at the time of filing the complaint and that the same were found in the month of June-2011. The present complaints were filed in the year 1997 & 1998 and there has been no averment about sale tax form and even CW1 and CW2 filed their affidavits in evidence in the year 2008 but they did not mention anything about issuance of sale tax forms and misplacement thereof. It is not claimed by the complainant that any complaint with any authority was made regarding misplacement of such said valuable documents, 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 ....