Cheque Dishonour under S.138 of Negotiable Instruments Act, 1881 and Non-Production of Books of Accounts in Complaints for Cheque-Dishonour

Cheque Dishonour under S.138 of Negotiable Instruments Act, 1881 and Non-Production of Books of Accounts in Complaints for Cheque-Dishonour

In an interesting case, the Metropolitan Magistrate acquitted the accused for the offence punishable under Section 138 Negotiable Instruments Act, 1881. The acquittal was found justified.

Supply of Goods

In this case, petitioner was a proprietorship concern dealing in business of papers and packaging and the accused used to have a running account with the petitioner company for purchasing papers. The accused had placed an order for supply of papers with an assurance of payment on delivery vide invoice dated 29th April 2011 and 30th April 2011 amounting to a total of ₹5,80,598/- and as there was a previous balance of ₹35,983/- on the accused and the petitioner had later purchased paper from the accused for a sum of ₹1,80,611/-, after adjusting the same the liability of the accused towards petitioner as on 30th April 2011 was of ₹4,35,970/-. 

In discharge of that liability the accused issued a cheque bearing number 158770 drawn on Syndicate Bank for a sum of ₹4,35,970/- in favour of the petitioner company. On presentation of the aforesaid cheque, it was dishonoured with remarks ‘Account Closed’ vide return memo dated 19 th September 2011. Legal demand notice was sent to the accused. Despite the service of legal notice, the accused failed to make the payment. Hence, the complaint.

In his defence he claimed that the petitioner had cheated him and he was not liable to pay any amount to the petitioner. He further submitted that he used to supply goods to the petitioner and a sum of ₹2,68,781/- had to be paid by the petitioner to him.

Improper Bills and A Source of Defence for Accused

Statement of the accused was recorded under Section 313 Cr.P.C. wherein he stated that he never bought any paper from the petitioner but used to supply paper to the petitioner and the bills placed by the petitioner are not in order otherwise they would have been countersigned. As regards the cheque the accused stated that the cheque was lost by him of which he had lodged a police complaint in the month of August 2011 and when he received the legal notice it was duly replied by him.

Accused examined himself as DW-1 wherein he reiterated his statement recorded under Section 313 Cr.P.C. He further stated that he used to sell corrugated papers to the petitioner of which he filed around 15 bills vide Ex.DW-1/A-1 to A-15 having signatures of the petitioner along with stamp. He also stated have the petitioner owed him a sum of ₹2,68,781. He also reproduced his DVAT form from 1st April 2011 to 30th September 2011 vide Ex.DW-1/B and copy of summary of purchase for the month of April, May, August and September 2011 as Ex.CW-1/D-1 to D-4. The accused also produced ledger balance with the petitioner vide Ex.DW-1/E. He also stated that he had replied to the notice of the petitioner and produced a copy of the reply as Mark A and sent notice for recovery of his outstanding amount as Mark B. He also proved his complaint regarding loss of cheque as Ex.DW-1/F. 

Liability and Evidence in Cheque- Dishonour

After perusing the evidence on record, the petitioner has relied on two invoices to show the liability of the accused but none of these two invoices are countersigned by the accused. The ledger of the running account with the accused has not been placed on record by the petitioner. Moreover, the invoices and ledger with respect to the business transactions between the petitioner and the accused that have been relied upon by the accused have not been denied by the petitioner. 

Absence of Countersign

From the material placed on record it was held that it is evident that the petitioner purchased goods from the accused on 15 occasions and kept on paying those in regular intervals leaving a balance of ₹2,68,781 on 24th March 2011. After this the petitioner claimed to have sold goods to the accused on 29th April 2011 and 30th April 2011 through two invoices which are not countersigned by the accused despite that being the usual practice of the petitioner of countersigning the invoices whenever he purchased goods from the accused. The petitioner chose not to produce any book of accounts in support of the invoices filed by him yet admitting the last sale by the respondent and adjustment of ₹35,983/-. 

Case : Swastik Paper and Packaging v. Amit Upadhyaya [2019] GCtR 6663 (Delhi)