Karnail Singh v. M/S Haryana Agro Industries Corp. Ltd. And ORS

IN THE HIGH COURT OF PUNJAB AND HARYANA AT

CHANDIGARH CRR-496-2025 (O&M) Date of decision: 20.05.2025 Karnail Singh ....Petitioner

Versus

Haryana Agro Industries Corporation Limited and others ....Respondents CORAM: HON'BLE MR. JUSTICE HARPREET SINGH BRAR

Present:

Mr. Sanjeev Kumar, Advocate for Mr. Brijender Kaushik, Advocate for the petitioner.

HARPREET SINGH BRAR J. (Oral) 1.

The present revision petition is preferred against judgment dated 18.11.2024 passed by learned Additional Sessions Judge, Ambala whereby the judgment of conviction dated 10.10.2018 and order of sentence dated 11.10.2018 passed by learned Judicial Magistrate, First Class, Ambala were upheld in the case stemming from criminal complaint No.517 registered under Section 138 of the Negotiable Instruments Act, 1881, (hereinafter 'NI Act'). 2.

Briefly, the facts are that the accused, comprising a rice mill and its partners, entered into an agreement with Haryana Agro Industries Corporation Limited for custom milling of 4328.56 metric tons of paddy during the relevant procurement season. As per the agreement, they were obligated to deliver 2900.14 metric tons of rice to the Food Corporation of India (FCI) by the extended deadline of

30.09.2014. However, they failed to deliver the full quantity and defaulted on 795.38 metric tons. Following this shortfall, the complainant issued a demand notice for recovery of 2,93,78,050. In ₹ response, the accused issued a cheque bearing No.000002 dated 29.01.2015 for 25,00,000/- as part payment. The cheque was ₹ dishonoured due to insufficient funds. Despite serving a legal notice dated 23.02.2015 demanding payment, no amount was paid. Consequently, the complainant initiated legal proceedings under Section 138 of the Negotiable Instruments Act for dishonour of cheque. 3.

After assessing all material on record, the learned trial Court convicted the petitioner vide judgment of conviction dated 10.10.2018 and sentenced him to undergo simple imprisonment for 01 year as well as to compensate the complainant by paying Rs.25,00,000/- vide order of sentence dated 11.10.2018. Aggrieved by the same, the petitioner preferred an appeal before the learned Lower Appellate Court which was also dismissed.

4.

Learned counsel for the petitioner inter alia contends that the learned Courts below have completely disregarded the fact that the complaint (supra) was filed by respondent No.1, a registered company under the Companies Act, 2013. However, nothing is available on the record to indicate that a resolution was passed by the Board of Directors that would authorize respondent No.1 to initiate prosecution. Further, the alleged agreement dated 31.10.2013 was executed between respondent No.3-the firm and the Governor of Haryana, through District

Magistrate. No agreement was executed between respondents No.1 and 3, therefore, respondent No.3 cannot be made liable towards respondent No.1. Therefore, it cannot be said that the disputed cheque was issued towards discharge of a legally enforceable debt. Finally, a compromise was arrived at between respondents No.1 and 4, resulting in acquittal of respondent No.4. However, the liability should have been shouldered by the firm i.e. respondent No.3 and respondent No.4 cannot be freed merely because he paid a certain amount towards the settlement. Further still respondent No.1 has no authority to enter into a partial compromise. In fact, the learned Lower Appellate Court has upheld the conviction of the petitioner while acquitting his partner in a similar but separate appeal.

5.

Having heard the learned counsel for the petitioner and after perusing the record of the case with his able assistance, it appears that respondent No.2 was duly authorized to initiate prosecution in the present case, as a government official bears the power to delegate responsibilities to his sub-ordinates. However, for further analysis, a study of Sections 118 and 139 of the NI Act are warranted, which read as follows:

Section 118. Presumptions as to negotiable instruments.- Until the contrary is proved, the following presumptions shall be made:

(a) of consideration:-- that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;

xxx xxx xxx

Section 139. Presumption in favour of holderIt shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.

6.

It is no longer res integra that these presumptions are of a rebuttable nature. While, the onus to prove the guilt of the accused rests on the prosecution, once the facts required to form the basis of these presumptions in law exist, the Court is duty bound to draw the conclusion as stipulated by the statute. However, the accused is not barred from presenting evidence in his defence. The accused is only required to raise a probable defence casting a doubt on the existence of consideration which he can do by adducing direct evidence, circumstantial evidence or even on the basis of presumptions of law or fact.

Furthermore, if he can explain the circumstances that would indicate his innocence, it is not mandatory for the accused to adduce evidence as the material available on record itself can be looked at from a new perspective Thereafter, the burden shifts back to the prosecution to reply to and negate the rebuttal made by the accused. The standard of proof in an offence under the NI Act is that of civil proceedings i.e. preponderance of probabilities. Since the burden of proof on the accused is not as heavy as the prosecution, he is not required to disprove the entire prosecution case.

7.

A two Judge bench of the Hon'ble Supreme Court in M.S. Narayana Menon alias Mani v. State of Kerala and Another 2006(6) SCC 39, speaking through Justice S.B. Sinha, observed as follows: "45. In Kundan Lal Rallaram v. Custodian, Evacuee Property, Bombay [AIR 1961 Supreme Court 1316], Subba Rao, J., as the learned Chief Justice then was, held that while considering the question as to whether burden of proof in terms of Section 118 had been discharged or not, relevant evidence cannot be permitted to be withheld. If a relevant evidence is withheld, the court may draw a presumption to the effect that if the same was produced might have gone unfavourable to the plaintiff. Such a presumption was itself held to be sufficient to rebut the presumption arising under Section 118 of the Act stating: "...

Briefly stated, the burden of proof may be shifted by presumptions of law or fact, and presumptions of law or preseumptions of fact may be rebutted not only by direct or circumstantial evidence but also by presumptions of law or fact. We are not concerned here with irrebuttable presumptions of law."

8.

Adverting to the facts of the case, it transpires that the petitioner had taken the defence that the disputed cheque was issued as a security cheque. However, nothing has been brought to the fore to substantiate that claim. Even the agreements entered into by his firmrespondent No.3 does not specify the need for providing a security cheque. Furthermore, if the cheque was misused by the complainants, the petitioner ought to have taken action against them but no complaint to this effect has been moved by him.

9.

Further, it was categorically agreed to by the petitioner, vide agreement dated 31.10.2013, that respondents No.1 and 2 shall provide the paddy for milling, that respondent No.3 would process into rice and supply to the FCI. A perusal of the record also shows that the

petitioner had also requested for an extension to provide the quantity agreed upon, which was rejected by the government. As such, the petitioner has been unsuccessful in rebutting the presumption under Section 139 NI Act.

10.

In view of the facts and circumstances of the case, this Court finds that learned counsel for the petitioner has failed to point out any perversity or illegality in findings recorded by the learned Courts below, which warrants interference by this Court. As such, there is no merit in the present revision petition and the same is dismissed. 11.

Pending miscellaneous application(s), if any, shall also stand disposed of.

12.

A copy of this order be sent to learned Chief Judicial Magistrate, Ambala, through learned District & Sessions Judge, Ambala, for information and execution of order of sentence dated 11.10.2018 passed by learned Judicial Magistrate Ist Class, Ambala. (HARPREET SINGH BRAR) JUDGE 20.05.2025 yakub Whether speaking/reasoned:

Yes/No Whether reportable:

Yes/No