A Delhi Court has recently convicted a man for the offence under Section 138 of the Negotiable Instruments Act, 1881 on the complaint of Shalimar Paints Limited. The Court rejected the defence of the accused that the cheque was offered as a security.

The accused was alleged to have dishonoured a cheque after placing an order for the purchase of paint which was duly supplied by Shalimar Paints Limited.

Judge Abhitesh Kumar held, “… it is established that the accused has not managed to show, even as probable, its defence that the complainant company supplied material of inferior quality. Thus the presumption under section 139 NI Act is also not rebutted. … it comes before this court that the version of the accused can’t be accepted and he has failed to discharge his burden. Presumption is still intact with the complainant. … accused Somnath Sanyal is convicted for the offence under section 138 of the NI Act.”

The Court also said that the judgments relied upon by the accused do not help his case.

Advocate Siddharth Singh appeared on behalf of the complainant while Advocate Chandra Biswas appeared for the accused.

Brief Facts –

The complainant is a company engaged in the business of manufacturing, marketing, and supply of decorative paints and industrial coatings since 1902 through its diversified distributors and dealer network across the country. The accused proprietorship firm named “Somnath Sanyal & Co” placed an order for the purchase of paint with the complainant which was duly supplied by the complainant.

The accused in the discharge of his liability issued a cheque of Rs.2,81,143/- but the same was returned unpaid due to the reason “fund insufficient”. Thereafter, the complainant sent a statutory demand notice to the accused through speed post and email but when even the demand notice could not give any fruitful results, the complainant filed the complaint.

The Court, after going reiterating the principles of Section 118(a) r/w 139 of the NI Act noted, “… the law as it stands today is that presumption u/s 118(a) r/w 139 of the Act is rebuttable and the standard of proof for accused shall be preponderance of probabilities. In present complaint, the line of defence of the accused that material was supplied by the complainant was not of agreed standard and accused has suffered loss.”

It was further observed by the Court that the accused failed to place on record any scientific/expert opinion and that the non-supply of warranty certificate does not endorse the fact that materials/paints supplied were not of agreed or requisite standard.

“The accused have not established on record that the cheque in question was issued even prior to the delivery of the alleged inferior materials/paints. Accused is also failed to prove that cheque in question was a security cheque. No step is taken by the accused to stop the payment”, the Court said.

The Court passed an order convicting and sentencing the accused in this matter.

“… it is in the opinion of this Court, the scales of justice would be balanced, if convict Somnath Sanyal is sentenced to simple imprisonment for period of 1 month and directed to pay compensation of Rs.2,81,143/- with simple interest thereon at 9% per annum from the date of filing of complaint till making actual payment, within 30 days to the complainant. In default of payment of said compensation, convict Somnath Sanyal shall further undergo simple imprisonment for period of 1 month”, the Court directed.

The Court however said that the benefit of Sections 68 and 69 of the Indian Penal Code will be available to the convict.

Cause Title- Shalimar Paints Limited v. Somnath Sanyal

Click here to read/download the Judgment

Click here to read/download the Order on Sentence

section138 NI Act

Swasti Chaturvedi