Bangalore District Court
Thyssen Krupp Elevator (India) vs Ideb Projects (P) Ltd on 7 May, 2018
IN THE COURT OF XXI ADDL.CHIEF METROPOLITON
MAGISTRATE, BENGALURU CITY
Present: Sri. V. NAGARAJA, B.A., LL.B.,
XXI Addl. Chief Metropolitan Magistrate,
Bengaluru.
Dated this the 7th day of May, 2018
C.C. No.10236/2010
COMPLAINANT: THYSSEN KRUPP ELEVATOR (INDIA)
PVT. LTD.,
Represented by its General Manager
And Authorized Signatory
Sri. Laxmikant
S/o. S.R. Varadachar,
Aged about 56 years,
Senior Administrator &
Authorized Signatory,
Having its office at:
M/s. Thyssen Krupp Elevator
(India) Pvt. Ltd.,
33rd Cross Road,
4th Block East,
Jayanagar,
Bangalore - 560 011.
(Reptd. By MNB., Advocate)
V/s.
ACCUSED: 1. IDEB PROJECTS (P) LTD.,
Represented by its Managing Director
No.7, 9th and 10th Floor,
Delta Block, Sigma Soft Tech Park,
Varthur Kodi, Whitefield Road,
Bangalore - 560 066.
2. Mr. H.S. BEDI,
Managing Director,
IDEB Projects (P) Ltd.,
No.7, 9th and 10th Floor,
Delta Block, Sigma Soft Tech Park,
Varthur Kodi, Whitefield Road,
Bangalore - 560 066.
2 C.C.No.10236/2010
3. Mr. Alok Kumar (Split Up)
4. Mr. N.M. Uttappa (Quashed)
5. Mr. Venkat Srinivasan (Split Up)
6. Mr. J.N. Thakurtha (Split Up)
(A-1 & 2 Reptd. By AK., Advocate)
:JUDGMENT:
Complainant has filed this complaint under Section 200 of Cr.P.C. r/w Section 138 of N.I. Act, seeking for penalizing the accused for the offence punishable under Section 138 of N.I. Act and also for awarding compensation to him.
2. Case of the complainant in a nutshell is that:
Complainant is a private limited company, so same is represented by its Senior Manager, Administration, who is authorized signatory and said company is carrying business in supply, erection, commissioning and maintenance of elevators.
3. Whereas accused No.1 is also company registered under Companies Act and same is represented by accused No.2 to 6, who are directors of the said accused No.1 company, who are responsible for day to day management and day to day affairs of the accused No.1 company. 3 C.C.No.10236/2010
4. It is further averred that as per request of the accused, complainant had supplied 14 numbers of elevators to the housing project of accused. The total value of above 14 elevators including installation fee, commissioning and maintenance is Rs.1,94,60,000/- (One Crore Ninety Four Lakhs and Sixty Four Thousand). So, accused was required to pay above said amount to complainant, whereas accused had only made some part payments through different cheques from time to time on considering the execution of project that is to say accused made part payments totally Rs.1,51,35,131/- so far i.e., from 07.12.2005 to 20.11.2008. Whereas accused No.2 to 6 assured for payment of balance amount, so in order to repay the balance amount, accused has issued cheque bearing No.650053 dated 12.03.2009 for Rs.23,02,863/- drawn on ICICI Bank, Indiranagar Branch, Bengaluru and assured to honour the cheque. So, believing the words of accused, he presented the above said cheque on 03.08.2009 through his banker i.e., ICICI Bank, CMS Branch, Bengaluru. But said cheque was dishonoured for the reason "Funds Insufficient". So, the bank authorities issued endorsement dated 05.08.2009. So, he issued notices to all accused on 20.08.2009 by demanding above 4 C.C.No.10236/2010 cheque amount, whereas said notices have been served on all accused on 24.08.2009, but they have not paid the cheque amount within stipulated time. Hence, accused have committed offence punishable U/s.138 of NI Act. Hence, he is constrained to file this complaint seeking for penalizing the all accused for the offence punishable under Section 138 of N.I. Act., and also seeking for awarding of compensation to him.
5. In pursuance of summons issued by this court, accused No.2 made appearance through his counsel and obtained bail and now he is on bail.
6. Whereas proceedings against accused No.4 M.N. Uttappa has been quashed by Hon'ble High Court of Karnataka in Crl. Petition No.1898/2016 dated 22.02.2018.
7. It is significant to note proceedings against other accused i.e., accused No.3, 5 & 6 are split up as per order dated 17.02.2016.
8. As these proceedings are summary in nature, substance of accusation read over and explained to accused No.2 in language known to him whereas, he pleaded not guilty and claimed for trial. 5 C.C.No.10236/2010
9. In order to prove the case of the complainant, its Senior Manager Mr. S.V. Laxmikant has been examined as PW-1 and got documents marked Ex.P-1 to Ex.P-30. The complainant also examined one witness as PW-2. After completion of evidence of the complainant, statement of accused as specified U/s.313 of Cr.P.C., has been recorded and he has not chosen to adduce defence evidence.
10. I have heard arguments of both learned counsels. Learned counsel for accused No.2 also filed his written arguments.
11. Perused the records.
12. After perusal of records, the points arise for my consideration are:
1) Whether complainant proves beyond all reasonable doubt that accused No.2 being Managing Director of accused No.1 company, who was in-charge of accused No.1 company and also responsible to the company for the conduct of the business of the said company, in order to discharge legally enforceable debt of accused No.1, a cheque bearing No.650053 dated 12.03.2009 for Rs.23,02,863/- drawn on ICICI Bank, Indiranagar Branch, Bengaluru has been issued in favour of complainant on behalf of accused No.1?
2) Whether complainant further proves that he has complied with mandatory requirements as specified under Sections 138 and 141 of N.I. Act?
3) What Order?
13. My findings on the above points are:
Point No.1 : In the Affirmative
Point No.2 : In the Affirmative
6 C.C.No.10236/2010
Point No.3 : As per final order,
for the following:
REASONS
14. Point No.1: As I have already stated, in order to prove the case of the complainant which is company represented by its Senior Manager Mr. S.V. Laxmikant, (who is having letter of authority as per Ex.P.2 based on a resolution of board as per Ex.P.1) has been examined as PW-1 and he filed his examination-in-chief by way of affidavit by reiterating entire complaint averments as stated above. In support of his oral testimony, he relied upon Ex.P-1 to Ex.P-30. In support of his case, he further examined one more witness as PW-2.
15. On the other hand, accused No.2 has not chosen to adduce any evidence on his behalf or on behalf of accused No.1
16. Before appreciation of evidence and contentions of the parties regarding their respective contentions, I am of the opinion, it is worth to note presumptions envisaged in N.I. Act as well as ratio laid down by the Hon'ble Apex Court in Three Judges Bench 7 C.C.No.10236/2010 Judgment reported in (2010) 11 SCC 441 (Rangappa V/s. Sri Mohan) wherein it is held:
"The presumption mandated by Section 139 includes a presumption that there exists a legally enforceable debt or liability. This is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, herein, there can be no doubt that there is an initial presumption which favours the respondent /complainant."
Section 139 is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section for the offence punishable under Section 138 of N.I. Act of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof. It is further held:
Once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under Section
139 of the Negotiable Instruments Act has to be raised by the court in favour of the 8 C.C.No.10236/2010 complainant. The presumption referred to Section 139 of the NI Act is a mandatory presumption and not a general presumption, but the accused is entitled to rebut the said presumption.
17. So in the light of above presumptions and ratio decidendi laid down by Hon'ble Apex Court, if the present facts and situations are analyzed, it is obvious that according to complainant, authorized signatory of accused No.1 company, has issued cheque Ex.P-3 for discharging of part of the amount due regarding purchasing of elevators. On the other hand, on considering the stand taken by accused No.1 and 2 in the cross-examination of PW-1 and also his (accused No.2) answers given in his statement recorded u/S.313 of Cr.P.C., it is obvious that though he disputes his liability as claimed by complainant, but it is not in dispute that Ex.P-3, cheque is belonged to the account of accused No.1, company and it bears signature of authorized signatories of accused No.1 company as per Ex.P-24 memorandum of association and article of association as well as Ex.P-30 which is names letter given by accused No.1 company to banking authority to operate bank account on its behalf as authorized signatories. So, as I have already stated in view of ratio laid down by Hon'ble Apex court in the Judgments stated 9 C.C.No.10236/2010 supra, that as soon as accused admits that signatures on cheque belonged to authorized signatories of accused No.1 company, the mandatory presumption u/S 139 of N.I. Act comes to the aid of complainant. So, he can rest upon said presumption, whereas the onus of proof shifts on accused to rebut the said presumption.
18. Whereas, learned counsel for defence argued that in order to raise presumption U/s.138 of NI Act, the condition precedent is that complainant must prove the existence of legally recoverable/enforceable debt or liability, if he is able to prove the same, then only presumption can be raised otherwise not.
19. Having regard to the arguments of learned counsel for accused, it is important to note as I have already pointed out Hon'ble Three-Judges Bench Judgment of Hon'ble Supreme Court in Rangappa's case stated supra, it is clearly held:
"The presumption mandated by Section 139 includes a presumption that there exists a legally recoverable debt or liability".10 C.C.No.10236/2010
20. So when above ratio clearly states that presumption includes existence of legally enforceable debt or liability then further proof of that fact is not required that too in summary proceedings. Because Hon'ble Apex Court in the judgment reported in (2009)2 SCC 513 (Kumar Exports V/s. Sharma Carpets) has clearly observed that:
Presumption literally means "taking as true without examination or proof"
21. Moreover, it is well settled law that the prime object of presumptions are to minimize or to avoid the leading of unnecessary evidence.
22. Even otherwise, on perusal of Ex.P-15 purchase order issued by accused No.1 company, Ex.P-16 memorandum of understanding, Ex.P-17 which is statement of accounts and Ex.P-18 which is letter issued by authorized signatory of accused No.1 company by admitting the issuance of cheque and liability covered under the same and Ex.P-19 which are tax invoices 36 in number clearly establishes that accused No.1 company purchased elevators from the complainant company for total Rs.1,94,60,000/- and accused had made part payments under various cheques as reflected in Ex.P-17 11 C.C.No.10236/2010 account statement and remained further due of Rs.43,24,869/-. It is significant to note accused has not placed any contrary documents to discard above documents produced by complainant. So, the above said documents can be safely relied upon and arrive a clear conclusion that accused No.1 company was due of more than amount covered under the present cheque Ex.P-3. So, it shows that there exists legally enforceable debt. So, the mandatory presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is to say the cheque was not issued for consideration and in discharge of any debt or liability, in other words, onus shifts on the accused to rebut the said mandatory presumption raised in favour of complainant as observed by Hon'ble Apex Court in the Judgment reported in (2009)2 SCC 513 (Kumar Exports V/s. Sharma Carpets).
Now the crucial question arises as to whether accused No.1 and 2 are able to rebut the said presumption or not?
23. It is significant to note though learned counsel for accused No.1 and 2 has cross-examined PW-1 & PW-2, but there is no specific defence except mere denial of complainant's case. It is further significant to note as I 12 C.C.No.10236/2010 have already pointed out accused No.2 has not chosen to stepped into witness box to raise any specific defence. So, when there is no cogent and convincing evidence by the accused to rebut the mandatory presumption raised in favour of complainant, then I am of the clear opinion that accused has miserably failed to rebut the mandatory presumption.
24. Whereas, learned counsel for accused No.1 and 2 in his oral as well as written arguments, he argued that in order to rebut the presumption envisaged U/s.138 of NI Act, accused need not step into witness box, whereas he can rebut the presumption based on material available on record. Moreover, the standard of proof required by the accused to rebut the presumption is only 'preponderance of probabilities'.
25. He further argued that complaint is very vague regarding responsibility and liability of accused No.2 that is to say the complainant has not made any specific allegations against accused No.2 either in his complaint or in his examination-in-chief as to how and in what manner the accused No.2 was responsible to the accused No.1 company for conduct of its day to day business at the 13 C.C.No.10236/2010 relevant point of time. Whereas, the complainant has made bald and vague allegations in the complaint that accused No.2 to 6 are responsible for the day to day affairs and management of the accused No.1 company. So, mere vague allegations does not mean that accused are responsible and committed offence punishable U/s.138 of NI Act.
26. He further argued that evidence of PW-2 i.e., Bank Manager clearly reveal that accused No.2 is only director but not managing director and he is not signatory to present cheque. Such being so, accused No.2 cannot be held responsible.
27. He further argued that though the complainant contended that after partial payments made by the accused, accused is still due of Rs.42,00,000/-. But present cheque is for Rs.23,02,863/-, whereas PW-1 in his evidence, he clearly deposed that complainant has not initiated any proceedings to recover alleged remaining balance amount. So, it clearly shows that there was no balance amount, that's why the complainant has not initiated any proceedings for recovery. 14 C.C.No.10236/2010
28. Moreover, the complainant had not furnished the performance bank guarantee to accused as per conditions of memorandum of understanding dated 25.03.2008. So, the accused has right to withhold 5% of contract amount. So, there was no due or enforceable debt. Hence, Section 138 and 141 of N.I. Act do not come into picture. Hence, complaint has to be dismissed against accused No.1 and 2 and accused No.2 has to be acquitted.
29. Having regard to the arguments of learned counsel for accused it is no doubt true that in order to rebut the presumption by the accused, the standard of proof required is 'preponderance of probabilities' and in order to rebut the said presumption, the accused need not step into witness box in some cases only, when the material available on record will substantiate and probabalize his defence, but not in all cases.
30. At this juncture, it is worth to note in above said Rangappa V/s. Sri. Mohan's case, it is clearly observed that:
"A mere plausible explanation is not expected from the accused and it must be more than a plausible explanation by way of rebuttal evidence. In other words, the 15 C.C.No.10236/2010 defence raised by way of rebuttal evidence must be probable and capable of being accepted by the court"
31. At this juncture, it is also worth to note ratio decidendi laid down by the Constitutional Bench of Hon'ble Apex Court in the judgment reported in AIR 1964 SC 575 (Dhanvantrai Balwantrai Desai V/s. State of Maharashtra) which has been followed in the subsequent judgment reported in (2001)6 SCC 16 (Hiten P.Dalal V/s. Brathindranath Banerjee) wherein it is held that:
"That the distinction between the two kinds of presumption lay not only in the mandate to the court, but also in the nature of evidence required to rebut the two. In the case of a discretionary presumption the presumption if drawn may be rebutted by an explanation which "might reasonably be true and which is consistent with the innocence" of the accused.
"On the other hand in the case of a mandatory presumption"
"The burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under Section 114 of the Evidence Act and cannot be held to be 16 C.C.No.10236/2010 discharged merely by reason of the fact that the explanation is offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The words unless the contrary is proved' which occur in this provision make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible"
32. At this juncture, it also worth to note in another judgment of Hon'ble Apex Court reported in (2010)8 SCC 383 (Meghmala and others V/s. Narasimha Reddy and others) wherein it is held that:
"It is not like any other criminal case where the accused is presumed to be innocent unless the guilt is proved. The presumption of innocence is a human right, however, subject to the statutory exceptions, the said principle forms the basis of criminal jurisprudence. For this purpose, the nature of offence, its seriousness and gravity thereof has to be taken into consideration. Statutes like the Negotiable Instruments Act, 1881; the Prevention of Corruption Act, 1998; and the Terrorist and Disruptive Activities (Prevention) Act, 1987, provide for presumption of guilt if the circumstances 17 C.C.No.10236/2010 provided in those statutes are found to be fulfilled and shift the burden of proof of innocence on the accused. Thus, the legislature has adopted a deviating course from ordinary criminal law shifting the burden on the accused to prove that he was not guilt"
33. Keeping in view of above ratio, if the preset facts and situations are analyzed, as I have already pointed out that accused has not chosen to enter into witness box to raise any probable and acceptable defence to rebut the presumption, whereas mere some suggestions made in cross-examination of PW-1 and PW-2 by the learned counsel for accused, will not rebut the presumption because it is not general presumption, on the other hand it is mandatory presumption so same has to be rebutted by 'proof' but not by a bare explanation or mere suggestions"
as observed by Hon'ble Apex Court in the Constitutional Bench and Larger Bench Judgments stated supra. Hence, I come to clear conclusion that accused has failed to rebut the mandatory presumption.
34. Coming to another argument of learned counsel for accused that the complainant has not specifically averred in his complaint as to how the accused No.2 was in charge or was responsible to the accused No.1 company 18 C.C.No.10236/2010 for conduct of its business. So, he is not covered Section 141 of N.I. Act. It is significant to note on perusal of cause title of the complaint, it is specifically averred that accused No.2 H.S. Bedi is Managing Director of accused No.1 company. It is further significant to note on perusal of Ex.P-20 which is account opening form filed to bank on behalf of accused No.1, clearly reveal that accused No.2 H.S. Bedi has been shown as Managing Director and he has been authorized to operate the account. It is further significant to note on perusal of Ex.P-30 which is letter given by accused No.1 to banking authority clearly reveal that accused No.2 H.S. Bedi (Harkirat Singh Bedi) has been shown as Chairman and Managing Director. It is significant to note accused No.2 has not disputed these documents. Moreover, he has not produced any contrary documents to show that if he is not Managing Director of accused No.1 company, then who was the Managing Director at the relevant point of time. So, in absence of any contrary documents, I am of the opinion that this court can safely rely upon above said Ex.P-20 and Ex.P-30 to prove that accused No.2 is Managing Director of accused No.1 company at the relevant point of time. 19 C.C.No.10236/2010
35. At this juncture, it is worth to note ratio laid down by Hon'ble Apex Court in Larger Bench judgments reported in (2005)8 SCC 89 (S.M.S. Pharmaceuticals Ltd., V/s. Neeta Bhalla) and (2012)5 SCC 661 (Aneeta Hada V/s. Godfather Travels & Tours Private Limited) and Division Bench judgment reported in (2010)3 SCC 330 (National Small Industries Corporation Limited V/s. Harmeet Singh Paintal and another) wherein it is held that:
"A company, though a legal entity, can act only through its Board of Directors. The settled position is that a Managing Director is prima facie in charge of and responsible for the company's business and affairs and can be prosecuted for offences by the company. But insofar as other Directors are concerned, they can be prosecuted only if they were in charge of and responsible for the conduct of the business of the company"
"If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded against"
"If the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint"20 C.C.No.10236/2010
36. So, in the light of above ratio, if the present facts and situations are analyzed, as I have already pointed that documents produced by the complainant clearly establishes that at the relevant point of time, accused No.2 H.S. Bedi was Managing Director of accused No.1 company. So, under such circumstances his position in the company itself shows that he is in-charge of and responsible for the companies business and affairs and he can be prosecuted on behalf of company. So, under such circumstances there is no need to specifically aver the same facts in the complaint as observed by the Hon'ble Apex Court in the judgments stated supra. Hence, I do not find any force in the arguments of learned counsel for accused.
37. In view of above discussion, I come to clear conclusion that accused No.1 being principal accused is found guilty for the offence punishable U/s.138 of NI Act, whereas accused No.2 being its Managing Director of accused No.1 company, is covered U/s.141 of N.I. Act. Hence, both are liable to be convicted for the offence punishable U/s.138 of NI Act. Hence, I hold this point in Affirmative.
21 C.C.No.10236/2010
38. Point No.2: As I have already discussed in point No.1 that Ex.P-3 cheque has been issued in favour of complainant on behalf of accused No.1 company for discharging of legally recoverable debt i.e., part payment. Whereas, on perusal of Ex.P-4 to Ex.P-6 which are bank endorsements given by bank authority clearly reveal that complainant had presented the said cheque within validity period, but said cheque was dishonoured with endorsement "Funds Insufficient". On perusal of Ex.P-7 which is legal notice issued to all accused clearly reveal that the complainant got demand notice issued to the all accused within specified time of 30 days from the date of receiving of endorsements from bank. On perusal of Ex.P-9 to Ex.P-14 which are postal acknowledgements clearly reveals that the notices were duly served on all the accused.
39. So on considering the oral coupled with the documentary evidence of the complainant, they clearly proved that complainant has complied with mandatory requirements as specified U/s.138(a) and (b) of N.I. Act. Whereas, the accused have not paid the cheque amount within specified time, inspite of service of demand notices. 22 C.C.No.10236/2010 Hence, accused No.1 and 2 have committed offence punishable U/s.138 of NI Act. Hence, I hold point No.2 in Affirmative.
40. Point No.3: For the foregoing reasons discussed on points No.1 and 2, I proceed to pass the following:-
ORDER Acting under Section 255(2) r/w 264 of Cr.P.C., the accused No.1 being principal accused and accused No.2 being Managing Director, are hereby convicted for the offence punishable u/S.138 of Negotiable Instruments Act.
In view of Section 141 of N.I. Act, accused No.2 being Managing Director of accused No.1, is hereby sentenced to pay fine of Rs.23,10,000/- (Twenty Three Lakhs and Ten Thousand only). In default he shall undergo simple imprisonment for a period of 6 (Six) months.
In view of Section 357 of Cr.P.C., complainant is entitled for compensation of Rs.23,05,000/- (Twenty Three Lakhs and Five Thousand only) out of above said fine amount.
After collecting the above fine amount, office is directed to pay Rs.23,05,000/- (Twenty Three Lakhs and Five Thousand only) to complainant as compensation and defray remaining fine amount of Rs.5,000/- (Five Thousand only) to state, after appeal period is over.
Accused shall execute personal bond of Rs.23,10,000/- in view of Sec.437(A) of Cr.P.C.23 C.C.No.10236/2010
The office is hereby directed to supply the copy of this Judgment to the accused on free of cost.
(Dictated to Stenographer, transcribed and computerized by him, corrected and then pronounced by me in the open court on this the 7th day of May, 2018) (V. NAGARAJA) XXI ADDL. C.M.M., BENGALURU.
ANNEXURE LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
PW-1 : S.V. Laxmikant
PW-2 : Prasad Kotikal
LIST OF DOCUMENTS MARKED FOR THE COMPLAINANT:
Ex.P-1 : Resolution of Board of Directors Ex.P-2 : Authority Letter Ex.P-3 : Cheque Ex.P-4 to 6 : Bank Endorsements Ex.P-7 : Copy of Legal Notice Ex.P-8 : Eight Postal Receipts Ex.P-9 to 14: Postal acknowledgement Cards Ex.P-15 : Purchase Order Ex.P-16 : Memorandum of Understanding Ex.P-17 : Statement of Accounts Ex.P-18 : Request Letter Ex.P-19 : Invoices Ex.P-20 : Account Opening Form Ex.P-21 : Resolution of Board of Directors Ex.P-22 : Form No.32 Ex.P-23 : True Copy of Cheque Ex.P-24 : Memorandum of Association Ex.P-25 : True copy of PAN Card Ex.P-26 : True copy of Telephone Bill Ex.P-27 : Copy of Confirmation Letter Ex.P-28 : True copy of PAN Card Ex.P-29 : Statement of Accounts Ex.P-30 : Latest Board Resolution 24 C.C.No.10236/2010 LIST OF WITNESSES EXAMINED FOR THE DEFENCE:
- Nil -
LIST OF DOCUMENTS MARKED FOR THE DEFENCE:
- Nil -
(V. NAGARAJA) XXI ADDL. C.M.M., BENGALURU.