Delhi District Court
M/S. Modline Finstock Pvt. Ltd vs Surender Kumar on 31 January, 2019
IN THE COURT OF MS. PRIYANKA RAJPOOT, METROPOLITAN MAGISTRATE,
NORTH-WEST, ROHINI, DELHI
CC No. 18813/2016
M/s. Modline Finstock Pvt. Ltd.
Office at : R.K. House, Room No. 102,
First Floor, WP-504, Shiv Market,
Ashok Vihar,
Delhi-110052. ............Complainant
Versus
Surender Kumar
S/o Late Sh. Todi Singh
Authorised signatory/partner:
M/s. Sanjay Electronics,
Main Mubarak Pur Road,
Prem Nagar-III, Near Shani Bazar Mor,
Nangloi,
Delhi-110041
Also at :
D-104/1, Inder Enclave-II, Delhi. .............Accused
JUDGMENT
(1) Name of the complainant, : M/s. Modline Finstock Pvt. Ltd.
parentage and address Office at : R.K. House,
Room No. 102, First Floor,
WP-504, Shiv Market,
Ashok Vihar,
Delhi-110052
(2) Name of accused, : Surender Kumar
parentage and address S/o Late Sh. Todi Singh
Authorised signatory/partner:
M/s. Sanjay Electronics,
Main Mubarak Pur Road,
Prem Nagar-III,
Near Shani Bazar Mor, Nangloi,
Delhi-110041
Also at :
D-104/1, Inder Enclave-II, Delhi.
M/s. Modline Finstock Pvt. Ltd. v. Surender Kumar CC No. 18813/2016 Page no. 1
(3) Offence complained of or
proved : 138 N.I. Act
(4) Plea of accused : Pleaded not guilty
(5) Date of institution of case : 06.09.2006
(6) Date of reserve of order : 16.01.2019
(7) Date of Final Order : 31.01.2019
(8) Final Order : Acquittal
1. Vide this judgment I shall dispose of the complaint filed by the complainant under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the 'Act ').
2. Brief facts relevant for the decision of the case are as under:-
That the complainant is a company duly incorporated under The Companies Act, 1956 and it is engaged in the business of leasing, financing and advancing of loan to various customers for purchasing consumer goods & automobiles etc. In discharge of liability, the accused handed over the following cheques to the complainant which on presentation were returned unpaid by the bank.
Cheque Dated Amount Drawn on Date of Reason for
bearing dishonour dishonour
number
000114 27.07.2006 Rs. 15,000/- Kotak Mahindra Bank, 02.08.2006 payment stopped
Kasturba Gandhi
Marg, Delhi
000115 07.07.2006 Rs. 15,000/- Kotak Mahindra Bank, 02.08.2006 payment stopped
Kasturba Gandhi
Marg, Delhi
000116 27.06.2006 Rs.15,000/- Kotak Mahindra Bank, 02.08.2006 payment stopped
Kasturba Gandhi
Marg, Delhi
M/s. Modline Finstock Pvt. Ltd. v. Surender Kumar CC No. 18813/2016 Page no. 2
The complainant company had a sent legal notice dated 07.08.2006, however, the accused neither paid any amount nor sent any reply to the same. The present complaint was filed through its authorized representative namely Sh. Manoj Kumar, who was authorized vide resolution dated 15.03.2005 passed by the complainant company. Initially, the complaint was filed in Tis Hazari Courts in the year 2006, however, the court vide order dated 16.10.2014 returned the complaint to the complainant as per the directions of Hon'ble Supreme Court of India, in case titled as Dashrath Rupsingh Rathore v. State of Maharashtra & Anr. passed on 01.08.2014. Thereafter, the complainant filed the complaint again in Patiala House Courts but it was transferred to this court on 08.04.2016 as per Negotiable Instruments(Amendment) Act, 2015.
3. In pre-summoning evidence, new AR of the complainant company namely Sh.Devender Singh examined himself on affidavit Ex. CW-1/1. He reiterated the contents of complaint and placed on record, copy of resolution dated 04.04.2012 as Ex. CW-1/A, the above mentioned three cheques as Ex. CW-1/B1 to Ex. CW-1/B3 respectively, cheques returning memos dated 02.08.2006 as Ex. CW-1/C1 to Ex. CW-1/C3, legal notice dated 07.08.2006 as Ex. CW-1/D1, postal receipts as Ex. CW-1/D2 & Ex. CW-1/D3 and A.D. Card as Ex. CW-1/D4.
4. Upon appreciation of pre-summoning evidence, accused was summoned for an offence punishable under Section 138 of the Act and notice under Section 251 Cr.P.C. for this offence was framed upon accused on 24.06.2016 to which he pleaded not guilty and claimed trial. He took the defence that the cheques in question were issued by him towards security to the complainant company as complainant company used to provide finance facility to his customers for the purchase of electronic goods. He admitted his signatures on the cheques in question, however, he denied having filled in contents in the cheques in question. He denied having any liability towards the complainant. He admitted receiving of legal notice and stated that he gave reply to the same.
5. Thereafter, AR of the complainant examined himself as CW-1. During his cross- examination, he stated that he has been working in the complainant company since year 2003 as Officer Incharge. He stated that he knows the accused since the year 2004-05. He stated that the cheque in question were deposited in the office of the complainant company.
M/s. Modline Finstock Pvt. Ltd. v. Surender Kumar CC No. 18813/2016 Page no. 3 He stated that no loan was extended by the complainant company to the accused. He denied the suggestion that the accused does not have any liability towards the complainant company. He admitted that the customers used to purchase electronic goods from the accused and complainant company used to provide finance facility for the same. He denied the suggestion that the cheques in question were taken as advance and they were to be presented only in case of default in making of payment by the customers. He stated that Sh. Mukesh Kumar was working as field boy/executive in the complainant company. He denied the suggestion that Sh. Mukesh Kumar and Sh. Sunil Kumar had taken the cheques in question from the shop of the accused. He denied the suggestion that the cheques in question have been misused by the complainant company. He denied the suggestion that no resolution has been passed by the complainant company in his favour. He stated that the complainant company has passed the board of resolution in his favour in the meeting of Board of Directors. He placed on record two documents Ex. CW-1/E & Ex. CW-1/F viz. Copy of certificate of incorporation and certificate of registration of complainant company. He admitted that signatures of the accused and the contents in the cheques in question are in different ink. He denied the suggestion that Ex. CW-1/E & Ex. CW-1/F do not show that the complainant company has authority to provide finance facility. He could not say whether the loan amount is shown in the documents of the complainant company or not.
6. On 08.11.2017, statement of accused under section 281 Cr.P.C. read with section 313 Cr.P.C. was recorded in which all the incriminating evidence were put to him to which he denied all the allegations leveled against him. The accused preferred to lead defence evidence.
7. In defence evidence, accused examined himself as DW-1 and deposed that he is one of the partners of the firm M/s. Sanjay Electronics. He stated that one Sh. Mukesh has taken the cheques in question and gave them to the complainant for security purpose with the condition that if any of his customers fails to pay the financed amount to the complainant company then he(accused) would pay on their behalf. He further stated that the complainant has filed a false case against him. During his cross-examination, he stated that the signatures in the acknowledgment card Ex. CW-1/D4 is not his signatures. He stated that he has not taken any loan from the complainant company. He admitted that he has given the cheques in question to the complainant company as security with the condition that if any of M/s. Modline Finstock Pvt. Ltd. v. Surender Kumar CC No. 18813/2016 Page no. 4 his customers does not pay the finance amount as sanctioned by the complainant company then he would be liable to pay the complainant company for the default of his customers. He denied that the security cheques have been issued against a liability. He stated that no receipt was executed between him and the complainant against the cheques in question. He stated that there is no document to show that the cheques in question were given as security. He could not recall when he handed over the cheques to the complainant company. He denied the suggestion that he has a liability towards the complainant. He stated that one of the agents of the complainant company used to collect the amount against the products purchased by his customers. He denied the suggestion that the complainant company gave a receipt book for issuing receipts to his(accused's) customers for collecting payment of financial help provided by the complainant company. He denied the suggestion that he used to collect the payment from the customers on behalf of complainant company. He denied the suggestion that the cheques in question were issued in discharge of liability. He denied the suggestion that he has not given the cheques in question as security.
8. Thereafter, final arguments were addressed on behalf of both the parties. Written submissions were filed on behalf of complainant. Reliance is placed upon by the complainant on Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd. [Criminal Appeal No. 867 of 2016].
9. I have considered the rival submissions of the parties and perused the entire evidence led by the complainant as well as by the accused.
10. Before appreciating the facts of the case in detail for the purpose of decision, let relevant position of law be discussed first :-
For the offence under Section 138 of the Act to be made out against the accused, the complainant must prove the following points, that :-
1. the accused issued a cheque on account maintained by him with a bank.
2. the said cheque has been issued in discharge, in whole or in part, of any legal debt or other liability.
3. the said cheque has been presented to the bank within a period of three months from the date of cheque or within the period of its validity.
4. the aforesaid cheque, when presented for encashment, was returned M/s. Modline Finstock Pvt. Ltd. v. Surender Kumar CC No. 18813/2016 Page no. 5 unpaid/dishonoured.
5. the payee of the cheque issued a legal notice of demand to the drawer within 30 days from the receipt of information by him from the bank regarding the return of the cheque.
6. the drawer of the cheque failed to make the payment within 15 days of the receipt of aforesaid legal notice of demand.
11. The Act raises two presumptions in favour of the holder of the cheque i.e. complainant in the present case; firstly, in regard to the passing of consideration as contained in Section 118 (a) and secondly, a presumption that the holder of cheque receiving the same of the nature referred to in Section 139 discharged in whole or in part any debt or other liability.
Section 118 of the N.I Act provides : "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;"
Section 139 of the N.I Act further provides as follows: "Presumption in favour of holder
- it 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".
12. For the offence under Section 138 of the Act, the presumptions under Sections 118(a) and 139 have to be compulsory raised as soon as execution of cheque by accused is admitted or proved by the complainant and thereafter burden is shifted to accused to prove otherwise. These presumptions shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability etc. A presumption is not in itself evidence but only makes a prima facie case for a party for whose benefit it exists. Presumptions both under Sections 118 and 139 are rebuttable in nature. Same was held by the Hon'ble Supreme Court of India in Hiten P. Dalal v. Bratindranath Banerjee [(2001) 6 SCC 16].
13. It has been held in M/s. Kumar Exports v. M/s. Sharma Carpets, [2009 A.I.R. (SC) 1518] that the accused may rebut these presumptions by leading direct evidence and in M/s. Modline Finstock Pvt. Ltd. v. Surender Kumar CC No. 18813/2016 Page no. 6 some and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Further, the burden may be discharged by the accused by showing preponderance of probabilities and the onus on the accused is not as heavy as it is on the complainant to prove his case.
14. In the present case, the accused has admitted in the notice under Section 251 Cr.P.C. that the cheques in question bear his signatures and he issued the same in favour of the complainant. Reference can be made to judgment of Apex Court in Rangappa v. Sri Mohan [9 (2010)11 SCC441] that, "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 complainant."
15. It means that in the present case the onus is upon the accused to rebut the presumption raised under Sections 118(a) and 139 of the said Act and merely saying that the cheque in question was given by him to the complainant as security cheque is not sufficient to rebut the presumption.
16. Coming to the facts of the present case. In my opinion, the accused has succeeded in rebutting the presumption of legal liability by exposing the inherent infirmities in this case of complainant. The accused has taken the defence that the cheques in question were given as security and they were to be used only if any of his customers commits default in payment of amount payable to the complainant company. The complainant has claimed that the accused has issued the cheques in question in discharge of a liability. However, what was the liability towards which the cheques in question were issued has not been stated by the complainant. The complaint, affidavit and legal notice are completely silent on the aforesaid aspect. There is nothing on record which can show the nature of transaction between the parties or that there was a liability of the accused to the tune of Rs.45,000/- (amount covered by the cheques in question) towards the complainant. During the cross-examination, AR of the complainant has stated that no loan was given to the accused. He also admitted that the complainant company used to finance the goods purchased by the customers from the shop M/s. Modline Finstock Pvt. Ltd. v. Surender Kumar CC No. 18813/2016 Page no. 7 of the accused and thus, it fortifies the version of the accused that the cheques in question were given as security and they were to be encashed only when any customer of the accused defaulted in payment of installment/outstanding amount. It is pertinent to note that neither in the complaint nor in the affidavit, the complainant has disclosed the details of loan given to the customers of the accused, the date when the cheques were issued, the purpose for which cheques were given, the details of customers who have not made the payment of loan to the complainant company etc. Thus, there is no material on record to buttress the claim of the complainant. The averments in the complaint and in the affidavit are vague and elusive and the liability is not clearly established. Even though the accused has admitted his signatures on the cheques in question, the fact remains there is no document on record to substantiate the claim of the complainant. The complainant company has failed to establish that the cheques in question were issued by the accused in respect of legally enforceable debt or liability.
17. Another fact to be noted is that the cheques in question are drawn on the account of M/s. Sanjay Electronics. The accused in his examination in chief has deposed that he is one of the partners of the said firm. The complainant has also filed the complaint Sh.Surender Kumar in his capacity as partner of the said firm, however, the partnership firm has not been impleaded as an accused. Now the question arises whether the prosecution of the partner of a firm, by virtue of Section 141 of the Act is maintainable in the absence of the partnership firm being impleaded or arrayed as an accused? In the case of Murjibhai Vishram Varsani v. Adam Alimamad Kumbhar [R/Cr. MA/11911/2015] dated 02.02.2017, Hon'ble High Court of Gujarat was held that:
"The Explanation to Section 141 makes it clear that wherever there is a reference under Section 141 to a company it has to be substituted by the word firm where the accused is a partnership firm and the provision has to be read as if it refers to the firm. What this means is that a complaint can be filed for the offence under Section 138 NI Act not only against the partnership firm on whose behalf the cheque was issued but also against an individual partner or person who, at the time of the commission of the offence, was in charge of the affairs of the firm or responsible to it for the conduct of its business. There is nothing in the provision which indicates that in every complaint involving the dishonour of a cheque issued by a firm both the firm as well as its partners have to be compulsorily impleaded. In other words a complaint in which only the firm is made an accused and the partners are not M/s. Modline Finstock Pvt. Ltd. v. Surender Kumar CC No. 18813/2016 Page no. 8 would not be bad in law for that reason. Clearly that is not the intention of the Parliament. A partnership firm is a separate legal entity in terms of the Indian Partnership Act 1932 and it is answerable in law in that capacity. That is how under various statutes like the Income Tax Act 1961, the Central Excises Act 1944, the Sales Tax Laws and Section 141 NI Act, a firm can be proceeded against as such. It is perfectly possible for a complainant, aggrieved by the dishonour of a cheque issued by or behalf of a firm, to file a complaint for the offence under Section 138 NI Act only against the firm. The complainant may choose not to proceed against the individual partners as accused either because he is not aware as to who are the partners or is not interested in proceeding against the partners apart from the firm".
18. In the case of Philip J v. Ashapura Minechem Ltd. and Anr., Hon'ble Bombay High Court has dealt with the issue i.e. whether a prosecution launched under section 138 of the Act against a partner alone without joining the partnership firm can be maintainable? It was held that in view of explanation to section 141 of the NI Act, as also held in Aneeta Hada case, the legal position held to be as automatically applicable in case of prosecution against a partnership firm also. It was accordingly held that for maintaining prosecution against a partner under section 141 of the NI Act, arraigning of partnership firm as an accused is imperative.
19. In the case of Vijay Power Generators Ltd. v. Sumit Seth, [2014 All M.R. (Cri.) Journal 305], Hon'ble High Court of Delhi held that a firm is a company within the meaning of Section 141 of the Negotiable Instruments Act and, therefore, the partner of a firm is only vicariously liable where an offence under Section 138 of the Act is committed by the firm, provided he was the person in charge of and responsible to the firm for conduct of its business at the relevant time. Unless the firm is prosecuted and convicted, a partner cannot be convicted with the aid of Section 141 of the Act.
20. It is not in dispute that the accused is the partner of the firm M/s. Sanjay Electronics. The complainant during the cross-examination of the accused has not controverted the stand taken by the accused that he is one of the partners of M/s. Sanjay Electronics. It is also not in dispute that the cheques forming subject matter of the complaint are drawn on the account of the firm M/s. Sanjay Electronics. Thus, the complaint against the accused is not maintainable without arraying the partnership firm i.e. M/s. Sanjay Electronics as an accused.
M/s. Modline Finstock Pvt. Ltd. v. Surender Kumar CC No. 18813/2016 Page no. 9
21. Hence, in the light of above discussion, it comes out that the complainant has failed to prove its case. The complainant has failed to prove the existence of legal debt/liability. Accordingly, accused is acquitted for the offence under Section 138 of Negotiable Instruments Act. Bail bonds and Surety bonds stand discharged. Original documents of surety, if any, be released as per rules.
ANNOUNCED IN THE OPEN COURT (PRIYANKA RAJPOOT)
TODAY i.e. 31st JANUARY 2019 METROPOLITAN MAGISTRATE
ROHINI DISTRICT COURTS/ DELHI
M/s. Modline Finstock Pvt. Ltd. v. Surender Kumar CC No. 18813/2016 Page no. 10