Delhi District Court
Indian Airforce Benevolent ... vs . N.P. Gadgil & Ors. on 20 September, 2019
IN THE COURT OF DHEERAJ MOR: METROPOLITIAN MAGISTRATE,
PATIALA HOUSE COURTS, NEW DELHI.
Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors.
U/s 138 read with section 141 Negotiable Instrument Act, 1881
JUDGMENT
Case No. : 1323/17
Date of Institution : 23.05.1997
Date of Commission of Offence : 27.04.1997
Name of the complainant : Indian Air Force Benevolent
Association
(Through Authorized Representative
Wing Commander M.I. Akhtar)
Society registered under the
Societies Registration Act, 1860.
Having its office at:-
AFGIS Building, Subroto Park,
New Delhi-110010.
Names & addresses of the accused : 1. Sh. N.P. Gadgil, Director M/s Western India Industries Ltd., R/o B-55, Paschimi Marg, Vasant Vihar, New Delhi-110070.
2. Sh. Arun Anand, Director M/s Western India Industries Ltd., R/o S-5, Panchsheel Park, New Delhi-110017.
3. Sh. Jiwan Kumar, Vice-President (Finance) CC No. 1323/17 Page No.1 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors.
M/s Western India Industries Ltd., R/o 18, Panchsheel Park, Commercial Complex, New Delhi-110070.
Offence complained of :U/s138/141 Negotiable Instruments Act, 1881.
Plea of accused persons : Not guilty
Final Order : Accused no. 3 is convicted.
Accused nos.1 and 2 are
absconders vide order dated
16.01.2019.
Date on which reserved for judgment: 07.08.2019
Date of announcing of judgment : 16.08.2019
BRIEF STATEMENT OF THE REASONS FOR THE DECISION
1. Briefly stated, as per complaint, complainant is a Charitable Society registered under the Societies Registration Act, 21 of 1860. The said society has been formed with the main objective of assisting, financing and helping the widows/families of the deceased personnel of the Air Force and for enhancement of its various welfare schemes. The main source of income of the complainant organization is the interest on the various investments made by them. Amongst other activities of the complainant, it invests the surplus funds with various public sector undertakings, Public Ltd. Companies etc. against fixed deposit, bonds, non-convertible debentures and mutual units from time to time.
CC No. 1323/17 Page No.2 of 25Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors.
2. Pertinently, the original complaint was filed by the complainant through its AR Squadron Leader M. Satish against M/s Western India Industries Ltd. (hereinafter referred to as "said company") and its Chairman and Managing Director Sh. P.B. Gadgil in addition to the present three accused persons. During trial of this case, Sh. P.B. Gadgil expired and therefore, proceedings against him were abated on 02.09.2013. Further, the said company was wound up on 25.11.1997 and it went into liquidation. Consequently, at the request on behalf of the complainant, on 23.08.2018, the name of the said company was deleted from the array of the accused persons. Thus, only three accused persons are left in this case. Accused nos. 1 and 2 are the Directors of the said company and accused no. 3 is the Vice-President (Finance) of the said company. Accused nos. 1 and 2 were declared absconders on 16.01.2019, after adopting due process of law. Therefore, only accused no.3 has faced the complete trial of this case.
3. It is averred that the accused persons approached the complainant in the month of February, 1996 and requested it to invest a sum of Rs. 2 Crores under its fixed deposit scheme for a period of one year. Pursuant to the said request, the complainant invested a sum of Rs. 2 Crores in the said scheme for a period of one year. The accused persons agreed to pay interest @ 15% per annum, which was to be paid on monthly basis and they had also agreed to comply with the other terms and condition as contained in the letter dated 24.04.1996 issued by the complainant. The accused persons issued one post dated cheque of principal amount of Rs. 2 Crores, a post dated cheque for an amount of Rs. 58,333/- toward CC No. 1323/17 Page No.3 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. interest from 24.04.1996 to 30.04.1996, 11 post dated cheques of Rs. 2.5 Lacs each towards interest from May, 1996 to March, 1997, and a post dated cheque for an amount of Rs.1,91,667/- towards interest from 01.07.1997 to 23.04.1997 in favour of the complainant vide letter dated 24.04.1996. However, vide letter dated 06.09.1996, the accused persons informed the complainant that the said post dated cheques were drawn on Times Bank Ltd., which had been closed and requested it to return the remaining post dated cheques. Thereafter, the complainant returned the remaining post dated cheques and the accused persons forwarded the seven post dated cheques of Rs. 2.5 Lacs each drawn on Oriental Bank of Commerce, Panchsheel Park, New Delhi for the payment of interest from September, 1996 to March, 1997, a post dated cheque dated 23.04.1997 for an amount of Rs.1,91,667/- towards the interest from 01.04.1997 to 23.04.1997 and one post dated cheque dated 23.04.1997 for the principal amount of Rs. 2 Crores.
4. It is further averred that as per the terms and conditions of the fixed deposit scheme, the fixed deposit was to mature on 23.04.1997. It is the case of the complainant that vide letter dated 31.01.1997, the accused persons represented that they were not in a position to pay the amount due to funds constrain. Consequently, a meeting was held between the parties on 11.02.1997 and it was mutually agreed that the payments of interests due on 01.02.1997, 01.03.1997 and 01.04.1997 be clubbed and their due date be re-scheduled. Accordingly, vide letter dated 13.02.1997, the accused persons agreed to all the terms and conditions as contained in the said letter and furnished a fresh post dated cheque for an amount CC No. 1323/17 Page No.4 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. of Rs. 7.5 Lacs dated 01.04.1997 in lieu of three cheques of Rs. 2.5 Lacs each towards the interest for the month of January, 1997 to March, 1997 and another cheque of Rs. 14,795/- dated 01.04.1997 towards the penal interest for inability of the accused persons to pay the said interest in time. Therefore, total four cheques remained unpaid i.e. i) cheque bearing no. 021025 dated 23.04.1997 for the principal amount of Rs. 2 Crores, ii) cheque bearing no. 021023 dated 23.04.1997 for a sum of Rs.1,91,667/- towards interest from 01.04.1997 to 23.04.1997, iii) cheque bearing no. 060272 dated 01.04.1997 for an amount for Rs. 7.5 Lacs towards the interest for the month of January, 1997 to March, 1997 and iv) cheque bearing no. 060273 dated 01.04.1997 for an amount of Rs. 14,795/- towards the penal interest. Significantly, the present complaint is in respect of the later two cheques (hereinafter referred to as "disputed cheques") and the complainant has instituted a separate complaint no. 1322/17 in respect to the former two cheques.
5. The complainant presented both the disputed cheques with its banker for their realization. However, both of them were returned unpaid for the reasons "insufficient funds". The said fact was brought to the knowledge of the accused persons. At their request, the disputed cheques were represented. However, again the same got dishonoured with the similar remarks vide return memos both dated 02.04.1997. Thereafter, the complainant sent a legal notice dated 12.04.1997 to the accused persons calling upon them to pay the disputed cheques amount. Consequent upon the failure of the accused persons to pay the cheque amount within the statutory period of limitation, the complainant instituted CC No. 1323/17 Page No.5 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. the present complaint for the offence punishable u/s 138 read with section 141 Negotiable Instruments Act, 1881 (hereinafter referred to as NI Act) and under section 415/417 IPC against the accused persons.
6. On 19.12.1997, Sh. M. Satish AR for the complainant company was examined in pre-summoning complainant evidence. He has reiterated the contents of the complaint on oath. He has relied upon the following documents:-
(a) Resolution dated 10.03.1997 passed by the complainant society, thereby authorizing him to institute the present complaint is Ex.CW1/A;
(b) Letter of the accused company dated 22.02.1996 address to the complainant is Ex.CW1/B;
(c) Invest Proposal Form issued by accused company is Ex.CW1/C;
(d) Letter of the complainant dated 24.04.1996 whereby Rs.2 crores were invested by the complainant with accused company is Ex.CW1/D;
(e) Letter dated 24.04.1996 issued by accused for forwarding post dated cheques is Ex.CW1/E;
(f) Letter dated 06.09.1996 sent by the accused to the complainant is Ex.CW1/F;
(g) The disputed cheques are Ex.CW1/G and Ex.CW1/H;
(e) The original return memos of the said cheques are Ex.CW1/I and Ex.CW1/J;
(f) Copy of the legal notice dated 02.06.1997 is Ex.CW1/K; and
(g) Postal receipts are Ex.CW1/L to Ex.CW1/T. CC No. 1323/17 Page No.6 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors.
Thereafter, pre-summoning complainant evidence was closed.
7. On 25.03.1998, all the accused persons were summoned for facing trial of the present case. The proceedings against the then accused no.2 (P.B. Gadgil) were abated vide order dated 02.09.2013. The then accused no.3 (N.P. Gadgil) was declared absconder vide order dated 14.12.2012. The then accused no.4 (Arun Anand) was absent and on 25.07.2014, notice under Section 138 NI Act was framed against accused no.3 Jeevan Kumar (at that time, accused no.5). He pleaded not guilty and claimed trial to the said charge. In view of the judgment of Hon'ble Supreme Court of India in Dashrath Roop Singh Rathor Vs. State of Maharashtra and Anr. (2014) 9 SCC 129, vide order dated 27.10.2014 the Ld. Trial Court at Dwarka Courts, New Delhi, returned the present original complaint and documents for its presentation before the court having proper territorial jurisdiction. As per the ratio of Dashrath Roop Singh Rathore (supra), after return of the complaint, the fresh complaint case was filed in Saket Court, New Delhi on 06.02.2015. However, after Negotiable Instruments (Amendments) Act, 2015 and on the basis of the amendment therein, on 02.02.2016 the Ld. Trial Court at Saket Courts, held that it does not have jurisdiction to try this complaint as the bank of payee/holder in due course falls within the jurisdiction of Patiala House Courts, New Delhi. Therefore, the present complaint case was transferred to Patiala House Courts, New Delhi vide order dated 06.02.2016.
8. In view of the aforementioned uncertainties and changes in the territorial jurisdiction, this case was finally assigned to the Ld. CC No. 1323/17 Page No.7 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. Predecessor of this court for its trial. The trial of this case commenced afresh from the stage of pre-summoning complainant evidence. In the said evidence, the complainant examined its new AR i.e. Wing Commander M.I. Akhtar. He has tendered his affidavit for evidence in pre- summoning complainant evidence. In his said affidavit Ex. CW-1/1, he has reiterated the contents of the complaint on oath. Therefore, its contents are not reproduced herein for the sake of brevity. The present complaint is Ex. CW-1/A. He relied upon the following documents:-
a) Certified copy of the Resolution dated 10.03.1997 is Ex. CW-1/A;
b) Letter dated 22.02.1996 of the accused is Ex. CW-1/B;
c) Investment Proposal Form is Ex.CW-1/C;
d) Letter dated 24.04.1996 of the complainant is Ex. CW-1/D;
e) Letter dated 24.04.1996 of the accused is Ex. CW-1/E;
f) Letter dated 06.09.1996 of the accused is Ex.CW-1/F;
g) The disputed cheques are Ex.CW1/G and Ex. CW-1/H;
h) Cheque return memos are Ex. CW-1/I and Ex. CW-1/J;
i) Copy of Legal notice dated 12.04.1997 is Ex.CW1/K;
j) Original postal receipts are Ex.CW1/L to Ex.CW1/P;
k) Original UPC is Ex. CW-1/Q;
l) The present complaint is Ex. CW-1/U;
m) Certified copy of the order dated 27.10.2014 of Ld. MM, Dwarka is Ex. PW-1/V; and
n) The board resolution dated 09.05.2017 is Ex. CW-1/X.
9. Sh. Sonu, JJA Mauza Clerk, Record Room Criminal, Dwarka Courts, Delhi was examined as CW-2. He had brought the summoned record i.e. original case files bearing CC No. 698/14/97 and 699/14, both titled as Indian Airforce Vs. Western India Industries Ltd. & Ors., goshwara No. 24411/14 and 24410/14 respectively. Thereafter, pre-summoning complainant evidence was closed.
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10. On the basis of the said evidence and the documents placed on record on behalf of the complainant, all the original four accused persons (including said company) except accused P.B Gadgil were summoned vide order dated 11.10.2017 for facing trial of offence punishable under Section 138 NI Act. However, on the statement on behalf of the complainant, name of accused no.1 company was deleted from the list of accused persons on 23.08.2018. Further, vide order dated 16.01.2019, accused nos. 1 N.P. Gadgil and accused no. 2 Arun Anand were declared absconders as they failed to appear before the court despite publication of proclamation under Section 82 Cr.P.C. against them in the newspaper "Rashtriya Sahara" on 14.12.2018.
11. Prima facie, there was sufficient ground to presume that the accused no.3 Jeevan Kumar has committed the offence punishable under Section 138 NI Act and accordingly, on 26.02.2019, substance of accusation was stated to him through a written notice under Section 251 Cr.P.C to which he pleaded not guilty and claimed trial. In response to the said notice, he has admitted that one of the signatures on both the disputed cheques belong to him. In his defence, he has stated that the disputed cheques were post dated cheques of one year. He further stated that the disputed cheques were isssed in the year 1996. However, date of 1997 was mentioned on the said cheques at the time of their issuance. He has admitted that the complainant had invested Rs.2 crores in fixed deposit with the said company in the year 1996 for the period of one year and the said cheques were issued for the repayment of the said amount. He has further stated that Sh. P.B. Gadgil was incharge and responsible CC No. 1323/17 Page No.9 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. for all the transactions. He has stated that he was Engineer by profession and was not responsible for matters of the company related to its accounts. He has stated that he had left the job of the said company on 25.03.1997.
12. Thereafter, accused no. 3 moved an application under section 145(2) NI Act. The same was allowed on 26.02.2019, thereby permitting the accused to cross-examine the complainant witnesses. Accordingly, the matter was listed for complainant evidence.
13. In post notice complainant evidence, complainant Association has examined only one witness i.e. Wing Commander M.I. Akhtar, AR for the complainant association as CW-1. He has adopted his pre summoning affidavit for evidence in post notice evidence.
14. In his cross examination, CW-1 has deposed that all the correspondence of the complainant with the said company were duly received and responded by accused no.3 Jeevan Kumar. He has not filed on record the registration certificate and by-laws of the complainant association. He has deposed that letter dated 24.04.1996 proves that the complainant society is registered. He has volunteered that the complainant Association is a registered society under the Societies Registration Act, 1860. He has deposed that he joined the complainant society on 27.03.2017 as Secretary and he came to know about the present case only through the records. He has deposed that the investment proposal form Ex.CW1/C was sent by accused no.3 on behalf CC No. 1323/17 Page No.10 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. of the said company to Air Force Group Insurance Society and Air Headquarter Non Public Funds. He has further testified that the complainant society is a part of Air Headquarter Non Public Funds. He has deposed that Ex.CW-1/E which finds mention letter dated 23.04.1996 is self-sufficient to show that the complainant Association invested with the said company. It is a letter addressed by accused no. 3 to the complainant Association in relation to the investment made by the said association with the said company. He has volunteered that complainant association is housed in the building of Air Force Group Insurance Society and the investment committee is jointly held. He has deposed that he has not filed the acknowledgement of the registered post through which legal notices were sent to the said company and accused no.3. He has volunteered that the letter in which accused no.3 had accepted the said notice has been reflected in the exhibits. Thereafter, CE was closed.
15. Thereafter, separate statement of accused no. 3 under section 313 Cr.PC. was recorded on 27.04.2019. In the said statement all the incriminating evidence were put to him for seeking his explanations. In the said statement, he has maintained his defence that he was the employee of Western India Industries Ltd. He has stated that he joined the said company in the year 1987 and resigned from it on 25.03.1997. He has further stated that he was having General Power of Attorney in his favour for signing the documents and signing the cheques on behalf of the said company. He has stated that he never received any legal notice sent by the complainant as he was no more in the employment of the company after 25.03.1997. He has further stated that whatever documents and CC No. 1323/17 Page No.11 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. cheques he had signed on behalf of the company was on the basis authorization in his favour and he was having no control over the affairs of the company and did not participate in the day to day affairs of the company. He has stated that he has no liability to pay the complainant. He preferred to lead evidence in his defence. He has examined two witness including himself in his defence. He moved an application under Section 315 Cr.P.C. for seeking permission to be examined as a defence witness. The same was allowed on 27.04.2019.
16. DW-1 Sh. Jeewan Kumar (accused no.3) deposed that he joined the Western India Industries Ltd. in the year 1987 as Deputy General Manager and he was dealing with projects related to fire fighting system. Copy of his appointment letter is Mark-A. He has further deposed that the said company had authorized him through a Power of Attorney dated 17.03.1993 Ex. DW-1/1 to execute and sign the documents on its behalf. The said company had also authorized him along with the other employee to sign cheques. The copy of Board Resolution dated 25.03.1992 along with the letter dated 21.04.1992 in respect of Standard Chartered Bank are Mark B and B1. He has deposed that the disputed cheques bear his signatures as well as signatures of Sh. S.N. Aggarwal. He had deposed that he resigned from the said company on 25.03.1997. His resignation letter dated 25.03.1997 is Ex. DW-1/2. He has deposed that his resignation letter was received by Mr. Ramesh Jain, Assistant General Manager of the said company as Managing Director of the company Mr. P.B. Gadgil was in Pune. The copy of his resignation letter is Ex.DW1/2, which bears receipt dated 25.03.1997 at point A. He has deposed that the CC No. 1323/17 Page No.12 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. said company had informed all its clients regarding his resignation vide letter dated 19.06.1997 and the same is Mark C. He has also placed on record the copies of his ITRs for the assessment year 1997-98 along with Form 16 issued by the company and 1998-99. The same are marked as mark D, D1 and D2. He has deposed that he did not receive any notice from the complainant in respect of the present case. He has deposed that he has no liability in respect of the dishonor of the disputed cheques.
17. In his cross-examination, he admitted that the complainant had invested Rs. 2 Crores with Western India Industries Ltd. in the year 1996 under Fixed Deposit Scheme. He has also admitted that in discharge of the liability towards the complainant, the said company had issued two cheques which bears his signatures as its authorized signatory. He further admitted that investment proposal Ex.CW1/C, letter dated 24.04.1996 Ex.CW1/U and letter dated 06.09.1996 Ex.CW1/T, all bears his signatures. He has deposed that he did not write any letter to the complainant informing it about its resignation from the said company.
18. DW-2 Sh. Ramesh Jain has deposed that he was working as HR Head in Western India Industries Ltd. He has deposed that the resignation letter dated 25.03.1997 Ex. DW-1/2 was written by the accused Jeevan Kumar and the same was received by him. He also identified his signatures on the said letter at portion A to A. He proved his experience certificate Ex. DW-2/A(OSR), PAN Card Ex. DW-2/B and Passport Ex. DW-1/C. He has deposed that the said resignation letter was addressed to Sh. P.B. Gadgil, MD of the said company. After 3-4 days of the receipt CC No. 1323/17 Page No.13 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. of the said resignation letter, a relieving letter of the accused was issued and it was sent to the accused by post. In his cross-examination, DW2 has admitted that he has not placed on record the relieving letter of the accused. He also admitted that there is no stamp of the company on Ex.DW1/2 and Ex.DW2/A.
19. DW3 Sh. Devender Sharma is staff officer of the Bank of India, Panchsheel Shoppoing Complex Branch, New Delhi. He has deposed that the details of the bank account no.3843 in the name of the accused Jeevan Kumar is not traceable in the records of the said bank. Thereafter, DE was closed and the matter was fixed for final arguments.
20. Final arguments advanced by the counsel for the complainant and accused no. 3 are heard. Case file including written submissions filed on behalf of both the parties are carefully perused.
21. In order to bring home the guilt of the accused for the offence punishable under Section 138 NI Act, the complainant is required to prove the following essential ingredients of the said section:-
a) The accused had drawn a cheque in favour of the complainant;
b) The same was presented by the complainant with his banker within the period of its validity and the same was returned back unpaid due to insufficiency of funds or that it exceeds the amount arranged to be paid from the account of the accused;
c) The complainant gave a notice in writing to the accused within 30 days of the receipt of information by him from the bank regarding its return as unpaid;
d) The accused failed to make payment of the amount of CC No. 1323/17 Page No.14 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors.
cheque within 15 days of the receipt of the said notice;
e) The complainant institutes the complaint within 30 days from the date of expiry of the said 15 days; and
f) The cheque was issued by the accused for the discharge, in whole or in part, of any debt or other lawful liability.
22. It is an admitted fact that both the disputed cheques were issued by M/s Western India Industries Ltd. to the complainant and it bears signatures of accused no. 3 Jeevan Kumar as its Authorized Signatory. The disputed cheques Ex.CW1/G and Ex.CW1/H are both dated 01.04.1997 and the complainant is drawee/payee in both the disputed cheques. The same were presented by the complainant with its banker within its validity period. They were returned unpaid vide cheque returning memos both dated 02.04.1997 Ex.CW1/I and Ex.CW1/J. On receipt of the said information, the complainant dispatched legal notices dated 12.04.1997 Ex.CW1/K on 12.04.1997 by way of UPC. The postal receipts of the said UPC is Ex.CW1/L to Ex.CW1/P and original UPC is Ex.CW1/Q. One of the said notice was sent to accused no.3 at the address of the said company. The said accused has contended that he had not received the said notice. In Krishna Texport and Capital Markets Ltd. Vs. IIa A. Agarwal & Ors. (2015) 8 SCC 28, the Hon'ble Apex Court has held that individual notice under Section 138 of NI Act is not mandatory to the Directors or authorized signatory of the accused company for indicting them for the said offence. Therefore, even if, individual notice was not issued to accused no.3, it would not absolve him of the liability on the said sole ground provided a notice under Section 138 of NI Act is issued to the said company. The notice Ex.CW1/K was CC No. 1323/17 Page No.15 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. sent to the admitted registered office of the said company. In view of Section 27 General Clauses Act, 1897, the said notice is deemed to have been duly served upon the said company in the ordinary course of post. Therefore, it can be conclusively inferred that the said company received the said legal notice of the complainant. In view of Krishna Texport and Capital Markets Ltd. (supra), the said legal notice is also deemed to be served upon accused no.3. However, they did not make payment of the disputed cheques. Thereafter, the complainant instituted the present complaint Ex.CW-1/U on 23.05.1997. The said documents are not disputed by the accused persons. In view of the respective dates of the said documents, there is no reason to assume that the complainant defaulted the statutory time line for institution of the present complaint. Further, there is no real contest on the part of the accused persons that the complainant crossed the time limit as scheduled by the statute in filing of the present complaint.
23. Ld. counsel for the accused has argued that the complainant does not have any locus standi to institute the present complaint. He has contended that the investment proposal form was sent by the said company to Air Group Insurance Society and Air Headquarter Non Public Funds and not the complainant. However, the said contentions does not hold water. CW1 has explained that the complainant association is part of Air Headquarter Non Public Funds. Further, the letter dated 24.04.1996 Ex.CW1/E, whereby Rs.2 crore was invested with the said company is written on the letter head of complainant association. Besides, all the other communications of the said company through accused no.3 were CC No. 1323/17 Page No.16 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. addressed to the complainant association. Moreover, accused no.3/DW1 Jeevan Kumar has categorically admitted in his cross-examination that the complainant invested Rs.2 crores with the said company in 1996 under fixed deposit scheme. He also admitted that the said cheques were issued to the complainant towards the discharge of the liability of the said company. Hence, the said contentions on behalf of the accused are liable to be discarded as it does not contain even an iota of merit.
24. As per Section 139 NI Act there is a presumption in favour of the complainant that the disputed cheques were issued by the drawer/accused in discharge of his lawful liability. Therefore, in view of the said provision, the court shall presume and hold that the disputed cheques were issued by the accused for discharge of its lawful liability. Thus, as per the statute and its interpretation by Hon'ble Supreme Court, it is mandatory for the court to draw a presumption against the drawer/accused. However, the said presumption is rebuttable. The accused can rebut the same by proving the contrary. Thus, in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of debt or liability, the presumption may fail. The accused may discharge the said onus by leading positive evidence to dispel the said presumption or by impeaching the credibility of complainant witness through his cross-examination or by creating holes in the version of the complainant to render it improbable.
25. However, in the instant case, instead of displacing the said presumption, accused no.3 has buttressed the same. He has not CC No. 1323/17 Page No.17 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. disputed even a single document placed and proved on record on behalf of the complainant. In view of the documents placed and duly proved on record and in the wake of unequivocal admission on the part of accused no.3, it is proved beyond reasonable doubt that the disputed cheques were issued by Western India Industries Ltd. through accused no.3 and another authorized signatory to the complainant towards the discharge of its lawful liability. Therefore, in view of the above discussion, all the essential ingredients of Section 138 of NI Act are satisfied against the said company and thus, it is liable for the said offence.
26. Therefore, now the only question that survives for consideration is whether accused no.3 can be held vicariously liable by invoking Section 141 NI Act for the offence committed by the said company under Section 138 of NI Act. In the present case the disputed cheques were issued on behalf of Western India Industries Ltd., which is a company and therefore, Section 141 NI Act acquires importance. As per Section 141 (1) NI Act if the offence under Section 138 NI Act is committed by a company, every person who, at the time of the offence was committed, was incharge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence. Section 141 (2) NI Act provides that in case of the offence committed by a company under this Act, if it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officers of the company, such director, manager, secretary or other officers shall also be deemed to be guilty of that offence. Thus, for the CC No. 1323/17 Page No.18 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. offence committed by the companies, not only the person who was incharge of and was responsible to the company for its conduct but even the director, manager, secretary or other officers of the company if consented or connived or neglected on his part to the commission of the said offence, shall be deemed to be guilty for the offence under this Act.
27. Ld. counsel for the accused has argued that the said company was deleted from the list of the accused persons and therefore, without arraigning the principal offender, the deemed provision of Section 141 NI Act cannot be invoked for holding its authorized signatory vicariously liable for its act/offence under Section 138 of NI Act. In support of his submissions, he has placed reliance upon the judgment of Hon'ble Supreme Court title as "Aneeta Hada Vs. God Father Travels & Tours Pvt. Ltd. (2012) 5 SCC 661".
28. In Aneeta Hada (supra) the proposition of law that was for consideration before the three Judge Bench of Hon'ble Supreme Court was whether an authorized signatory of a company would be liable for prosecution under Section 138 of NI Act without the company being arraigned as an accused. Pertinently, in Anil Hada Vs. Indian Acrylic Ltd. (2000) 1 SCC 1, the Hon'ble Supreme Court vide its two Judge Bench held that prosecution of the company is not sine qua non for conviction of its Directors and its authorized signatories under Section 138 of NI Act. However, in Aneeta Hada (Supra), the Hon'ble Supreme Court overruled the findings of Anil Hada (supra), while observing as under :-
"51. We have already opined that the decision in Sheoratan Agarwal runs counter to the ratio laid down in C.V. Parekh which is CC No. 1323/17 Page No.19 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors.
by a larger Bench and hence, is a binding precedent. On the aforesaid ratiocination, the decision in Anil Hada has to be treated as not laying down the correct law as far as it states that the Director or any other officer can be prosecuted without impleadment of the company. Needless to emphasise, the matter would stand on a different footing where there is some legal impediment and the doctrine of lex non cogit ad impossibilia gets attracted.
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59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag- net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada is overruled with the qualifier as stated in para 51. The decision in Modi Distrillery has to be treated to be restricted to its own facts as has been explained by us hereinabove."
29. In the instant case, originally the said company was arraigned as an accused. However, on 23.08.2018, its name was deleted from the list of the accused persons on the ground that it has gone under liquidation. Admittedly, the said company has gone into liquidation and therefore, there is a legal impediment in its prosecution. In Aneeta Hada (supra), it is held that Director or any other officer of the company cannot be prosecuted under Section 138 of NI Act without impleadment of the company. However, it has carved out an exception stating that situation would be different where there is some legal impediment and the doctrine of lex non cogit ad impossibilia. Thus, it has partly overruled Anil Hada CC No. 1323/17 Page No.20 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. (supra) case. In the instant case, on account of legal bar in the prosecution of the company for the offence under Section 138 of NI Act, its impleadment as an accused is not indispensable for proceedings against its Directors and other officers for the said offence.
30. Moreover, there is a distinction between the case where the company cannot be prosecuted on account of non-fulfillment of any of the ingredient of the Section 138 of NI Act and where there is a legal bar to prosecute the company. In the former case, the liability of the principal offender/company itself does not arise and therefore, there is no question of invoking deeming provision to vicariously convict its Directors or authorized signatories. Hence, in the said case, non-impleadment of the company as an accused would be fatal for the complaint even against the Directors and other officers of the company. However, in the later case, the allegations against the company satisfies all the ingredients under Section 138 of NI Act, but despite that it cannot be prosecuted due to legal bar. Therefore, in the said cases, the impleadment or non-impleadment of the company as an accused is of no consequence and it is merely an empty formality. In the present case, the said company was originally impleaded as an accused and summons for facing trial for the present offence were also issued to the said company. However, at the later stages of trial, when it was revealed that it has gone into liquidation, the complainant in its rightful wisdom opted to delete it from the list of the accused persons. Thus, deletion of the name of the said company from the list of the accused persons does not adversely affect the case of the complainant against accused no.3. He was duly aware during the trial that CC No. 1323/17 Page No.21 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. he has been arraigned as an accused for being vicariously liable for the act committed by the principal offender i.e. Western India Industries Ltd. Thus, he cannot even claim that any prejudice has been caused to him by deletion of the said company from the list of the accused persons. In view of the above discussion, the deletion of the said company from the array of the accused persons cannot come to the rescue of accused no.3.
31. Another argument raised on behalf of accused no.3 is that he had already resigned from the said company at the time of the presentation of the disputed cheques by the complainant with its banker. It is argued that the present offence was committed when the said company failed to make the payment of the cheque amount within the stipulated time after receipt of the statutory notice. It is further contended that the disputed cheques were signed by accused no.3 as the authorized signatory of the said company while he was in its service and his liability towards the said cheques extinguished as soon as he resigned. It is contended that the deeming provision of Section 141 NI Act cannot be invoked against him.
32. The disputed cheques bearing admitted signatures of accused no.3 on behalf of the said company were presented by the complainant with its banker on 23.05.1997. DW1/accused no.3 has testified that he had resigned from the said company on 25.03.1997. The copy of the said resignation letter is Ex.DW1/2. Therefore, as per the said accused, he had resigned from the said company prior to the presentation of the disputed cheques and commission of the present offence. He has also examined DW2 Sh. Ramesh Jain, who has claimed to be HR Head in the said CC No. 1323/17 Page No.22 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. company. He has testified that he had received the said resignation letter Ex.DW1/2, which bears his signatures. He has deposed that the Managing Director of the said company accepted the said resignation letter and thereafter, relieving letter was issued to the accused. However, the Ex.DW1/2 does not bear any receiving stamp of the said company. Moreover, DW2 has nowhere testified that he was authorized to receive the resignation letter of accused no.3. Further, the extract of minutes of the relevant meeting of the Board of Directors of the said company has not been placed on record to show that the resignation of accused no.3 was accepted. Moreover, the alleged relieving letter purportedly issued to accused no.3 has also not seen the light of day. The said letter Ex.DW1/2 is insufficient to prove that accused no.3 had tendered his said resignation letter to the said company and the same was duly accepted as per law. Besides, in absence of the aforementioned relevant documents including relieving letter, the testimony of DW2 does not inspire confidence. His testimony is further shrouded in suspicion as he was not authorized by the said company to receive the resignation letter of accused no.3.
33. In order to prove his resignation, DW1 has also placed on record the copy of ITRs for the assessment year 1997-1998 along with Form-16 issued by the said company marked as Mark-D, Mark-D1 and Mark-D2, in order to show that he stopped receiving salary from the said company after April, 1997. However, the said photocopy documents are not proved as per Evidence Act, 1872. Therefore, the said inadmissible documents cannot form basis for holding that the accused no.3 had resigned from the said company on 25.03.1997. Even otherwise, the said documents cannot CC No. 1323/17 Page No.23 of 25 Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors. conclusively establish that the said accused had resigned from the said company in March, 1997. In view of the discussion in this para and preceding paragraph, there is no reason to believe that accused no.3 had resigned from the said company, as asserted by him. Accordingly, the natural and logical inference is that he was in the service of the said company at the time of the commission of the present offence.
34. Even if it is assumed that the said accused had resigned on the date on which he alleges, he cannot be absolved of his liability. Section 141 (2) NI Act prescribes that if it is proved that the offence under Section 138 of NI Act was committed by the company on account of the negligence on the part of any officer of the company, he shall also be deemed to be liable for the said offence. The said accused was aware that he had signed and issued the disputed cheques to the complainant, which were yet to be encashed. Therefore, he was under a bounden duty to inform the complainant about his resignation from the company. However, he admitted that he did not send any notice to the complainant after his alleged resignation. Had he bonafidely intimated about his alleged resignation from the said company to the complainant, the complainant would have got an opportunity to approach the said company for re- issuance of the disputed cheques before their presentation. Therefore, his said inaction talks volumes about his culpable negligence that led to the commission of the present offence. Thus, even in the case of his resignation from the said company, he can be held liable by invoking deeming provisions of vicariously liability under Section 141 (2) NI Act.
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35. In view of the above discussion, all the ingredients of Section 138 of NI Act r/w Section 141 NI Act are satisfied against accused no.3 Jeevan Kumar and the case of the complainant is proved beyond any reasonable doubt. Accordingly, accused no.3 Jeevan Kumar is hereby convicted for the offence punishable under Section 138 of NI Act r/w Section 141 NI Act.
ANNOUNCED IN THE OPEN COURT Digitally signed
by DHEERAJ
ON 16.08.2019 DHEERAJ
MOR
MOR
Date:
2019.08.16
23:54:24 +0530
(Dheeraj Mor)
Metropolitan Magistrate, Patiala House Courts
New Delhi/16.08.2019
This judgment contains 25 pages and each page is signed by me.
Digitally signed DHEERAJ by DHEERAJ MOR MOR Date: 2019.08.16 23:54:31 +0530 (Dheeraj Mor) Metropolitan Magistrate, Patiala House Courts New Delhi/16.08.2019 CC No. 1323/17 Page No.25 of 25
Indian Airforce Benevolent Association vs. N.P. Gadgil & Ors.