Delhi District Court
M/S Combined Ads vs M/S Devbhumi Tele Films Pvt Ltd on 24 March, 2018
1
IN THE COURT OF MS PRABH DEEP KAUR : METROPOLITAN MAGISTRATE -
02 : SOUTH : SAKET COURT : NEW DELHI
M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD
CC No. 468556/2016
U/S 138 NEGOTIABLE INSTRUMENTS ACT
JUDGMENT
(1) Serial number of the case : 468556/2016
(2) Name of the complainant : M/s Combined Ads
through its proprietor
Sh Pramod Juneja
D-19, Pandav Nagar,
Delhi-110092
(3) Name of the accused, : 1. M/s Devbhumi Tele Films
parentage & address Pvt Ltd
2. Rakesh Mittal
S/o Sh Rajinder Mittal, Director
M/s Devbhumi Tele Films Pvt
Ltd.
3. Sakshi Aggarwal
D/o Sh Mohan Aggarwal
Director, M/s Devbhumi Tele
Films Pvt Ltd.
All at : 361, Parparganj Industrial
Area, Delhi-110092
Also At :
D-251, First Floor, Gali No. 10,
Laxmi nagar, Delhi-110092
(4) Offence complained of or proved : 138 Negotiable Instruments
Act, 1881
(5) Plea of the accused persons : Pleaded not guilty
M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 1 of 31 2 (6) Final Order : ACCUSED NOS. 1 & 3- ACQUITTED ACCUSED NO. 2- PROCEEDINGS DROPPED VIDE ORDER DATED 10.12.2012 (7) Date of Institution : 17/02/2007 (8) Date on which reserved for judgment : 17/03/2018 (9) Date of Judgment : 24/03/2018 BRIEF STATEMENT OF THE REASONS FOR THE DECISION
1. The brief facts of this case as carved out from the complaint are that accused nos. 2 & 3 are Directors of accused no. 1 and responsible for day to day affairs of accused no. 1 and were also liable for the amounts due from accused no. 1. Accused nos. 2 & 3 were dealing with the complainant and were asked to issue cheques directly to printer & publisher and accused no. 1 issued few cheques directly to Amar Ujala and other publishers but all the cheques have been returned dishonoured for want of funds. Accused no. 1 issued a cheque bearing no. 301488 dated 11.07.2006 for Rs.2,00,000/- drawn on Canara Bank, Patparganj Branch, New Delhi (hereinafter "the cheque in question") in favour of the complainant for a consideration towards the payment of various invoices raised by the complainant for payment of advertising and printed material charges etc. The cheque in question was returned dishonoured with M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 2 of 31 3 remarks "Insufficient Funds". Thereafter, on failure of accused persons to pay the said cheque amount, a legal demand notice dated 26.12.2006 was sent to the accused persons through registered AD/UPC on the addresses of the accused persons to which the accused persons sent a reply dated 13.01.2007. Despite that payment of the cheque in question was not made by the accused persons within the stipulated time of 15 days. Hence, the complainant filed the instant complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter "the Act").
2. In the pre-summoning evidence, Sh Pramod Juneja, AR of complainant has filed his affidavit and by way of affidavit, he has reiterated all the averments made in the complaint. AR of complainant also relied upon documents ie Power of Attorney ExCW1/1, copies of various Invoices ExCW1/2 to ExCW1/41 (colly), returning memos ExCW1/42 & ExCW1/43, legal notice dated 26.12.2006 ExCW1/44, postal receipts & AD card ExCW1/45 to ExCW1/48 and the reply of accused persons ExCW1/49. Since sufficient material was found against the accused persons, summoning order u/s 204 CrPC was passed against the accused persons vide order dated 21.02.2007.
3. Accused persons appeared pursuant to issuance of summons and notice U/s 251 CrPC was served upon the accused persons vide order dated 23.04.2009 to which the accused persons pleaded not guilty and claimed trial.
4. During trial at the stage of cross examination of complainant, accused no. 2 had expired on 06.02.2012 and proceedings against accused no. 2 Rakesh Mittal were dropped vide order dated 10.12.2012.
M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 3 of 31 4 Thereafter, no one appeared to represent accused no. 1 company and accused no. 1 company was proceeded absentia vide order dated 19.04.2014 as per provisions of Section 305 CrPC at the stage of cross examination of complainant.
5. In the post summoning evidence, complainant examined Sh Pramod Juneja, AR of complainant as CW-1 and he reiterated all the averments made in the complaint as well as the stage of pre-summoning evidence. AR of complainant also examined Sh Dula Ram as CW-2 to prove the statement of accounts of M/s Devbhumi Tele Films Pvt Ltd, Sh R K Saini as CW-3, Sh Manoj Bansal as CW-4. All the witnesses were duly cross examined by the counsel for the accused no. 3. However, accused no. 2 expired during trial on 06.02.2012 before the cross examination of CW-1 and proceedings were abated against him vide order 10.12.2012 and accused no. 1 company remained unrepresented since then. No other complainant witness was produced by the complainant. Thereafter, CE was closed vide order dated 05.11.2014.
6. Thereafter, the plea of the accused no. 3 u/s 313 r/w 281 CrPC was recorded vide order dated 22.11.2014, wherein, all material existing on record including the exhibited documents were put to accused. The accused no. 3 stated that she was director of accused no. 1 company till 20.05.2006 and after that, she had filed her resignation which was duly accepted by ROC. Accused further stated that she never approached the complainant firm and she never communicated in oral or written with the complainant firm. She never visited the offices of complainant firm as the complainant firm did the work on their M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 4 of 31 5 own. She never gave any approval to the work done by complainant firm and the bills & invoices ExCW1/2 to ExCW1/41 (colly) were forged and fabricated. Accused no. 3 further stated that at the time of incorporation of accused company, she was student and the other director of accused no. 1 namely Rakesh Mittal obtained her signatures on various cheques of accused no. 1 company for the purpose of day to day business of accused company so as to not to effect her studies. She never gave any cheque to complainant firm or to Pramod Juneja/AR. She further stated that she received legal demand notice from the complainant firm and she sent a reply ExCW1/49 to the complainant and accused no. 2 Rakesh Mittal had also sent reply to the legal notice through his counsel on her behalf also but she never authorized him to send any reply on her behalf. Accused no. 3 further stated that accused no. 1 company was incorporated with one of her father's friend ie Rakesh Mittal and at that time, she was student of CA and she was unaware about the transactions as she was not involved in day to day affairs of accused company.
Accused no. 3 further expressed her desire to lead defence evidence.
7. Thereafter, matter was listed for DE and accused no. 3 examined herself as DW-1 in her defence evidence. She also examined Sh R K Saini from ROC as DW-2 and Sh Mohan Aggarwal also as DW-2 (rectified as DW-3 vide order dated 21.11.2017) in her defence evidence. Thereafter, no other defence witness was produced by accused no. 3. No DE has been advanced on behalf of accused no. 1 company. Thus, DE was closed vide order dated 21.11.2017 and M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 5 of 31 6 matter was fixed for final arguments.
8. It has been argued on behalf of complainant that complainant has filed invoices supported with release orders as well as newspapers to corroborate the plea that advertisements were given in the media as per orders of accused company and complainant raised the bills accordingly and complainant has even made the payments towards the release orders to the newspapers agencies etc. It has been further argued that the accused no. 1 company issued cheques for payments of advertising, printing charges etc. In para no. 5 of the complaint, complainant has specifically mentioned the particular roles of accused nos. 2 & 3 in the accused no. 1 company. Cheque dated 11.07.2006 got dishonoured on 21.12.2006 and thereafter, complainant issued legal notice to the accused persons and two replies have been received, one by accused nos. 1 to 3 ie ExCW1/50 and another by accused no. 3 only ie ExCW1/49. Now, both the replies are self contradictory as in the reply ExCW1/49, the accused no. 3 has taken plea that she has already resigned from the Directorship of accused company on 20.05.2006 and she had kept some blank signed cheques in the office and there are allegations of collusion between complainant and other Directors of accused no. 1 company. While in the reply dated 17.01.2007 ExCW1/50, there are allegations of theft upon the complainant but nothing has been brought on record by accused persons to corroborate their allegations in their respective replies. It has been further argued that every bill/invoice filed by the complainant ie ExCW1/2 to ExCW1/41 have acknowledgment/receiving of accused persons. It has been further argued M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 6 of 31 7 that the bills have been raised after deducting 15% commission of the complainant. It has been further argued that the testimony of the complainant has to be read as a whole and not in isolation and from reading the entire testimony of complainant, it is clear that complainant has successfully established the liability of accused persons. It is further argued that as far as objections of accused no. 3 regarding the genuineness of bills is concerned, the bills filed by the complainant start with alphabet "JAIS" because the complainant had maintained separate bill account for the accused with alpha numeric method and therefore, the complainant can issue the bill with "JAIS" series to the accused company only and not to anyone else. It has been further argued that admittedly complainant is not liable to pay service tax on the bills which are unpaid but the plea of accused that the "dues" are required to be shown in Service Tax Returns is not correct because as per law, complainant is not bound to disclose the dues in any return till the actual realization of amount. It has been further argued that even if it is considered that complainant failed to show the due in the returns, even then the whole complaint cannot be discarded only on this ground. It has been further argued that the testimony of AR of complainant has remained unrebutted. It has been further argued that complainant has examined Sh Manoj Bansal as CW-4 to prove that accused nos. 2 & 3 have actively participated in the transactions between complainant and accused company and to prove that the accused company placed its order with the complainant company and complainant company provided the services to the accused company as per its requirement. It has been further argued that M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 7 of 31 8 CW4 was re-examined to remove the typographical mistake as the address of the company was incorrectly mentioned as D-19 instead of D-92 and the purpose of re-examination was not the improvisation of his testimony or filling the lacunae. It has been further argued that as far as plea of accused no. 3 regarding media partner is concerned, the term media partner has been used in the advertisements but media partnership is not an actual partnership and complainant has filed pamphlets and advertisements of other entities to prove that the term media partner does not mean that there is any negotiation between the two entities, instead media partner means outsourced media and advertisement agencies who are engaged to communicate the campaign message to the public through online and social media channels purely provide their services without any share in profit or loss but on renumeration basis. It has been further argued that the complainant has summoned the record from ROC to prove the liability of accused no. 3. From the record of ROC produced by CW-3 Sh R K Saini, it is clear that accused no. 3 has tendered her resignation which is stated to be having retrospective effect with the delay just to evade her liability to pay the cheque amount to the complainant. It has been further argued that from the testimony of CW-3, it is clear that accused no. 3 has paid late fees on submission of her resignation because the mandate is that if there is any delay in filing the documents to the ROC for eg. submission of resignation of a Director to ROC, then these delayed documents can be filed but late fees has to be paid. It has been further argued that accused no. 3 has cross examined CW-1 on the merits of the case but if the defence of accused no. 3 is that she is M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 8 of 31 9 not involved in day to day affairs of company, then why cross examination has been conducted by accused no. 3 as to merits of the case. From the way in which accused no. 3 has cross examined the complainant, it is clear that accused no. 3 was having knowledge of the transactions between complainant and accused no. 1 company. It has been further argued that the cross examination of CW-4 conducted by accused no. 3 on 05.11.2014 shows that accused no. 3 was having knowledge of the transactions between complainant and accused no. 1 company and accused no. 3 actively participated in the transactions between complainant and accused no. 1 company. The relevant portions of cross examination of CW-1, CW-3 and CW-4 were pointed out by the counsel for the complainant. It has been further argued that CW-2 has brought the account opening form and from the statement of accounts brought by CW-2, it is clear that on 03.02.2006, an amount of Rs1.50 lacs was given from the account of accused no. 1 company to accused no.3. This clearly proves that accused no. 3 was responsible for day to day affairs of accused no. 1 company otherwise the amount would not have been given to accused no. 3 nor the account would have been made operative jointly. Further, from the statement of accounts of accused no. 1 company, it is clear that approx. 18 cheques were honoured and 14 cheques were dishonoured since the incorporation of company till the intimation of the resignation of accused no. 3 to the bank on 18.07.2006. Certainly, all these cheques must have been issued by accused no. 3 being authorized signatory of accused no. 1 company and this proves that the plea of accused no. 3 during cross examination that she had only signed 7-8 cheques, is M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 9 of 31 10 false. Further, Ld counsel for complainant has pointed out the portion of cross examination of DW-1 as well as DW-2 Mohan Aggarwal ie father of accused no. 3 and has argued that from the answers given by these witnesses during cross examination, it is clear that the defence given by accused no. 3 is an after thought and there is a collusion between accused persons and DW-2 against the complainant. It has been further argued that the plea of collusion is strengthened by the fact that despite dispute between accused no. 2 and father of accused no. 3 in March 2006 as stated by father of accused no. 3 during cross examination, the resignation of accused no. 3 was tendered in May 2006 and resignation was submitted to ROC in July 2006 only after the date of cheque. It has been further argued that accused no. 3 has filed quashing petition U/s 482 CrPC against the summoning order but in the said petition, accused no. 3 has not mentioned anything about her defence that she is not involved in day to day affairs of accused no. 1 company nor she has disclosed the reason for her resignation. It has been further argued that resolution filed with ROC is the only document to show that resignation of accused no. 3 has been accepted by the said resolution has not been properly proved despite the fact that complainant has disputed the same. There are two resolutions of the accused company in respect of so called resignation of accused no. 3 from the directorship, one dated 20.05.2006 which is ExDW1/3 and other dated 16.08.2006 which is ExCW2/2 (colly). The resolution dated 16.08.2006 has been produced by the bank witness in which there is cutting on the date of resignation of accused no.
3. It has been further argued that as per accused no. 3 there was a cutting in the M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 10 of 31 11 aforesaid resolution, only due to typographical error, but as per complainant, accused no. 3 is not even competent to take any objections because as per accused no. 3 herself, she was not the Director in the company on the date of resolution. Further, the complainant has pointed out the fact that in all the advertisements, name of Sh Krishan Tripathi has been mentioned with his mobile number and Sh Krishan Tripathi has been alleged to be new Director of the company after 20.05.2006 and thus, as per complainant, there is a connivance between all the accused persons as well as the alleged new Director Sh Krishan Tripathi. Further, during final arguments, complainant has filed a chart mentioning the amount for the advertisements being published by the complainant for accused no. 1 company through different media channels as well as the amount of printing stationery materials for the accused company and complainant has argued that as per the invoices filed by the complainant, the accused company has liability to pay more amount than the cheque amount and even on the date of alleged resignation of accused no. 3 on 20.05.2006, accused company was having more liability than the cheque amount. It has been further argued that clearly accused no. 3 has failed to prove her defence and accused no. 1 has not even come forward to dispute its liability while the testimony of complainant witnesses has remained unrebutted and complainant has proved his case beyond reasonable doubts. Therefore, accused is liable to be convicted.
On the other hand, by way of oral arguments, accused no. 3 has reiterated the written submissions filed on 01.12.2017.
M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 11 of 31 12
9. Arguments advanced by both parties heard. Case file perused meticulously.
10. In order to prove an offence under Section 138 NI Act, following ingredients are required to be fulfilled :
i) That there is legally enforceable debt or liability;
ii) The drawer of the cheque issued the cheque to discharge in part or whole the said legally enforceable debt or liability,
iii) The cheque so issued was returned unpaid by the banker of the drawer.
iv) Legal demand notice was served upon the accused and the accused failed to make the payment within 15 days of the receipt of the said notice.
11. In the case at hand, accused persons have disputed their legal liability to pay the cheque amount to the complainant. The dishonour of cheque in question, receipt of legal notice and its reply are not in dispute.
12. It is a well settled position of law that when a negotiable instrument is drawn, two statutory presumptions arises in favour of the complaint, one under Section 139 NI Act and another under Section 118 (a) of the NI Act. Further, the court will presume a negotiable instrument for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or consider the non existence of the consideration so probable that a prudent person may ought under the circumstances of the particular case to act upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 12 of 31 13 behalf of the complainant could be relied upon. Reliance placed on M.S. Narayana Menon v. State of Kerala, (2006) 6 SCC 39).
13. As per complainant, the accused persons had issued cheque in question for payment towards various invoices raised by the complainant for payment of advertising and printed material charges etc. which got dishonoured and despite receipt of legal notice, accused persons failed to make the payment within stipulated time period.
On the other hand, by way of reply to legal notice, accused nos. 1 & 2 have made the allegations upon the complainant regarding stealing the cheque in question from the accused persons and also disputed their legal liability to pay the cheque amount and disputed the invoices. However, during cross examination of complainant, the accused no. 2 expired and no one came forward to represent accused no. 1 company thereafter and therefore, no DE could be led on behalf of accused nos. 1 & 2.
While accused no. 3 in her personal capacity sent additional reply and during trial in her personal capacity, she disputed her legal liability to pay the cheque amount on the ground that she had already resigned from the accused company and she was not looking after the day to day work of accused company and also disputed the invoices.
14. a. The first and foremost defence taken by accused no. 3 is that she has no liability to pay cheque amount to the complainant because she was never involved in day to day affairs of accused no. 1 company nor she ever participated in day to day functions of company. As per accused no. 3, M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 13 of 31 14 she has already given her resignation to accused no. 1 company on 20.05.2006 and the same was duly accepted on that day itself and therefore, question of issuance of cheque in question dated 11.07.2006 does not arise at all. As per accused no. 3, she had given certain blank signed cheques to other director/accused no. 2 when she was director and these cheques have been misused by complainant in connivance with other director.
b. Admittedly, as per ExDW2/B, (ie Form 32 of accused no. 1 company) (also ExCW-3/6), the accused no. 3 resigned from accused no. 1 company on 20.03.2006 (ExDW2/C) ie resignation letter) and this resignation was put on office ROC record on 14.07.2006 as per ExDW2/C1. Admittedly, office of ROC did not receive any information regarding the resignation and change of address of Ms Sakshi Aggarwal/accused no. 3 from 20.05.2006 till 14.07.2006 and admittedly, the cheque in question dated 11.07.2006 got dishonoured on 21.12.2006 and again on 23.12.2006 for the reason "Funds Insufficient" and not for the reason "authorized signatory changed or not signed by authorized signatory".
c. Now, the court has to deal with the issue since when the resignation of accused no. 3 is to be effective and what will be effect of that to the present complaint.
d. Now, as per Samuel Dilip Mehta vs State of Maharashtra and Ors. AIR 2002 BOM 194, it has been held by Bombay High Court that :
"The submissions advanced by the litigation parties are touching an important point involved in this matter which make us to express our views on the point M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 14 of 31 15 whether a director of a public or private limited company can resign unilaterally and that too by writing a letter to the chairman of the said company or its secretary. Is it necessary for such a director to fill up form No. 32 and is obliged to give a notice or intimation to that effect to the Registrar of Companies ? The question arises for our adjudication is whether that particular director is obliged to give such information to the Registrar of Companies and whether he cannot retire without complying with the said requirement. Keeping in view the provisions of the Companies Act, the relevant articles of the Constitution of India, we come to the conclusion that a director of the public limited company or private limited company can tender his resignation unilaterally and without filing in form 32 and without sending a notice to the Registrar of Companies. It is clear that the filling in the said form and giving due intimation and information to the Registrar of Companies is the duty of the Company Secretary and not of an individual director. Suffice it to say that when he has to do is to send in writing a letter informing either the Chairman or the Secretary of the Company, as the case may be, his intention to resign from the post of the Director of the said company. Thereafter the said letter has to be moved in the special meeting, as the case may be, and the Board of Directors have to take a decision whether the Board is accepting his resignation or not. An intimation should be sent to such director and after formalities for giving a finishing touch to the resolution which has been passed in the said meeting of the Board of Directors. It is for the Company Secretary to fill in the forms as prescribed and to give due information and intimation to the Registrar of Companies, as the law required. Thereafter, it has to be so mentioned in all prescribed registers of the company, accounts and balance sheet of the company and thereafter, the said fact is to be brought to the notice of the members of the company as early as possible and at the latest in annual general meeting".
e. The same principles have been reiterated in the judgment of Dr JS Gambhir vs Millennium Health Institute and Diagnostics Pvt Ltd CA NO.
M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 15 of 31 16 301/2013 in Company Petition No. 203/2007 decided on 11.02.2014.
f. Thus, the resignation of accused no. 3 is to be considered as effective from 20.05.2006 and the allegations of complainant qua the connivance between accused nos. 2 & 3 with help of father of accused no. 3 Sh Mohan Aggarwal are beyond the purview of scope of present complaint. Similarly, the averments of forgery put by the complainant upon accused no. 3 and her father Sh Mohan Aggarwal are not relevant to the present controversy.
g. However, the facts of the case Samuel Dilip as well as Dr J S Gambhir (as mentioned above) does not apply to the facts in hand because in the present complaint, the issue is related to resignation of an authorized signatory and director and her liability for the payment for work done for the period prior to her resignation (ie 20.05.2006) when admittedly she was a director.
h. In the facts in hand, the issue of legal liability of accused no. 1 company is related to the work allegedly done by complainant for accused company from April 2006 till May 2006. Therefore, accused no. 3 cannot escape her liability for the period for which she admittedly was an authorized signatory and director of the company.
i. The judgment of N Harihara Krishnan vs J Thomas 2017 (3) DCR 61 is not applicable to the facts in hand as the Apex Court in that case was dealing with impleadment of authorized signatory U/s 319 CrPC, is the complaint case U/s 138 N I Act.
j. Similarly, the facts of DCM Financial Services Ltd vs J N Sareen M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 16 of 31 17 and another AIR 2008 SC 2255 are not applicable to the facts in hand. The facts of Laxminivas Agarwal vs Andhra Semi Conductors Pvt Ltd 2006 Cri LJ 2643 are also not applicable. Similarly the judgment of Anita Handa vs Godfather Travels & Tours Pvt Ltd (2012) 5 SCC 661, (2012) 4 SCALE 644 is not applicable as in this case the Apex Court was dealing with the issue where cheque was issued by a company but the company was not impleaded as an accused.
k. As far as plea of accused no. 3 regarding her non-
involvement in day to day affairs of complainant is concerned, in K K Ahuja vs V K Vora & Anr. Criminal Appeal Nos. 1130-31 of 2003 Supreme Court of India, the Hon'ble Apex Court had dealt with the question as to who can be said to be persons "incharge of", and was responsible to the company for business of complainant U/s 141 N I Act. In para No. 20 of the said judgment, it is held that :
"The position under section 141 of the Act can be summarized thus :
(ii) In the case of a director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was incharge of and was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under sub-section (2) of Section 141".
l. The same principles have been laid down by the Apex Court in SMS Pharmaceuticals Ltd vs Neetu Bhalla and Anr. Appeal (Crl.) 664 of 2002 Supreme Court of India. Again reiterated in Davinder Kaur vs The State of West Bengal & Anr. CRR 1341 of 2015 High Court of Calcutta, Karthikeya V Sarabhai vs M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 17 of 31 18 M/s TVS Net Technologies Ltd Crl. OP Nos. 20185, 20186 & 20489 of 2010 High Court of Madras, Nipam Kotwal, Director vs Dominos Printech India Pvt Ltd on 28.11.2007 Delhi High Court and K Kathirvel vs M/s Kirorimal Kasiram MP (MD) Nos. 1 and 3 of 2010, 1 and of 2010 High Court of Madras and Standard Chartered bank vs State of Maharashtra & Ors. Etc 2016 (3) JCC (NI) 113 Supreme Court of India.
m. In Shree Raj Travels & Tour Ltd & Ors. vs Destination of the World (Subcontinent) Private Limited Crl.MC No. 2652/2010 & Crl. Misc. A. No. 13888-89/2010 High Court of Delhi, the Hon'ble High Court has dealt with the principles of Indoor Management of accused company and clearly held that complainant as an outsider cannot have the complete knowledge of the events happening within the company and therefore, if the cheque is duly issued by a director, the director cannot escape his liability. The court was dealing the matter at the stage of quashing the proceedings U/s 482 CrPC. In Suresh Kallappa Makavi vs Madan Bindurao Desai and Another 2009 (1) DCP 766 High Court of Karnataka, same principles have been reiterated.
n. In Ved Prakash Gupta & Anr. Vs M/s Anchon Chemplast Pvt Ltd Crl.MC No. 432/2013 High Court of Delhi, dealt with the similar situation which has arisen in the present case wherein the authorized signatory/director is stated to be resigned prior to date of cheque and Hon'ble Court held that :
"All the transactions are related to the period when the petitioners were directors and as stated above, according to respondent no. 1 (the complainant) they had negotiated with regard to supply of goods. Of course, copy of Form No. 32 in case of petitioner Ved M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 18 of 31 19 Prakash Gupta reveals that the resignation was sent to the ROC on w.e.f. 20.07.2011. Assuming that it was received immediately after 20.07.2011, the question for consideration is, even if the resignation is presumed to have been received in the office of Registrar of Company immediately after 20.07.2011, can the petitioner be absolved of his liability ? If this is allowed, perhaps no director nor any officer of the accused company can ever be made liable, because they can enter into any transaction at their will, issue some post dated cheques and then tender their resignation before the date of its encashment".
o. Thus, clearly in view of above mentioned dictums as well as above discussion, it is clear that accused no.3 being authorized signatory and director of the company cannot escape her liability for the payment for the work done during her tenure in the company as a director on the ground that she was not involved in day to day affairs of the company.
15. Further, the arguments of accused regarding non calling of Swami Awdheshanand G Giri Maharj as CW are irrelevant to decide the present complaint as it is prerogative of complainant only as to whom complainant wants to summon as a witness.
16. a. Further, accused no. 3 has raised objection that as per legal provisions, even the accused company did not have the liability to pay the cheque amount to the complainant because on the date of presentation of cheque, there was no legally enforceable debt or liability of accused company towards the complainant and therefore, accused no. 3 cannot be held vicariously liable U/s 141 of N I Act. It has been further argued by accused no. 3 that complainant has failed to prove its case beyond reasonable doubts. As per M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 19 of 31 20 accused no. 3, the complainant admitted that there was no written agreement between the complainant & accused company and complainant/CW-1 also admitted that no written orders in respect of advertisements have been placed by accused company nor any design of advertisement was approved by accused company. As per accused no. 3, the same is highly improbable. Further, the accused has also raised objections as to non filing of service tax returns by the complainant as per Section 70 and Notification No. 12/2002 dated 01.08.2002 of Service Tax 1994 as well as non mentioning of service tax registration no. on the bills. Accused also raised objections as to non mentioning of bills amount in audited profit & loss account. Similarly, not showing the audited balance sheet & ITR and has argued that complainant has failed to prove its case.
b. The accused has relied upon judgments of :
1. M S Narayana Menon @ Mani vs State of Kerala and another (2006) 6 SCC 39
2. Sanjay Mishra vs Ms Kanishka Kapoor @ Nikki & Anr. Criminal Application No. 4694 of 2008
3. M/s Kumar Exports vs M/s Sharma Carpets 2009 (1) JCC (NI) 34
4. Kapadvanj Peoples Cooperative Bank Ltd vs Jayantibhai Talasaji Marwadi and others 2013 (1) DCR 270
5. Ravi Kumar D. vs State of Delhi & Anr. Crl. MC No. 4378/2009
6. Kulvinder Singh vs Kafeel Ahmed 2013 (1) DCR 417
7. John Fernandes vs Noorjahan Khan 2010 (1) DCR 59
8. Veena Rani Chhabra vs Manju Rohida 2009 (2) DCR 302
9. Santhi C vs Mary Sherly & State of Kerala Crl.Appeal No. 996 of 2011
All these judgments reiterate and reaffirm the well settled legal M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 20 of 31 21 provisions and are specific to the facts of that particular case.
c. On the other hand, the complainant has argued that when the defence of accused no. 3 is that she has no liability to pay the cheque amount as she has already resigned and she was never involved in day to day affairs of accused company, then she cannot have right to take defence on behalf of accused company on merits. As far as this plea is concerned, the objection of complainant is liable to be discarded because accused has every right to take legal objections irrespective of nature of his or her defence.
d. Further, it has been argued on behalf of complainant that complainant has duly proved the invoices and to prove that, complainant has duly proved its case as CW-1 has duly deposed in post summoning evidence that :
".....for the publicity/advertisement work for the prospective TV channel to be launched through accused no. 1......................the complainant firm through deponent carried upon the work assigned by the accused persons and their associates as per their requirement, satisfaction and approval".
e. Further, to corroborate the above mentioned averments, the complainant has filed copy of invoices raised upon accused persons as well as the release orders given to publishing houses by the complainant in furtherance of orders placed upon complainant by the accused persons. The perusal of release orders clearly shows that complainant has completed the work as per orders placed by the accused persons and accused persons have issued cheque in question as part payment. It has been further argued that as per rules of M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 21 of 31 22 Service Tax, Service Tax is leviable only when the payment for the service is received. The service provider is liable to pay service tax only when the payment for the service has been received by him and not otherwise. In other words, if the service provider raises a bill and the payment is yet to be received against the bill, no service tax is leviable. Thus, service tax is charged on receipt basis only, not on "accrual" or "due" basis. But nothing prevents an assessee on paying the tax on services sooner the bills is raised. There is no prohibition in doing so.
f. The complainant has relied upon judgments of :
1. Samarendra Nath Das vs Supriyo Maitra decided on 16.12.2005
2. Vijender Singh vs Eicher Motors Limited & Anr. Decided on 05.05.2011 Delhi High Court
3. Krishna P Morajkar vs Joe Ferrao on 19.07.2013 Bombay High Court 2013 (2) DCR 607 g. However, the facts of Krishna P Morajkar vs Joe Ferrao on 19.07.2013 Bombay High Court 2013 (2) DCR 607 as well as facts of Samarendra Nath Das vs Supriyo Maitra decided on 16.12.2005 are not applicable to the facts in hand because in both the cases, it was a friendly loan given by an individual while in the present case, it is a commercial transaction between two legal entities stated to be of more than worth Rs3.50 crores. Similarly, the facts of Vijender Singh vs Eicher Motors Limited & Anr. Decided on 05.05.2011 Delhi High Court are not applicable to the facts in hand as in this case the court was dealing with the issue of liability of a guarantor.
h. However, it is clear that the failure of the complainant to pay M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 22 of 31 23 any taxes or filing of any return cannot give liberty to the accused for non payment of amount if proved to be payable to the complainant.
17. a. Now, the court has to consider whether the complainant has successfully proved its case so as to raise presumption against the accused. In the present case, in the pre-summoning evidence, complainant has only stated that accused persons have issued cheque in question for consideration towards payment of various invoices raised by complainant for payment of advertising and printed material charges etc. The nature of liability was not explained. Only at the stage of pre-summoning evidence for the first time, complainant clarified that accused persons have approached the complainant for publicity/advertisement work for its prospective TV Channel and complainant carried upon the work assigned by the accused persons as per their satisfaction.
b. Further, CW-1/AR of complainant admitted during cross examination that :
"There is no written agreement between the accused company and the complainant firm in respect of giving advertisements in the newspaper. It is correct to suggest that the advertisement release orders to the Newspapers companies were given by Ms/ Combined Design n Print. It is correct that the bills raised upon the accused company are from my firm M/s Combined Ads".
It is highly improbable that two legal entities ie the complainant firm and accused no. 1 company would enter into business transaction without written agreement because generally in commercial transactions when high stakes are involved, parties opt to pen down the terms & conditions of their M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 23 of 31 24 liabilities, interest and rights etc. c. Further, even if the court considers that there was an oral agreement between parties, the onus is upon the complainant to prove the terms and conditions of oral agreement between parties. During cross examination, CW-1 deposed that :
"No document was executed in respect of the rate of various advertisements on the basis of which, the invoice in question was raised. There is no margin of the complainant company but the complainant company used to receive 15% commission on the rates of advertisement published in the newspaper. At this stage, the witness is confronted with the invoices ExCW1/2 to ExCW1/30 and the bills annexed with the invoices which are now exhibited as ExCW1/2A to ExCW1/30A respectively and the witness is asked that why there is a difference in the amount as mentioned in ExCW1/2 to ExCW1/30 and ExCW1/2A to ExCW1/30A. After seeing the documents, witness stated that he cannot explain the difference in the amount in all the documents. I raised the release orders ExCW1/2B to ExCW1/30B as per negotiation with the publisher.......".
Thus, the complainant has not clarified during trial as to what was the rate agreed upon by the accused persons or what were the conditions subject to which complainant was authorized by accused persons to give advertisement on their behalf. It is highly improbable that parties would enter into oral agreement but no terms & conditions will be agreed between them as to mode of placing order or as to mode of payment or as to rate of basic rate etc. d. Further, sometimes even the bills/invoices is considered as a written agreement between parties. However, perusal of record shows that the M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 24 of 31 25 terms written in invoices ExCW1/2 to ExCW1/41 are not complete and concrete so as to conclude that the invoice itself is an agreement between parties while the advertisement release orders ExCW1/2A to ExCW1/30B contains complete terms and conditions of the contract between parties.
e. Further, the complainant has averred that bills ExCW1/2 to ExCW1/41 have been raised upon the accused persons but the complainant has nowhere averred that these bills have been duly received by accused persons nor the bills/invoices contain the stamp of accused company while as per general practice, whenever a bill is received by a company, its AR puts his signature along with the stamp of that company. During trial, complainant has not even bothered to explain whether any efforts have been made to supply the bills to the accused company and it is highly improbable that complainant firm would do the work of approx. 3.50 crores on behalf of accused company without even providing the bills to accused company from time to time because as per bills, the term no. 10 says "any discrepancy in the bill should be reported within 10 days from the date of receipt of bill".
f. Further, the supporting advertisement release order is a proof that complainant has given advertisement in the newspapers for the Channel to be launched as JAIS TV but this does not prove ipso-facto that the advertisement has been given on behalf of accused company in absence of any agreement between parties. The complainant might have done the work but the court has to consider as to what was the consideration of the agreement between parties as well as the issue whether the accused persons have liability M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 25 of 31 26 to pay the cheque amount to the complainant.
g. Further, during cross examination, the AR of complainant/CW-1 has deposed that :
"It is correct that I do not have any written work order placed before me by the accused person.................... Q. Do you take the payment in respect of publication of ads before or after the publication of the said ad ? A. After the publication of the ad.
Q. Do you take work orders on written or oral requests ?
A. We take verbal orders.
We are an authorized agency to publish advertisements. Q. Is it correct to suggest that you have not filed any documents to support that you are an authorized agency to publish advertisements ?
A. I do not know.
Q. In your advertisement, you have written "Medial
Partner Combined Ads" ExCW1/4A at point X1. What does this mean ?
A. This is in respect of authorization to sell online scholarship forms.
I do not know if there was any written authorization for selling online scholarship forms".
Thus, as per complainant, the accused has not even placed written orders in respect of advertisements. It is highly improbable that a person would give an advertisement without giving written order and without even giving written design because generally in the world of media, advertisement is considered to be a vital factor in first impression of the product or channel. During cross examination, CW-1 admitted that :
"It is correct to suggest that the design is told by the customer before the advertisement is given in the newspaper. It is correct that a design is approved by the customer before the advertisement is published in the newspaper. However, no letter is given by the customer prior to such release. It is wrong to suggest that a letter M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 26 of 31 27 regarding publishing the advertisement in the newspaper is given by the customer before giving advertisement in the newspaper. Vol : Generally such letter is issued by the publishing firm".
Thus, the complainant has admitted that the design is approved by customer before advertisement is published and as per complainant, in the present case, the customer was accused and no reason is there why accused company as a customer would not finalize the design before the advertisement or atleast would not give the material to be advertised.
h. Further, in the present complaint the complainant has not filed anything on record except the invoices Ex.CW-1/2 to Ex. CW-1/41. The invoices admittedly, do not bear the receiving of anyone on behalf of accused persons nor the same is having stamp of accused company. Therefore, the complainant has to show corroborative piece of evidence or record to prove the liability of accused persons. However, the complainant has admitted during cross examination that :
".......My firm Combined Ads is registered with Service Tax and not with Sale Tax. My other firm Combines Design n Print is not registered with any authorities. I do not mention the Service Tax Number in my invoices. Vol :
But I do deposit the same with the authorities. I do not know whether it is mandatory to mention Service Tax No. on the invoices of my firm, however, I duly deposit the same with the concerned authorities....................The accused did not place any written order in respect of the said advertisement. Vol : It was verbal order. .......................My firm is registered with the service tax authorities..........I had published the advertisements of the accused person in month of April 2006. Vol : I started publishing the advertisements of the accused person in the month of April 2006. I last published their ads in May 2006. I did not file the sales tax of income M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 27 of 31 28 tax returns for the same. Vol : Returns is to be filed only on the receipt of the payment from a customer...............I have not file return for payment of service tax in respect of the accused company for the financial year 2006-07. Vol The return for the payment of service tax is filed only in respect of the payment received from the clients and the accused no. 1 company has not made any payment, therefore, the same is not mentioned in the service tax as per the rules in the year 2006".
Clearly, there is no mandate upon the complainant to pay the service tax before the receipt of actual payment but it is highly improbable that a legal entity who has done work for another legal entity worth more than Rs3.50 crores would not reflect the amount of work done in the service tax returns.
i. Further, CW-1/AR of complainant has deposed during cross examination that :
"I do not know whether the account of complainant company were audited in the year 2006-07............Today I have brought the documents as per direction on the last date of hearing ie Balance sheet as on 31.03.06 which is ExCW1/D1, profit & loss account for the year ended on 31.03.06 which is ExCW1/D2, audited report dated 28.10.06 which is ExCW1/D3, copy of ITR for the assessment year 2006-07 which is ExCW1/D4 (OSR). Balance sheet as on 31.03.07 which is ExCW1/D5, profit & loss account for the year ended on 31.03.07 which is ExCW1/D6, audited report dated 19.10.07 which is ExCW1/D7, copy of ITR for the assessment year 2007-08 which is ExCW1/D8 and statement of assessable income for the assessment year 2007-08 which is ExCW1/D9 (OSR)......
Q. I put it to you that you have not annexed the schedules and complete audit report along with the documents ExCW1/D1 to D9 ?
A. I have filed the documents as supplied by my
Chartered Accountant.
M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 28 of 31 29 Court Observation : The witness has not filed the annexures as mentioned in the documents ExCW1/D1 & D5.................
I do not know whether the liability of the accused company is shown in ExCW1/D1, D2, D5 and D6 or not.
Thus, as per complainant, complainant has not maintained any statement of accounts nor has filed any audited balance sheet. Considering the fact that it was a commercial transaction between parties wherein the stakes worth Rs3.50 crores were involved, it is highly improbable that the complainant would not maintain statement of accounts and would not even bother to reflect the amount in profit & loss statement nor would reflect the same in audited balance sheets.
j. Further, AR of complainant/CW-1 deposed that :
"I had not taken any security from the accused persons for the said advertisement. Vol : No security is taken in respect of advertisements".
It has been argued on behalf of complainant that complainant had been given credit by the publisher firms and therefore, it had given credit to accused. Admittedly, the complainant firm is working since the year 1982 approx. therefore, by the year 2006, it was an established name and firm in the field of media but the accused company who admittedly was incorporated on 09.01.2006, was a new entrant in the field of media and therefore, no reasonable ground is made out as to why neither any security was taken from the accused company nor any advance payment was taken from accused company prior to doing the work worth Rs3.50 crores because admittedly by the M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 29 of 31 30 year 2006, even it cannot be said that the company was having a turnover of crores and therefore, it was a reliable entity.
k. Further, AR of complainant /CW-1 has deposed during cross examination that "No written communication was made with the accused to realize the amount of invoices ExCW1/2 to ExCW1/41. Vol I started the work with the accused in the first week of May 2006 and accused gave the cheque in question dated 11.07.2006 in the first week of May 2006 itself, therefore, no written communication was made. I raised the invoices ExCW1/2 to ExCW1/41 on the basis of work done for the accused from first week of April 2006 till last week of May 2006. I did not do any work for the accused after May 2006............I did not file any other civil suit against the accused company for recovery of the money. I did not maintain any ledger account for the bills raised against the accused company. The work, for which the bills ExCW1/32, 33, 34, 40 & 41 were raised, was done by the complainant company itself".
Admittedly, the amount of cheque in question is only Rs. 2 crores while as per complainant it has done the work worth Rs. 3.5 crores approximately for the accused company. It is highly improbable that complainant would not take any step for realization of remaining amount of Rs. 1.5 crores (approximately) and would only file a criminal complaint U/s 138 NI Act, waiving off the claim of approximately Rs. 1.5 crores.
18. In view of the above discussions and reasons, in the opinion of this Court, the presumptions arising in favour of the complainant U/s 118 & 139 of the Act have been rebutted by the accused by preponderance of probabilities, whereas the complainant has failed to prove its case beyond reasonable doubts.
M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 30 of 31 31 Resultantly, this court finds the accused no. 1 M/s Devbhumi Tele Films Pvt Ltd. and accused no. 3 Sakshi Aggarwal d/o Sh Mohan Aggarwal, irector, M/s Devbhumi Tele Films Pvt Ltd. not guilty for the offence punishable U/s 138 N I Act. Hence, they stand acquitted.
19. Further, accused no. 3 is directed to furnish bail bond and surety bond in the sum of Rs.1,00,000/- U/s 437(A) CrPC and is directed to be present before the Ld Appellate Court as and when notice is served upon her.
20. File be consigned to Record Room after due compliance. Digitally signed
PRABH by PRABH
DEEP KAUR
Announced in the open court
on 24/03/2018 DEEP Date:
2018.03.26
KAUR 15:02:36 +0530
(PRABH DEEP KAUR)
Metropolitan Magistrate-02/N I Act/South
Saket Court/New Delhi
Certified that this judgment contains 31 pages and each page bears my signature.
(PRABH DEEP KAUR) Metropolitan Magistrate-02/N I Act/South Saket Court/New Delhi M/S COMBINED ADS VS M/S DEVBHUMI TELE FILMS PVT LTD CC No. 468556/2016 Page 31 of 31