Delhi District Court
National Agricultural Cooperative ... vs M/S Reliance Polycrete Ltd on 21 July, 2011
1
IN THE COURT OF SH ANUJ AGGARWAL : METROPOLITAN MAGISTRATE - 03
SOUTH : SAKET COURT : NEW DELHI
National Agricultural Cooperative Marketing Federation of India Ltd vs
M/s Reliance Polycrete Ltd
CC No. 305/10
U/s 138 Negotiable Instruments Act
JUDGMENT
(1) Serial number of the case : 305/10
(2) Name of the complainant : National Agricultural
Cooperative Marketing
Federation of India
Ltd (NAFED), through
Sh S K Maggu, Deputy
Manager (F&A), Nafed
Building, Siddhartha
Enclave, Ashram Chowk,
Ring Road, New Delhi14
(3) Name of the accused,
parentage & residential address : 1. M/s Reliance Polycrete Ltd., 1504, Ist Floor, Wazir Nagar, Opp. Defence Colony, New Delhi110003
2. Dr S K Jain, CMD M/s Reliance Polycrete Ltd., 1504, Ist Floor, Wazir Nagar, Opp. Defence Colony, New Delhi110003 (4) Offence complained of or proved : 138 Negotiable Instruments Act (5) Plea of the accused : Pleaded not guilty (6) Final Order : Convicted (7) Date of Institution : 14/02/2006 (8) Date on which reserved for judgment : 12/07/2011 (9) Date of Judgment : 20/07/2011 National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 2
1. The material facts as carved out from the complaint are that the complainant is a national level cooperative society carrying on business of trading of agricultural and nonagricultural items. The accused no. 1 is a public limited company and accused no. 2 is the Chairman cum Managing Director of accused no.1.
2. The accused approached the complainant in the month of December 2004 with proposal vide letter dated 28/12/2004 for procurement and export of iron ore and wanted financial facility of Rs.80 crores. Thereafter, the complainant paid a total sum of Rs.18,38,75,000/ on the request/indent of the accused for the purpose of procuring and exporting iron ore in terms of agreement. The said amount was stated to be paid on different dates and the accused issued the receipt for the above amount.
3. Accused towards part payment of aforesaid financial facility of Rs. 18,38,75,000/ issued cheque no. 176658 dated 02/11/2005 for Rs.16,00,000/ drawn on ICICI Bank Ltd., Defence Colony Branch, New Delhi to the complainant. The accused assured the complainant vide his letter dated 15/02/2005 that the above said cheque would be honoured. As per the complainant, the said cheque got dishonoured due to the reason "Funds Insufficient". The complainant made a demand for payment of the said amount of money by giving a Demand Notice dated 28/12/2005 to accused. Statutory notice of demand was duly served upon accused but he failed to make the payment of the said amount to complainant within stipulated time. Thereafter, the complainant has filed this complaint U/s 138 of National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 3 Negotiable Instruments Act, 1881 (hereinafter "the Act") against the accused.
4. On 14/02/2006, the court took cognizance of the offence U/s 138 of the Act. On being satisfied that the complainant has a prima facie case against the accused, the court summoned the accused for offence U/s 138 of the Act.
5. Accused appeared pursuant to the summons issued by the court and was admitted to bail. It may be relevant to mention here that during the trial, accused no. 1 company was represented by accused no. 2 who is the Chief Managing Director (CMD) of the accused no. 1 company and also the signatory of cheque in question. The particulars of the offence were read over and explained to the accused in simple Hindi, to which he pleaded not guilty and claimed trial.
6. In order to substantiate its case, the AR for the complainant examined himself as the only complainant witness.
7. All the circumstances appearing in the evidence against the accused were put in order to enable him to offer him explanation. In his statement U/s 313 CrPC recorded on 18/05/2009, the accused admitted drawing of cheque in question, its dishonour due to the reason "Funds Insufficient" and receiving of demand notice. It was, however, stated by accused that some properties were mortgaged with complainant which were agreed to be sold to the buyer M/s Bimal Castings Pvt Ltd with the permission of complainant and as token advance, a cheque of Rs.16,00,000/ was given by the buyer in the name of accused no 2. However the National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 4 same cheque was not honoured by the buyer since buyer wanted some clarifications in the property regarding the demarcation and the mutation. It was further submitted by the accused that buyer later on submitted photocopies of pay orders of Rs.16,00,000/ and requested to give demarcation and mutation of the property and was ready to hand over those pay orders to S K Jain. Accused further submitted that since the demarcation mutation was not made available to the buyer, he was not handed over the pay orders. As per the accused, the cheque in question was not paid since the buyer has not paid the token money.
8. Accused examined three witnesses in his defence. DW1 is accused himself, DW2 is Kunwar Singh, consultant of complainant and DW3 is Homi Rajvansh.
9. I have heard both the parties at length and perused the record. It has been argued by Ld. counsel for the complainant that from evidence, complainant has proved that the cheque in question was issued by accused no. 2 on behalf of accused no. 1 which got dishonoured and despite service of legal notice, accused did not make payment. It is argued that during cross examination of witnesses, nothing material has come out and the complainant has been able to prove his case to the hilt. It is argued that accused has failed to discharge the burden cast upon him to rebut the presumption in favour of complainant under the provisions of N I Act.
10. Per contra, for knocking down the edifice of complainant case, it has been argued with vehemence by Ld. counsel for defence that no case is made out National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 5 against accused as the very institution of this complaint is faulty as the authorized representative of the complainant company has not been duly authorized. It has been further argued that Sh S K Maggu is not authorized and competent to launch prosecution and depose in this matter. It has also been argued that cheque in question was not given for part payment of financial facility and was towards realization of collateral security.
11. Before looking into the factual issues involved herein, I would discuss certain statutory provisions of Negotiable Instruments Act. Section 118 (A) of N I Act provides for presumptions regarding consideration for a Negotiable Instrument. It reads as under : "That every negotiable instrument was made or drawn for consideration and that every such instrument when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration".
12. Section 139 of the Negotiable Instruments Act provides for presumption in favour of a holder. It reads as under :
"It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, or any debt or other liability".
13. Apex court in Rangappa vs Mohan AIR 2010 SC 1898 while over ruling the judgment titled Krishna Janardhan Bhatt vs Dattatraya G Hegde AIR 2008 SC National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 6 1325 observed in para 14 that :
"the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observation in Krishna Janardhan Bhatt (supra) cannot be correct............This is of course in the nature of a rebuttable presumption and it is opened to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested".
14. Therefore, in view of the statutory provisions and apex courts judgment, there is a presumption in favour of holder of the cheque that he has received the same for discharge in whole or in part of any legally enforceable debt or other liability. It is a well settled principle of law that the presumption available U/s 139 N I Act can be rebutted by the accused by adducing evidence. Therefore, the burden of proof is on the accused to discharge his burden. The accused can prove the non existence of consideration by raising a probable defence and if he proves the same, then only the onus would shift upon complainant, who has to prove it as a matter of fact and his failure to prove would disentitle him to grant the relief.
15. In Hiten P Dalal vs Brstindranath Banerjeet AIR 2001 Supreme Court 3897, Hon'ble Supreme Court observed that the defence submission that the cheques were not drawn for the discharge in whole or in the part of any debt or other liability is answered by the third presumption available to the banks U/s 139 of the Negotiable Instruments Act. This section provides that "it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability". The effect of these presumptions is to place the evidential burden on the National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 7 defence of proving that the cheque was not received by the bank towards the discharge of any liability.
16. I shall now examine the testimony of witnesses to see whether the accused has been able to discharge the burden of mandatory presumption by cogent evidence or not? CW1 is the AR of complainant whose examination in chief was conducted by way of affidavit, wherein he reiterated the averments made by him in his complaint. The authorization letter dated 10/02/2006 was exhibited as ExCW1/1, the agreement between complainant and accused was exhibited as ExCW1/3, the receipts issued by the accused for amounts paid by the complainant were exhibited as ExCW1/8 to ExCW1/11, the cheque in question was exhibited as ExCW1/13, the return memo dated 19/12/2005 was exhibited as ExCW1/14, demand notice was exhibited as ExCW1/17 and the postal receipts as ExCW1/18 (colly).
17. CW1 was crossexamined at length by Ld. Counsel for the accused. During cross examination, it was deposed by the witness that the accused gave paper pertaining to his land as collateral security on which NOC was given by the complainant. The witness further deposed that he is not aware if the cheque was given by the purchaser to the accused on 01/11/2005 and in lieu of that cheque the accused issued cheque in question on 02/11/2005 to the complainant. The witness further deposed that he was not aware if the payment was not made to the complainant as the cheque issued by the purchaser to the accused got bounced. It was further deposed (voluntarily) that the cheque in question was deposited by the complainant on the written advice of accused. The witness denied the suggestion National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 8 that complainant is not entitled to any payment against the cheque in question or that the complainant had received the entire payments through cheques issued subsequently.
18. I have gone through the deposition of complainant witness carefully. In my considered view, the testimony of the witness during the whole cross examination has remained intact and inspires confidence of this court. No inconsistency or contradiction crept in the testimony of the witness while being put to cross examination. Ld. counsel for accused has also failed to point out any contradiction whatsoever in the testimony of the witness.
19. Accused has examined three witnesses in his defence. DW1 is accused no. 2 i.e S K Jain who is the Chief Managing Director of accused no. 1 company. In his examination in chief (conducted by way of affidavit), it was deposed by accused that he had issued the cheque in question against the realization of mortgaged collateral security. It has further been deposed by the witness that he had received a cheque no. 149020 dated 01/11/2005 for Rs.16 lacs i.e. ExDW1 from Sh Aditya Sharma i.e. land purchaser party. The agreement to sell of land dated 26/10/2005 was ExDW1/A.
20. It was further deposed by the accused as a witness that cheque no. 149020 could not be encashed, therefore, the cheque in question also could not be encashed. It was also deposed that the complainant had issued of NOC in favour of accused for disposal of land which was a collateral security.
National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 9
21. During his cross examination, the accused admitted drawing of cheque in question and its dishonour also. It was deposed (voluntarily) by the accused that the cheque in question was issued towards sale proceeds of collateral security which were mortgaged with the complainant and which the complainant permitted to sell to one Sh Aditya Sharma (record reveals that Sh Aditya Sharma was authorized signatory of M/s Bimal Casting Pvt Ltd). The accused admitted it be correct that letter dated 13/12/2005 was issued under his signatures to the complainant. It was further deposed by the accused (voluntarily) that Sh Aditya Sharma issued a cheque bearing no. 149020 dated 01/11/2005 for Rs. 16 lacs against the sale proceeds of mortgaged property and that he issued a cheque back to back for Rs.16 lacs in favour of the complainant and as the cheque issued by Sh Aditya Sharma could not be honoured due to some technical issues in the mortgaged property, hence the cheque issued by accused also go dishonoured. The accused admitted the suggestion that the cheque issued by Sh Aditya Sharma was dishonoured on 17/11/2005 and the cheque in question got dishonoured on 17/12/2005.
22. DW2 is Kunwar Singh, consultant NAFED who admitted the issuance of letter dated 21/11/2005 to the accused. DW3 is Homi Rajvansh who admitted that he issued NOC for disposal of collateral security on 19/11/2005 i.e. ExDW/2.
23. After considering the facts and circumstances of this case and evidence brought on record, I am of the considered view that accused has not been National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 10 able to discharge the burden of mandatory presumption in the present complaint for the following reasons : I. The only defence taken up by accused in the present case is that the certain properties of accused were mortgaged with complainant and complainant had issued NOC for sale of same to the third party i.e. Sh Aditya Sharma (of M/s Bimal Castings Pvt Ltd who was interested in purchasing the property of accused) and accordingly, Sh Aditya Sharma had issued a cheque bearing no. 149020 dated 01/11/2005 for Rs.16 lacs to the accused as a token advance and accused had also issued a cheque back to back for Rs. 16 lacs in favour of complainant. As per the accused since the cheque issued by Sh Aditya Sharma did not get honoured because of some technical issue (demarcation and mutation), the said transaction of sale of property did not materialize and therefore, for this reason the cheque issued to the complainant also could not be honoured. In my considered view, the said defence of accused cannot be said to be tenable at all. The dishonour of cheque issued by a third party (in favour of accused) can by no stretch of imagination be said to be a valid ground for dishonour of cheque issued by accused. Unless otherwise agreed, the honour of a cheque (issued by accused) can never deemed to be subject to a condition that the cheque issued by a third party (in favour of accused) should be honoured first before cheque issued by accused is honoured.
II. The letter dated 13/12/2005 i.e. ExCW8 issued on behalf of accused persons to the complainant has been brought on record by the complainant. During cross examination of accused no. 2, the latter had admitted it National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 11 to be correct that letter dated 13/12/2005 was issued under his signatures to the complainant. Para 5 of said letter reads as follows : " As regards, Rs.16 lacs is concerned, you can deposit our cheque to reach our bank on Friday dated 16th December'05 or alternatively we can deposit with you the pay order of the same on 16th December'05"
What is clear from the above that it is accused only who had advised the complainant to deposit the cheque in question. It is also not the case of accused that the cheque which has been mentioned at para 5 of the said application does not refer to cheque in question as during cross examination of AR of complainant, no suggestion or question was put forth by Ld. Counsel for defence regarding the same. The said letter is dated 13/12/2005 whereas it has come on record vide ExDW1/B that cheque bearing no. 149020 issued by Sh Aditya Sharma in favour of accused no. 2 got dishonoured on 17/11/2005 meaning thereby that the letter dated 13/12/2005 (interalia advising complainant to deposit the cheque in question) was written subsequently when the dishonour of cheque issued by Sh Aditya Sharma was already in the knowledge of accused. Therefore, the plea of accused does not seem plausible in view of the letter dated 13/12/2005 wherein he himself had advised the complainant to deposit cheque in question when the factum of dishonour of cheque issued by land purchaser party was already in his knowledge.
III. No objection certificate i.e. ExDW2 issued by National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 12 complainant in favour of accused was brought on record by DW1 i.e. accused no. 2 and same was also proved by DW3 i..e the signatory of said No Objection Certificate. A careful perusal of same reveals that the complainant had given its no objection to the accused and agree to release the original title deeds of the property held by complainant as collateral security subject to accused making full payment of Rs.9.16 crores. However, in the said NOC, it has nowhere been mentioned that the payment to be made by accused to the complainant shall be conditional subject to the buyer making the payments to the accused. It is also not the case of accused that the complainant had agreed that in case the payments are not made by the prospective buyer to the accused, the cheque in question shall also not be honoured.
IV. The agreement dated 31/01/2005 i.e. ExCW1/3 entered into between accused and complainant for extending financial facility and the various receipts issued by accused to the complainant i.e. ExCW1/8 to ExCW1/11 against the payments made on different dates have duly been proved and remains uncontroverted during the trial. As averred by the complainant, the extending of financial facility by the former to the accused has got proved by the material brought on record meaning thereby that the issuance of cheque in question by the accused to the complainant could have been for no other purpose except for part payment of said financial facility.
Therefore, it is crystal clear that the defence raised by accused is nothing but moonshine and cannot stand the test of judicial scrutiny.
National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 13
24. During the course of arguments, it was vehemently argued by Ld. counsel for the defence that the authorization of Sh S K Maggu, AR of complainant is faulty and defective and therefore, the present complaint cannot be said to be maintainable. It was also argued that Sh S K Maggu is not a competent witness as the facts of this case are not in his knowledge. I have considered submissions of Ld. counsel for accused and also gone through the written arguments filed by Ld. counsel in support of his submissions. In my considered view, the submissions made by Ld. counsel for defence have no force. The complainant (NAFED) in the present case is a incorporeal person and therefore, has to be represented by corporeal person while prosecuting a criminal complaint in a court of law. Perusal of ExCW1/1 i.e. resolution dated 10/02/2006 reveals that Sh S K Maggu has been authorized by Sh Alok Ranjan, Managing Director of complainant company to represent and sign and deliver all the documents with regard to present complaint. As per the said exhibit, the said authorization has been made by Managing Director of the complainant company in exercise of power vested vide paras 42(A) (vii) & (B)
(vi) of ByeLaws of NAFED meaning thereby the authorization of Sh Maggu has been done in accordance with byelaws of the complainant company. During the trial, accused was at liberty to cross examine Sh S K Maggu qua his authority to represent the complainant company. However, no examination of Sh Maggu was done by counsel for accused in this regard. During defence evidence also, the accused could have brought on record the material on the basis of which this court could have arrived at a conclusion that the authorization of Sh S K Maggu is not proper. However, the accused has not brought any such material on record. In view of this, I am of the considered view that authorization of Sh S K Maggu in the present case is National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 14 proper and as per prescribed procedure of complainant company.
25. In Bhasin Credit Aid Ltd vs Raj Kumar 133 (2006) DLT 383, it has been held by Delhi High Court at Para 5 : "...........The question for decision in the present case is whether the Court below was justified in dismissing the appellant's complaint under Section 138 of N I Act on the ground of absence of proper authorization in favour of Mr M L Sharma through whom the said complaint was filed. The law, in this regard, is well settled that anyone can set the criminal law in motion by filing the complaint constituting the offence. For the offence under the Negotiable Instruments Act, the only criteria prescribed by Section 142 is that it must be instituted by the payee or holder in due course. The fact that the complaint lodged by a Manager or other employee who had not been authorized by the Board of Directors to sign and file the complaint cannot be a ground for quashing the complaint"
26. Therefore, what has been upheld by the High Court in the said case is that even a complaint lodged by a Manager or other employee of the company who has not been authorized by board of directors to sign and file the complaint cannot be a ground for quashing of complaint. However, in the present case, as discussed above, Sh S K Maggu has been authorized vide resolution dated 10/02/2006 to represent the company in the present matter, therefore, the submission made by Ld. counsel for accused challenging the authority of Sh S K Maggu does not hold any National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 15 good ground to be entertained.
27. The other plea of Ld. Counsel for accused is that Sh S K Maggu is not a competent witness as facts of this case are not in his knowledge is also not tenable. The present case is not a case where the deposition has been made by the witness on the basis of his personal knowledge rather all the transactions have been brought on record by way of documentary evidence which has been duly proved and remains uncontroverted during the whole trial. Therefore, it cannot be said that Sh SK Maggu is not a competent witness.
28. In the facts and circumstance of this case and in view of the discussion as held above, I am of the considered view that the defence raised by accused is not tenable and unworthy of any belief and credit. It was for the accused to rebut the presumption by reliable and cogent evidence and above discussion makes it clear that accused has failed miserably to discharge the burden. Having considered the entire evidence, it is proved that accused had issued the cheque against liability and against legally enforceable debt and the said cheque was dishonoured due to insufficiency of funds.
29. It is proved on record that accused despite service of statutory notice of demand failed to make the payment of the cheque in question within 15 days from receipt thereof. The complainant has fulfilled all the ingredients of Section 138 of the N I Act. It is also not disputed that the cheque has been issued on behalf of accused no. 1 company by accused no. 2 who is also the CMD of the company.
National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 16 Accordingly, both the accused stand convicted for committing the offence U/s 138 N I Act. Let they be heard on the point of sentence.
Announced in the open court on 20/07/2011 (ANUJ AGGARWAL) Metropolitan Magistrate 03/N I Act/South Saket Court/New Delhi Certified that this judgment contains 16 pages and each page bears my signature.
(ANUJ AGGARWAL) Metropolitan Magistrate 03/N I Act/South Saket Court/New Delhi National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 17 IN THE COURT OF SH ANUJ AGGARWAL : METROPOLITAN MAGISTRATE - 03 SOUTH : SAKET COURT : NEW DELHI National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd CC No. 305/10 U/s 138 Negotiable Instruments Act ORDER ON SENTENCE Present : AR for complainant with counsel Convict with counsel I have both the parties on the point of sentence.
Ld. counsel for convict requests for taking lenient view on the ground that convict is the sole bread earner of the family.
Ld. counsel for the complainant, on the other hand, requests for maximum punishment to the convict on the ground that the complainant is a government organization and therefore, convict should not be allowed to be thrived on public money.
I have heard the submissions made by both the parties. Sentencing is a judicial discretion and court should not shy away from sentencing the convict adequately in befitting circumstances. The offence under section 138 N I Act has been introduced to encourage greater vigilance to prevent the usual callous attitude of drawer of cheque and to lend greater credibility to the transactions.
Considering the circumstances, convict no. 1 i.e. company is sentenced to pay a fine of Rs.10,000/ within 30 days from today. Further convict no. 2 is sentenced to simple imprisonment for 09 months and further directed to pay a compensation of Rs.24,00,000/ (Twenty Four lacs) within a period of 30 days to the complainant. In default of payment of compensation, the convict no. 2 shall further National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd 18 undergo simple imprisonment for one month.
It is ordered that the compensation amount if not paid in time, shall be recoverable under the provisions of section 421 CrPC.
At this stage, counsel for the convict orally requests for suspension of sentence under the provisions of Section 389 (3) CrPC for filing the appeal by convict and request is made for releasing him on bail. Heard.
Convict no. 2 is admitted on bail on his furnishing bail bond in the sum of Rs.20,000/ with one surety of the like amount. Bail bond furnished and same is accepted.
File be consigned to record room.
Announced in the open court on 21/07/2011 (ANUJ AGGARWAL) Metropolitan Magistrate 03/N I Act/South Saket Court/New Delhi National Agricultural Cooperative Marketing Federation of India Ltd vs M/s Reliance Polycrete Ltd