Delhi District Court
Cc No. 620697/2016 Intec Capital Ltd. vs Rbm Developers Page No. 1/16 on 17 August, 2022
IN THE COURT OF ANKIT MITTAL,
METROPOLITAN MAGISTRATE - 04, N. I. ACT,
SOUTHEAST DISTRICT, SAKET DISTRICT COURTS, DELHI.
JUDGMENT
M/S Intec Capital Ltd.
At: 701, Manjusha Building, 57, Nehru Place, New Delhi19 ..............Complainant Versus
1. M/S RBM Developers P. Ltd.
2. Rajendra Bhushan Sharma, Director M/s RBM Developers P. Ltd.
3. Meera Sharma, Director M/s RBM Developers P. Ltd.
All at: H1, 315, 3rd floor, Garg Tower, Netajji Subhash Place, Pitampura, New Delhi Also at: A3/701, 7th floor, Printers Apartment, Sector13, Rohini, New Delhi ..............Accused Persons PS - Najafgarh Under Section 25 of Payment and Settlement System Act, 2007 CNR No. DLSE020033172015
a) Sl. No. of the case : CT No. 620697/2016
b) Date of filing of complaint : 21.07.2014
c) Name of the complainant : M/S Intec Capital Ltd.
At: 701, Manjusha Building, CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 1/16 57, Nehru Place, New Delhi19
d) Name of the accused :1. M/S RBM Developers P. Ltd.
2. Rajendra Bhushan Sharma, Director, M/s RBM Developers P. Ltd.
(complaint proceedings was abated due to his death vide order dated 19.07.2022).
3. Meera Sharma, Director M/s RBM Developers P. Ltd.
(complaint proceedings was dropped vide separate statement of AR of complainant dated 03.06.2015, hence not summoned) All at: H1, 315, 3rd floor, Garg Tower, Netajji Subhash Place, Pitampura, New Delhi
e) Offence complained of : Under Section 25 of Payment and Settlement System Act, 2007
f) Plea of accused : Pleaded not guilty
g) Final order : Conviction
h) Date of such order : 17.08.2022 BRIEF STATEMENT OF THE REASONS FOR DECISION :
1. Vide this judgment, this Court shall dispose off complaint for offence punishable Under Section 25 of Payment and Settlement System Act, 2007 filed by the complainant company through its AR who was authorized to sign and verify documents of company. Certified copy of board resolution dated 14.02.2013 is Ex. CW1/A and copy of letter of authority dated 27.05.2014 is Ex. CW1/B (OSR). In the gist the facts of the case as CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 2/16 averred in the complaint are that the accused no. 2 and 3 are directors of the accused no.1 company and they are liable for all the acts of the company. Further, accused no.2 being the director of the accused no.1 company signed the mandate and issued the instructions to its banker. It is further averred in the complaint that accused no.2 and 3 on behalf of accused no.1 approached the complainant company for finance for their business purpose and accordingly, accused company was provided loan facility by the complainant company under an agreement no. 012/055 hereinafter referred to as 'Loan Agreement' for a loan amount Rs.10,33,056 on interest and the loan was to be repaid with interest over a period of 36 months, at a monthly installment of Rs.36,874/. It is further averred that accused no.2 on behalf of accused no.1 opted for ECS mandate and accordingly issued standing instruction to its banker namely Punjab National Bank, New Delhi bearing MICR Code - 110024066 to debit a sum of Rs.36,874/ from his account bearing no.1519008700001501 towards the monthly installments in respect of dues and liabilities under the above mentioned loan agreement on monthly basis and correspondingly to credit the said amount, in the bank account of the complainant i.e. HDFC Bank, Delhi. Copy of mandate form issued by the accused is Mark 1. It is further averred that on initiation of the ECS by accused, in respect of the equated monthly installments amounting to Rs.36,874/ for the month of May, 2014 could not be executed on the grounds of "Insufficient Balance" and the intimation of dishonorment of ECS has been received by the complainant vide transaction returning memo dated 16.05.2014 being MICR Code no.110024066 and clearing house reference no./sequence no.2058953289 issued by HDFC Bank, Delhi which is duly registered with the RBI for ECSdebit clearing as a user institution. Returning memo of ECS transaction is Ex. CW1/C. It is further averred that on dishonorment, complainant sent a legal notice dated 04.06.2014 to the accused persons at his last known CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 3/16 address through speed post on 05.06.2014 to make payment within 15 days from date of receipt of notice. Copy of legal notice as Ex.CW1/D, speed post receipts as Ex.CW1/E (colly) and tracking report as Ex.CW1/F (colly). The present complaint is Ex.CW1/G and evidence by way of affidavit is Ex.CW1/X. APPEARANCE OF ACCUSED & NOTICE
2. Presummoning evidence was led by the complainant side and after hearing complainant side, accused was summoned for offence punishable Under Section 25 of Payment and Settlement System Act, 2007. After appearance of accused, it was ensured that copy of complaint has been supplied. Notice was framed against the accused persons for offence punishable Under Section 25 of Payment and Settlement System Act, 2007 on 14.01.2015 in which accused pleaded not guilty and claimed trial. Further, the accused persons stated that they have already deposited 25% margin money with the complainant and their machinery is also lying with the complainant. COMPLAINANT'S EVIDENCE
3. During the trial, complainant has led the oral and documentary evidence against the accused to prove his case beyond reasonable doubt. The following evidence are as under:
Oral Evidence CW1 Sh. Love Kumar Documentary Evidence Ex. CW1/A Certified copy of board resolution dated 14.02.2013.
Ex. CW1/B Copy of letter of authority dated 27.05.2014 (OSR). Ex. CW1/C Returning memo of ECS transaction dated 16.05.2014 Ex. CW1/D Copy of legal demand notice dated 04.06.2014 Ex. CW1/E Copy of speed post receipts dated 05.06.2014 (colly) CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 4/16 Ex. CW1/F Copy of tracking reports (colly) Ex. CW1/G Complaint.
Ex. CW1/X Evidence by way of affidavit of CW1
Mark 1 Copy of mandate form issued by the accused.
Complainant stepped in witness box as CW1 adopted his affidavit of pre summoning as his evidence reiterating almost all facts of complaint, stating all exhibits available on record.
4. Complainant evidence was closed vide order dated 03.06.2015 and thereafter, matter was fixed for recording statement of accused.
STATEMENT OF ACCUSED
5. The statement of accused company was recorded under Section 313 of The Code of Criminal Procedure, 1973 read with Section 281 of The Code of Criminal Procedure, 1973 on 03.06.2015. Incriminating evidence was put to it which was denied by the accused. In recording of statement of the accused company, it opted to lead defence evidence but the same was closed 14.05.2018.
6. On 11.03.2022, it was mentioned by the Ld. Counsel for the complainant that the accused Rajender Bhushan has expired and vide order dated 19.07.2022 proceedings qua accused Rajender Bhushan was abated due to his death.
7. Further, the matter was pending at the stage of final arguments since, 04.10.2018 and despite giving several opportunities same was not being addressed by the accused persons rather accused persons stopped appearing in the matter afterwards and consequently, coercive steps were ordered against the accused persons for the securing of the presence of the accused. Thereafter, on 11.03.2022, it was mentioned by the Ld. Counsel for the complainant that the accused Rajender Bhushan has expired, CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 5/16 consequently, court notices were issued to the accused company for its appearance, however, despite giving several opportunities, none appeared on behalf of the accused company. Hence, final arguments were heard ex parte against the accused company u/s 305(4) Cr.P.C on 28.07.2022.
8. Case file perused.
INGREDIENTS OF OFFENCE AND DISCUSSION
9. Before dwelling into the facts of the present case, it would be apposite to discuss the legal standards required to be met by both sides. In order to establish the offence under Section 25 of Payment & Settlement System Act, 2007, the prosecution must fulfill all the essential ingredients of the offence. It is relevant here to quote the relevant Section here which has been defined as under:
Section 25 Dishonour of Electronic Funds Transfer for insufficiency, etc., of funds in the account.
(1) Where an electronic funds transfer initiated by a person from an account maintained by him cannot be executed on the ground that the amount of money standing to the credit of that account is insufficient to honour the transfer instruction or that it exceeds the amount arranged to be paid from that account by an agreement made with a bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the electronic funds transfer, or with both: Provided that nothing contained in this section shall apply unless
(a) the electronic funds transfer was initiated for payment of any amount of CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 6/16 money to another person for the discharge, in whole or in part, of any debt on other liability;
(b) the electronic funds transfer was initiated in accordance with the relevant procedural guidelines issued by the system provider;
(c) the beneficiary makes a demand for the payment of the said amount of money by giving a notice in writing to the person initiating the electronic funds transfer within thirty days of the receipt of information by him from the bank concerned regarding the dishonour of the electronic funds transfer; and
(d) the person initiating the electronic funds transfer fails to make the payment of the said money to the beneficiary within fifteen days of the receipt of the said notice. (2) It shall be presumed, unless the contrary is proved, that the electronic funds transfer was initiated for the discharge, in whole or in part, of any debt or other liability. (3) It shall not be a defence in a prosecution for an offence under subsection (1) that the person, who initiated the electronic funds transfer through an instruction, authorization, order or agreement, did not have reason to believe at the time of such instruction, authorization, order or agreement that the credit of his account is insufficient to effect the electronic funds transfer.
(4) The Court shall, in respect of every proceeding under this section, on production of a communication from the bank denoting the dishonour of electronic funds transfer, presume the fact of dishonour of such electronic funds transfer, unless and until such fact is disproved.
(5) The provisions of Chapter XVII of the Negotiable Instruments Act, 1881 (26 of 1881) shall apply to the dishonour of electronic funds transfer to the extent the circumstances admit. Explanation.For the purpose of this section,debt or other liabilitymeans a legally CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 7/16 enforceable debt or other liability, as the case may be.
10. Further, the term "electronic funds transfer" have been defined u/s 2(C) of Payment and Settlement System Act, 2007 which is reproduced as under:
S. 2 (c) : "electronic funds transfer" means any transfer of funds which is initiated by a person by way of instruction, authorization or order to a bank to debit or credit an account maintained with that bank through electronic means and includes point of sale transfers; automated teller machine transactions, direct deposits or withdrawal of funds, transfers initiated by telephone, internet and, card payment.
11. It is pertinent to note that Section 25(5) attracts the applicability of Chapter XVII of the Negotiable Instruments Act, 1881 to the dishonouring of an electronic funds transfer. Section 138 of the NI Act expressively provides provisions concerning the penalization of dishonoured cheques. Both these sections make the dishonouring of electronic funds and cheques an offence punishable with imprisonment, a fine or both. The prime difference between the two is that in the case of the former, the dishonour, which is the subject matter of the offence, is of electronic funds transfer rather than of a cheque.
12. In this regard I would like to rely upon a judgment of Hon'ble Delhi High Court In the case of Ritu Jain Vs. The State Through Standing Counsel & Anr. in Crl. M. C No. 555/2016 date of decision 12.03.2019, wherein it was held that by virtue of Section 25(5) of the Payments and Settlement Act, the provisions of Chapter XVII of the Negotiable Instruments Act, 1881 (26 of 1881) shall apply to the dishonour of an electronic funds transfer to the extent the circumstances admit. Therefore, when Section 25 of the Payment and Settlement Act is invoked, Section 138 of the NI Act is also applicable as the case may be.
13. Hence, once the accused admitted he has issued ECS Mandate, it relates to CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 8/16 the accused is proved an initial presumption as contemplated u/s. 139 of Negotiable Instruments Act has to be raised by the court in favor of the Complainant. Sec. 139 of the Negotiable Instrument Act contemplates that it shall be presumed unless contrary is proved that the holder of the ECS received the nature referred to in the Sec.138 of NI act and sec 25 of payment and settlement act for the discharge of the whole or in part any debt or liability. The presumption referred to u/s 138 of Negotiable Instruments Act is mandatory presumption and in general presumption.
14. Since provisions of Sec.25(1) and 25(2) of Payment and Settlement Systems Act, 2007 r/w explanation are similar to the provisions of Secs.138 and 139 of N.I. Act, it is just and proper to consider principle of law laid down in the case of Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The principles pertaining to the presumptions and the onus of proof were recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarize the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 9/16 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence. Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
15. The presumptions raised under Section 118(b) and Section 139 NI Act are rebuttable presumptions. A reverse onus is cast on the accused, who has to establish a probable defence on the standard of preponderance of probabilities to prove that either there was no legally enforceable debt or other liability.
16. That the perusal of Section 25 of the Payment and settlement Systems Act shows that one of the basic ingredients of the offence under Section 25 of the aforementioned Act is that the electronics funds transfer is initiated by the accused out of the account maintained by him with a bank for payment of any amount of money to another person for the discharge, in whole or in part, of any debt or other liability, in accordance with the relevant procedural guidelines issued by the system provider. In other words not only the ECS mandate must be signed by the accused but also it should be initiated in accordance with relevant guidelines issued by system provider.
17. On going through the material available on record, it is the specific case of the complainant company is that, the accused persons took the loan of Rs. 10, 33,056/ for the CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 10/16 purpose of their business which was to be repaid with interest by way of 36 monthly installments of Rs.36,874/ by way of ECS system, however, the accused has utterly failed and neglected to regularize the loan account as when complainant company presented its request for clearance of ECS, same was dishonoured with "Insufficient Balance" which is Ex. CW1/C. Admittedly, the ECS in question has not been disputed about initiated Electronic Fund Transfer by the accused. Since the accused has not disputed the ECS and the signature, the presumption u/s 139 of NI Act has to be drawn as held by the Hon'ble Supreme Court of India in Rangappa Vs. Sri Mohan (Supra).
18. Primarily, the defence taken by the accused company in its statement u/s 313 Cr.P.C was that firstly, it has not received the legal demand notice and secondly, accused company admitted that there is an outstanding dues remaining to be paid by it, however, it took the limited defence that it had already deposited the 25% margin money with the complainant and same be adjusted towards the loan as well as the machinery which is lying with the complainant should also be sold and adjusted in the loan amount.
19. The first contention of the accused company that it has not received the legal demand notice is frivolous in nature as the address mentioned on the legal demand notice which was served upon the accused company which has not been disputed in the cross examination of the complainant. Moreover, it has been settled by the Hon'ble Apex Court in the Judgment reported as, C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555 that an accused who claims that he did not receive the legal notice, can, within 15 days of receipt of summons from the court, make payment of the cheque amount, and an accused who does not make such payment cannot contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 11/16 contrary under Section 27 of the General Clauses Act and Section 114 of the Evidence Act. Hence, in the light of well settled as enunciated by the landmark judgment of C.C. Alavi Haji v. Palapetty Muhammed (supra) the defence of accused in the given situation is immaterial and devoid of any merit.
20. The second contention of the accused company was that the 25% of the margin money deposited by it with the complainant company as well as the sale proceeds of the machinery of the accused company lying with the complainant on which loan was financed should also be raised and same be adjusted, thereafter, the accused company is willing to pay the remaining amount which was stated by it in its defence recorded u/s 313 Cr.P.C The aforementioned contention of the accused company is more of admission in nature rather than the defence as accused was willing to pay the remaining loan amount, however, it has no where rebutted on the part of the accused company that why the liability arising in the present complaint which was filed on the dishonour of ECS mandate is not maintainable.
21. It is relevant to mention here the judgment passed by The Hon'ble Supreme Court of India in the case of Kumar Exports v. Sharma Carpets (2009) 2 SCC 513 wherein it has been observed that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of the negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 12/16 contrary is proved by the accused, that is, the cheque was not issued for consideration and discharge of any debt or liability. A presumption is not in itself evidence but only makes a prima facie case for a party for whose benefit it exists. The Apex Court further held that in a trial under Section 138 of the Act the accused has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumption an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the Court need not insist in every case that the accused should disprove the non existence of consideration and that by leading direct evidence because the existence of negative evidence is entirely possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of that, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumption the accused should bring on record such facts and circumstances, upon consideration of which the Court may either believe that the consideration and debt did not exist, or their non existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 13/16 so relied upon are compelling, the burden may likewise shift again on the complainant.
22. Adverting to the facts of the case, it is clear that the accused company has not disputed that accused has issued ECS mandate ie. Mark 1 issued to its banker for processing the payment request raised by the complainant. This fact is also clear from admission of the accused from its notice framed u/s 251 Cr.P.C as well as from its statement recorded u/s 313 Cr.P.C.
23. Further, I have gone through the cross examination and I do not find any material reason to disbelieve the testimony of complainant. Minor discrepancies, even if in existence, can never be given much importance so as to throw out the entire version of a witness. Nothing came out in the crossexamination to disprove the case of the complainant. In view of the above, it is held that there is nothing in the crossexamination of the complainant which can impeach his credit or tend to show that accused has rebutted the presumption of law available in favour of complainant.
24. Moreover, no defence evidence be it oral or documentary was led by the accused company in order for rebutting the presumption raised in favour of the complainant. The sole defence of the accused that the margin money of 25% should be adjusted in the loan amount was frivolous in nature as the present complaint was filed on the basis of the dishonourment of ECS mandate of monthly EMI. Interestingly, it appears that accused is oblivious of the fact that the present complaint is qua the EMI not of entire loan amount, hence, accused has failed to rebut the statutory presumptions which was raised in favour of the complainant u/s 139 as well as 118 of N. I. Act. CONCLUSION
25. In view of my above discussion, I am of considered opinion that the accused company has utterly failed to rebut the statutory presumption in favour of the complainant. CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 14/16 Unless and until the accused rebuts the statutory presumption with convincing and cogent evidence, burden cannot be shifted on the complainant. The statutory presumption under Section 25 (2) of the Payment and Settlement Systems Act, 2007 r/w Sec.138 of Negotiable Instruments Act has remained unrebutted and it can be said that the evidence on record is sufficient to accept the case of the complainant that the accused had issued ECS mandate in question towards discharge of legally enforceable debt and the complainant has proved all the requirements of under Section 25 (2) of the Payment and Settlement Systems Act, 2007 r/w Sec.138 of Negotiable Instruments Act, so as to constitute the offence against the accused RBM Developers Pvt. Ltd.
The accused has miserably failed to rebut the said presumption by raising a probable defence. The defence of the accused that there was no legal liability is not proved, even on the standard of preponderance of probabilities. Moreover, the Hon'ble Supreme Court in the case of Lakshmi Dyechem v. State of Gujarat (2012) 13 SCC 375, has held as under, "Therefore, if the accused is able to establish a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. The accused can rely on the materials submitted by the complainant in order to raise such a defence and it is inconceivable that in some cases the accused may not need to adduce the evidence of his/her own. If, however, the accused/drawer of a cheque in question neither raises a probable defence nor able to contest existence of a legally enforceable debt or liability, obviously statutory presumption under Section 139 of the NI Act regarding commission of the offence comes into play if the same is not CC No. 620697/2016 Intec Capital Ltd. Vs RBM Developers Page No. 15/16 rebutted with regard to the materials submitted by the complainant." In light of the aforementioned discussion, the complainant has successfully proved all the essential ingredients of Section 25 of Payment & Settlement System Act, 2007 read with Section 138 N. I. Act. Accordingly, accused company R. B.M Developers Pvt. Ltd. is held guilty for committing the offence under Section 25 of Payment & Settlement System Act, 2007 is hereby convicted.
Let the copy of the judgment be given dasti to convict company free of cost.
Announced in the open Court (ANKIT MITTAL)
on 17.08.2022 M.M.04/N.I.Act/SouthEast,Saket/Delhi
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