Delhi District Court
Sharda Capsec Limited vs M/S Elite Capital And Management on 19 December, 2014
CC No.1116/14
Sharda Capsec Limited Vs M/s Elite Capital and Management
IN THE COURT OF SHRI DEEPAK KUMAR, MM5 (NI ACT) SOUTH
WEST DISTRICT: NEW DELHI
C.C No. 1116/14
Unique case ID No. 02405R0128051999
In the matter of :
Sharda Capsec Limited
office At: 44/3, Community Centre,
East of Kailash, New Delhi110065
Through
Its Chairman and Managing Director
Shri G.C Sharda
...Complainant
Versus
1. M/s Elite Capital and Management
Services Limited, Registered Office
at Flat No. 1806, Sector B, Pocket1,
Vasant Kunj, New Delhi110070.
Corporate Office At A30, Sector5,
1
CC No.1116/14
Sharda Capsec Limited Vs M/s Elite Capital and Management
Noida, U.P
Also at B6, Kalindi, New Delhi
2. Mr. Prem Chand Gupta
3. Mr. Paresh Gupta
4. Mr. Sushma Gupta, wife of Mr. Prem
Chand Gupta
All Directors of M/s Elite Capital
Management Services Limited
All residents of B6, Kalindi Kunj, New Delhi
...Accused
Date of Institution : 22.02.1999
Date on which judgment was reserved : 19.12.2014
Date of judgment : 19.12.2014
2
CC No.1116/14
Sharda Capsec Limited Vs M/s Elite Capital and Management
J U D G E M E N T
1. Vide this judgment, I shall dispose of the present complaint u/s 138 of the Negotiable Instruments Act (in short, NI Act) filed by the complainant against the accused.
2. The case of the complainant is that the complainant is a company registered under the Companies Act and is carrying on the business of finance and investments. The accused No. 1 is a company registered under the Companies Act and the accused Nos. 2, 3 and 4 are its Directors. It is stated in the complaint that accused No. 2 Prem Chand Gupta had approached the complainant company for financial loan to the accused No. 1 company and had proposed to the complainant that the accused persons would sell 91,000 shares of Rs. 10/ each for the lump sum consideration of Rs. 10,03,000/ only on the condition that the said shares would be purchased back by the accused persons after a period of twelve and a half months i.e on 15.10.1997 at the rate of Rs. 12.50 each. It is further mentioned that it was also agreed that complainant is authorized to sell the said shares in the open market, if the price of the same goes beyond Rs. 15/ each 3 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management before 15.10.1997. It is further stated in the complaint that in order to furnish security to the said sum, the accused No. 2 Prem Gupta stood guarantor for the same vide transfer deed in respect of 45,000 shares of accused No. 1 company. It is further stated that the said understanding was to be put down in writing under a buy back agreement dated 01.10.1996. It is stated that on 15.10.1997 the complainant requested to the accused No. 2 to buy back the shares and repay the amount in terms of buy back agreement dated 01.10.1996 and on 29.01.1998 the complainant had further requested to the accused No. 1 for the payment of money in terms of agreement dated 01.10.1996 along with interest at the rate of 3% per month. It is further stated that complainant by its letter dated 29.04.1998 and registered letters both dated 17.05.1998 and 15.07.1998 requested the accused persons for the payment of the said money in terms of buy back agreement dated 01.10.1996 along with interest. However, as per the complaint, accused persons failed to comply with the contractual obligations. After several oral/written reminders and after much persuasion, in discharge of his debts/liability towards the complainant, accused 4 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management No. 2 issued cheque bearing no. 486831 dated 21.12.1998 for a sum of Rs. 17,02,015/ drawn on State Bank of India, NOIDA, U.P, in favour of the complainant on behalf of accused No. 1. According to the complainant, the aforesaid cheque when presented for realisation, was received back dishonoured vide bank return memo with the remarks "REFER TO DRAWER". Consequentially, a legal notice dated 12.01.1999 was served by the complainant through its counsel upon the accused under registered A.D post as well as U.P.C calling upon the accused to make the payment towards cheque amount in question within 15 days of receipt of notice. According to the complainant, the said notice was duly served upon the accused but no payment against the above dishonored cheque has been made by the accused within the requisite period. Hence the present complaint.
3. The cognizance of offence under Section 138 of the Negotiable Instruments Act, 1881 was taken by the Ld. Predecessor Court. Accordingly, accused persons were summoned by the court. However, accused persons did not appear before the court and vide order dated 01.11.2011, accused 5 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management no. 2, 3 & 4 were declared absconders by the Ld. Predecessor Court. Thereafter, notice u/s 251 Cr.P.C. explaining accusations against the accused u/s 138 of the NI Act was framed on 23.05.2012 and it was read and explained to the AR of the accused No. 1, to which AR of the accused No. 1 did not plead guilty and claimed trial. An application filed on behalf of the accused u/s 145(2) NI Act seeking to cross examine CW was allowed. Thereafter, AR of the complainant was crossexamined. Vide statement of counsel for the complainant dated 05.09.2013, CE was closed. On 26.09.2013, statement of accused u/s 313 Cr.P.C was recorded. Accused persons opted to lead DE. Consequently, DW1 and DW2 were examined and cross examined.
4. Documents relied upon by the complainant are as follows:(i) Ex. CW1/1: The extract of the minutes of the meeting of the Board of Directors dated 29.10.1998 (ii) Ex.CW1/2: True copy of certificate of incorporation and a memorandum and articles of Association (iii) Ex.CW1/3: agreement dated 01.10.1996 (iv) Ex.CW1/4 to Ex.CW1/8: Office copies of letter dated 29.01.1998, 6 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management 29.04.1998, 27.05.1998 and 15.07.1998 along with post receipts (v) EX.CW1/9: Original Cheque no. 486831 dated 21.12.1998 for a sum of Rs. 17,02,015/ drawn on State Bank of India, Noida Branch, U.P (vi) Ex. CW1/10: Deposit slip dated 30.12.1998 (vii) Ex.CW1/11 to Ex.CW1/12 : A memo dated 01.01.1999 along with memo dated 31.12.1998 issued by the State Bank of India (viii) Ex.CW1/13 to Ex.CW1/14: Legal notice dated 12.01.1999 along with the postal receipt of UPC (ix) Ex.CW1/15: Reply to the notice dated 12.02.1999 (x) Ex.CW1/16 : Complaint (xi) Ex.CW1/17 :
Certified copy of resolution dated 28.07.2010 passed in the meeting of board of directors of complainant's company (xii) Ex.CW1/18 : Resolution dated 29.10.2012 passed in the meeting of board of directors of complainant company (xiii) Ex.CW1/19:
Special Power of attorney (xiv) Ex.CW1/20: certified copy of Form 23 AC and (xv) Ex.CW2/1 letter dated 24.05.2013 issued by Sh.
D.K. Chhibber, Chief Manager, Bank of Baroda.
5. It is well settled position of law that to constitute an offence under S. 138 N.I. Act, the following ingredients are required to be fulfilled:
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Sharda Capsec Limited Vs M/s Elite Capital and Management
(i) A person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;
(ii) The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
(iii) That cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier;
(iv) That cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
(v) The payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; 8 CC No.1116/14
Sharda Capsec Limited Vs M/s Elite Capital and Management
(vi) The drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
6. Being cumulative, it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act.
7. I have heard both the parties and gone through the record. The following questions arise for my consideration in the present case:
(i) The extent of liablity of the accused on the date of cheque in question.
(ii) Whether the signatory/accused was authorized person to enter into loan agreement with the complainant and issue the cheque on behalf of accused company.
(iii) Whether the defence of the acccused of other particulars of the cheque in question, except his signatures, 9 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management being filled by some one else is a valid defence in the eyes of law.
(iv) Whether the impugned cheque was dishonoured Discussions on question (i) and (ii) and findings thereon
8. Section 118 of the NI Act inter alia provides that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the NI Act stipulates that unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque , for the discharge of, whole or part of any debt or liability . The said presumptions are rebuttable in nature.
9. It has been held in M/s. Kumar Exports v. M/s. Sharma Carpets, 2009 A.I.R. (SC) 1518 that the accused may rebut these presumptions by leading direct evidence and in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Further, the burden may be 10 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management discharged by the accused by showing preponderance of probabilities and the onus on the accused is not as heavy as it is on the complainant to prove his case.
10. In Rangappa vs. Sri Mohan 2010 V AD(SC), three Judge Bench of Hon'ble Supreme Court held that section 139 raises a presumption of existence of legally enforceable debt or liability and not simple existence of debt or liability. This presumption is rebuttable presumption and it is open to the accused to raise a defense wherein the existence of legally enforceable debt or liability can be contested.
11. As, discussed above, it becomes glaringly clear that the accused does not need to discharge his or her liability beyond the shadow of reasonable doubt.He just need to create holes in the case set out by the complainant. Accused can say that the version brought forth by the complainant is inherently unbelievable and therefore the prosecution cannot stand. Or the accused can give his version of the story and say that on the basis of his version the story of the complainant cannot be believed. In the first situation the accused has nothing to do except to point inherent 11 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management inconsistency in the version of the complainant. So far as the factum of liability is concerned, in view of the mandatory presumptions of law as discussed above if an accepted signed cheque has been produced by the complainant, then there cannot be any inherent lacuna in the existence of liability. But then definitely accused can create some loopholes in the story of the complainant by impeaching the credit of witness during the cross examination. The strength of standards on the accused is not as high as placed and desired from the complainant. Accused can discharge its burden by demonstrating the preponderance of probabilities coming in its way.
12. The facts of the present case may now be examined in the light of the above legal position. Complainant company has filed a BuyBack agreement i.e Ex.CW1/3 which records the execution of buy back agreement of 91,000 shares of Rs.10 each between Sharda Capsec Limited and Elite Capital & Management Services Ltd. However, the accused company assailed the authority of the accused no.2, the managing director of the company to enter into agreement with the complainant company on behalf of accused 12 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management company. To substantiate its contention, it was submitted on behalf of accused company that the said BuyBack Agreement does not bear the common seal of the company as required by the articles of association of the company and that the company is not bound by any such unauthorized act of its Director. However the same has been controverted by the ld counsel for complainant company.
13. Lets examine the legal imperatives regarding the requirement of having common seal on the document requiring authentication of a company.
Section 54 of the Companies Act reads as below: "save as otherwise expressly provided in this Act, a document or a proceeding requiring authentication of a company may be signed by a director, the manage the secretary or other authorized person of the company and need not be under its common seal."
Further Accused company in its reply to the notice of the complainant company Ex.CW1/ has accepted the execution 13 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management of the said Buy Back Agreement between the complainant company and Accused Company. During his examination u/s 313 Cr.PC, accused company through its AR admitted the receipt and reply of the notice.
14. Further Buy Back Agreement i.e. ExCW1/3 explicitly mentions that: "Elite Capital & management Services ltd. a company incorporated under Companies Act ,1956 and having its registered office at 1806,B Vasant Kunj,New Delhi through its director Mr. Prem Chandra Gupta duly authorized by the Board(hereinafter referred to as the second party)"
Further complainant company filed a document i.e Ex CW1/20 which is certified copy of Form 23. AC (Form for filing balance sheet and other documents with the registrar of companies.) pertaining to the accused company and filed by accused company in the office of Registrar of Companies,N.C.T of Delhi & Haryana and in these st documents, accused company in its balance sheet as on 31 14 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management March 2010 has shown the loan liability of Rs.10,03,000/ towards the complainant company.
Further, DW.1 Subhash Garg, who is the authorized representation of the accusedcompany during the course of his crossexamination, has admitted the same. The relevant portion of the testimony of DW 1 Subhash Garg is as under:
"....It is correct that accused company has also been filing its balance sheet, P/L regularly with the "Register of Companies, Delhi as well as of Haryana.(Page 2 second line from top).
Further, DW 1 Subhash Garg in his cross examination has stated as under:
"It is correct that Ex. CW1/20 is the balance sheet, P/L A/C statement of accused company which were filed before the Registrar of Companies,Delhi and Haryana pertaining to the year ending on 31.03.2010. It was submitted in the year of 2010. It is correct that documents Ex. CW1/20 show the 15 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management unsecured loan taken by the accused company amounting to Rs. 10,63,000/. It is correct that in Ex. CW1/20 schedule B at point "A" it is shown that accused company owed a loan of Rs. 10,03,000/ from the complainant company. It is correct that accused company has not repaid Rs. 10,03,000/ till today.
Section 58 of the Indian Evidence Act is as under:
58. Facts admitted need not be proved -No fact need to be proved in any proceeding which the parties thereto or their agent agree to admit at the hearing or which, before the hearing, they agree to admit by any writing under their hands, or which by any rule of pleading in force at the time they are deemed to have admitted by their pleadings. Provided that the court may, in its discretion, require the facts admitted to be proved otherwise than by such admissions.
15. Therefore, in terms of the above facts and circumstances,the validity and sanctity of the Buy Back agreement 16 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management remained unrebutted / unassailed throughout the case. Nothing substantial could be brought on record or to the notice of the court on behalf of accused to discredit or disprove the contention of the complainant regarding the existence of legally enforceable debt of Rs.1003000/. The submission made on behalf of accused seems vague and unworthy to believe. At one end,accused company is conceding the existence of Buy Agreement,while at the other end, to the utter dismay and surprise of the court, the accused company is disputing the authority of the Managing Director, the accused no.2 to enter into loan agreement with anyone or issue cheque to discharge loan liability on behalf of the accused company. Both the Buy Back agreement and the impugned cheque in question bears the seal of the accused company and it has been explicitly mentioned on them that the same is being signed/executed on behalf of the accused company. Further there is no dispute on the fact that the said cheque was issued from the account of the accused company.
16. Further, it has been argued on behalf of accused company that the as per Buy Back Agreement, complainant 17 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management company was required to sell the shares in the open market if the value of the shares fetch Rs.15 per share. However, complainant company failed to sell the shares despite of the price of shares in question exceeding the value of Rs.15 per share in open market in terms of the said Buy Back Agreement. Ld. Counsel for the accused company has taken the help of deposition of DW2 i.e AR of Delhi Stock Exchange, who, in his examination in chief, has deposed that the rate of the shares in question was above Rs. 15 per share in the open market at the relevant period. However,he deposed that at that time, facility for online trading of the shares was not available. The same has been vehemently opposed by the counsel for the complainant company by submitting that the said term of selling the shares in the open market was just an option and certainly not the absolute mandate to be followed. He further argued that the DW2 has no personal knowledge of the facts of this case. Bere reading of the Buy Back Agreement in question makes it clear that the selling of shares in the open market in the event of the value of the shares in question exceeding certain value was just an option for the complaint 18 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management company and the complainant company was not bound to utilize the said option.
17. Another point which has been specifically raised by the Ld. Counsel for accused company is that even if it is admitted for the sake of argument but denied otherwise,that any amount was payable by the accused company,if interset at 3% p.m is calculated on the amount of Rs. 11,37,500/ demanded vide letter of 15101997,the amount calculated as on 21121998 comes to Rs.1617451(Rs.11,37,500 plus Rs.4,79951/ towards the interest @ 3% p.m from 15101997 till 20121998) and not Rs. 17,02,015/ as written in the alleged cheque.On the other hand,Ld counsel of complainant submits that the accused company has not correctly calculated the amount which were required to be calculated at the @ 3% per month compounded at the interval of three months after reconciling the amount, Which when calculated comes Rs. 17,02,015/.Complaint has produced on record the letter dated 27.05.1998 I.e. ExCW1/6 in support of its contention.
18. Ld. Counsel for accused has placed his reliance on the judgement of Hon'ble High Court in the case tilted as 'Geetu 19 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management Lakhpat & Anr. vs. Jaipal, Equivalent Citations : 2011 (181) DLT 4, decided on 05.04.2011, in which it has been observed as follows: "...In the present case, granting of interest at 2% per month is both exorbitant and usurious. The Supreme Court in the aforesaid judgements, relied upon by the counsel for the appellants, has granted interest varying between 6% to 9 % per annum. A Division Bench of this Court in the case of Pt. Munshi Ram & Associates (P) Ltd. Vs. Delhi Development authority 2010 (3) Arb. L.R 284 (Delhi) has held that Court has power to reduce even the presuit rate of interest in case the said rate of interest is found to be against the public policy. In my opinion, rate of interest of 24% per annum i.e 2% per month as granted by the trial Court is clearly against the public policy in the present economic scenario considering the aforesaid judgements of the Supreme Court".
19. The Hon'ble High Court of Delhi in the aforementioned judgment has also referred the judgment of Hon'ble Supreme Court in the case titled as Rajendra Construction Co. Vs. 20 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management Maharashtra Housing & Area Development Authority and others, 2005 (6) SCC 678, McDermott International Inc. v. Burn Standard Co. Ltd. and others, 2006 (11) SCC 181, Rajasthan State Road Transport Corporation v. Indag Rubber Ltd., (2006) 7 SCC 700 & Krishna Bhagya Jala Nigam Ltd. v. G. Harischandra, 2007 (2) SCC 720 and State of Rajasthan Vs. Ferro Concrete Construction Pvt. Ltd. (2009) 3 Arb. LR 140 (SC).
20. The Supreme Court in the aforesaid judgments, has granted interest varying between 6% to 9% per annum.
21. At the outset,it assumes relevance and significance to mention here that to fasten criminal liability u/s 138 NI Act, liability of the accused on the date of the cheque alone is material and it can not be permitted to be increased based on conjectures and surmises. Complainant has brought on record series of letter which were allegedly communicated to the accused company regarding the demand of payment in the transaction in question. In one of those letters dated 27.05.1998 i.e. ExCW1/6,the interest to 21 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management be compounded at the interval of three months has been specifically mentioned. However the complainant has not brought on record any material evidence to substantiate his claim except oral arguments and bunch of letters, the receipt of which has not been established. Even, if presuming that the letters were validly delivered to the accused company, it is important to mention here that the contractual obligations cannot be fastened unilaterally. The same needs to be reciprocated and accepted by the other party in a manner as mandated by the provisions of the Indian Contract Act. In the present complaint case, it has been vaguely argued on behalf of the complainant that the accused no.2,the Managing Director of the company had personally met the Chairman cum managing Director and reconciled the amount and agreed to pay the said amount. However, nothing has been brought on record to prove any such oral agreement or understanding between the parties. Further,the interest amount being claimed by the complainant is 3% per month to be compounded after every three month is quite excessive and apparently appears to be penal in nature, which finds little 22 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management justification from the side of the complainant and goes against the tenets of the settled principal of law as discussed and referred above. Though Complainant cannot be expected to travel the extent of mathematical precision on the scale of scientific finality. However, Oral arguments can never be substitute of the evidence.
22. Therefore, considering the above mentioned facts and legal positions, it won't be unjustified and completely misplaced to say that the complainant has miserably failed to prove the reconciliation of interest as being put forth by them in support of their case. Preponderance of probabilities lies completely in favour of the accused company. Apparently, the above amount of Rs. 10,03,000/ was less than the cheque amount. Lastly, to fasten criminal liability u/s 138 NI Act, liability of the accused on the date of the cheque alone is material and it can not to permitted to be increased based on conjectures and surmises. The foundation on which case is sought to be built by the complainant, appears to be suffering from fatal infirmities and inconsistencies so much so that it goes directly to the root of the case and shakes the very edifice on which the case of the complainant rests. Further, the case of 23 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management complainant is required to rest on its own leg and the same can not be allowed to be bypassed or passed on in casual and cosmetic manner.
23. It is all more significant that presumption can only be raised in furtherance of prosecution case and not in derogation of the same. The three judge bench of Hon'ble Supreme Court in a case while dealing with Prevention of Corruption Act has observed in respect of presumption of law in 'Trilok Chand Jain v. State of Delhi AIR 666 as under: " ......the presumption,therefore can be used in furtherance of the prosecution case and not in derogation of it.If story set up by the prosecution inherently militates against or is incon sistent with the fact presumed,the presumption will be ren dered sterile from its very inception"
24. In view of the above discussion, I hold that the complainant has failed to prove his case. Accused has been able to rebut presumptions u/s 118 and 139 NI Act arising in favour of the Complainant.
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25. The accused is entitled to acquittal on this ground alone and the remaining three questions become only of academic importance. However, in the interest of justice, I proceed to give my finding on the same.
Discussions on question (iii) and findings thereon
26. Now the question come before this court whether the cheque was validly issued on behalf of the accused company to discharge its loan liability. As discussed and decided above, I have already held that there was loan liability of Rs.10,03,000/ which remained unrebutted. Now coming to the second question. To decide this, lets examine the contentions and respective evidence of the parties.
27. The signature on the impugned cheque has been admitted by the accused company. However, it has been argued on behalf of the accused that the complainant obtained the blank signed cheque from a person other than the employee and subsequently misappropriated the same by filling the particulars of the cheque. However, it has been argued by the counsel for 25 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management complainant company that the accused company never filed any criminal complaint regarding misplacement or misappropriation of any such stolen cheque. It has been further submitted on behalf of the complainant that the impugned cheque was handed over to the complainant by the accused no.2 personally. But the same was again assailed by the counsel for accused by submitting that the version of the complainant regarding handing over of the cheque is selfcontradictory and thus greatly weaken the credibility of the case of the complainant. For this, Ld. Counsel for accused has pointed towards the deposition of CW1 in his cross examination,in which CW1 stated that the impugned cheque was handed over to him by the accused no.2 at his i.e accused no.2's residence. However in the complaint,it has been said that the accused no. 2 personally met the Chairman cum Managing Director of the accused company, which implies at the place of the complainant.
28. I have carefully considered the above submissions. First and foremost, let me discuss the version of the alleged theft of the cheque. It has been contended on behalf of the accused 26 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management company that the complainant managed somehow to get the blank cheque in question from a person other than the accused no.2.In this regard it seems important to mention here that the sagacity of any prudent person placed in similar situation demands the immediate action which may in the form of police complainant or approaching any enforcement authorities, startlingly which has not happened in this case. Accused company remained conspicuously and deliberately silent over this issue right from the beginning. This itself imperils the case of the accused as far as the story of stolen cheque is concerned. It seems purely an afterthought and the figment of imagination which was intended to fill the lacuna in the case of the accused company. Further the submissions are vague in nature. Secondly, arguments can not be substituted for evidence. A bare claim or explanation given by the accused cannot be accepted. In case titled V S Yadav vs Reena 172(2010) DLT 561, Hon'ble High Court of Delhi has observed that:
"Mere pleading not guilty and stating that the cheques were issued as security, would not give amount to rebutting the 27 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management presumption raised under Section 139 of N.I. Act."
.........................
"If no loan was given, but cheques were retained, he immediately would have protested and asked the cheques to be returned and if still cheques were not returned, he would have served a notice as complainant. Nothing was proved in this case."
29. Further,as far as the issue of the place of handing over the cheque in question is considered,I don't find any major contradictions in the version of the complainant company. Human minds naturally tend to make some improvements or embellishments when being asked to state the same facts again and again. However, what is required by the court is to see and appreciate the substance of the facts mentioned in the statements or depositions and not get swayed away by some flourishes or trimmings which overall does not negate the substance and salience of the facts. Further it has been argued on behalf of the accused is that the particulars except the signatures in the aforesaid cheque had not been filled by him. Complainant has 28 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management relied upon the a case titled as 'Gurmeet Singh vs. State of Haryana and Anothers' It may now be examined whether the above defence is of any help to the accused.
30. Section 20 NI Act provides for "inchoate stamped instruments" and states that if a person signs and delivers a paper stamped in accordance with the law and "either wholly blank or have written thereon an incomplete negotiable instrument" such person thereby gives prima facie authority to the holder thereof "to make or complete as the case may be upon it, a negotiable instrument for any amount specified therein and not exceeding the amount covered by the stamp."
31. The position in law has been explained in the judgment of the Division Bench of the Kerala High Court in Lillykutty v. Lawrance 2003 (2) DCR 610 in the following words:
"In the instant case, signature is admitted. According to the drawer of the cheque, amount and the name has been written not by the drawer but by somebody else or by the payee and tried to get it encashed. We are of the view, by 29 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management putting the amount and the name there is no material alteration on the cheque under Section 87 of the Negotiable Instruments Act. In fact there is no alteration but only adding the amount and the date. There is no rule in banking business that payee's name as well as the amount should be written by drawer himself. "
32. The above judgment was quoted with agreement by the Hon'ble Delhi High Court in Ravi Chopra vs State & Anr. 2008(2) JCC (NI) 169 and it was held that if the signatures on the cheque are admitted by the accused, it matters little if the name of the payee, date and amount are filled up at a subsequent point in time. Further, it has been held in Gurmeet Singh vs.State of Haryana and Anothers that 'it is well settled that even if the amount, date and other particulars are filled up by some other person with different, accused can not escape his liability under Section 138 of the Negotiable Instrument Act, 1881, if he has admitted his signatures in the cheque in question'
33. In view of the judgments discussed above, the contention of the Ld. Defence Counsel that other columns in 30 CC No.1116/14 Sharda Capsec Limited Vs M/s Elite Capital and Management cheque, except the signatures, were not filled in by the accused does not have any force in the eyes of law.
Discussion on point (iv) and finding thereon
34. Now the issue which arised during the course of the trial was whether the impugned cheque was dishonored in legal terms so as to fasten the criminal liability on the accused under s. 138 of Negotiable Instrument Act. It has been argued on behalf of the accused company that the complainant failed to prove that the impugned cheque was dishonored due to insufficiency of funds in the account of the accused company.
35. In the present case,impugned cheque was returned by the bank by mentioning therein the ground 'refer to drawer'.
36. In M/S Electronics Trade and Technology Development Corporation Ltd.vs.Indian technologists and Engineers Pvt Ltd.,it has been held by the Hon'ble Supreme Court that 'refer to drawer' ground amounts to dishonour of the cheque which is covered within the meaning of Section of 138 of the Negotiable Instrument act.
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Sharda Capsec Limited Vs M/s Elite Capital and Management
37. Thus in view of the above established legal positions, I hold this point in favour of the complainant company.
38. I have held in answer to question (i) above that the complainant has failed to prove his case. Accused has been able to rebut presumptions u/s 118 and 139 NI Act arising in favour of the Complainant. Accordingly, accused Company M/s Elite Capital & Management Services Ltd. & Ors. is acquitted of the offence punishable under Section 138 of the Negotiable Instruments Act. Announced in the open Court on 19th Day of December, 2014 (DEEPAK KUMAR) MM05 (NI Act)/SouthWest Dwarka/ New Delhi 32