Delhi District Court
V.P. Malhotra vs . M/S. Silver Star Fashion Pvt Ltd & Ors. on 23 December, 2017
IN THE COURT OF SH. GAGANDEEP JINDAL :
METROPOLITAN MAGISTRATE :09 : SOUTH EAST
DISTRICT : SAKET COURT : NEW DELHI
V.P. Malhotra Vs. M/s. Silver Star Fashion Pvt Ltd & Ors.
CC No. 2121/16
U/s 138 Negotiable Instruments Act, 1881
1. CIS No. : 629117/16
2. Name of the complainant : V.P. Malhotra,
S/o Late Sh. H.B. Malhotra,
R/o H. No. 365, Sector 15A,
Noida, U.P.
3. Name of the accused : 1. M/s. Silver Star Fashions Pvt
persons, parentage & Ltd,
residential addresses Registered Office :
E1/15, Jhandewalan Extn.,
New Delhi55 through its
Managing Director.
Also at
M/s. Silver Star Fashions Pvt
Ltd, 298300, 1st Floor, Udyog
ViharVI, Sec.37, Gurgaon
122012.
2. Mr Gaurav Chugh, Director,
M/s. Silver Star Fashions Pvt
Ltd, E1/15, Jhandewalan
Extension, New Delhi.
Also at M/s. Silver Star
Fashions Pvt Ltd, 1510, Sector
10A, Gurgaon.
V.P Malhotra Vs. Silver Star Fashion Pvt Ltd. & Ors. CIS NO. 629117/16 Page 1 of 10
4. Offence complained of or : U/s 138 of Negotiable
proved Instruments Act, 1881
5. Plea of the accused persons : Pleaded not guilty and claimed
trial
6. Final Judgment/order : Convicted
7. Date of judgment/order : 23.12.2017
Date of Institution : 01.06.2016
Date of Reserving Judgment/Order : 20.12.2017
Date of Pronouncement of Judgment/Order : 23.12.2017
JUDGMENT
1. By way of the present Judgment, I shall dispose off the present complaint filed by V.P. Malhotra (hereinafter referred to as 'complainant') against M/s. Silver Star Fashions Pvt Ltd. (hereinafter referred to as 'accused company'), Bharat Makkar, Managing Director and Gaurav Chugh, Director M/s. Silver Star Fashions Pvt Ltd (accused no. 2 and 3 respectively) u/s 138 of Negotiable Instruments Act, 1881 r/w Section 142 Negotiable Instruments Act, 1881 (hereinafter referred to as 'N.I. Act' in short).
2. During the trial, accused no. 2 remained absent after obtaining bail in the present case. He was declared absconder vide order dt 12.10.2017. None had appeared on behalf of the accused company though its Managing Director and Director V.P Malhotra Vs. Silver Star Fashion Pvt Ltd. & Ors. CIS NO. 629117/16 Page 2 of 10 appeared. Therefore, accused company was proceeded in absentia u/s 305 Cr.PC.
3. It is submitted by the complainant that accused no.
2and 3 were looking after the management of affairs and business of accused company and are looking after day to day management of accused company. On 30.10.2014, accused no. 2 had taken unsecured loan of Rs 25,00,000/ from the complainant which was transferred to RTGS to the account of accused company. The said loan was given @ 2% per month. Accused company issued a cheque dt. 15.02.2016 for a sum of Rs. 25 lacs drawn on Oriental Bank of Commerce, Udyog ViharV, Gurgaon in favour of the complainant to repay the loan amount. When the complainant presented the above said cheque, the same was returned vide returning memo dated 17.02.2016. Thereafter, accused company issued fresh cheque through accused no. 2 bearing no. 110555,dt. 30.04.2016 of Rs 25 lacs drawn on Axis Bank Ltd, Sector10, Gurgaon. The said cheque got dishonoured for the reasons funds insufficient by returning memo dt 03.05.2016. Thereafter, complainant got issued legal demand notice dated 07.05.2016 through registered post but accused failed to make the payment against the dishonoured cheque within 15 days from the date of service of legal demand notice. Hence, the present case was filed.
V.P Malhotra Vs. Silver Star Fashion Pvt Ltd. & Ors. CIS NO. 629117/16 Page 3 of 104. Notice u/s 251 Cr.P.C. was framed against the accused no. 2 and 3 to which they pleaded not guilty and claimed trial.
5. To prove his case, complainant has examined himself as CW1 by way of affidavit and has relied upon the following documents:
a) Statement of bank account of complainant is Ex CW1/1.
b) Confirmation of account issued by the accused company wherein the receipt of Rs 25 lacs is reflected is Ex CW1/2.
c) Original cheque in question is Ex. CW1/4.
d) Original Returning memo is Ex. CW1/5,
e) Copy of legal demand notice Ex. CW1/6,
f) Postal receipts are Ex.CW1/7 and AD Card CW1/8.
g) Tracking report is Ex. CW1/9.
6. Accused persons failed to cross examine the complainant witnesses despite opportunities. Therefore, their right to cross examine complainant was closed vide order dt 02.06.2017.
7. Accused no. 2 was declared absconder vide order dt 12.10.2017 after execution of proclamation u/s 82 Cr.PC.
8. In the statement of accused no. 3 recorded u/s 313 Cr.P.C., he admitted that he was Director (Production) of accused company from December 2014 to May 2016. He V.P Malhotra Vs. Silver Star Fashion Pvt Ltd. & Ors. CIS NO. 629117/16 Page 4 of 10 denied his knowledge about any loan granted by the complainant and issuance of cheque in question. He admitted receipt of legal demand notice.
9. Accused examined Sh. R.K Saini, Senior Technical Assistant from office of Registrar of Companies, Delhi who produced his authority letter Ex DW1/1 and proved certified copy of Form No. DIR12 of accused company alongwith annexures Ex DW1/2 (colly), certified copy of details of signatories of accused company Ex DW1/3 and certificate u/s 65B Indian Evidence Act Ex DW1/4.
10. Final arguments on behalf of both the parties heard.
11. Ld. Counsel for the complainant submits that the testimony of complainant remained unrebutted. Accused no. 3 did not deny that he was not responsible for day to day affairs of accused company in his statement u/s 313 Cr.PC. As per Ex DW1/2 (colly) a resignation of accused no. 3 was accepted w.e.f 01.06.2016 whereas cheque in question got dishonoured on 03.05.2016 and legal demand notice was served on 10.05.2016. He rely upon the judgment "Standard Chartered Bank Vs State of Maharashtra (2016) 6SCC 62"
and "National Small Industries Corporation Vs Harmeet Singh (2010) 3SCC 330". Therefore, accused no. 3 be convicted for the offence u/s 138 NI Act.V.P Malhotra Vs. Silver Star Fashion Pvt Ltd. & Ors. CIS NO. 629117/16 Page 5 of 10
12. On the other hand, Ld. Counsel for the accused no. 3 argued that he tendered his resignation on 05.05.2016 and he was not responsible for day to day affairs of the company. He was working as employee of accused company and was promoted to Director (Production). The cheque in question does not bear his signatures, therefore, no case is made out against him.
13. To prove the loan transactions of Rs. 25 lacs complainant relied upon statement of his bank account Ex CW1/1 and confirmation of account issued by accused company for receipt of loan amount of Rs 25 lacs Ex CW1/2. The oral testimony of complainant remained unrebutted because he was not cross examined. The authenticity of documents Ex CW1/1 and Ex CW1/2 is not disputed by accused no. 1 and 3. Therefore, the loan transaction of Rs 25 lacs had been proved.
14. Complainant has also proved the issuance of cheque Ex CW1/4 for repayment of loan amount of Rs 25 lacs which got dishonoured for the reasons funds insufficient vide returning memo dt 03.05.2016 Ex CW1/1. Accused no. 3 had admitted the receipt of legal demand notice u/s 138 NI Act.
15. The only defence raised by accused no. 3 is that he was Director of accused company till 05.05.2016 and was not V.P Malhotra Vs. Silver Star Fashion Pvt Ltd. & Ors. CIS NO. 629117/16 Page 6 of 10 responsible for day to day affairs of the accused company, however, as per the form no. DIR12 of accused company Ex DW1/2 alongwith annexures as produced by DW1 contains the resignation letter dt 05.05.2016 of accused no. 3. In the said resignation letter accused no. 3 put his signatures with dt 01.06.2016 and it is categorically written that he resigned from the office of Director of accused company w.e.f 01.06.2016 due to personal and professional reasons. Moreover, as per the Form No. DIR12 of accused company his resignation was accepted w.e.f 01.06.2016 whereas the cheque in question got dishonoured on 03.05.2016 i.e. during the directorship of accused no. 3 and legal demand notice was served on 10.05.2016 and present complaint was filed on 30.05.2016. Therefore, it cannot be said that accused no. 3 was not director at the time of commission of offence u/s 138 NI Act.
16. The Hon'ble Apex Court of India in the case titled as "Standard Chartered Bank Vs State of Maharashtra (2016) 6SCC 62" observed as follow:
" 23. Be it noted, the observations made in Saroj Kumar Poddar and clarification given in S.M.S Pharma II and Everest Advertising (P) Ltd. were taken note of in K.K Ahuja Vs. V.K Vora. In the said case, the Court explaining the position under Section 141 of the Act has stated thus the position under Section 141 V.P Malhotra Vs. Silver Star Fashion Pvt Ltd. & Ors. CIS NO. 629117/16 Page 7 of 10 of the Act can be summarized thus:
(i) If the accused is the Managing Director or a Joint Managing Director,it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the company. It is sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant time. This is because the prefix "Managing" Director at the relevant time. This is because the prefix "Managing"
to the word "Director"makes it clear that they were in charge of and are responsible to the company, for the conduct of the business of the company.
(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 in charge 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 .
(iii) In the case of a Director, Secretary or Manager [as defined in Section2 (24) of the Companies Act] or a person referred to in clauses (e) and (f) of Section 5 of the Companies Act, an averment in the complaint that he was in charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under Section 141 (1) of the Act. No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable under Section 141 (2) by making necessary averments relating to consent and connivance or negligence in V.P Malhotra Vs. Silver Star Fashion Pvt Ltd. & Ors. CIS NO. 629117/16 Page 8 of 10 the complaint, to bring the matter under that sub section.
(iv) Other officers of a company cannot be made liable under sub section (1) of Section 141. Other officers of a company can be made liable only under sub section (2) of Section 141, by averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence".
17. Complainant has categorically deposed accused no. 3 was looking after the management of affairs of management and business of accused company and also looking after day to day management of accused company. As per Form No. DIR12 Ex DW1/2 (colly), accused no. 3 was appointed as promoter director of accused company w.e.f 26.12.2014. Accused no. 3 did not lead any defence to refute these allegations.
Conclusion:
18. From the above discussion and appreciation of the evidence, this court is of the opinion that the complainant has successfully proved that the cheque in question was issued by the accused company through its director Bharat Makkar (already absconder) and accused Gaurav Chugh to discharge legally enforceable liability of Rs. 25 lacs which got dishonoured on its presentation and accused persons V.P Malhotra Vs. Silver Star Fashion Pvt Ltd. & Ors. CIS NO. 629117/16 Page 9 of 10 failed to make payment within 15 days after service of legal demand notice. The accused company and accused Gaurav Chugh failed to raise any probable defence to rebut the presumption u/s 118 and 139 of Negotiable Instruments Act. Hence, accused company M/s. Silver Star Fashions Pvt Ltd and accused Gaurav Chugh are accordingly convicted for the offence u/s 138 of Negotiable Instrument Act. Accused persons shall be heard on quantum of sentence separately.
ANNOUNCED IN THE OPEN
COURT ON 23.12.2017 (GAGANDEEP JINDAL)
MM09, SOUTHEAST DISTRICT
SAKET: NEW DELHI
V.P Malhotra Vs. Silver Star Fashion Pvt Ltd. & Ors. CIS NO. 629117/16 Page 10 of 10