Delhi District Court
Cc Ni Act.4623/2021 Ats Bus. Serv. Pvt. ... vs . Sbs International Pvt. Ltd. & Ors. Page ... on 17 March, 2023
CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 1
IN THE COURT OF MS. AISHWARYA SHARMA,
METROPOLITAN MAGISTRATE (NI ACT) DIGITAL COURT02,
SOUTHEAST DISTRICT, SAKET COURT COMPLEX, NEW DELHI
Criminal Complaint No: CC NI ACT/4623/2021
ATS BUSINESS SERVICES PVT. LTD. ... Complainant
Versus
SBS INTERNATIONAL PVT. LTD. & ORS ... Accused
1. Name & address of the complainant: ATS BUSINESS SERVICES
PVT. LTD. Through AR
Corporate Office at:
G19, Ground Floor, Sector3,
NOIDA, Gautam Budh Nagar,
Uttar Pradesh 201301
Registered Office at:
302, Rohini Complex, WA121,
Shakarpur, New Delhi110092
2. Name & address of the accused : 1) SBS INTERNATIONAL PVT.
LTD.
Through Director
Having Registered Office at:
Plot No. 179,179 A, Sector3,
IMT Manesar, Gurugram,
Haryana122050
2. MR.ANKIT GUPTA
(DIRECTOR SBS International
Pvt. Ltd.)
3. MS. NISHTHA GUPTA
(DIRECTOR SBS International
Pvt. Ltd.)
4.MS RADHA KHANDELWAL
Digitally signed
by AISHWARYA
AISHWARYA SHARMA
SHARMA Date:
2023.03.17
15:38:31 +0530
CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 2
(DIRECTOR SBS International
Pvt. Ltd.)
All accused No. 2 to 3 are R/O
179, 179A, Sector3, IMT
Manesar, Gurugram,
Haryana122050
Also at: M463, Guru Harkishan
Nagar, Paschim Vihar,
New Delhi110087
3. Offence complained of : U/S 138, The Negotiable
Instruments Act,1881.
4. Plea of accused : Pleaded not guilty.
5. Final Arguments : 27.02.2023
6. Date of Institution of case : 20.04.2021
7. Date of decision of the case : 17.03.2023
JUDGMENT
1. Vide this judgment, I shall dispose of the aforementioned complaint case filed by the complainant Company ATS Business Services Pvt. Ltd., (hereinafter referred to as the 'complainant') through it's Authorized Representative namely Mr. Sharad Panwar, Manager (Marketing), against accused persons namely 1) SBS International Pvt. Ltd.and its Directors namely 2) Sh. Ankit Gupta, 3) Ms. Nishtha Gupta and 4) Ms. Radha Khandelawal (hereinafter referred to as the 'accused persons').
2. Factual Matrix: The complainant's case is that the complainant is a private limited company incorporated under the Companies Act and is engaged in the business of trading of alluminium alloy ingots throughout the country and accused No. 2, 3 & 4 being the director of the accused No.1 company namely SBS Internation Pvt. Ltd. used to place order for supply of alluminium ingots from time to Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2023.03.17 15:38:36 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 3 time on credit basis as well as on instant payment basis in terms of the Tax Invoices. It is stated that pursuant to purchase order dated 05.09.2020 placed by the accused persons with the complainant company, the complainant company supplied 2002 pieces of alluminium ingots vide Tax Invoice bearing No. ATS/2021/SBS/06 dated 07.09.2020, pursuant to purchase order bearing NO. SBS/202021/051 dated 05.09.2020 placed by the accused persons and these goods were were duly received by the accused company and for payment of the goods supplied, accused company had issued cheque bearing No. 001102 dated 14.01.2021, drawn on HDFC Bank, having its Branch at Shop No. 005A & 005B, Ground Floor, TowerA, Unitech Cyber Park, Sector 39, Gurgaon, Haryana122001 for an amount of Rs. 14,54,716/ (hereinafter referred to as cheque in question) with assurance and representation that the same shall be honoured and when the said cheque was presented by the complainant company the same was dishonoured for the reason "Exceeds Arrangement" vide return memo dated 27.01.2021. The complainant thereafter, sent a legal demand notice dated 08.02.2021 to the accused calling upon the accused to repay the loan amount within fifteen days of the receipt thereof. The said legal demand notice was delivered upon the accused vide speed post and email. However, the accused did not come forward to repay his debt within the prescribed period of fifteen days. Hence, being aggrieved, the complainant filed the present complaint under section 138 of The Negotiable Instruments Act, 1881 on 20.04.2021 and prayed that the accused be prosecuted and punished and he be also directed to pay compensation /fine equivalent to double the cheques amount to the complainant under section 138 of The Negotiable of Instruments Act, 1881.
3. Summoning of accused: The learned predecessor court summoned the accused after hearing the arguments at the stage of presummoning vide order dated Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2023.03.17 15:38:41 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 4 29.09.2021 and the accused entered appearance in the present case on 28.04.2022 and he was admitted to bail vide same order.
4. Notice: The court has framed notice of accusation under section 251 Cr.P.C. against the accused persons on 19.05.2022. The substance of accusation was read over and explained to the accused persons and after being satisfied that the accused persons comprehended the same, the court recorded their plea.
5. Plea of the accused: The accused persons pleaded not guilty and claimed trial. Accused No. 2 Mr. Ankit Gupta, admitted he signed on the cheque in question on behalf of Accused No.1 Company and he also admitted having filled all the particulars of cheque in question. All the accused persons further admitted receiving of the legal demand notice by them at their correct address. In their defence, all the accused persons stated that the default is unintentional as they could not make the payment due to losses in their business on account of COVID. On the same date, the statement of accused for admission / denial was recorded U/S 294 Cr. P.C, wherein he admitted the correctness of dishonour memo as well as postal receipts thus, the Bank witnesses at Sr. No.2 &3 and witness at Sr. No. 4 Concerned Officer of Post Authority, were dropped. Though, the accused persons pleaded not guilty and claimed trial, however, they did not disclose any defence and stated that the default was unintentional and they could not make payment due to losses in their business on account of Covid. Accused persons did not even prefer any application U/S 145 (2) of NI Act, as such they were not given opportunity to cross examine the witness of the complainant. However, this court did not convict them on their plea of guilt exercising power U/S 254 Cr.P.C and the matter was kept for recording statement of accused persons U/S 313 Cr.P.C after examination in chief of CW1/ complainant was recorded. Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2023.03.17 15:38:46 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 5
6. Evidence on behalf of complainant: To prove his case, the AR of complainant company Mr. Sharad Panwar has examined himself as CW1. He has filed his evidence under Section 200 of the Cr.P.C. by way of an affidavit i.e. EX. CW1/1 bearing his signatures at point A & B wherein he has reiterated the same facts as are averred in the complaint. In support of his case, he has also filed EX. CW1/A the Copy of Master Data of accused company along with certificate U/S 65 B of Indian Evidence Act, EX. CW1/B the ledger account of the complainant company qua accused, EX. CW1/C the copy of purchase order placed by accused with the complainant company pursuant to which the goods were supplied to the accused company, EX. CW1 /D the Tax invoice regarding the same, EX. CW1/E the original cheque in question dated 14.01.2021, EX. CW1/F the original return memo dated 27.01.2021, EX.CW1/G (Colly) the legal demand notice dated 08.02.2021, along with its postal receipts and tracking report is EX. CW1/H (Colly), EX. CW1/I the copy of bank statement of complainant.
7. Examination of the accused under section 313 Cr.P.C.: The accused persons were examined under section 313 Cr.P.C. on 12.07.2022 wherein the accused No. 2 Ankit Gupta has admitted that the complainant company is engaged in trading of alimunium alloy ingots throughout the country and he being the director of the accused company used to place order for supply of alluminium ingots from time to time on credit basis as well as on instant payment basis in terms of the Tax Invoices. Accused No. 2 also admitted that pursuant to purchase order dated 05.09.2020 i.e. EX. CW1/C placed by him with the complainant company, the complainant company supplied alluminium ingots vide Tax Invoice EX. CW1/D, which were duly received by their company, however, stated that he does not remember the exact number of pieces delivered to them. Accused No. 2 also admitted that for payment of the goods Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2023.03.17 15:38:51 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 6 supplied, accused company had issued cheque in question EX. CW1/E in discharge of it's liability towards the complainant company. Accused No. 2 also admitted that when the said cheque was presented by the complainant the same was dishonoured for the reason "Funds Insufficient" vide return memo dated 27.01.2021 i.e. EX. CW1/F. Accused No.2 also admitted receipt of the legal demand notice EX.CW1/G (Colly), it's postal receipt and tracking report EX. CW1/H (Colly). Accused No. 3 & 4 on the other hand, stated that they cannot say anything about the transactions as they were not involved in the day to day affairs of the Accused No. 1 Company. The accused persons stated that they intend to lead defence evidence.
8. Defence Evidence: In defence of accused persons, the accused No.2 Sh. Ankit Gupta has examined himself as DW1 wherein he stated that he is the Director in M/S SBS International Pvt. Ltd. and that the complainant company was regularaly trading with their company since 2019 and that the accused persons used to buy aluminium ingots from the complainant company and at times, they also sell aluminium scrap and make payments after making the adjustments. He also stated that the accused pesons always make only transfer of payments through RTGS and the account statement of SBS International making payments through RTGS is EX. DW1/A. He further stated that on 15.09.2020, they have purchased various ingots from the complainant and payments were not to be made immediately and the same was to be made after 6 months after making adjustments with regard to sale of scrap like earlier. He further stated that since it was COVID, at the specific request of the complainant, the accused persons have issued 2 security cheques to the complainant. He further stated that in December, 2020 the accused persons have sold aluminium scraps to the complainant vide Invoice dated 19.12.2020 i.e. EX. DW1/B along with certificate U/S 65 B of the Indian Evidence Act EX. DW1/C. He further stated that Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2023.03.17 15:38:55 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 7 they have issued 2 security cheques for the purpose of security, in order to secure the transaction dated 15.09.2020 and final payment was to be made after adjusting all the sales made by them to the complainant company but the complainant turned hostile and presented both their cheques without their consent and knowledge. He further stated that they have also sold aluminium scaps on 07.03.2022 to the sister concern of the complaiant company namely Voltrix Metles Pvt. Ltd at the instance of the complainant company vide Bill dated 07.03.2022 EX. DW1/D along with certificate U/S 65 B of Indian Evidence Act is EX. DW1/E. He further stated that even till this stage, the complainant company did not inform them that they have filed the present case and rather ordered them for sale of aluminium scrap. He stated that since the beginning of their trade with the complainant company they have only made online payment and never by way of cheque. He further stated that the two cheques including the cheque in question were given to the complainant only for the purpose of the security and that they have already made the entire payment of the cheque amount to the complainant company.
9. During his crossexamination, this witness admited that they received the goods dispatched by the complainant company vide Invoice No. ATS/2021/SBS/06 dated 07.09.2020 for a sum of Rs. 14,59,035/. He denied that there was no such understanding that the payment has to be made on the date of invoice. He admitted that there was no written agreement regarding the terms of the payment except the tax invoice. And thereafter, he stated that he does not remember if there was any written agreement or not and admitted that the same is not part of record. He stated that the cheque in question is not regarding the payment in lieu of the receipts of the goods. He admitted that he has stated in his statement U/S 313 Cr. P.C that the cheque in question was given to the complainant in discharge of the liability accrued on account of supply of said goods. However, he again depsed that the cheque was Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2023.03.17 15:39:00 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 8 just for the security and in their business, all the payments were made through RTGS mode only. He stated that he does not remember when he handed over the cheque in question to the complainant. He denied that he handed over the cheque to the complainant after much persuance by the complainant company. He stated that he had not made any claim regarding invoice No. 0002319 dated 19.12.2020 for a sum of Rs. 1,15,404/. He denied that he has not made any claim to recover the said amount because there was no outstanding liability towards the complainant. He stated that they have not made any claim and stated that as per the terms, the payment has to be made after settlement/ adjustment. He stated that he does not remember if there was any written communication/ understanding with the complainant company and that he does not know as to who is the owner of the company namely Volterix Metals Pvt. Ltd. He also stated that he is not aware if Mr. Deepak Johri, who is the director of ATS Business Pvt. Ltd has any concern with Volterix Metals Pvt. Ld.. He denied the suggestion that ATS Business Pvt. Ltd. has no concern with Volterix Metals Pvt. Ltd. He stated that Mr. Deepak Johri verbally communicated with him to sell aluminium scrap to this company and AR who was representing ATS in the present case, was the Director of Volterix Metals Pvt. Ltd. He stated that he does not remember, if he had any discussion regarding the sale of aluminium scrap with Volterix Metals Pvt. Ltd. and it's directors and stated that the accused had not made any written claim with Volterix Metals Pvt. Ltd. for recovery of the amount of Rs. 3,28,182/ and stated that whenever the Director of Volterix and Mr. Deepak Johri came to their office, the accused company requested to make the said payment. He stated that verbally it was decided that the payment will be made after settlement/ adjustment. He admitted that at the relevant time, there were three directors of the accused company and he does not remember which of the Directors signed the Audit report. He stated that the company never distributed the profit and dividend amongst Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2023.03.17 15:39:04 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 9 it's directors. He stated that he did not receive any amount from the company as share of profit and stated that he received salary from the company and that his wife and mother also received salary from the company at the relevant time. He admitted that he had signed the cheque and filled the particulars in the cheque in question. He also admitted that there was liability on their part at that time of presentation of the cheque. He stated that the payment had to be made after adjustment/ settlement.
10. Accused No. 3 Smt. Nishtha Gupta, also examined herself as DW2 and stated that she is only a sleeping Director in the SBS International Pvt. Ltd. She stated that she has no idea about the working of the company. She stated that she became sleeping Director of the accused company on the asking her family members and that she is not involved in the affairs of the company. During her crossexamination, she stated that she does not remember when she became Director in the Accused Company. She also stated that she is not aware whether she signed the company's annual audit report or not and she is also not aware whether she has signed the returns of the company which is filed with the ROC. She also stated that she is not aware whether in her personal saving account, the amount has been credited from the accused company's account. She stated that as on today, she is not Director of the accused company. She also stated that she does not remember the date but she must have resigned from the Directorship of the accused company last year and that she signed the resignation letter on the instructions of her husband who is Director in the accused company. She stated that her company is engaged in business of Die Casting.
11. Accused No. 4 Smt. Radha Khandelwal also examined herself as DW3 and has deposed on the similar lines as deposed by DW2 Ms. Nishtha Gupta that she is only a sleeping Director in the SBS International Pvt. Ltd and that she has no Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2023.03.17 15:39:08 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 10 idea about the working of the company. She stated that she became sleeping Director of the accused company on the asking her family members and that she is not involved in the affairs of the company. During her crossexamination, she stated that she does not remember when she became Director in the Accused Company. She also stated that she is not aware whether she signed the company's annual audit report or not and she is also not aware whether she has signed the returns of the company which is filed with the ROC. She also stated that she is not aware whether in her personal saving account, the amount has been credited from the accused company's account. She stated that as on today, she is not Director of the accused company. She stated that as on today, she is not Director of the accused company. She also stated that she does not remember the date but last year, she must have resigned from the Directorship of the accused company and that she signed the resignation letter on the instructions of her son who is Director in the accused company. She stated that her company is engaged in business of Die Casting. Thereafter, the DE was closed vide statement of Accused No.2 on his behalf as well as on behalf of Accused No. 3 & 4, recorded on 20.02.2023.
12. Final Arguments: I have heard both the parties, pursued the material on record and considered the submissions advanced. Learned counsel for the complainant with the help of Section 118 (a) and Section 139 of the Act argued that complainant has successfully proved guilt of accused for the commission of offence punishable under Section 138 of the Act beyond all reasonable doubt by way of ocular as well as documentary evidence on record. On the other hand, Ld. Counsel for the accused persons argued that complainant has failed to establish the guilt of the accused for the commission of offence under Section 138 of the Act beyond all reasonable doubts as the cheque given by the accused persons as security has been misused by complainant company, as it was agreed between the parties that the Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2023.03.17 15:39:13 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 11 outstanding amount will paid after making adjustment of dues of both the parties against each other. He further argued that the accused No. 3 & 4 cannot be held liable for dishonour of the cheque in question as they were sleeping Directors. He also argued that since the cheque amount is different from the outstanding dues as shown by the complainant, the accused persons cannot be held liable for dishonour of the cheque. He also argued that the accused persons are liable to be acquitted as admittedly they have paid the entire cheque amount to the complainant.
13. Appreciation of evidence and finding: Now coming to the merits of the case, I first deem it pertinent to enunciate the law relating to dishonour of cheques.
14. To bring home a liability under section 138 of The Negotiable Instruments Act, 1881, following elements must spring out from the averments in the complaint and the evidence adduced by the complainant, viz,
a) A person must have drawn a cheque on an account maintained by him in a bank for payment of a certain sum of money to another person from out of that account for the discharge of any legally enforceable debt or liability;
b) cheque has been presented to the bank within a period of three months from the date on which it is drawn or within the period of its validity whichever is earlier;
c) That cheque has been 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;
d) The payee or the holder in due course of the cheque has made 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;
and
e) The drawer of such cheque fails to make payment
Digitally signed
by AISHWARYA
AISHWARYA SHARMA
SHARMA Date:
2023.03.17
15:39:17 +0530
CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 12
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.
Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability.
15. Thus, for securing conviction under section 138 of NIA following points are required to be proved:
a) The cheque was issued by the drawer in discharge of any debt or other liability.
b) It must be legally enforceable debt or liability.
c) The cheque must be presented by payee within period of 3 months or
it's validity whichever is earlier.
d) The cheque is dishonoured because of insufficient funds or it exceeds
the arrangement.
e) A legal notice in writing demanding the payment of cheque is issued
within 30 days of the receipt of information from the bank.
f) There is default by the drawer to make the payment within 15 days from the date of the receipt of notice.
g) The complaint is filed within 30 days from the date of cause of action.
16. Since criminal liability can be attached by proving each element of the section under which liability is sought to be enforced, I shall now go on to appreciate the evidence documentary and oral, in light of how compellingly it satisfies each of such ingredient, if at all.
A. A person must have drawn a cheque on an account maintained by him in a bank for payment of a certain sum of money to another person from out of Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2023.03.17 15:39:22 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 13 that account for the discharge of any legally enforceable debt or liability:
17. The first condition pertains to the issuance of the cheque in question to make the payment from an account maintained by the drawer of the cheque towards a legally enforceable debt or other liability. In the present case, this fact is not disputed by any of the accused persons that the cheque in question was drawn on the account of the accused company namely SBS International Pvt. Ltd. and that it has been signed by Accused No.2 Sh. Ankit Gupta, being director of accused No.1 company. Admittedly, accused No.3 Ms. Nishtha Gupta and Accused No.4 Ms. Radha Khandelwal have not signed the cheque in question, however, they have been impleaded being Directors of the accused company and being incharge and responsible for the conduct of the business of the accused company, as per Section 141 of NI Act. Both the accused No. 3 & 4 have tried to dispute their liability by claiming that they were sleeping directors of Accused No.1 company at the relevant point of time, however, this fact cannot be relied upon as Accused No.2 Mr. Ankit Gupta, during his cross examination has admitted that both the accused NO.3 & 4 along with him were Directors of the accused NO.1 company at the relevant point of time and were receiving salary from the accused company. Further, he even admitted that Accused No.3 Ms. Nishtha Gupta (his wife) has even signed the Audit report of Accused No. 1 company which further suggests that she was involved in day to day affairs of the accused No.1 company at the relevant point of time.
18. Though, the accused No.3 & 4 have claimed that they were sleeping Directors of Accused No.1 Company and were not involved in it's day to day affairs, therefore, they are not liable for dishonour of the cheque in question, however, both these accused persons have not lead any evidence to establish this fact. In absence of any evidence to this effect, the version of accused NO.3 & 4 regarding them being Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2023.03.17 15:39:26 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 14 sleeping Directors, cannot be relied upon, specifically when accused No. 2 himself admitted that accused No.3 (his wife) had signed the Audit Report of the accused No.1 company and he has no where deposed before this court that accused No. 3 & 4 were sleeping directors, rather has only stated that accused No.3 & 4 were Directors of accused No.1 company at the relevant point of time. Though both accused No. 3 & 4 have deposed on 19.01.2023 before this court that they have resigned from their Directorship in the Accused NO.1 company, however, they have stated that they had done the same last year, meaning thereby, they must have resigned in the year 2022 whereas the transaction in question is of September, 2020, which also shows that accused No.3 & 4 were Directors of Accused No.1 Company at the relevant point of time.
19. The testimony of CW1 and documentary evidence lead by the complainant and the admission made by the accused No.2 suggests that the accused No.3 & 4 were also active Directors of the accused No.1 Company at the relevant point of time. Further, since accused No. 3 & 4 have admitted that the cheque in question has been issued from the account of the accused No.1 company and accused No.3 & 4 have not lead any evidence to prove that they were the sleeping Directors which could establish that they were not incharge or responsible for the conduct of the business of the firm at the relevant point of time, thus, Accused No. 3 & 4 are also deemed to be guilty of the offence committed by the accused No.1 company. On this point, it is relevant to refer judgment of Hon'ble Supreme court of India in Smt. Katta Sujata v Fertilizers & Chem. Travancore, (2002) 7 SCC 655, wherein it has been held that "...In short, the partner of a firm is liable to be convicted for an offence committed by the firm if he was Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2023.03.17 15:39:31 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 15 in charge of and was responsible to, the firm for the conduct of the business of the firm or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any neglect on the part of the partner concerned..."
20. In view of the discussion made above, it is established that all the accused persons were directors of the Accused No.1 company at the relevant point of time. In the present case, the accused persons have admitted that the cheque in question has been issued from the account of the accused No. 1 company and it has been signed by accused No.2 Sh. Ankit Gupta, on behalf of accused No.1 company being its Director. Thus, all the accused persons will be responsible for dishonour of the cheque in question.
21. The case of the complainant is that the accused persons have received supply of 2002 pieces of Aluminium Alloy Ingots vide Tax Invoice No. ATS/2020 21/SBS/06 dated 07.09.2020 i.e. EX. CW1/D, against the Purchase order bearing No. SBS/202021/051 dated 05.09.2020 i.e. EX. CW1/C and for payment of the aforesaid goods issued the cheque in question dated 14.01.2021 for a sum of Rs. 14,54,716/ i.e. EX. CW1/E in discharge of their liability for making payment for the goods received, which was dishonoured upon presentation with remarks "Exceeds Arrangements" Vide return memo dated 27.01.2021 i.e. EX. CW1/F, pursuant to which the complainant gave legal demand notice dated 08.02.2021 i.e. EX. CW1/G (Colly) to the accused persons, however, despite delivery of the same, the accused persons did not make the payment which lead the complainant to file this complaint. Throughout the trial, the accused persons have not disputed receiving supply of goods from the complainant, rather, Accused No.2 Sh. Ankit Gupta, has admitted the same and even admitted placing Purchase Order Dated 05.09.2020 with the complainant.
Digitally signed by AISHWARYA AISHWARYA SHARMA
SHARMA Date:
2023.03.17
15:39:35 +0530
CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 16
Further, the purchase order EX. CW1/C and Tax Invoice EX. CW1/D supports the case of the complainant and these documents have not been disputed by the accused persons throughout the trial and the accused persons have not even lead any evidence to prove otherwise. The claim of the complainant is that for the payment of the goods supplied vide Tax Invoice EX. CW1/D, the accused persons have issued the cheque in question and the accused persons have also not disputed this fact and have also admitted that the cheque in question has been handed over to the complainant company and signed by Accused No.2 Mr.Ankit Gupta being Director of Accused No.1 Company. Such admission of the accused persons suggests that the cheque in question has been issued by the accused company in discharge of it's liability for making payment for the goods received from the complainant company.
22. In this regard, Section 139 of The Negotiable Instruments Act, 1881 also carves out a presumption in favour of the drawee that the cheque was issued to him in discharge of a debt or other liability of a legally enforceable nature. Also, the said provision must be read along with the Section 118 of the same enactment which spells out another presumption in favour of the drawee that every negotiable instrument was drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration. Having said that, what follows from the above is that the web of proof in a trial under Section 138 NI Act is structured on the premise of the reverse onus of proof theory since the offence is a document based technical one. The journey of evidence in a trial under Section 138 NI Act thus, begins not from the home of the prosecution story but from the point of the defence. The presumptions carved out in favour of the complainant are those of law and not those of fact. The court is obligated to draw presumptions and only when the contrary are proved by the Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2023.03.17 15:39:40 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 17 defence, the same will be said to be rebutted. Whereas the standard of proof remains the same in such a trial, the reverse onus of proof on the defence is guided by the principle of preponderance of probabilities only. As rebuttal evidence, the accused merely has to prove that the cheque was not given for any consideration or that there was no legal liability in existence against him for which the negotiable instrument was given. On this point, reliance can be placed on Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16 wherein it was held as under:
"22. Because both Sections 138 and 139 require that the Court `shall presume' the liability of the drawer of the cheques for the amounts for which the cheques are drawn, ..., it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption has been established. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused (...). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court may presume a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable probability of the nonexistence of the presumed fact.
23. In other words, provided the facts required to form the basis of a presumption of law exists, the discretion is left with the Court to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, after considering the matters before it, the Court Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2023.03.17 15:39:45 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 18 either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man."
23. In the present case, the accused persons have admitted receiving of the goods and issuance of cheque in question in favour of the complainant and during notice put U/S 251 Cr. P.C did not dispute their liability rather admitted the same and stated that they could not make the payment due to losses in their business on account of Covid. Even during their statement U/S 313 Cr. P.C, the accused No. 2 Sh. Ankit Gupta, stated that the complainant has filed this case against them as they could not make payment for the goods supplied and he requires 1520 days time to clear the entire payment. It is also pertinent to point out that during trial, the accused persons have already made payment of the cheque amount to the complainant and preferred an application U/S 147 of NI Act for compounding, however, the complainant refused to give consent for compounding and accordingly, the application for compounding was dismissed by this court vide order dated 11.10.2022. All these facts clearly shows that the cheque in question was issued by the accused persons in discharge of their liability for making payment for the goods received. For the first time, the accused persons have disputed their liability at the stage of DE wherein the accused No.2 Sh. Ankit Gupta has taken the defence that the cheques in question were given as security for the goods supplied at the request of the complainant, as the payment was to be made after 6 months and it was to be paid after adjustment of amount of sale of scrap by the accused company to the Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2023.03.17 15:39:50 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 19 complainant company vide Invoice dated 19.12.2020 EX.DW1/B and alluminium scrap supplied to the complainant's sister company namely Volterix Metals Pvt. Ltd. at the instance of complainant company vide Invoice EX. DW1/C dated 07.03.2022.
24. It is pertinent to point out that during his crossexamination Accused No. 2 Sh. Ankit Gupta/DW2 admitted that regarding the terms of the payment, there was no separate agreement executed between the parties except the tax Invoice EX. DW1/D. Perusal of the terms and conditions mentioned in the Tax Invoice EX. DW1/D dated 07.09.2020, reveals that the payment had become due on the date of issue of invoice, unless otherwise agreed between the parties in writing. Thus, the defence of the accused that the payment against this invoice was to be made after 6 months cannot be relied upon as it is against the written agreement between the parties and thus, the verbal evidence regarding alteration of the same are inadmissible as per Section 91 & 92 of the Indian Evidence Act. Further, DW1 Sh. Ankit Gupta during his crossexamination has even admitted that he does not know if the Director of the complainant company Mr. Deepak Johri did not have any concern with Volterix Metals Pvt. Ltd. and he even could not produce any communication made regarding supply of goods to Volterix Metals Pvt. Ltd. at the instance of complainant company. Thus, it cannot be relied upon that there was agreement between the parties that the payment against the goods supplied to the accused company by the complainant comany, will be made after adjustment of amount of sale of alluminium scrap supplied by the accused to either the complainant company or Volterix Metals Pvt. Ltd. on 19.12.2020 and 07.03.2022,which is much after the supply of the goods vide Tax Invoice dated 07.09.2020. Further, had there been such agreement between the parties, the accused persons would have atleast responded to the legal demand notice to dispute their liability, however, even during trial prior to the stage of DE, Digitally signed by AISHWARYA SHARMA AISHWARYA Date: SHARMA 2023.03.17 15:39:54 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 20 the accused persons have not disputed their liability rather have admitted the same.
25. Further, the other defence of the accused persons that the cheque in question was given as security cannot be relied upon in view of admission of admission of accused No.2 Sh. Ankit Gupta to the effect that he had filled all the particulars in the cheque in question himself. If the cheque in question would have been given as security and not towards payment for the goods supplied, the accused No.2 Sh.Ankit Gupta, could not have mentioned the date of drawal on the cheque in question. Further, even if the version of the accused is accepted to be correct and it is believed that the cheque in question was given as security and not in discharge of liability for the goods supplied, this fact will not absolve the accused persons from their liability. As once the liability of the accused persons is assessed on record, it becomes irrelevant if the cheque was given as security. On this point, it is relevant to refer to the judgment of the Hon'ble High Court of Delhi in case titled as Suresh Chandra Goyal v. Amit Singhal (CRL. L.P 706/2014) which stated as follows:
"...28. There is no magic in the word "security cheque", such that, the moment the accused claims that the dishonoured cheque (in respect whereof a complaint under section 138 of the Act is preferred) was given as a "security cheque", the Magistrate would acquit the accused. The expression "security cheque" is not a statutorily defined expression in the NI Act. The NI Act does not per se carve out an exception in respect of a 'security cheque' to say that a complaint in respect of such a cheque would not be maintainable. There can be mirade situations in which the cheque issued by the accused may be called as security cheque, or may have been issued by way of a security, i.e to provide an assurance or comfort to the drawee, that in case of failure of the primary consideration on the due date, or on the happening (or not happening) of a contingency, the security may be enforced. While in some situations, the Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2023.03.17 15:39:57 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 21 dishonour of such a cheque may attract the penal provisions contain in section 138 of the Act, in others it may not..."
26. Lastly, it has been argued by Ld. Counsel for accused persons that since there is difference in the amount of the goods supplied and the amount mentioned in the cheque in question, it cannot be said that the cheque in question was issued in discharge of any legally enforceable debt or liability. I do not find any merits in this arguments of the Ld. Counsel for accused as the cheque amount can be lesser than the 'amount due' but it cannot be higher than the 'amount due'. If it is higher than the 'amount due' then only the complaint will not be maintainable, as in such a situation the cheque cannot be said to have been given in discharge of any existing liability in such a situation. On this point, I find strength from Judgment of Hon'ble Delhi High Court in Alliance Infrastructure Project Pvt. Ltd. v Vinay Mittal (Crl.MC No.2224/2009) wherein it has been held that if the cheque is presented for an amount more than the amount actually payable to the payee, such a complaint should not be maintainable and the drawer of the cheque will not be guilty of offence U/S 138 of NI Act.
27. In the present case, Ld. Counsel for accused persons also argued that this complaint is not maintainable as the accused persons have already made payment of entire cheque amount to the complainant during the pendency of the trial. However, I do not find any merits in this arguments of Ld. Counsel for accused as any subsequent payment after filing of complaint will not absolve the accused persons of their liability for commission of offence, unless the complainant gives consent for compounding which the complainant has already refused. On this point, I find strength from Judgment of Hon'ble Supreme Court in Rajneesh Aggarwal v Amit J. Bhalla (2001) 1SCC631 wherein it has been held that; "9. So far as the criminal complaint is Digitally signed AISHWARYA by AISHWARYA SHARMA SHARMA Date: 2023.03.17 15:40:01 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 22 concerned, once the offence is committed, any payment made subsequent thereto will not absolve the accused of the liability of criminal offence, though in the matter of awarding of sentence, it may have some effect on the Court trying the offence "
28. In the present case, to rebut the presumption existing in favor of the complainant, the accused persons were required to prove that the cheque was not given for any consideration or that there was no legal liability in existence against them for which the negotiable instrument was given. However, as discussed above, the accused persons have failed to prove the same. Since, the defences taken by accused persons stands beseeched and the complainant's story is established from the testimony of CW1, therefore, considering the weight of the attending circumstances viz, the consistency in the prosecution story, the compelling documentary evidence adduced by the complainant, the first element of Section 138 NI Act stands assembled.
B. That cheque has been presented to the bank within a period of three months from the date on which it is drawn or within the period of its validity whichever is earlier:
29. As far as this condition is concerned, the same is satisfied upon the perusal of the cheque in question EX.CW1/E dated 14.01.2021 and the return memo EX CW1/F dated 27.01.2021, thus, being presented within prescribed period of limitation of three months. The defence did not adduce any evidence whatsoever to contradict the same.
C. That cheque has been 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 Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date:
2023.03.17 15:40:06 +0530 CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 23 an agreement made with the bank:
30. Section 146 of The Negotiable Instruments Act, 1881, in this regard comes into play which raises a presumption that the court shall presume the fact of dishonour of the cheque in case the cheque is returned vide a return memo having thereon the official mark denoting that the cheque has been dishonoured. Such bank slip or memo is a prima facie proof of dishonor. In the present case, the fact that the cheque in question has been dishonoured due to 'Exceeds Arrangement' have not been disputed by the accused persons throughout the trial, rather it has been admitted by them during their statement of admission and denial recorded U/S 294 Cr. P.C. Such admission of the accused persons clearly shows that they issued cheque from the account in question intentionally despite being aware that the same will not be honoured and the the defence has failed to rebut the presumption U/S 146 of the Negotiable Instruments Act, 1881 . Hence, this condition is fulfilled.
D. The payee or the holder in due course of the cheque has made 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
31. As far as the making of demand by sending a legal notice is concerned, the complainant had sent the legal notice EX. CW1/G (Colly) dated 08.02.2021 vide speed post and as per it's tracking report the same was delivered upon the accused persons on 11.02.2021 and 13.02.2021 through Speed Post and it was also delivered upon the accused persons through Email on 08.02.2021. The accused persons throughout the trial have admitted that they have received the legal demand notice. Thus, the fourth condition, to entail liability under section 138 of the Negotiable Instruments Act, 1881, in light of the above cited law and judgments, is fulfilled.
Digitally signed by AISHWARYA AISHWARYA SHARMA
SHARMA Date:
2023.03.17
15:40:12 +0530
CC NI Act.4623/2021 ATS Bus. Serv. Pvt. Ltd. vs. SBS International Pvt. Ltd. & Ors. Page No. 24
E. 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:
32. The last condition is that the accused persons fails to make the payment within fifteen days from the date of the receipt of the legal demand notice. In the present case, the accused persons have evidently failed to make the payment within fifteen days and even during trial, he sought time for making the payment. Thus, the last limb of what will entail the liability against the accused persons is also structured.
33. Ratio: Since in the instant case, the presumption of law operates in favour of existence of debt or liability, it is the burden of the accused persons to show that they have no liability towards complainant in the present complaint. But as discussed above, the accused persons have failed to lead any cogent evidence which could be termed as a probable defence. Thus, having considered the entire evidence, I am of the opinion that the complainant has successfully proved all the essential ingredients of Section 138 of the Act. Accordingly, accused persons namely 2) Sh. Ankit Gupta, 3) Ms. Nishtha Gupta and 4) Ms. Radha Khandelawal, Directors of Accused No. 1 Company namely SBS International Pvt. Ltd. are found guilty and accordingly convicted for commission of offence U/S 138 NI Act. Let they be heard on point of sentencing on another date.
34. Let the copy of this judgment be given to the accused/convict persons free of cost and the same be also uploaded on CIS and Layers forthwith.
Digitally signed by AISHWARYA AISHWARYA SHARMA
SHARMA Date: 2023.03.17
15:40:17 +0530
Announced in the open court on (Aishwarya Sharma)
this day i.e. day of 17th March, 2023 MM (N.I. ACT)Digital Court02/SED,
Saket Courts, New Delhi