Delhi District Court
By Way Of The Present Judgment vs . on 29 August, 2011
IN THE COURT OF SH. VIPIN KHARB
METROPOLITAN MAGISTRATE, DWARKA COURTS,
NEW DELHI
Case No. : 6117/09
Indiabulls Financial Services Ltd. ... Complainant.
Office at F60, Second Floor,
Malhotra Building, Connaught Place,
New Delhi 110001
Vs.
Vardhman Trading Agency
Through its partner
Arun Jain
1/7359, Gali no. 11, East Gorakh Park Extn.
New Delhi.
Seema Jain
1/7359 Gali no. 11, East Gorakh Park
Shahdra, New Delhi 110032 ... Accused.
Date of Institution : 09.01.2009
Date of Reserving Judgment : 12.07.2011
Date of Judgment : 29.08.2011
Case No. : 6117/08 1 / 22
:: JUDGMENT ::
BRIEF FACTS AND REASONS FOR DECISION OF THE
CASE
1. By way of the present judgment, I shall decide the complaint case U/s 138 Negotiable Instrument Act 1881 (as amended upto date) filed by the complainant Indiabulls Financial Service Ltd. through its attorney Sh. Abhishek Singh against the accused Arun Jain and Seema Jain partner of Vardhman Trading Agency.
2. The facts in brief necessary for the disposal of the present case are that as per the allegations in the complaint, the accused No.1. Vardhman Trading Agency has approached the complainant company and requested for business loan. Both other accused No. 2 and No. 3 are the co applicant for loan and a loan of Rs. 10 lacs was sanctioned to the accused vide loan A/c No. LSMEBDL00017465. In discharge of liability accused no. 2 has issued the cheque bearing number 935386, drawn on Canara Bank, Vivek Vihar, Delhi amounting to Rs.37,419/ dated 11.11.2008 in favour of the complainant. However, on presentation of the same it was dishonoured vide cheque returning Case No. : 6117/08 2 / 22 memo dated 14.11.2008 for the reasons "Exceeds Arrangement". The complainant has thereafter given a legal notice of demand dated 20.11.2008 to all the accused which was sent by registered post on 02.12.2008 as well as by UPC thereby calling upon the accused's to make the payment of the cheque amount. It is alleged that the accused have failed to pay any sum in response to the legal notice of demand. As a result of which the complainant has filed the instant complaint for prosecution of the accused U/s 138 Negotiable Instrument Act.
3. After the complaint was filed, the Authorized Representative (AR) of the complainant led his presummoning evidence by way of an affidavit and after hearing the counsel for the complainant and considering the entire material and documents on record, summons were issued against all the accused vide order dated 20.01.2009 for the offence U/s 138 Negotiable Instrument Act 1881. On appearance of the both accused No. 2 and No. 3, separate notice U/s 251 Cr.P.C. dated 17.07.2010 were given to both accused to which they pleaded not guilty and claimed trial.
4. Sh. Arun Kumar substituted AR of the complainant got himself Case No. : 6117/08 3 / 22 examined as CW1 and reiterated the contents of the complaint on oath before this court and filed an affidavit in evidence which is Ex.CW1/J. He got exhibited original cheque before the court as Ex.CW1/C and the cheque returning memo dated 14.11.2008 as Ex. CW1/D, the legal notice of demand dated 20.11.2008 as Ex. CW1/E UPC as well as registered post receipt dated 02.12.2008 which is Ex.CW1/F vide which the aforesaid notice was sent.
Sh. Arun Kumar was cross examined by Ld. Counsel for the accused. Thereafter the complainant's evidence was closed at request.
5. After that the statement of both accused u/s 313 Cr.P.C. was recorded one by one. All the incriminating evidence along with exhibited documents were put to the accused Arun Jain in which he has admitted to the fact that a business loan of Rs. 10 lacs in July 2007 was taken by him. He admitted that the cheque in question was given to the complainant in blank and only after putting his signatures there as a security. He submitted that cheque in question was presented without giving any intimation. Accused has also denied the receipt of legal notice of demand in his statement. Sh. Arun Jain submitted that the mode of payment was through ECS and he had Case No. : 6117/08 4 / 22 already made payment to the complainant with respect to cheque in question.
All the incriminating evidence along with exhibited documents were also put to the accused no. 3 Seema Jain in which she has admitted to the fact that a business loan of Rs. 10 lacs in July 2007 was taken by her. She submitted that the cheque in question was not signed by her.
Thereafter, Ld. counsel for the accused has moved an application U/s 315 Cr.PC for producing the accused no. 2 Sh. Arun Jain as a defence witness. The aforesaid application was allowed and the accused No. 2 deposed as DW1. The accused was duly cross examined by Ld. counsel for the complainant. Thereafter, the defence evidence was closed at request of Ld. counsel for the accused. After that the case was fixed for final arguments.
Submissions were made by Ld. counsel for both the parties during final arguments.
6. I have heard Ld. counsels and perused the entire record of the case file and the evidence on record. In order to bring home the conviction of the accused, the complainant has to show not only Case No. : 6117/08 5 / 22 unbroken chain of events leading to commission of actual offence on record but also the ingredients of the offence complained of.
7. Before proceeding further let us go through the relevant provisions of law. The main ingredient of Section 138 of the Negotiable Instruments Act are as follows:
(a) The accused issued a cheque on an accountmaintained by him with a bank.
(b) The said cheque has been issued in discharge of any legal debt or other liability.
(c) The cheque has been presented to the bank withinthe period of six months from the date of the cheque or within the period of its validity.
(d) When the aforesaid cheque was presented for encashment, the same was returned unpaid/ dishonoured.
(e) The Payee of the cheque issued a legal notice of demand within 30 days from the receipt of information by him from the Bank regarding the return of the cheque.
(f) The Drawer of the cheque failed to make the payment within 15 days of the receipt of the aforesaid legal notice of demand.
If the aforesaid ingredients are satisfied then the drawer of the Case No. : 6117/08 6 / 22 cheque shall be deemed to have committed an offence punishable u/s 138 Negotiable Instruments Act.
8. Now let us deal with the each ingredient of the section 138 of Negotiable Instruments Act to see whether the case against the accused has been proved or not.
9. WHETHER THE CHEQUE WAS ISSUED OR NOT The accused no. 2 has admitted to have signed the cheque in question while answering to the question at the time of framing of notice U/s 251 Cr.PC. Further while answering to the question U/s 313 Cr.PC the accused no. 2 has admitted to have given the cheque in question to the complainant but he stated that the same was given in blank only after putting his signatures thereon at the time of taking the loan by him. Therefore, so far as signing and delivery of the cheque in question by the accused no. 2 is concerned the same is not disputed.
Perusal of cheque in question Ex.CW1/C shows that it was issued on behalf of Vardhman Trading Agency i.e. Accused no. 1, by its partner. Accused no. 2 when appeared as DW2 has admitted that Case No. : 6117/08 7 / 22 accused no. 1 is a firm and he and Seema Jain i.e. accused no. 3 are its partner.
Therefore,, in the light of above admissions it is clear that cheque in question was signed and delivered on behalf of accused no. 1 by accused no. 2.
Moreover, in Jaipal Singh Rana Vs. Swaraj Pal 149 (2008) DLT 682 it was held by Delhi High Court that "by putting the amount and the name there is no material alteration on the cheque U/s 87 of the Negotiable Instruments Act. In fact there is no alteration but only adding the amount and the date.
It was further observed in the aforesaid judgment that there is no rule of banking business that the name of the payee as well as the amount should be written by the drawer himself. No law provides that in case of cheques the entire body has to be written by the drawer only. "
In view of the aforesaid judgment and the evidence on record it stands proved that the cheque in question was issued by the accused no. 2 on behalf of accused no. 1.
Case No. : 6117/08 8 / 22
10. WHETHER THE CHEQUE WAS PRESENTED WITHIN THE PERIOD OF VALIDITY Perusal of the record reveals that the cheque in question which is Exhibit CW1/C is dated 11.11.2008 which got dishonoured vide cheque returning memo which is Exhibit CW1/D dated 14.11.2008. The cheque returning memo is not disputed by any of the accused, therefore, it stands proved that the cheque in question was presented within the period of its validity i.e. within six months from the date of issuance of the cheque.
11. DISHONOUR OF CHEQUE IN QUESTION In the instant case Sh. Arun Kumar who has appeared as complainant witness has got exhibited the cheque returning memo which is Ex. CW 1/D. Neither of the accused has denied the fact of the dishonour of the cheque in question with the reasons "Exceeds Arrangement". Therefore, it stands proved that the cheque in question was dishonoured vide cheque returning memo dated 14.11.2008 which is Ex.CW1/D with the reasons "Exceeds Arrangement". Case No. : 6117/08 9 / 22
12. SERVICE OF LEGAL NOTICE OF DEMAND UPON THE ACCUSED In the instant case, Sh. Arun Kumar who has appeared as complainant's witness has specifically stated in his examination in chief that the complainant got issued the legal notice of demand dated 20.11.2008 which is Ex.CW1/E and which was sent to the accused's on 02.12.2008 vide RPAD and by UPC on 01.12.2008. Receipt of UPC and RPAD are Ex.CW1/F. However, the accused's have denied the receipt of legal notice of demand.
" There is presumption U/s 27 of General Clauses Act in favour of the complainant that properly addressed documents sent by the registered post is deemed to have been delivered if not returned back."
I have perused the legal notice of demand it bears the correct address of the accused and the UPC receipt issued by the postal authorities in ordinary course is also on record. Moreover, the summons were served at the aforesaid address and the accused has put in appearance in compliance thereof. The address furnished by the accused's on the bail bond is same as mentioned over the legal notice of demand.
Case No. : 6117/08 10 / 22
On being asked by the Court, accused submitted that his present address is 1/7359, Gali no. 11, East Gorakh Park, Top Floor, Shahdra and the same is mentioned upon ordersheet dated 11.02.2011.
Considering the evidence on record, it stands proved that the legal notice of demand was served upon the accused.
13. WHETHER THE CHEQUE IN QUESTION WAS ISSUED IN DISCHARGE OF ANY LEGAL DEBT OR OTHER LIABILITY In the case in hand, two persons and one firm are arrayed as accused. Notice U/s 251 Cr.PC was framed against accused no. 2 i.e. Arun Jain and accused no. 3 i.e. Seema Jain but no notice was framed against the accused no. 1 i.e. Vardhman Trading Agency. Before deciding the legal liability of all the accused it is important to decide whether case can be proceeded against the accused no. 2 and 3, who are the partners in the firm, in the absence of non framing of notice u/s 251 Cr.PC against the firm i.e. Vardhman Trading Agency i.e. accused no. 1. The relevant provisions which deals with the offences committed by the company under NI Act is section 145 NI Act which read as follows: Case No. : 6117/08 11 / 22 Section 141 Offences by Companies: (1) If the personal committing an offence under section 138 is a company, every person, who, at the time the offence was committed, was incharge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that .........
,, ,, ,, Provided further ........
,, ,, ,, (2) Notwithstanding anything contained n subsection (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and Case No. : 6117/08 12 / 22 punished accordingly.
Explanation For the purpose of this section,
(a) "company" means any body corporate and includes a firm or other association of individuals; and
(b) "director", in relation to a firm, means a partner in the firm.
The explanation appended to the section 141 NI Act gives expanded meaning to the terms "company" and "director" for the purpose of offences committed under NI Act.
In the expanded ambit of the word "company" even firms or any other associations of persons are included and as a necessary adjunct thereof a partner of the firm is treated as director of that company.
It has been held in the Anil Handa Vs. Indian Acrylic Ltd. AIR 2000 SC145: (2000) 1 SCC 1:2000 Cr.L.J 373 by Hon'ble Supreme Court that three categories of persons are brought within the purview of the penal liability through the legal fiction envisaged in S. 141. They are (1) the company which committed the offence, (2) everyone who was incharge of and was responsible for the business of the company, and (3) any other person who is a director or a manager or a Case No. : 6117/08 13 / 22 secretary or officer of the company, with whose connivance or due to whose neglect the company has committed the offence:
The provisions do not contain a condition that prosecution of the company is sine quo non for prosecution of the other persons who fall within the second and the third categories mentioned above. No doubt a finding that the offence was committed by the company is sine qua non for convicting those other persons. But if a company is not prosecuted due to any legal snag or otherwise, the other prosecuted persons cannot, on that score alone, escape from the penal liability created through the legal fiction envisaged in S. 141 of the Act.
Even if the prosecution proceedings against the company were not taken or could not be continued, it is no bar for proceeding against the other persons falling within the purview of sub. Ss. (1) and (2) of S. 141 of the Act.
Even though where the partnership firm on whose behalf the cheque was issued was not made an accused in the complaint, held, complaint against its partner cannot be quashed:
In the light of the above decision of the Hon'ble Supreme Court it is clear that even if no notice is framed against the accused no. 1 i.e. Case No. : 6117/08 14 / 22 the firm even then prosecution of the accused no. 2 and 3 i.e. partners of the firm can be done. But for the conviction of the accused no. 2 and 3, it is necessary for the complainant to show that offence under section 138 NI Act was committed by accused no. 1 i.e. Vardhman Trading Agency.
Now, Court will consider whether complainant has been successful in proving the liability of each of accused separately. Liability of accused no. 1.
Complainant has submitted in the complaint that i.e. Ex.CW1/G that a loan of Rs. 10 lac was given to the Vardhman Trading Agency. Accused no. 2 while appearing as DW1 has accepted that a loan of Rs. 10 lacs was taken from the complainant and he has repaid Rs. 6 lacs of the loan amount to the complainant. So it is clear that still around Rs. 4 lacs are to be repaid to the complainant.
Perusal of Court record shows that the statement of account of accused dated 30.03.2011 filed by the complainant at point A on page 3 shows the liability of accused on 01.11.2008 of Rs. 37,419/ and the cheque in question which is Ex.CW1/C is dated 11.11.2008 amounting to Rs. 37,419/. This shows that on the date on which the cheque was presented i.e. 11.11.2008 there was liability of Rs. Case No. : 6117/08 15 / 22 37,419/ on the Vardhman Trading Agency i.e. accused no. 1. Liability of accused no. 2.
As to the liability of Sh. Arun Jain i.e. accused no. 2, Sh. Arun Kumar who has appeared as complainant's witness has specifically stated in his examination in chief by way of affidavit that the accused no. 2 issued the cheque in question in partial discharge of the legal liability of accused no. 1 towards the repayment of the loan amount. The accused no. 2 has however stated in his statement U/s 313 Cr.PC that he has given the cheque in question to the complainant but the same was given in blank only after signing the same at the time of taking of loan.
Before deciding this issue let us go through the relevant provisions of law.
Section 46 of the Negotiable Instruments Act speaks of the delivery, it reads as follows: "The making, acceptance or endorsement of a promisory notice, bill of exchange or cheque is completed by delivery, actual or constructive."
Section 118 (b) of the Negotiable Instruments Act provides that until the contrary is proved, the following presumption shall be Case No. : 6117/08 16 / 22 made.
(b) As to date that every Negotiable Instrument bearing a a date was made or drawn on such date.
Moreover, there is a presumption in favour of the complainant u/s 118 (a) Negotiable Instruments Act that until the contrary is proved, it will be presumed that every negotiable instrument was drawn for consideration and every such instrument when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration.
Further Section 139 of the Negotiable Instruments Act, 1881 provides that it shall be presumed until the contrary is proved that the holder of the cheque received the cheque of the nature referred in the Section 138 for the discharge in whole or in part of his debt or liability.
Now it will have to be examined whether the accused no. 2 has rebutted the presumption as contemplated by Section 118 (b) and Section 139 of Negotiable Instruments Act.
As to rebut the presumption of section 118 (b) and section 139 of the Act, accused no. 2 has brought nothing on the record. Accused no. 2 has failed to adduce any evidence during any stage of the trial to Case No. : 6117/08 17 / 22 show that cheque was not presented on the date mentioned on it rather it was delivered to the complainant on some earlier date. In his defence, accused no. 2 only submitted that the cheque in question was given as a security cheque but to prove it he brought nothing on record.
It is no longer ResIntegra that mere averments by the accused without placing on record cogent proof is not sufficient to rebut the mandatory presumption incorporated in the statute by enacting section 118 (b) and section 139 of the Act.
Considering the evidence on record, I am of the opinion that the accused no. 2 has failed to rebut the presumptions U/s 118 (a), (b) and section 139 of Negotiable Instruments Act.
Therefore, it stands duly proved that the cheque in question which is Ex.CW1/C was issued and drawn in discharge of legal liability of the accused no. 1 by accused no. 2 and for consideration. Liability of accused no. 3.
As to the legal liability of Smt. Seema Jain i.e. accused no. 3, Ld. counsel for accused during final arguments submits that as cheque in question was not signed by the accused no. 3, therefore, there is no legal liability on her to pay the cheque amount. Case No. : 6117/08 18 / 22
The wordings contained in S. 141(1) of the Act are slightly different from the wordings contained in S. 141 (2) of the Act with reference to the presumption. It is mentioned under S. 141 (1) of the Act that when a company has committed the offence, every person, who was incharge and responsible to the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty. But under S. 141 (2) of the Act, the presumption would arise against the director manager, etc, only when it is proved that the offence has been committed with the consent or connivance of or is attributable to, any neglect on the part of those persons.
As the accused no. 3 is the partner in the accused firm therefore, complainant has to show that offence has been committed with her consent or connivance or his attributed to her neglect. Complainant has brought nothing on record to show any part played by the accused no. 3 i.e. Smt. Seema Jain in delivering of the cheque in question and in dishonoring of the same.
Hence, in the considered opinion of the Court, as complainant has failed to adduce any evidence to show the culpability or involvement of the accused no. 3. has no legal liability with respect to the cheque in question.
Case No. : 6117/08 19 / 22
14. THE DRAWER OF THE CHEQUE HAS FAILED TO MAKE THE PAYMENT WITHIN 15 DAYS OF THE RECEIPT OF SAID NOTICE In the instant case Sh. Arun Kumar who has appeared as complainant's witness has deposed in his examination in chief by way of affidavit that despite service of legal notice of demand accused has failed to pay the cheque amount and no question has been put to the AR in his cross examination so far as the payment of cheque amount by the accused is concerned. Further the accused has also admitted in his statement U/s 313 Cr.PC that he had not paid the cheque amount to the complainant despite statutory notice.
Accused no. 2 when appeared as DW1 submitted that he had paid Rs. 55000/ against the cheque in question vide payment receipt which he got exhibited as Ex.DW1/1 to DW1/5.
Perusal of these receipts Ex.DW1/1 to Ex.DW1/5 shows that payment was made between period 25.07.2009 to 01.10.2009, which is beyond the statutory period of 15 days of the receipt of the legal notice. Further it is no where mentioned over the receipts that payment is made towards the cheque in question. Case No. : 6117/08 20 / 22
Now as far as low in this regard is concerned, once the payment is not made within the statutory period of 15 days then if any payment is made, whether in cash or kind subsequent thereto, will not absolve the accused of the liability of criminal offence U/s 138 of Negotiable Instruments Act.
I am forfeited by the judgment passed by Hon'ble Supreme Court of India in case titled as "Rajneesh Aggarwal Vs. Amit J Bhall, 2001 I AD (SC) 44" wherein , Supreme Court of India has held that:
"so far as the criminal liability is concerned, one 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. But, by no stretch of imagination a criminal proceedings could be quashed on account of deposit of money in the court or that n order of quashing of criminal proceedings which is otherwise unsustainable in law could be sustained because of deposit of money in the court."
Considering the evidence on record it stands proved that the accused no. 1 and 2 have failed to make the payment of the cheque Case No. : 6117/08 21 / 22 amount within 15 days of the receipt of legal notice of demand.
15. In view of the aforesaid discussion, I am of the considered opinion that the complainant has proved his case against the accused no. 1 and 2 beyond shadow of reasonable doubts. All the ingredients of Section 138 of Negotiable Instruments Act have been duly proved on record. Accordingly, accused no. 1 i.e. Vardhman Trading Agencey and accused no. 2 Sh. Arun Jain S/o Late Sh. Aatma Ram Jain stands convicted of the offence u/s 138 Negotiable Instruments Act.
Accused no. 3 Smt. Seema Jain W/o Sh. Arun Jain stands acquitted of the offence U/s 138 NI Act.
Let the copy of this judgment be supplied to the accused no. 2. Announced in the open court today i.e. 29.08.2011. (VIPIN KHARB) MM: DWARKA : 29.08.2011.
Case No. : 6117/08 22 / 22 Case No. : 6117/08 23 / 22