Delhi District Court
Consortium Securities (P) Ltd vs . Atul Gulati on 16 February, 2010
:1:
IN THE COURT OF MS. RAVINDER BEDI : M.M. /ASCJ / JSCC /
GUARDIAN JUDGE (SOUTH): PATIALA HOUSE COURTS,
NEW DELHI
Consortium Securities (P) Ltd Vs. Atul Gulati
CC NO. 582/1/09
U/s 138 N.I. Act
JUDGMENT
(a) The Serial number of the case : 582/1/09
(b) The date of filing of case : 25.4.2008
(c) The name of the complainant : Consortium Securities Pvt.
Ltd, 36, Sant Nagar, East of
Kailash, New Delhi 110 065.
(d) The name of the accused persons,
and his parentage & residential address : Shri Atul Gulati son of Late
Shri Subhash Chand Gulati
R/o 204, Ground floor, Sant
Nagar, East of Kailash, New
Delhi 110 065.
(e) The offence complained of or proved : U/S 138 N.I. Act
(f) The plea of the accused : Pleaded not guilty
(g) The Final Order : Convicted
(h) The date of order : 28.1.2010
Facts as borne out from the complaint are as follows:
1. The case set up by complainant company is that it is a registered company with Shri Rajan Varghese as the AR, who is authorized by complainant company. It is submitted that complainant company is a member of National Stock Exchange of India Limited and deals in buying the selling of the shares/securities. The accused was registered with complainant company as a customer and was allotted a Unique client code number and during the course of dealings, accused indulged in purchase/sale of securities. In discharge of his liability towards the payments, accused had issued cheque No. 036451 dated 8.2.2008 drawn on Vijaya Bank Defence Colony, which :2: was returned unpaid on presentation by the drawer banks for "Funds Insufficient" vide return memo dated 5.3.2008. The complainant made a demand for the payment of the said amount of money by giving a demand notice dated 28.3.2008 to accused through registered A.D. Statutory notice of demand was duly served upon accused but accused failed to make the payment of the said amount to complainant within 15 days of receipt of the said Demand Notice. Thereafter the complainant has filed this complaint U/S 138 of Negotiable Instrument Act, 1881 (hereinafter " the Act") against the accused.
2. On 25.8.2008 the Court took cognizance of the offence U/s 138 of the Act. On being satisfied that the complainant has a prima facie case against the accused the Court summoned the accused for offence U/s 138 of the Act.
3. On 19.5.2008 accused appeared through counsel pursuant to the summons issued by the Court. On 4.7.2008 the particulars of the offence were read over and explained to the accused in simple Hindi, to which he pleaded not guilty and claimed trial.
4. In order to substantiate its case, the complainant examined Shri Rajan Varghese as CW1, Shri Vijay Anand, Asstt. Manager Vijay Bank as CW2 and Shri Abhishekh Dawe, Manager HDFC Bank as CW3.
5. All the circumstances appearing in the evidence against the accused were put in order to enable him to offer his explanation.
6. In his examination U/s 313 Cr.P.C, the accused has submitted that a credit balance of Rs. 2391.98 was left on 8.2.2008 and there was no other liability. Accused further submitted that the cheque was issued in blank with only his signatures towards the margin money, maintained for day to day trading in lieu of cheque No. 469918 of Rs. 25,000/-, which was also issued towards margin money but the same was dishonoured. He further submitted :3: that no trading was done by him on 8.2.2008 nor any contract note, bill or statement of account in respect of trading was handed over to him on 8.2.2008 or subsequent thereto. He submitted that the statement of account of complainant Ex.CW1/D itself shows the opening credit balance of Rs. 2391.98 and the closing credit balance on 8.2.2008 as Rs. 534572/-. He has admitted receiving of demand notice Ex.CW1/1 from complainant but stated that he is not liable to make any payment towards the cheque in question Accused opted for leading evidence and examined Shri Rajan Varghese, witness of complainant company as DW1 on 21.2.2009.
7. I have heard arguments of learned counsels for complainant and ld counsel for the defence and perused the relevant statutory provisions and evidence alongwith written arguments filed on record.
8. In order to knock down the edifice of complainant case, defence has argued with vehemence that complainant has not been able to establish the existence of legally recoverable debt. It is argued that the consideration and the debt as alleged did not exist. It is argued that complainant has failed to establish as to the purpose of issuance of cheque. It is contended that the securities are still in possession of complainant company, considering the statement of D-mat account of accused. It is argued that the date when the cheque was given, there was no purchase and the cheque was issued in the circumstances, to be payable in future upon the occurrence of contingent event. Defence has placed reliance upon the authority rendered by Hon'ble Delhi High Court in Collage culture Vs. Apparel Export Promotion Council (decided on 11.10.2007). It is argued that in the absence of margin money complainant company could not have operated for the accused. It is argued that the securities are not in possession of the accused and are still with complainant company.
9. It is further argued by Ld. Counsel for accused that accused to discharge the burden of proof has brought ample material on record. Ld. :4: Counsel has placed reliance upon judgments in the matter of Sh. Vishnu Dutt Sharma Vs. Smt. Daya Sapra, 2009 (8) Scale ; in another citied in 2007 (1994) DRJ 352 ; judgment citied in 152 (2008) DLT 637.
10. Per contra, it is argued by counsel for complainant that neither the issuance of cheque nor the said cheque having dishonoured because of insufficient of funds has been denied by the accused. It is argued that the nature of presumptions U/S 138 and U/S 139 of the Act are in favour of complainant. It is argued that the defence taken by accused is sham and stands falsified in view of the documents filed by complainant. Counsel for complainant has placed upon reliance upon the judgment rendered by Hon'ble Apex Court in Hiten P. Dalal Vs. Bratindra Nath Benerjee (11.07.2001) It is argued that from record it is amply proved that the cheque in question was given for the discharge of liability of the transactions and the trading as on 08.02.2008.
11. Despite several opportunities given to accused, only one witness namely Sh. Rajan Varghese, AR for complainant has been examined.
12. Before embarking upon the factual issue involved herein, let us consider the provisions of Section 138 of Act. The requirements are :
(1) there is a legally enforceable debt (2) the drawer of the cheque issued the cheque to satisfy the whole or the part of the debt (3) the cheque so issued has been returned due to insufficiency of funds.
13. Section 138 of the Act merely raises a presumption in regard to the second aspect of the matter. The existence of legally recoverable debt is not a matter of presumption U/S 139 of the Act. It merely raises a presumption in favour of holder of the cheque that the same has been issued for discharge of any debt or other liability. The accused can prove the non existence of consideration by raising a probable defence and if he has proved, only then :5: the onus would shift upon complainant, who has to prove it as a matter of fact and on his failure to prove would dis-entitle him to grant the relief.
14. In order to judge the legal and factual merit of the defence contention, it would be relevant to refer to Section 118 & 149 of the Act. The provision Section 118 & 149 of the Act have been dealt the provisions of law deal within catena of judicial pronouncements.
15. In K. Bhaskaran Vs. Sankaran Vaidhyan Balan ; AIR 1999 Supreme Court 3762; it was observed that as the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden is on the accused to rebut the aforesaid presumption.
16. The provisions make it clear that the presumption has to be rebutted by ''proof" and not by a bare explanation which is merely plausible. It was so held in Dhanwantrai Balwantrai Desai Vs. State of Maharastra, AIR 1964, SC 575.
17. From the aforestated settled legal principles, it is crystal clear that Section 118 of the Act envisages legal presumption that the cheque was drawn for consideration on the date which the cheque bears. This presumption is rebuttable but the burden of proving that the cheque was not issued for a debt or liability is on the accused. The accused must adduce evidence showing the reasonable possibility of non existence of the Presumed Fact. The presumption has to be rebutted by proof and not by a statement or plausible explanation. In this regard, I have considered the evidence produced by defence on record and have considered the judgments of Superior Courts relied upon by respective parties and have carefully :6: perused the entire record. The fact of the issuance of cheque is not denied but it is stated by accused that the said cheque was issued by him as security. The receiving of demand notice is also not denied, so far the statement of accused recorded under Section 313 Cr.P.C. goes to show.
18. I have carefully considered the evidence on record. The complainant company is a member of National Stock Exchange, dealing in purchase and sale of share and securities on behalf of its registered consumers. From evidence of A.R. Sh. Rajan Varghese - CW-1, I find that the witness has reiterated and reaffirmed the facts in the complaint. From cross-examination of CW-1 Sh. Rajan Varghese & CW-2 Sh. Vijay Anand, nothing material has been elicited. CW-1 deposed that during the course of dealings, accused indulged in purchase and sale of securities, speculative transactions and also in derivative trading (future and option). He further submits that as per Ex.CW-1/D, there was debit balance of Rs.5,27,392/- and for discharge of his liability, accused issued the cheque in question on 08.02.2008 for Rs.5,00,000/- Ex.CW-1/E, which on its on presentation was returned unpaid by banker with remarks "Insufficient Funds" vide the memo Ex.CW-1/H. During cross-examination, the witness states that the accused is the registered consumer having Specific Code Number and the transactions done by him were regularly maintained by open running account. He also states that the cheque in question was given on 08.02.2008 against the Settlement No.1202, as is reflected in Ex.CW-1/D. Having considered the testimony in entirety, I find that complainant has been able to prove its case.
19. The accused has adduced evidence by summoning complainant's witness Sh. Rajan Varghese as DW-1 in defence evidence. DW1 has proved the transaction statement Ex.DW-1/A & Ex.DW-1/B respectively and the Contract Note are Ex.DW-1/C & Ex.DW-1/D respectively. The perusal of Contract Note Ex.DW-1/C clearly evidences the factum of the accused having traded in the shares on 08.02.2002 and the Settlement Date was 12.02.2008. The document Ex.DW-1/C clearly shows a transactions of Rs.5,05,396.94 :7: having done on 08.02.2008. The Transactions Statement and the Contract Note proved by defence have rather authenticated the factum of transactions done by accused on 08.02.2008 and which are further corroborated in cross- examination of CW-1, that the cheque was given on 08.02.2008 i.e. on the day itself when transaction was done.
20. As far the entry in Ex.CW-1/D with respect to the transactions from 08.02.2008 to 12.02.2008 concerns, it is clear from the Contract Note itself that the transaction in purchasing the shares was done on 08.02.2008 but the settlement for that transaction was to be done as per procedure of Stock Exchange after 3-4 days. Therefore, the Contract Note shows the settlement date as 12.02.2008 as is reflected in statement of account Ex.CW-1/D.
21. I have considered the plea of defence in view of the judgment "Collage Culture" that the cheque in question would not attract Section 138 of the N.I. Act as it was not issued for any debt in presenti. Perusal of the judgment shows that it is not applicable to the present factual matrix as the cheque was given in respect of trading of shares. The trading of shares is governed by the Transaction Rules of the Concerned Stock Exchange. The shares are traded on particular day and their settlement is done on routine generally, on the date as fixed by the Concerned Stock Exchange. In such trading, the liability arises the moment the transaction is done as click of the mouse and the settlement is done after 3-4 days in usual course. The transaction once completed, at a particular instance cannot be cancelled, reversed or revoked. The Contract Note Ex.DW-1/C clearly indicates the order number, the trade date & time as well as the name of securities. Since the said Ex.DW-1/C has not been denied by the defence, the document speaks for itself.
22. So far the contention of defence that the complainant could not have operated in the absence of margin money I find no force in submissions of defence in view of the cross of CW-1 Rajan Varghese, which runs as "It is :8: correct that the trading is done on behalf of accused by complainant on the basis of availability of funds in the customer's account and margin as well as the cheque given on the date of trading". CW-1 further states "The cheque in question was given by the accused on 08.02.2008 against the Settlement No.1202". This itself fortifies and clearly establish the stand of complainant that the cheque was issued as payment of margin money along with the payment of purchases towards shares. Ex.DW-1/C also shows that 1500 shares of J P Associates were purchased and 'Day Trading' was done with respective shares of Reliance Com. The contention of defence that securities are still in possession of complainant, holds no ground as the said shares were purchased in the name of accused as Ex.DW-1/C. Moreover, the accused was having every remedy against non transfer of securities to his D-mat account. The factum of the transactions dated 08.02.2008 by the accused is not denied but no complaint whatsoever at any point of time regarding the non transferred of the shares into his D-mat account has been filed, nor any evidence has been produced in defence. Therefore, the plea as raised above by the accused simply pales into insignificance.
23. Since the existence of the transaction is not denied by the accused nor is it in dispute that the cheque was dishonoured due to insufficient funds, complainant is entitled to rely upon the legal presumptions in support of his case as accused has not been able to improbablise the version by producing the evidence by producing any evidence.
24. Having gone through the provisions of Section138 of the Act, it is clear that evidence U/s 138 N.I. Act casts criminal liability punishable with imprisonment or fine or both on a person who issues cheques towards the discharge of a debt or liability as a whole or in part and the cheques is dishonoured by bank on presentation.
25. It is proved on record that accused despite service of statutory notice :9: of demand failed to make the payment of the cheque in question within 15 days from receipt thereof. The complainant has fulfilled all the ingredients of Section 138 of the N.I. Act. Accordingly, accused is guilty for committing the offence U/ S 138 N.I. Act. Let she be heard on the point of sentence on 30.1.2010 at 3.00 PM.
(Announced in Open Court (MS. RAVINDER BEDI)
on 28.1.2010) JSCC cum ASCJ cum Guardian Judge
(South)
:10:
IN THE COURT OF MS. RAVINDER BEDI : M.M. /ASCJ / JSCC /
GUARDIAN JUDGE (SOUTH): PATIALA HOUSE COURTS,
NEW DELHI
Consortium Securities (P) Ltd Vs. Atul Gulati
CC NO. 582/1/09
U/s 138 N.I. Ac
16.2.2010
2.00 PM
ORDER ON SENTENCE
Present: Counsel for complainant.
Convict in person with counsel.
1. I have heard the convict and his counsel on the Point of Sentence.
2. It is submitted that convict has been appearing religiously since the inception of the complaint. It is argued that the securities are still in the possession of the complainant company. It is argued that convict has no previous antecedents and the learned counsel for the convict has prayed that a lenient view be taken in the present matter.
3. Counsel for the complainant to the contrary argues that since the convict had issued the cheque in discharge of liability and his guilt has been established beyond any doubt, he be punished with maximum punishment provided and he does not deserve any leniency. Therefore, Ld. counsel for complainant has prayed for taking strict view under the provisions of NI Act.
4. I have heard respective parties at bar. I have also considered the past antecedents of convict and the circumstances of the case. Sentencing is a judicial discretion and Court should not shy away from sentencing the convict adequately in befitting circumstances. The offence under Section 138 NI has been introduced to encourage greater vigilance to prevent the usual callous attitude of drawer of cheque and to lend greater credibility to the transactions.
5. Considering the circumstances, it would be appropriate to sentence the convict to simple imprisonment for six months alongwith fine of Rs. 5,50,000/- as per Section 143 (1) (Proviso) NI Act r/w Section 357(1)(b) of Cr.P.C. Out of :11: this amount, Rs. 5,00,000/- (being cheque amount) shall be payable to the complainant as compensation and Rs. 3,000/- to state within a month from today. In default of payment of fine payable to state, convict shall further undergo imprisonment for three months.
6. It is ordered that the compensation amount if not paid in time, shall be recoverable under the provisions of Section 421 Cr.P.C.
7. At this stage, counsel for convict prays for for suspension of sentence Under the provisions of section 389 (3) Cr.P.C, for filing the appeal by convict and request is made for releasing him on bail. Heard.
Surety Sardar Swaran Singh is present.
Since convict intends to present an appeal, he is hereby admitted to bail on furnishing personal bond in the sum of Rs 25,000/- with one surety in the like amount.
Bail bond furnished and accepted till 15.03.2010. Copy of order be given dasti.
(Announced in Open Court (MS. RAVINDER BEDI)
on 16.2.2010) JSCC cum ASCJ cum Guardian Judge
(South) 16.2.2010