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M2K Entertainment Pvt. Ltd. vs . Innovatives & Ors. Page 1 Of 20 on 20 August, 2022

    IN THE COURT OF SH. ANSHUL SINGHAL,
MM (NI ACT)-03, ROUSE AVENUE COURT COMPLEX,
        NEW DELHI DISTRICT, NEW DELHI

In the matter of: CC No.: 1910/2017
CNR NO.: DLND020029242017




M/s M2K Entertainment Pvt Ltd
E-13/29, 1st floor, Harsha Bhawan,
Connaught Place, New Delhi-110001.
                                                     ......Complainant
                                    versus
1.     M/s Innovatives
       KH.no. 81, Building No. 1163,
       Tyagi Vihar, Meerut Road,
       Sewa Nagar, Ghaziabad-201001.

2.     Mr. Ashish Sharma,
       s/o Sh. ML Sharma,
       Partner, M/s Innovatives
       KH.no. 81, Building No. 1163,
       Tyagi Vihar, Meerut Road,
       Sewa Nagar, Ghaziabad-201001.

       Also at:
       1.    House No. 82, Durga Bari,
             Sadar Sarafa Bazar,
             Meerut Cantt., UP.
       2.    T-3/201, Gulmohar Garden,
             Raj Nagar Extension,
             Ghaziabad, UP.

3.     Mr. Sanjay Sharma
       KH.no. 81, Building No. 1163,
       Tyagi Vihar, Meerut Road,
       Sewa Nagar, Ghaziabad-201001.
                                                       ........Accused

CC No. 1910/17
M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors.        Page 1 of 20
                                 JUDGMENT

Date of Institution of Complaint : 02.02.2017 Offence Complained of : u/s. 138 of NI Act Plea of Accused : Not Guilty Date of Final Arguments Heard : 27.07.2022 Decision Qua Accused no.1 & 2 : Acquittal Decision qua accused no.3 : Not summoned.

Date of Decision : 16.08.2022 BRIEF STATEMENT OF REASONS FOR DECISION

1. Vide this judgment, I shall dispose of the present complaint u/s. 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as the NI Act) filed by the complainant against accused on account of dishonour of cheque bearing no. 559690 dated 29.11.2016 for a sum of Rs.2,94,077/- drawn on Punjab National Bank, Meerut Road, Ghaziabad (UP) issued by the accused in favour of the complainant (hereinafter referred to as the cheque in question).

2. Brief facts of the case as per the complaint are that the accused no. 1 is a Partnership firm acting through its partners accused no.2 & 3 and is engaged in the business of manufacturing, supply and installation of Gripper Stretch Fabric, Wall Drapes Fabric etc. The cheque in question was signed and issued by the accused no.2 on behalf of accused no.1. It is further submitted that the accused persons had approached the complainant company for supply and installation of Gripper Stretch Fabric and Wall Drapes Fabric for Auditoriums in Cinema Hall of complainant and for said purpose, contract / work order dated 18.10.2016 was signed and executed between the complainant and CC No. 1910/17 M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors. Page 2 of 20 accused against total consideration of Rs. 11,76,307/- subject to actual measurement of work done at said Auditoriums as per the entire scope of work defined in Annexure-I of the said contract. It is further submitted that in terms of the said contract and on the request made by the accused persons, the complainant company had released an amount of Rs. 8,82,231/- (25%+50%=75%) of the total contract value and the accused persons submitted an indemnity bond dated 23.01.2016, executed by accused no.2 acting on behalf of accused no. 1 in favour of complainant company wherein the accused persons promised and undertook to indemnify the complainant company for any loss or damage against any non-fulfillment of obligation on the part of the accused in the said contract including refund of advance payment and agrees to pay the compensation including without limitation, liquidated damages equal to the said advance amount to cover the loss, damages and harm. It is further submitted that the cheque in question duly signed by accused no.2 on behalf of accused no.1 was handed over at the time of execution of the indemnity bond.

3. It is further submitted that it was observed by the complainant company many times and also informed to the accused persons from time to time that the work executed by accused persons in Audi-1 and Audi-3 was of very poor quality, not satisfactory and finishing work was also not upto the standards and also the accused persons have miserably failed to start the work in Audi-2 under the said contract. It is further submitted that considering the business CC No. 1910/17 M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors. Page 3 of 20 relationships, various opportunities were given to the accused persons for completion of work in Audi-2 and rectification of snags defects in Audi-1 and Audi-3 but in vain. That accordingly, the accused persons acted in violation of the contract and thereby were liable for the refund of the advance amount and hence, the cheque in question in conformity with the indemnity bond was presented for encashment. However, on presentation of the cheque in question the same was returned dishonoured with remarks "payment stopped by drawer" vide cheque return memo dated 29.11.2016. That thereafter, a legal notice was sent to the accused persons dated 22.12.2016 and since no payment was made within 15 days of the service of legal notice, then the present case has been filed.

4. During pre-summoning evidence, the complainant examined its AR as CW1 on 04.02.2017 and summons were issued to accused no.1 & 2 on the very same day. Accused no. 3 was not summoned by this court The accused persons appeared with counsel on 17.10.2017 and furnished bail bonds on 20.10.2018.

5. A notice explaining the accusation to the accused u/s. 138 of N.I.Act was served on 20.10.2018 and his plea was recorded. The accused pleaded not guilty and claimed trial. The accused submitted that he had issued the cheque in question as 25% of work order as security in terms of agreement dated 18.10.2016 and the said cheque was to be returned by the complainant on completion of work order. It is further stated by him that work order was completed by CC No. 1910/17 M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors. Page 4 of 20 him and another agreement in this regard was executed on 19.10.2016 wherein the complainant acknowledged the work completed by him. However, despite completion of work by him, complainant did not return the said cheque and misused the same for filing of present case.

6. An application u/s. 145(2) N.I.Act moved on behalf of the accused was allowed vide order dated 21.02.2019. During complainant's evidence (CE), the complainant has examined its AR as CW1, who has relied relied upon his evidence by way of affidavit and has relied on the following documents:-

(i) Copy of certificate of incorporation is Ex-CW1/1.

(ii) Board resolution in favour of the AR is Ex-CW1/2.

(iii) Contract / Work order dated 18.01.2016 is Ex-CW1/3.

(iv) Indemnity Bond dated 23.01.2016 is Ex-CW1/4.

(v) Original cheque in question is Ex-CW1/5.

(vi) Copy of various e-mails exchanged between the parties are Ex-CW1/6(colly).

(vii) Copy of letter dated 13.10.2016 Ex-CW1/7.

(viii)Cheque return memo dated 29.11.2016 is Ex-CW1/8.

(ix) Copy of legal demand notice dated 22.12.2016 is Ex-

CW1/9.

(x) Original postal receipts are Ex-CW1/10(colly)

(xi) Tracking reports are Ex-CW1/11(colly).

7. During cross examination of CW1 photocopy of note dated 19.10.2019 was put to the witness and since the witness did not admit the same, the same was marked as Mark A. CW1 was duly cross-examined by counsel for accused and CC No. 1910/17 M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors. Page 5 of 20 discharged. Since no other witness sought to be examined on behalf of complainant, accordingly, vide order dated 11.09.2019, CE was closed.

8. Accused was thereafter examined u/s. 281 r/w. Section 313 Cr.P.C on 19.09.2019, and the entire incriminating evidence was put to him, during which the accused stated that he had entered into a work agreement with the complainant company to renovate their movie theatre. He has further stated that the payment was to be made in three parts, i.e., first 25% as advance, then 50% against delivery of material, balance 25% on completion of work. He has further stated that at the starting of the work itself, the complainant company took from him a security cheque against the 25% of advance amount. He has further stated that thereafter, some dispute arose and the complainant company misused the same to file the present false and fabricated complaint. It is his case that he has no liability towards the complainant, instead the complainant owes him around Rs. 2.5 lacs. He has further stated that material worth Rs. 44,518/- is lying with the complainant.

9. Since accused chose to lead defence evidence (DE), accordingly, matter was adjourned for DE. Application u/s.315 Cr.P.C moved on behalf of accused no.2 was allowed vide order dated 20.12.2019 and accused no.2 has examined himself as DW1. During cross examination minutes of meeting dated 19.10.2016 were put to the witness, which is Ex-DW1/X1. Witness was duly cross examined and discharged on 05.03.2022.

10. Since no other witness was sought to be examined on behalf of the defence, accordingly, vide separate statement of accused dated 05.03.2022, DE was closed and the matter was adjourned for final arguments.

11. Final arguments were heard by this court on 27.07.2022. I have heard counsel for the parties, perused the record and have gone through the relevant provisions of the law.

12. At the very outset, it is pertinent to lay down the ingredients of the offence u/s. 138 of NI Act. In Jugesh Sehgal vs. Shamsher Singh Gogi, (2009) 14 SCC 683, the Hon'ble Supreme Court of India culled out the following ingredients in order to constitute an offence u/s. 138 of NI Act:

"13. It is manifest that to constitute an offence under Section 138 of the Act, the following ingredients are required to be fulfilled:

(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;

(ii) the cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;

(iii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier;

(iv) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;

(v) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 CC No. 1910/17 M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors. Page 7 of 20 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;

(vi) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.

Being cumulative, it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act."

13. Ld. Counsel for the complainant has submitted that there exists legally enforceable liability in favour of the complainant on the basis of the documents which are Ex- CW1/3, Ex-CW1/4, Ex-CW1/6(colly), & Ex-DW1/X1, and on the basis of presumption under section 139 NI Act and on the basis of the averments made in the complaint and the evidence by way of affidavit. He has further submitted that the cheque in question was issued to the complainant by the accused in discharge of legally enforceable debt or liability and the dishonour of the said cheques is proved by bank return memo which is Ex-CW1/8. Further, copy of the legal notice and postal receipts are Ex-CW1/9 and Ex-CW1/10 (colly) respectively. He has further submitted that the complainant received no payment within 15 days of the service the legal notice. Ld. Counsel for complainant has thus submitted that all the ingredients laid down u/s. 138 NI Act are fulfilled and the accused should be convicted.

14. The primary defence that the accused has taken is that there is no legally enforceable liability in favour of the complainant and against the accused as on the date of the cheques in question or on the date of its presentation.

15. Before moving forward with the contentions of the accused persons, it is pertinent to discuss the relevant provisions of law which deal with legally enforceable debt or liability under the NI Act which are section 118(a) and 139 of the NI Act. Section 118(a) of the NI Act deals with the presumption of consideration and section 139 of NI Act deals with presumption of legally enforceable debt or liability and reads as follows:

"118. Presumptions as to negotiable instruments- Until the contrary is proved, the following presumptions shall be made:

(a) of consideration: that every negotiable instrument was made or drawn for consideration, and that every such instrument when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;

***

139. Presumption in favour of holder-

It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability."

16. It is further pertinent to mention the relevant judgments on the point of presumption of legally enforceable debt or liability. Reliance is placed upon the judgments of Hon'ble Supreme Court of India in Rangappa v. Sri Mohan, (2010) 11 SCC 441, Kumar Exports vs. Sharma Carpets, (2009) 2 SCC 513 and Bir Singh vs. Mukesh Kumar, (2019) 4 SCC 197, wherein it has held that the presumption u/s. 139 NI Act is a presumption of law and not presumption of fact. It has further been held that it is not necessary that the CC No. 1910/17 M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors. Page 9 of 20 cheque must have been filled by the accused himself and the accused may be liable even when the cheque has been filled by the complainant. The essential requirement is that the liability must exist on the date of the presentation of the cheque in question. It has been further held that once the signatures on the cheque are admitted then the court is bound to raise presumption u/s. 118 r/w. 139 NI Act regarding existence of legally enforceable debt or liability.

17. In the facts of the present case, the signatures on the cheque in question have been admitted. Accordingly, this court raises presumption under section 118(a) r/w. section 139 of NI Act that the cheque in question was issued by the accused to the complainant in discharge of legally enforceable debt or liability and it is now on the accused to raise a probable defence and to prove his case on the basis of preponderance of probabilities.

18. The first point raised by the accused is that the cheque in question was a security cheque given to the complainant. Ld. Counsel for the accused has submitted that since the cheque in question was given as a security and not in discharge of legally enforceable debt or liability, hence, the accused cannot be made liable for the offence u/s. 138 NI Act. It is the case of the accused that the cheque was given only for security purposes and the fact that the cheque in question was issued only for security purposes is proved from the indemnity bond which is Ex-CW1/4 wherein it has clearly been mentioned that the cheque is to be encashed only upon completion of certain conditions.

19. Per Contra, it has been submitted on behalf of the complainant that even if it is assumed that the cheque in question has been given only for security purposes then also, the same is not sufficient and the accused has to raise a probable defence and has to show on the basis of preponderance of probabilities that no liability exists in favour of the complainant.

20. Reliance is placed by this court upon the judgments of Hon'ble Supreme Court of India in Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Ltd., (2016) 10 SCC 458, Sripati Singh vs. State of Jharkhand & Anr., 2021 SCC OnLine SC 1002 and Sunil Todi vs. State of Gujarat & Anr., 2021 SCC OnLine SC 1174 wherein it has been held that merely because a cheque has been issued for only security purposes will not absolve the accused from the liability u/s. 138 NI Act. It has been further held that a cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. It has been held by the Hon'ble Court that the accused would very much be liable u/s. 138 NI Act for issuance of a security cheque also, if on the date of the presentation of such cheque there has not been a prior discharge of debt, or if the cheque has not been given towards advance payment, the goods in respect of which have not been received by the court, or if other than this there has been change in circumstances which precludes the complainant from depositing the cheque with the bank.

21. In view of the indemnity bond which is Ex-CW1/4 it becomes clear that the cheque in question was given only for security purposes. This court shall now examine whether there existed any legally enforceable debt or liability in favour of the complainant as on the date of presentation of the cheque in question.

22. To show that there was no legally enforceable debt or liability existing in favour of the complainant as on the date written on the cheque, it has been submitted on behalf of the accused that the claim of the complainant is primarily based upon the indemnity bond which is Ex-CW1/4 and has claimed that the cheque was deposited in lieu of the liquidated damages to which the complainant is entitled, however, no proof of the said damages has been brought on record by the complainant. Further attention of this court has been drawn towards e-mails dated 29.03.2016 and 01.04.2016 part of Ex-CW1/6(colly), wherein it has been admitted by the complainant that both the auditoriums no.1 and 3 are operational and certain snags are yet to be removed. Ld. counsel for the accused has submitted that firstly, both the auditoriums were operational as admitted by the complainant in e-mails dated 29.03.2016, 01.04.2016 and several subsequent e-mails. It has further been submitted that no proof has been furnished on behalf of the complainant that they have suffered any loss or damage because of non-removal of snags from the auditoriums. It has further been submitted that the complainant in terms of section 74 of Indian Contract Act is entitled to only CC No. 1910/17 M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors. Page 12 of 20 reasonable compensation and not to any stipulation by way of penalty and is further enjoined with the duty to mitigate the loss. It is further submitted that even if the entire case of the complainant is admitted to be true then also there is no proof on record to show that the complainant has suffered loss equivalent to the amount of cheque in question.

23. Per contra, Ld. counsel for complainant has relied upon para 4 & 5 of the indemnity bond dated 23.01.2016 which is Ex- CW1/4 and which reads as follows:-

"4. The contractor hereby indemnifies and promises to keep the Owner harmless against any non-fulfillment of obligations of the Contractor under the work order and / or recovery / repayment of aforesaid advance payment given by the owner to the contractor and further undertakes to bear the entire liability for, and to keep the owner indemnified and harmless against, any loss, damages, harm or prejudice caused by contractor and. Or any Sub-contractor / labour appointed by contractor or by any third party, acting for and /or on behalf of the contractor and /or because of any act of omission or commission of the contractor, including, but not limited to, delay or any deficiency in providing services under the work order; and in the event of any such loss, damages, harm or prejudice being caused to the owner, the contractor expressly promises and agrees to pay to the owner, compensation including, without limitation, liquidated damages equal to the amount of aforementioned advance payment to cover those losses, damages and harm, whose value cannot be pre-assessed at this stage.

5. The Contractor, in pursuance of having to pay aforesaid liquidated damages to the owner hereby, deposits with the owner a cheque no. 559690 from Bank A/c No. 4021002100022583 drawn on Punjab National Bank, Meerut Road, Ghaziabad(UP) favoring the owner for a sum of Rs. 2,94,077/-(Rupees Two lacs Ninety Four Thousand and Seventy Seven only), with an express and willful promise and a clear CC No. 1910/17 M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors. Page 13 of 20 understanding that in case the owner suffers any loss, damages or harm, as specified in Clause 4 hereof, the final decision in respect whereof shall vest in the Owner, said cheque may be encashed by the owner immediately thereupon, without giving any prior notice therefore to the contractor, in discharge of the Contractor's then existing and outstanding liability for payment of liquidated damages."

24. Further reliance has been placed by the complainant on various e-mails part of Ex-CW1/6(colly), whereby intimation has been given to the accused in regard to non completion of work and the snags in Audi-1 & Audi-3.

25. Much reliance has been placed by both the parties on the minutes of meeting dated 19.10.2016 particularly para 6 in Ex-DW1/X1. It is interesting to note that AR of the complainant in his cross-examination has denied the execution of said document, however during cross- examination of accused as DW1 the same was put to the accused as an admitted document. It is submitted on behalf of complainant that it is clearly mentioned in the said minutes of meeting that there are snags in Audi-1 & 3 and the same are to be removed and the entire work has to be completed as per complainant satisfaction. That the document e-mail part of Ex-CW1/6(colly) clearly shows that there was some work to be done in Audi-1 & 3. Same has also been admitted by the accused in e-mail dated 25.04.2016 which is also placed on record. It is thus the case of the complainant that, in view of the same it cannot be said that the entire work was done as per complainant's satisfaction.

26. Ld. counsel for accused has drawn attention of this court to the document which is Ex-CW1/3 which on the first page mentions the number of contract as M2KE/P/15-16/P-78 dated 18.01.2018 and on subsequent pages mentions number M2K/15-16/P-69 dated 01.12.2015. He has thus submitted that complainant has tried to mislead the court by not placing on record actual agreement between the parties.

27. Since the complainant is claiming liquidated damages for breach of contract, it is essential to determine whether the complainant is entitled to the amount specified in the indemnity bond (which is also the amount of cheque in question) towards compensation and liquidated damages in consonance of the principles of breach of contract and more particularly, section 74 of the Indian Contract Act, which reads as follows:

74. Compensation for breach of contract where penalty stipulated for:-

When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for. Explanation.-- A stipulation for increased interest from the date of default may be a stipulation by way of penalty.

Exception.-- When any person enters into any bail- bond, recognizance or other instrument of the same nature or, under the provisions of any law, or under the orders of the Central Government or of any State Government, gives any bond for the performance of any public duty or act in which the public are CC No. 1910/17 M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors. Page 15 of 20 interested, he shall be liable, upon breach of the condition of any such instrument, to pay the whole sum mentioned therein.

Explanation.-- A person who enters into a contract with Government does not necessarily thereby undertake any public duty, or promise to do an act in which the public are interested.

28. The principles pertaining to section 74 have been summarized by the Hon'ble Supreme Court of India in Kailash Nath Associates vs. DDA, (2015) 4 SCC 136, which states as follows:

"43. On a conspectus of the above authorities, the law on compensation for breach of contract under Section 74 can be stated to be as follows:

43.1. Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both parties and found to be such by the court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the court cannot grant reasonable compensation.

43.2. Reasonable compensation will be fixed on well-

known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act.

43.3. Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the section."

29. Thus, the law that emerges from this is that the complainant is entitled to only reasonable compensation and not anything beyond that. It is admitted between the parties that the accused has received the total sum of Rs.8,82,231/- i.e., 75% of the total consideration amount of Rs.11,76,307/- and the remaining amount was to be paid only on the completion of contract. It is admitted that the remaining 25% which is Rs. 2,94,077/- was never paid to the accused and the amount equivalent to 75% of the total consideration was paid to the accused only after certain work was completed and not before.

30. In the considered opinion of this court, no proof has been brought on record by the complainant that the complainant has actually suffered loss equivalent to the amount of cheque in question, particularly in the circumstance when an amount of Rs. 2,94,077/- has also not been paid to the accused in compliance of contract. It is further to be noted that Audi-1 and Audi-3 were operational on 29.03.2016 and it was only certain snags which were to be removed by the accused and even if the complainant has gotten the snags removed from some third party, then only such amount can be recovered by the complainant by the accused/ deducted from the balance payment. It is further to be observed that the terms of the contract which was Ex-CW1/3 were substantially changed by minutes of meeting which are Ex- DW1/X1 in terms of the contract value as also the schedule of making the remaining payment. It is further admitted fact that 50% of the initial contract value was not paid upon CC No. 1910/17 M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors. Page 17 of 20 delivery of material and there was much delay in the said payment which is also evident from the several e-mail conversations placed on record by the complainant.

31. Two contradictions in the case of the complainant come to hurt it the most. First being the discrepancy in the number and the date of the contract which is Ex-CW1/3 on the first page and the subsequent pages on the left side top corner, which creates a doubt on the genuineness of the document itself and the second being the fact that the AR of the complainant had first denied the fact of execution of minutes of meeting which are Ex-DW1/X1 during his cross- examination as CW1, however, the same was put to the accused as an admitted document by the counsel for the complainant which itself shows that the AR was less than truthful when he entered the witness box.

32. In my considered opinion, there are several contradictions in the case of the complainant which creates a doubt in the genuineness of the case of the complainant. Secondly, it is an established law that the party suffering the breach is not entitled to anything more than reasonable compensation and the courts cannot allow any stipulation by way of penalty. There is nothing on record to show that the complainant actually suffered loss or damages equivalent to the amount of cheque in question due to the snags left by the accused in the Auditoriums, more particularly when both the auditoriums nos. 1 & 3 were operational as admitted by the complainant itself. Furthermore, there is nothing on record to show that the cheque amount in question is the reasonable CC No. 1910/17 M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors. Page 18 of 20 compensation for the non-satisfactory work performed by the accused. As per the contract which is Ex-CW1/3, the accused was to perform the work in all the three auditoriums, and since the work has not been completed, hence, the complainant has already held back the third installment of Rs.2,94,077/- which is 25% of the contract value. Giving the complainant an additional 25% in the nature of refund of the advance amount would amount to unjust enrichment. At no stage of the proceedings has the complainant been able to show how Rs.2,94,077/-, which is the amount of cheque in question, is a reasonable compensation for the non-fulfillment of the conditions of the contract by the accused. The court cannot shut its eyes merely because a sum is mentioned as liquidated damages in the contract / indemnity bond and the complainant has already obtained a cheque as security from the accused. If this is allowed, it would lead to travesty of justice and the procedure established by law. In such circumstances, I am of the considered opinion that the amount of Rs.2,94,077/- is not legally enforceable or recoverable in consonance with the principles of breach of contract.

33. Thus, in my considered opinion, complainant has not been able to prove his case beyond reasonable doubt qua the accused as it has not been able to prove even the contents of the complaint and it cannot be said that there was legally enforceable debt or liability existing in favour of the complainant and against the accused as on the date of issuance or the presentation of the cheque in question CC No. 1910/17 M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors. Page 19 of 20 equivalent to the amount of cheque in question. The accused has thus been able to rebut the presumption u/s. 118 r/w. section 139 NI Act by raising a probable defence and proving his defence on the basis of preponderance of probabilities.

34. In view of the aforesaid, accused no.1 M/s Innovatives and accused no. 2 Mr. Ashish Sharma, s/o Sh. ML Sharma, are hereby acquitted of offence under section 138 Negotiable Instruments Act.

Note: This judgment contains 20 signed pages and each page has been signed by the undersigned.

Announced in Open Court         (Anshul Singhal)
on 20.08.2022           MM(N.I. Act)-03/NDD/RACC/ND




CC No. 1910/17
M2K Entertainment Pvt. Ltd. vs. Innovatives & Ors.    Page 20 of 20