Delhi District Court
Cc No. 42361/16 Pg Electroplast Ltd. vs . M/S. Samtel Glass Ltd. & Ors. Page 1 Of 24 on 23 September, 2021
IN THE COURT OF SH. ANSHUL SINGHAL, MM-03 (NI ACT),
NEW DELHI DISTRICT, PHC, NEW DELHI
In the matter of: - CC No.: 42361/16
CNR No. DLND020030002016
P.G. Electroplast Ltd.
A company Incorporated under
the provisions of Companies Act, 1956
Having is registered office at:
B-11, Mahendru Enclave,
Delhi-110033
Fomerly at:
14/39 Shakti Nagar
Delhi-110007
And having its Corporate office at
P-4/2, 4/3, 4/4, 4/5, 4/6, Site-B,
UPSIDC Industrial Area,
Surajpur, Greater Noida -201 306,
District Gautam Budh Nagar
Uttar Pradesh
......Complainant
versus
1. M/s Samtel Glass Ltd & Ors.
A company incorporated under the
Provisions of Companies Act, 1956
Having its Registered office at:
Village Naya Nohra
Kota Baran Road
Tehsil Ladpura
District Kota
Rajasthan
2. Ms. Swati Munjal
CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 1 of 24
Director of
M/s Samtel Glass Ltd
R/o K-5, Lane -W-12
Western Avenue
Sainik Farm
New Delhi-110062
Also at
Village Naya Nohra
Kota Baran Road
Tehsil Ladpura
District Kota
Rajasthan
3. Mr. Satish Kumar Kaura
Additional Director of
M/s Samtel Glass Limited
R/o B-407, New Friends Colony
New Delhi-110065
Also at
Village Naya Nohra
Kota Baran Road
Tehsil Ladpura
District Kota
Rajasthan
4. Mr. Pusshotam Dass
Additional Dirctor of
M/s Samtel Glass Ltd
R/O Flat No. 806, Sunbreeze, Tower-3
Sector-4, Vaishali
Ghaziabad -201010
Uttar Pradesh
Also at
Village Naya Nohra
Kota Baran Road
Tehsil Ladpura
District Kota
Rajasthan
CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 2 of 24
5. Mr. Amit Mahajan
Secretary of
M/s Samtel Glass Ltd
R/o 582, Sector-9
New Vijay Nagar
Ghaziabad -201009
Uttar Pradesh
Also at
Village Naya Nohra
Kota Baran Road
Tehsil Ladpura
District Kota
Rajasthan
........Accused persons
Date of Institution of Complaint : 03.08.2012
Offence Complained of : u/s 138 N.I.
Plea of Accused : Not Guilty
Date of Final Arguments Heard : 15.09.2021
Decision : Acquittal
Date of Decision : 23.09.2021
BRIEF FACTS AND REASONS FOR DECISION OF THE CASE
1. By this judgment, I will dispose of the present complaint U/s 138 of N.I.Act, 1881 filed by the complainant against accused on account of dishonour of two cheques one bearing No. 885080 dated 25.11.2011 for a sum of Rs. 20,84,166.98 and the other bearing cheque No. 885081 dated 25.11.2011 for a sum of Rs. 13,99,457.92 both drawn on ICICI Bank Ltd, New Friends Colony Branch, New Delhi-110065 issued by the accused in favour of the complainant (hereinafter referred to as the cheques in question).
CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 3 of 242. Brief facts of the case as per the complaint are that complainant is a company incorporated under the provisions of Companies Act, 1956. It is further submitted that on 14.09.2011, the accused no. 1 had entered into two agreements with the complainant company, one being "High Seas Sales Contract Agreement" for consignment of NECK TUBING (22.5+/-0.7MM) for a sum of Rs. 13,99,457.92/- and the other being "High Seas Sales Contract Agreement" for consignment of NECK TUBING 20"-21" for a sum of Rs.20,84,166.88. Complainant has further submitted that the said consignments were duly acknowledged by the accused persons and accordingly, on 14.09.2011, the complainant company had raised two invoices, one being for a sum of Rs. 13,99,457.92 and the other being for Rs. 20,84,166.98 respectively and in discharge of this liability, the accused persons had issued two cheques, one bearing No. 885080 dated 25.11.2011 for a sum of Rs. 20,84,166.98 and the other bearing cheque No. 885081 dated 25.11.2011 for a sum of Rs. 13,99,457.92 both drawn on ICICI Bank Ltd, New Friends Colony Branch, New Delhi-110065. It is further submitted that on 25.11.2011, when the said cheques were presented for payment with its bankers, the same were returned as dishonoured. It is further submitted that on 17.05.2012 as per the specific assurance of the accused persons, the aforesaid two cheques were again deposited by the complainant company with its bankers, but the same were again returned as dishonoured on 18.05.2012 as the accused persons had instructed its bankers for stopping the payment of the said two cheques. It is further contended that thereafter the complainant company had issued a legal demand notice dated 15.06.2012 to the accused persons calling upon to make the payment of the said CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 4 of 24 cheques, but all in vain. Hence, the complainant has been forced to be file the present complaint. Complainant has also stated that accused no. 2 to 4 are directors in the accused company and accused no. 5 is the secretary of the accused company and as such all are incharge of the day to day affairs of the accused no. 1 company.
3. A notice explaining the accusation to the accused persons U/s 138 of N.I. Act was served on 02.04.2014 and their plea was recorded. Accused persons did not plead guilty and they claimed trial. Accused no.1 to 3 had taken the defence that the total amount of dishonoured cheques was Rs. 34,83,624.90. On receipt of legal notice on or about 19.06.12, the accused no.1 tendered the payment of Rs. 34,83,624.90 vide cheque No. 001326 dated 02.07.12 drawn on Bank of India and notified the complainant as well as their counsel by letter dated 02.07.12 and e-mail dated 02.07.12. The cheque has been encashed by the complainant and has been debited to the account of accused no.1 on 05.07.12. Since the notice stands complied with within stipulated period, the complaint is not maintainable in law. Further a stance has been taken that no legal notice has been served upon accused no.3. Furthermore, it has been stated that accused no.2 is not incharge and responsible for the affairs of the company and is on board to complete the quorum. Accused no. 4 & 5 have while framing of notice taken a similar stand and have stated that they are not incharge and responsible for the affairs of the company.
CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 5 of 244. During CE, AR of the complainant adopted the affidavit which was submitted at the time of pre-summoning and relied upon the following documents:
(i) Resolution of board of directors is Ex-CW2/A1.
(ii) True copies of agreements one being "High Seas Sales Contract Agreement" for Rs. 13,99,457.92 and the other being "High Seas Sales Contract Agreement" for Rs.
20,84,166.98 are Ex-CW1/B-1 and Ex-CW1/B-2 respectively.
(iii) True copies of two invoices dated 14.09.2011 raised by complainant are Ex-CW1/C-1 and Ex-CW1/C-2.
(iv) Cheque bearing No. 885080 and cheque bearing no. 885081 are Ex-CW1/D-1 and Ex-CW1/D-2.
(v) Deposit slips dated 17.05.2012 in respect of cheque bearing No. 885080 and cheque bearing No. 885081 are Ex- CW1/ E-1 and Ex- CW1/E-2.
(vi) Cheque return memos dated 18.05.2012 in respect of cheque bearing No. 885080 and cheque bearing No. 885081 are Ex- CW1/F-1 and Ex-CW1/F-2.
(vii) True copy of legal demand notice dated 15.06.2012 is Ex-
CW1/G.
(viii) Postal receipts are Ex-CW1/H-1 to Ex-CW1/H-9.
(ix) Courier receipts are Ex-CW1/I-1 to Ex-CW1/I-9
(x) True copies of various tracking reports are Ex-CW1/J. CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 6 of 24
(xi) Copy of Cheque No. 001324 for Rs. 34,83,624/- issued in favour of PG Electroplast Limited dated 02.07.2012 is Mark A on behalf of the complainant.
Certain Documents were put to CW1 during cross-examination which are Mark D1 to D9 which are as follows.
(i) Copy of letter dated 02.07.2012 from accused company addressed to the complainant alongwith copy of couriers receipt and consignment tracking report as Mark D1(colly).
(ii) Copy of E-mail dated 02.07.2012 sent on behalf of Samtel Glass to D.K.Nassa and Advocate as Mark D2 and Mark D8 (also Mark B on 21.01.2019).
(iii) Copy of statement of account issued by Bank of India under the Bankers Books Evidence Act as Mark D-3 [also Ex- DW1/D2(OSR)].
(iv) Letter dated 05.07.2012 (original) alongwith original courier receipts as Mark D-4(colly) [also Ex-DW1/D3(colly)].
(v) Copy of E-mail dated 05.07.2012 sent on behalf of Samtel Glass to D.K.Nassa and Advocate as Mark D-5 and Mark D-9 (also Mark C on 21.01.2019).
(vi) Letter dated 23.07.2012 (original) alongwith original postal receipts and tracking reports as Mark D-6 (colly) [also Ex- DW1/D4(colly)].
(vii) Letter dated 02.07.2012(original) along with original courier receipts and tracking reports as Mark D-7 [also Ex-DW1/ D1(colly)].
CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 7 of 245. Application filed u/s. 145(2) on behalf of accused no. 4 and 5 was allowed vide order dated 31.07.2014 and on behalf of accused no. 1, 2 and 3 was allowed vide order dated 22.08.2014. CW1 was duly cross-examined by counsel for accused and vide separate statement of the AR of the complainant dated 22.01.2018 the CE was closed.
6. Accused persons were thereafter examined U/s 281 r/w Sec 313 Cr.P.C on 17.12.2018, putting entire incriminating evidence against them. All accused persons have taken a similar stand and have stated that the payment in question has already been made. Accused no. 1 to 3 did not wish to lead DE and accused no. 4 & 5 opted to lead DE. Since the accused no. 4 and 5 chose to lead evidence in their defence, matter was adjourned for DE.
7. Accused No. 5 has examined himself as DW1 after his application U/s 315 Cr.P.C was allowed by this court vide order dated 17.12.2018. The following documents were placed on record by DW1 in support of accused persons case:
(i) Reply of Legal Notice alongwith courier slips and delivery reports are Ex. DW1/D1 (Colly.). Same was objected to by the Ld. counsel for complainant as the delivery report are the computer inputs and are not supported by certificate under section 65B of the Indian Evidence Act.
(ii) Copy of bank Statement of accused is Ex. DW1/D2(OSR).
(iii) Letter dated 05.07.2012 along with courier slip is Ex. DW1/ D3 (colly) from the accused to the complainant.CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 8 of 24
(iv) Letter dated 23.07.2012 from the accused to the complainant along with postal receipts and tracking reports is Ex. DW1/ D4 (colly). Same was objected to by the Ld. counsel for complainant as the delivery report are the computer inputs and are not supported by certificate under section 65B of the Indian Evidence Act.
(v) Copy of certificate issued by the Chartered Accountant of group companies along with statement of accounts are Ex. DW1/D5 (OSR) and DW1/D6 (OSR).
(vi) Photocopy of cheque no. 001326 for Rs. 34,83,624.90/- is Mark A on behalf of the accused.
(vii) E-mail to the complainant by the accused dated 02.07.2012 is Mark B on behalf of the accused.
(viii) Copy of e-mail dated 05.07.2012 is Mark C on behalf of the accused.
Certain documents filed by DW1 during cross-examination which are as follows:
(i) Certificate of CA as Ex-DW1/X1.
(ii) Independent Auditor's report of Samtel Color Ltd as Ex-
DW1/X2 later Mark B in cross dated 13.01.2020.
(iii) Independent Auditor's report of Samtel Glass Ltd as Ex-
DW1/X3.
(iv) Financial statement of the Samtel Color Ltd for the financial
year 2013-14 and assessment year 2014-15 as Ex-DW1/X4 later Mark C in cross dated 13.01.2020.
CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 9 of 245. DE was closed on 13.01.2020 and the matter was adjourned for final arguments. Final arguments were heard by this court on 26.03.21 and 15.09.21.
6. I have heard counsel for the parties, perused the record and have gone through the relevant provisions of the law.
7. At the very outset, it is pertinent to lay down the ingredients of the offence under section 138 of NI Act. The following are the components of the offence punishable under Section 138 of Negotiable Instrument Act:-
(i) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/part any debt or liability,
(ii) presentation of the cheque by the payee or the holder in due course to the bank,
(iii) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque,
(iv) giving notice in writing to the drawer of the cheque within 30 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount, CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 10 of 24
(v) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice.
6. The complainant has submitted that there exists legally enforceable liability in favour of the complainant on behalf of the accused on the basis of Ex. CW1/B-1, Ex. CW1/B-2, Ex. CW1/C-1 and Ex. CW1/ C-2 which are the High Seas Sales Contract Agreements and the invoices respectively. He has further submitted that the cheques issued by the accused in favour of the complainant are Ex. CW1/D-1 and Ex. CW1/D-2 and their deposit slips are Ex. CW1/E-1 and Ex. CW1/E-2 respectively. He has further submitted that the dishonour of the cheques is proved by the cheque return memos which are Ex. CW1/F-1 and Ex. CW1/F-2. Further, copy of the legal notice is Ex. CW1/G and the postal receipts & courier receipts are Ex. CW1/H-1 to Ex. CW1/H-9 and Ex. CW1/I-1 to Ex. CW1/I-9 respectively. The various tracking reports are Ex. CW1/J. 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 persons should be convicted.
Defence of the accused
7. The first defence taken by the accused persons is that the entire payment was made within 15 days of receiving the legal notice by the accused persons and hence, the ingredients of an office U/s 138 CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 11 of 24 N.I.Act are not make out. The second defence taken by the accused persons is that accused no. 2, 3, 4 and 5 are not incharge of the day to day affairs of the accused no. 1 company.
Defence of Payment of amount of cheques in question within 15 days of receiving the legal notice.
8. Ld. Counsel for the accused has admitted that there exists a legally enforceable liability in favour of the complainant on behalf of the accused as on the date of sending the legal notice. His only case is that the same has been paid by the accused vide cheque no. 001326 dated 02.07.2012 drawn on Bank of India, Bulandshahar Road Industrial Area Branch, City Post Office, Bulandshahar Road, UP-201009 amounting to Rs. 34,83,624.90/- by Samtel Color Ltd. In favour of the complainant company, i.e., PG Electroplast Ltd on behalf of the accused company. Copy of the cheque is Mark A on behalf of the accused.
9. Ld. Counsel for accused has brought the attention of this court to the cross-examination of CW1 dated 17 December 2014 on behalf of accused number 1, 2 and 3. CW1 has stated as follows:
"At this stage, witness is shown photo copy of statement of bank account Mark D3 and was asked that complainant encashed cheque of Rs. 34,83,624.90 Paise on 05.07.12 as issued by Samtel Colour Ltd. to discharge the liability of Samptel Glass Ltd. Pertaining to the cheque in question. After seeing the same, witness stated that the above CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 12 of 24 mentioned amount was paid my Samtel Colour Ltd. Pertaining to the dues against Samtel Colour Ltd. and not against dues of Samtel Glass Ltd."
10. Perusal of the above statement shows that it has been admitted that the above said amount was in fact received by the complainant company. During cross-examination it has been repeatedly denied by CW1 that the said amount was received on behalf of Samtel Glass Ltd. On questions as to whether the complainant company has received letters and e-mails dated 02.07.2012 and 05.07.2012 and/or any other correspondence from the accused, the witness has said that he is not aware of the same. During evidence of DW1, Ld. Counsel for accused has produced all the letters and e-mail correspondences along with courier/ postal receipts and tracking reports.
11. It has already been stated that the receipt of the amount has not been denied by the complainant, however, complainant has denied that the amount was on behalf of the accused company, rather they have maintained their stance throughout the proceedings that the same was received against outstanding amount on behalf of sister concern of accused company, namely, Samtel Colour Ltd.
12. Ld. Counsel for the complainant has relied on two Supreme Court Judgments in Hiten P. Dalal vs. Bratindranath Banerjee, (2001) 6 SCC 16 and Rangappa vs. Sri Mohan, (2010) 11 SCC 441 for the purposes of showing that there is a presumption in favour of the complainant and against the accused of existence of legally enforceable liability.
CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 13 of 2413. Section 139 NI Act read with Section 118, NI Act creates a rebuttable presumption in favour of the complainant. According to Section 118 NI Act, until the contrary is proved, it shall be presumed inter alia that every negotiable instrument was made, drawn, accepted or endorsed for consideration. It is also presumed that, consideration is present in every negotiable instrument until the contrary is proved.
14. Furthermore, once the issuance of cheque is admitted by the accused/drawer, the presumption under Section 139 of the NI Act comes into play. As per the said Section 139 NI Act, 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.
15. At the very outset, it is pertinent to discuss the law laid down in Rangappa vs. Sri Mohan, (2010) 11 SCC 411, by the Hon'ble Supreme Court of India. It held that the presumption mandated by section 139 of NI Act does indeed include the existence of a legally enforceable debt or liability. It was further held that this is a rebuttable presumption. It was further held that the standard of proof required for rebutting this presumption is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. The accused can rely on the materials submitted by the complainant in order to CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 14 of 24 raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.
16. For rebutting the presumption of section 139 NI Act, and for proving the fact that accused no. 1 company had paid the entire cheque amount in question within 15 days of receiving the legal notice, the accused persons have placed several documents on record. During examination-in-chief of DW1, the witness has stated that the entire payment has been made vide cheque bearing no. 001326 dated 02.07.2012 drawn on Bank of India amounting to Rs. 34,83,624.90 Paise along with reply to legal notice. Copy of reply and the cheque has been placed on file. Copy of bank statement of accused no. 1 which is Ex. DW1/D2(OSR) has also been placed on file. Ex. DW1/ D1 (Colly.) and Ex. DW1/D3 are letters written on behalf of the accused persons addressed to the complainant society dated 02.07.12 and 05.07.12 respectively. Letter dated 02.07.12 states that cheque no. 001326 is being sent alongwith towards full and final payment of the outstanding amount and pursuant to that courier receipts along with tracking reports have been annexed. Letter dated 05.07.12 states that the said cheque no. 001326 has been banked by the complainant and requesting that a no dues certificate be issued by the complainant addressed to the accused. This letter is also annexed with courier receipts, postal receipts and tracking reports.
17. The tracking reports have been objected to by the Ld. Counsel for Complainant as not being accompanied with certificate u/s. 65B of CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 15 of 24 Indian Evidence Act. Arguments have been heard on this point as well.
18. Ld. Counsel for the complainant has relied on the judgment of the Hon'ble Supreme Court in Anvar PV vs. PK Basheer and Ors., (2014) 10 SCC 473, wherein it was held that when secondary evidence of electronic record is not admissible unless it is accompanied with requisite certificate in terms of section 65B of the Indian Evidence Act, 1872. Per Contra, Ld. Counsels for the Accused have argued that the tracking reports of the courier / postal receipts are part of record of government/ other agencies and have been downloaded directly from their websites and as such does not warrant certificate u/s. 65B of the Indian Evidence Act. Ld. Counsels have further submitted that even otherwise certificate u/s. 65B in respect of the e-mails dated 02.07.2012 and 05.07.2012 & in respect of tracking reports of courier/ postal receipts was filed on 30.01.2020. However, perusal of the record shows that neither any permission has been granted to the accused to file the certificate, nor has the same been taken on record by the court on any day after filing of the same. There is only an endorsement on the certificate to be put up with file on date fixed, i.e., 04.02.2020, however, in the order sheet dated 04.02.2020 also, there is no mention of the certificate. Accordingly, the certificate cannot be deemed to be taken on record in the present case.
19. In absence of the certificate and in view of the law laid down by Hon'ble Supreme Court of India, this court finds merit in the CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 16 of 24 submissions of the Ld. Counsel for the complainant that the delivery reports and the e-mails should not be read as a part of evidence.
20. Be that as it may, it has nowhere been denied by the complainant that the complainant has not received the reply to the legal notice and the follow-up letters from the accused company addressed to the complainant. Some evasive answers have been given by the witness in the form of, "I do not remember", "I am not aware" and "I do not know" when these documents were put to the witness during cross- examination. Evasive reply cannot be deemed to be a denial. DW1 has deposed that the cheque no. 001326 was sent in discharge of the two cheques in question and in support of his statement he has relied upon three documents which are Ex. DW1/D1, DW1/D3 & Ex. DW1/D4. Only the mode of proof of delivery reports has been objected to by Ld. Counsel for the complainant on which I have already given my finding. Co-joint reading of section 27 of the General Clauses Act and section 114(f) of the Indian Evidence Act shows that once a letter has been posted, it is deemed to have been served during ordinary course of business unless contrary is proved. Moreover, no cross-examination has been done by Ld. Counsel for the complainant on these documents. Accordingly, the factum of delivery of the reply to legal notice and other follow-up/ reminder letters stands proved and this evidence remains uncontroverted.
21. In reply to the legal notice dated 02.07.2012, it has been categorically stated that cheque No. 001326 dated 02.07.12 drawn on Bank of India amounting to Rs. 34,83,624.90 paise issued by CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 17 of 24 M/s. Samtel Colour Ltd. in favour of the complainant is being given against the impugned two cheques in question.
22. It is the case of the complainant that cheque no. 001326 was received against outstanding amount of approximately Rs. 41 Lakhs on behalf of sister concern of accused company, namely, Samtel Colour Ltd. itself and not towards the liability of the accused no. 1 company arising out of the impugned two cheques.
23. Ld. Counsels for the accused have submitted that a specific question was asked to CW1 during cross-examination on 17.10.2016 as to whether he can produce the relevant statement of account pertaining to M/s. Samtel Colours Company to the complainant company during the relevant period for the assessment year 2010-11 and 2011-12. The witness replied that he can bring the same if the same is traceable. However, when the witness was recalled for further cross-examination on 22.01.2018, he has not placed on record any such document. It is the stand of the complainant that Rs. 41 Lakhs was due on behalf of Samtel Colours Ltd. to the complainant company and this fact being in the special knowledge of the complainant, the burden to prove such a fact was on the complainant as per the provisions of section 106 Indian Evidence Act. Furthermore, during examination in Chief of DW1, the witness has exhibited certificate of CA of M/s. Samtel Colours Ltd. which is Ex.DW1/D6(OSR) wherein the CA has submitted that as on 31.03.2016 the total due on behalf of M/s. Samtel Colours Ltd. in favour of the complainant company is Rs. 2,41,326.44, the last CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 18 of 24 transaction being on 31.03.2012. Extensive cross-examination has been done by Ld. Counsel for the complainant on this point.
24. It is a settled law that the payee cannot choose how to appropriate the said amount that he is receiving when there is a specific direction in regard to the same as to how it has to be appropriated. In the present case, there were specific directions in the reply to legal notice as to how the proceeds from cheque no. 001326 are to be applied, however, the complainant while disregarding the said directions, proceeded to encash the cheque and appropriate the said amount towards the amount due from M/s. Samtel Colour Ltd. It is further noted that the complainant being in special knowledge of the fact as to what is the amount due from M/s. Samtel Colour Ltd. towards the complainant has failed to bring into evidence any ledger/ statement of account/ any other evidence showing that the liability of M/s. Samtel Colour Ltd. is more than or equal to the amount of cheque no. 001326. In the considered opinion of this court, the complainant should either have appropriated the amount of cheque in accordance with the directions contained in the accompanying letter or should have refused the receipt of the amount as well as the letter. The complainant cannot pick and choose from the amount and the letter.
25. Ld. Counsel for the complainant has argued that the defence taken by the accused is not tenable in the eyes of the law. He has submitted this on the basis of the ground that as per Accounting Standard 18 [AS-18] as provided under the Companies Act, 2013, CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 19 of 24 companies are required to make a related party disclosure. He has stated that Samtel Colour Ltd. has not disclosed the accused no. 1 company to be related concern and Ld. Counsel for accused has time and again stated that Samtel Colour Ltd. is a sister concern of the accused no. 1 company. Ld. Counsels for accused has stated that any such objection should be taken before appropriate forum and not before this Hon'ble Court in proceedings under section 138 NI Act. I find merit in the submissions of Ld. Counsels for accused and hold that such objections need to be taken before appropriate forum and not in a case of dishonour of a cheque u/s. 138 NI Act.
26. In view of the aforesaid discussion, I hold that the accused has been able to prove on the basis of preponderance of probabilities that the accused no. 1 company had made the entire payment of the cheques in question within 15 days of the receipt of legal notice and hence, the ingredients of the offence u/s. 138 NI Act are not made out.
Defence that the accused no. 2 to 5 are not incharge of the day to day affairs of the accused no. 1 company.
27. Ld. Counsel for complainant has stated that there is a specific averment in the evidence affidavit as well as the complaint and that the same has also been stated during cross-examination of CW1.
28. Per Contra, Ld. Counsels for accused has submitted that mere bald allegations as to the fact that a particular person is the director/ in management of the day to day affairs of the accused company in CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 20 of 24 view to be liable under section 141 of the NI Act are not tenable. They have further argued that the specific role of the accused person has to be stated and it has to be stated as to how the accused person was responsible for the day to day affairs of the entire company. They have further relied on several judgments of superior courts including that of the Hon'ble Supreme Court of India in National Small Industries Corporation Limited vs. Harmeet Singh Paintal, (2010) 3 SCC 330, wherein it was held as follows:
"38. But if the accused is not one of the persons who falls under the category of "persons who are responsible to the company for the conduct of the business of the company" then merely by stating that "he was in charge of the business of the company"
or by stating that "he was in charge of the day-to-day management of the company" or by stating that "he was in charge of, and was responsible to the company for the conduct of the business of the company", he cannot be made vicariously liable under Section 141(1) of the Act. To put it clear that for making a person liable under Section 141(2), the mechanical repetition of the requirements under Section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence and therefore, responsible under sub-section (2) of Section 141 of the Act."
29. In National Small Industries Corporation Ltd. (supra), the following principles were laid down by the Hon'ble Court:
"39. From the above discussion, the following principles emerge:
(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 21 of 24 fastening the criminal liability, there is no presumption that every Director knows about the transaction.
(ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company
(iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by the company along with averments in the petition containing that the accused were in charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with.
(iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred.
(v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with.
(vi) If the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint.
(vii) The person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases."
30. The above judgment of the Hon'ble Supreme Court was followed by the Hon'ble High Court Delhi in Har Sarup Bhasin vs. Origo Commodities India Pvt. Ltd., (2020) 266 DLT 578.
31. Ld. Counsel for complainant has submitted that accused no. 2 is the director of the accused no. 1 company and accused no. 3 & 4 are CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 22 of 24 additional directors and accused no. 5 is the Secretary at the time when the offence has been committed.
32. Accused no. 3 has signed the impugned agreements which are Ex.CW1/B1 & Ex.CW1/B2 being the authorised signatory of the accused no. 1 company. Accused no. 5 has sent various correspondences to the complainant in respect of the impugned transactions and as such it cannot be said that accused no. 5 did not have any knowledge of the transaction or was not otherwise involved in the day-to-day affairs of the complainant company. Accordingly, in the considered opinion of this court, at the time the offence was committed, Accused no. 3 and 5 were in charge of, and were responsible to the accused no. 1 company for the conduct of the business of the company.
33. In view the fact that no evidence has been brought forth by the complainant in support of its allegations that accused no. 2 & 4 were in charge of, and were responsible to the accused no. 1 company for the conduct of the business of the company, accused no. 2 & 4 cannot be held liable to be incharge of the day-to-day affairs of the accused no. 1 company.
Findings of the Court
34. Thus, in my considered opinion, the accused persons have been able to raise a probable defence and have been able to prove on the basis of 'preponderance of probabilities' that the ingredients u/s. 138 NI CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 23 of 24 Act are not made out as the payment for the dishonoured cheques in question had been made within 15 days of the receipt of legal notice. The complainant has not been able to prove beyond reasonable doubt that the accused has committed an offence punishable under section 138 of NI Act.
35. In view of the aforesaid, accused no. 1, i.e. M/s. Samtel Glass Ltd. is hereby acquitted of the offence under section 138 NI Act. The directors and other persons incharge of the affairs of the company at the time the offence is committed only have vicarious liability. Since, the company has been acquitted, other accused persons cannot also be convicted. Hence, accused no. 2 i.e. Ms. Swati Munjal being the director of accused no. 1 company, accused no. 3, i.e., Mr. Satish Kumar Kaura being the additional director of accused no. 1 company, accused no. 4, i.e., Mr. Pusshotam Dass being the additional director of accused no. 1 company and accsued no. 5, i.e., Mr. Amit Mahajan being the company secretary of accused no. 1 company are also hereby acquitted of offence under section 138 NI Act.
Digitally signed ANSHUL by ANSHUL SINGHAL SINGHAL Date: 2021.09.23 15:09:19 +05'30' Announced in Open Court (Anshul Singhal) on 23.09.21 MM(N.I. Act)-03/NDD/PHC/ND CC No. 42361/16 PG Electroplast Ltd. vs. M/s. Samtel Glass Ltd. & Ors. Page 24 of 24