Delhi District Court
Anil Khosla vs M/S Texcel Infotech Pvt. Ltd on 18 April, 2024
IN THE COURT OF SH. LOVLEEN, ADDITIONAL SESSIONS
JUDGE-03, SAKET COURTS, NEW DELHI
DLSE010036932023
CRL. APPEAL No. 107/2023
1. Ravinder Burju,
Managing Director,
Texcel Infotech Pvt Ltd.,
Plot No. 59, Sanjeev Housing Society,
East Marredpally,
Secunderabad- 500026.
2. Texcel Infotech Pvt Ltd.,
Plot No. 59, Sanjeev Housing Society,
East Marredpally,
Secunderabad- 500026.
....Appellants
VERSUS
Anil Khosla
S- 479, Greater Kailash-I,
New Delhi- 110048.
...Respondent
Date of institution : 01.04.2023
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DLSE010035862023
Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla
Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 1/52
CRL. REVISION No. 189/2023
ANIL KHOSLA
R/o S-479, Greater Kailash-1,
New Delhi-110048.
....Revisionist
VERSUS
1. Texcel Infotech Pvt Ltd.,
Through its Managing Director
Plot No. 59, Sanjeev Housing Society,
East Marredpally,
Secunderabad- 500026.
2. Ravinder Burju,
Managing Director,
Texcel Infotech Pvt Ltd.,
Plot No. 59, Sanjeev Housing Society,
East Marredpally,
Secunderabad- 500026.
......Respondents
Date of institution : 27.03.2023
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Date of Reserving judgment : 20.02.2024
Date of Pronouncement : 18.04.2024
Decision : Disposed of
JUDGMENT
1. Vide this common judgment, this court shall dispose of 02 connected matters filed by both the parties to CC No. 630270/2016 titled as Anil Khosla vs Texcel Infotech Pvt. Ltd. and Anr. which came to be disposed of Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 2/52 by the Ld. Metropolitan Magistrate (NI Act-01), South East District vide judgment dated 01.12.2022 and Order on Sentence dated 22.02.2023. Vide the said judgment, the Ld. Metropolitan Magistrate was pleased to convict the appellants Texcel Infotech Pvt. Ltd. and Ravinder Burju u/s 138 of NI Act. The Ld. Metropolitan Magistrate was then pleased to impose a fine of Rs.28,00,000/-upon the appellants Texcel Infotech Pvt. Ltd. and Ravinder Burju, which is payable to respondent Anil Khosla within one month, failing which appellant Ravinder Burju is to undergo simple imprisonment for 3 months. Appellants Texcel Infotech Pvt. Ltd. and Ravinder Burju have filed appeal u/s 374 Cr.P.C. being aggrieved by the judgment dated 01.12.2022. Revisionist Anil Khosla has preferred his revision petition as he is aggrieved due to inadequate sentence and compensation provided by the Ld. Metropolitan Magistrate at the time of disposal of his complaint. For the sake of convenience, the appellants Texcel Infotech Pvt. Ltd. And Ravinder Burju shall be referred to as 'accused No. 1' and 'accused No. 2' and the Revisionist Anil Khosla herein shall be referred to as 'complainant'.
BRIEF FACTS
2. The facts of the case have been correctly noted by the Ld. Trial Court in its impugned judgment. The relevant paragraphs are reproduced hereinafter for ready reference:-
" 2. The case of the complainant is that the complainant is one of the directors of the accused no.1. The accused no. 2, who is the Managing Director of the accused no. 1 had taken a short term loan of Rs.15,00,000/- (Rupees Fifteen lacs Only) from the complainant for a period of 90 days for the purchase of software license for LPR system from M/s Syac in order to fulfill the Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 3/52 commitments of accused no. 1 towards ECIL & M/s Syac with the total absolute interest of Rs.50,000/- (Rupees Fifty Thousand only) thereon for the said period. That the accused no. 2 had agreed that if he was unable to pay the loan amount within the aforesaid period of 90 days he would pay an interest @ 15% per annum for the extended period. That Accused no. 2 issued cheque bearing no. 626972 dated 01.11.2021 for an amount of Rs.
5,00,000, cheque bearing no. 626973 dated 01.11.2011 for an amount of Rs.5,00,000, cheque bearing no. 626974 dated 01.11.2011 for an amount of 5,00,000, cheque bearing no 626975 dated 01.11.2011 for an amount of Rs.50,000, all drawn on Corporation Bank Secunderabad Branch in order to repay the aforesaid loan with the agreed rate of interest for the period of 90 days. But when the complainant presented the above mentioned cheques for encashment with his bank at HSBC Bank, Greater Kailash-I, New Delhi, the same were dishonoured vide return memos dated 24.03.2012 with remarks "payment stopped by drawer'. Thereafter, complainant sent a legal demand notice dated 25.04.2012 which was served upon the accused on 27.04.2012 calling upon the accused to make the payment of the cheque amount within 15 days of the receipt of the legal notice as prescribed u/s 138 of the Negotiable Instruments Act. Even after the expiry of 15 days stipulated period, the accused did not make the payment, therefore, the accused committed the offence u/s 138 of the Negotiable Instruments Act and the present case was filed by the complainant."
Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 4/52 TRIAL
3. Vide order dated 30.07.2012, the Ld. Metropolitan Magistrate summoned the accused no. 1 and accused no. 2 to face trial u/s 138 NI Act in the relevant complaint case. On 02.02.2013, a notice u/s 251 Cr.P.C. was framed upon the accused no.1 and accused no. 2 in the complaint case wherein they pleaded not guilty and claimed trial. At that time, accused persons claimed that the cheques in question were given as 'Security' in lieu of loan agreement executed between the complainant and the accused persons.
4. The complainant examined himself as CW-1 in support of its allegations against the accused persons. Complainant also examined CW-2 Sh. Prabhash Kumar, Sr. Operation Officer, Standard Chartered Bank and CW-3 Smt. Shashi Bala, Asst. Manager, Corporation Bank as witnesses. Statement of accused persons was recorded u/s 313 Cr.P.C. In defence, the accused persons examined accused No.2 as DW2, Sh. Panna Lal, Assistant Manager, Corporation Bank, GK-II as DW-1 and Sh. S. Balaji Singh, Director of accused company as DW-3. Upon conclusion of trial, accused persons were convicted for the commission of offence punishable u/s 138 NI Act vide impugned judgment dated 01.12.2022.
GROUNDS OF APPEAL CITED BY ACCUSED PERSONS
5. The grounds cited by the accused against the impugned judgement are as under :
A. BARRED BY LIMITATION:-
a. That the impugned judgment on the point of conviction
and the order on the point of sentence are absolutely Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 5/52 erroneous, illegal and arbitrary. The Ld. Trial Court has committed factual errors which are apparent on the face of the record beside ill-appreciation of evidence which categorically prove the innocence of the accused persons/appellants. It is most respectfully submitted that the Ld. Trial Court has not considered the settled principles of law governing the field of Section 138 of N.I. Act and has passed a perverse judgment, which, in the respectful submission of the Appellants, it liable to be quashed and set aside.
b. That the Ld. Trial Court while holding that once cognizance is taken, limitation issue is no longer available with the Petitioner, failed to appreciate that same was kept open by the Hon'ble High Court while deciding the quashing petition filed by the petitioner with a direction that same will be considered at the stage of Trial.
c. That the Ld. Trial Court failed to appreciate that the complainant had filed the complaint after the expiry of time which has been given under the statute. That when the case was remanded back to the Ld. Trial Court by the Ld. Additional Session Judge, the Ld. Trial Court had addressed the issue of limitation but failed to appreciate the fact that filing was not closed. That the contentions raised before the Ld. Trial Court by the complainant are misconceived and cannot be a reasonable ground to condone delay of days. d. In Orchid Overseas Pvt. Ltd. V. Jaideep Singh Bhatia, the Ld. Trial Court was dealing with a similar issue Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 6/52 of limitation under Negotiable Instruments Act, 1881 (section
38) and the complainant in that case had taken the same ground as taken by the present complainant. It was observed that although the court was closed for summer vacations, but the filing was not closed. In this case, the Ld. Trial Court also summoned the concerned official of the Patiala House Court.
"(i) Closure of courts due to vacations.
(ii) Leave of Authorized Representative. Ld. Counsel for the complainant had contended that the complainant nurtured a bonafide belief that a complaint cannot be filed during vacations. However, it is well known that filing is done by engaging the services of an advocate and the counsel for the complainant would be aware of the fact that the filing counter is open during vacations. Concerned official, ACMM Officecum Filing Counter, Filing Section, Patiala House Courts was summoned on 6.10.2012 and a perusal of his statement makes it explicit that a complaint u/s 138 N.I.Act can be filed during vacations. In fact, it would be pertinent to peruse the following line from his statement 'even during vacations, filing takes place as the complainant does not want the limitation to expire', which goes on to show that it is a normal practice to file during vacations. Further, the leave of the AR has been explained in a vague manner, as 'some religious place' and 'some family sacraments' have not been clarified. The place has not been mentioned nor have the tickets been produced.
4. It is trite that even one day delay has to be sufficiently Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 7/52 explained. Mere recital by the complainant that 'However, 08.06.2012 was the last working day before summer vacations and therefore, the complainant could not file the complaint within the statutory period of one month' is nowhere indicative of the reason for delay in filing the aforesaid complaint. The judgment 'Aditya Goel Vs. State (NCT) of Delhi and anr 2009 (2) JCC(NI) 117' filed by Ld. Counsel for the complainant is of no help to the complainant."
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12. In view of the foregoing deliberations, this court holds that the complaint has been filed beyond the period of limitation prescribed, and therefore, it is hereby dismissed." e. That the Ld. Trial Court further negated the issue of limitation raised by the Petitioner on the ground that no evidence was produced by the Petitioner to prove that complaint is barred by limitation without appreciating that Calendar of the particular year which is primary evidence to prove limitation was already on record. That even the perusal of the Calendar of the Hon'ble High Court of Delhi (2012) reflects that although the courts were closed for summer vacations but the court of Metropolitan Magistrates were not closed and no indication were given related the filing centers Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 8/52 of the concerned courts which were open.
"The subordinate courts (except the court of Metropolitan Magistrates) in Delhi will remain closed for summer vacations from Monday, 11th June to Saturday, 30th June 2012. (Both the days inclusive) and for the winter vacation, from Monday, 24th December to Monday, 31st December 2012 (Both the days inclusive)."
f. That the Ld. Trial Court further failed to appreciate that in the instant case the cheque returned memo and the legal notice are within the statutory time limit prescribed by the Act. However, the Complaint was filed on 23.06.2012 i.e., after 57 days from the receipt of the legal notice, received by the accused on 27.04.2012. That 15 days from the date of receipt of the legal notice expired on 11.05.2012 and 30 days time for filing the complaint was over on 11.06.2012. That there is no explanation provided in the complaint regarding delay of 12 days in filing the complaint and it is stated that Complaint is filed within time. That further even if the Complainant states that because of vacation he was not able to file the case, the same is also not acceptable as Complainant has filed the case during the vacations only as per the calendar of the year 2012. The table below illustrates the list of events:
Date Particulars Remarks
27.04.2012 Legal Notice Legal Notice was received by
the appellant.
Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla
Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 9/52
11.05.2012 Legal notice period The period of 15 days after of 15 days serving and receiving the legal notice was completed.
11.06.2012 Limitation of filing The time of filing a complaint complaint after 15 days of legal of legal notice is 30 days, which expired on 11.06.2012 23.06.2012 The complaint was The complaint was filed after filed by the the expiry of the said period.
complainant There was an unreasonable
and unjustified delay of 11
days.
g. That the Ld. Trial Court failed to address the issue of limitation and no satisfaction was recorded by the Ld. Trial in its order as to why the said delay should be condoned. The Hon'ble Supreme Court in State of Maharashtra v. Sharad Chandra Vinayak Dongre & Ors, AIR 1995 SC 231, has held that the Court, while condoning delay has to record the reasons for its satisfaction, and the same must be manifest in the order of the Court itself. The Court is further required to state in its conclusion, while condoning such delay, that such condonation is required in the interest of justice. h. That the Hon'ble Supreme Court in Dashrathbhai Trikambhai Patel vs. Hitesh Mahendrabhai Patel & Anr, Criminal Appeal No. 1497 of 2022, had held that "when a part- payment of the debt is made after the cheque was drawn but before the cheque is encashed, such payment must be endorsed on the cheque under Section 56 of the Act. The cheque cannot be presented for encashment without Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 10/52 recording the part payment. If the unendorsed cheque is dishonoured on presentation, the offence under Section 138 would not be attracted since the cheque does not represent a legally enforceable debt at the time of encashment." i. That while dealing with a similar issue Hon'ble High Court of Delhi in the matter of Kailash Engineers vs. AutoPines (I) Ltd reported in 2003 (67) DRJ 782 has held that the Act creates mutual right and obligation between the drawer and drawee. And if parties fail to carry out their operations under the Act in this regard they have to suffer consequences thereof as limitation act does not apply in cheque bouncing cases because of non-obstante clause in Section 142 of the Act. It was further held that when any act or enactment prescribed a particular period for doing any act, the said period cannot be extended by the Court unless the said Act or enactment contains a provision empowering the Court to extend such period in appropriate case. j. That the Ld. Trial Court failed to appreciate and give any finding on the fact that the complainant/respondent himself is one of the directors in the accused company and being a director, he gave loan to the company and not to the Appellant in his personal capacity. Further, Ld. Trial Court failed to appreciate that the Complainant/Respondent is still one of the Directors in Accused no. 2 company and thus filing a case against the company in which complainant/respondent himself is the director cannot be allowed under the Act.
Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 11/52 k. That the Ld. Trial Court failed to appreciate that complainant was part of the board meeting when the alleged cheques were issued and complainant/respondent himself authorizes the accused number 1 to sign the alleged cheques. l. That the Ld. Trial Court while relying upon the testimony of CW-2 and CW-3 (Bank official) and holding that complete amount was transferred to the Petitioner Company, failed to appreciate that the legal notice and complaint is defective in nature. That the complainant alleged to have deposited an amount of Rs. 15,00,000/- in the accused Company's Account. However, the amount received from the complainant was only Rs. 13.50 Lacs. That the complainant never deposited full loan amount into the company's account and later on at the stage of defence evidence, for the very first time tried to clarify that the remaining amount was deposited in Delhi's imprest account which was managed and under full control and authority of the complainant only and the same fact has not been considered by the Trial Court while passing the impugned Order.
m. That the Ld. Trial Court relied upon a payment of 1.5 lakhs that was paid on 25.06.2011. However, the said payment was not the part of loan which complainant agreed to paid through board note dated 30.06.2011. It is pertinent to mention that the said money of 1.5 lakhs was never deposited at Hyderabad account and also was not a part of the board note. It is further submitted that the ld Trial Court failed to Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 12/52 appreciate that the board note is of 30.06.2011 and payment of 1.5 lakhs were made prior to the board note and thus can't be presumed as part of the loan paid to company as alleged. Therefore, the impugned judgment is perverse and is liable to be set aside.
n. That the Ld. Trial Court even failed to appreciate that the account of Delhi in which complainant/respondent has deposited 1.5 lakhs is being maintained by complainant himself and complainant himself withdrew the said money and misappropriated for his own use therefore, imposing any liability for the said amount upon the appellant herein will be perverse and erroneous.
o. That while dealing with the similar issue Hon'ble High Court of Delhi in the matter of Alliance Infrastructure Project Pvt. Ltd. & ors. vs. Vinay Mittal & Anr. in Crl.M.C. Nos. 2224 & 2225 of 2009 has held that "***...........
12. In respect of the cheque, subject matter of Crl. M.C. 2225/2009, the amount of the cheque was Rs. 31,91,650/- and the respondent, after giving credit for the amount of Rs. 10,50,000/- paid to him on 20.10.2008 demanded only a sum of Rs. 21.41,650/- vide notice dated 23.1.2009. Therefore, as far as the notice of demand issued in this case is concerned, it was legal and valid as the amount demanded was the actual amount payable by the petitioner to the respondent. But, in respect of the cheque, subject matter of Crl. M.C. 2224/2009, the amount demanded in the notice of demand dated 19.12.2008 was Rs. 49,47,600/-, though admittedly the amount due to the respondent at that time was only Rs. 32,97,600/-, after Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 13/52 giving credit of Rs. 10,50,000/- received by him by RTGS on 7.10.2008. Thus, the respondent called upon the petitioner to pay much more than the amount actually due and payable by it. In order to comply with the demand made in the notice, the petitioner would have been required to pay the whole of the amount of Rs. 49,47,600/- to the complainant/ respondent. A perusal of the notice would show that the complainant did not at all refer to the payment of Rs. 16,50,000/- received through RTGS, while issuing the notice of demand dated 19.12.2008. This is not as if the complainant/respondent acknowledged the payment of Rs. 16,50,000/- and despite that asked the petitioner to make payment of the whole of the amount of the cheque. The complainant/respondent did not even refer to the substantial payment which he had received by way of RTGS. To ask the drawer of the cheque to make payment of Rs. 49,47,600/-
despite having earlier received a sum of Rs.
16,50,000/- against that very cheque is nothing but a dishonest conduct. Had the petitioner complied with the demands made in this notice, it would have been compelled to later on chase the complainant for recovery of the excess amount paid by it and had the complainant not paid the excess amount received by him, the petitioner would also have been compelled to initiate legal proceedings against him. Therefore, a notice of demand which requires the drawer of the cheque to make payment of the whole of the cheque amount, despite receiving a substantial amount against that very cheque, much before issue of notice, cannot be said to be a legal and valid notice envisaged in Section 138(b) of Negotiable Instrument Act. The expression "amount of money" used in Section 138(b) of Negotiable Instrument Act, to my mind, in a case of this nature would mean the amount actually payable by the drawer of the cheque to the payee of the cheque. Of course, if the payee of the cheque makes some demands on account of interest, compensation, incidental expenses etc. that would not invalidate the Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 14/52 notice so long as the principal amount demanded by the payee of the cheque is correct and is clearly identified in the notice. When the principal amount claimed in the notice of demand is more than the principal amount actually payable to the payee of the cheque and the notice also does not indicate the basis for demanding the excess amount, such a notice cannot be said to be a legal and valid notice envisaged in Section 138(b) of Negotiable Instrument Act. In such a case, it is not open to the complainant to take the plea that the drawer of the cheque could have escaped liability by paying the actual amount due from him to the payee of the cheque. In order to make the notice legal and valid, it must necessarily specify the principal amount payable to the payee of the cheque and the principal amount demanded from the drawer of the cheque should not be more than the actual amount payable by him though addition of some other demands in the notice by itself would not render such a notice illegal or invalid.
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17. For the reasons given in the preceding paragraphs, I hold that the complaint, subject matter of Crl. M.C. No. 2225/2009 is liable to be quashed because the complainant presented the cheque for encashment of the whole amount of Rs. 49,47,600/- though the amount due to him on the date of the presentation of the cheque was Rs. 32,9600/- and he also demanded the whole of the amount of Rs. 49,47,600/- as principal sum without even indicating the principal Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 15/52 amount due to him under the cheque was Rs.
32,97,600/- and without even referring to the part- payment of Rs. 16,50,000/- which he had received by RTGS on 7.10.2008. The criminal complaint, subject matter of Crl. M.C. 2224/2009 is liable to be quashed as the complainant presented the cheque for encashment of whole of its amount of Rs. 31,91,650/- though he had already received a sum of Rs.
10,50,000/- before presentation of the cheque and the principal amount due to him on the date of presentation of the cheque was only Rs. 21,41,650/-. Ordered accordingly.
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by complainant himself and complainant himself withdrew the said money and misappropriated for his own use therefore, imposing any liability for the said amount upon the appellant herein will be perverse and erroneous.
B. COMPLAINANT BEING THE DIRECTOR:
PROCEEDINGS "CORAM NON JUDICE' P. That the Ld. Trial Court failed to give any findings upon the said issue and thus the impugned judgment is liable to be set aside on the said ground itself. That the Ld. Trial Court while holding the Appellants guilty U/S 138 of Negotiable Instruments Act on the ground that Petitioner is the Managing Director of the accused Company failed to appreciate that it is an admitted case and as per the cross examination dated Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 16/52 23.07.2014 of the Complainant it is crystal clear "I was appointed as Additional Director of the company in June, 2010.......". that apart from the above on 01.04.2010 a share holder agreement was also executed amongst the director to which the complainant was also a party. That Mr. Anil Khosla was regularised and appointed as Director as per the MCA website Form 32 which was Exhibited as DW2/1. The same was also mentioned in the annual returns which was Exhibited as DW2/3. That further the same was also recorded in the board meeting dated 31.08.2010 where the complainant was also a signatory to the board note Exhibited as DW2/5. That even after producing so many documents, Ld. Trial Court failed to take in to consideration that the Respondent Complainant was the Director of the Company and he gave unsecured loan to the Company under the capacity of the Director as per the Companies Act. That the Respondent was not the only one who extended the loan as per the Balance Sheet of year 2010 but all the Directors have provided loan to the Company and same was also exhibited.
q. That the Ld. Trial Court even failed to appreciate that as per the board note the amount is to be paid from the receivable revenue of the accused company and not from the personal pocket of any of the directors or from the funds available in the accused company at the time of signing the board note. It is an admitted position that the loan that has been given by all the directors of the accused company will be paid once accused company receives the profit from the Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 17/52 projects. However, as complainant himself refuses to adhere the procedures of the company and denied to sign on the bills and NOC therefore, the accused company suffered losses because of which the accused company went in losses because of which loan was not refunded to any of the director of the accused company including the appellant number 1 as well.
r. That the Ld. Trial Court further failed to appreciate that when all the Directors provided loan to the Company and the Company refuses to pay them back or not in a financial position to pay, the only remedy left with the Complainant is to file case by invoking relevant provisions of the Companies Act. That in the instant case it is again and admitted fact that case was filed by the complainant by invoking jurisdiction of the then Company Law Board (as admitted during the cross- examination of the DW 2 dated 08.07.2019) being the unsecured creditor of the Company the amount can only be recovered through proper forum and the jurisdiction of this Court is barred by the Companies Act. That moreover on similar facts First Information Report was also lodged by the Complainant against the accused wherein proceedings are stayed by the Hon'ble High Court.
s. That as per the Board Note dated 30.06.2011 the complainant proposed for providing short term business loan i.e. for 90 days for an amount of Rs. 15,00,000/- that same note also notes that accused Company will provide PDC's for a total amount of Rs. 15,00,000/- and another PDC for Rs. Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 18/52 50,000/-. That it was also provided in the board note that Complainant will have the first charge to the Company in respect of this loan amount. That it is respectfully submitted that amount was utilized for a specific purpose i.e., competition of project in Delhi and the amount recovered was to be reimbursed to the complainant. However, complainant never disclosed the receivables nor disclosed the amount received from the projects till date. Hence, it is respectfully submitted that cheques in question were issued as collateral security for the due performance of contract by which company and the accused no. 2 bound themselves to repay the said amount. It is therefore clear that cheques were not issued for discharge of existing debts. That the same principle was discussed in the case of Shanku Concretes Pvt. Ltd. Vs. State of Gujarat reported in (2000)2 GLR 753 wherein identical facts and circumstances of the case, the Hon'ble High Court of Gujarat was pleased to allow the petition filed by the Petitioner and was please to quash the proceedings "......XXX Having considered the rival contentions and on scrutinizing the record, it appears that the first part of the matter is required to be dealt with first. If the petitioners succeed in the first part, the second part of the matter need not be dealt with by this Court. Therefore, it has to be carefully scrutinized whether the complaint is being filed by the complainant is required to be quashed and set aside on the Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 19/52 ground urged by the petitioners. As stated above, Section 138 of the Act is enacted by the Legislatures as a punitive measure for the due discharge of civil liability and a penal action is prescribed for inculcating the faith of the people in the Banking system. A transaction, which would otherwise be an exclusively civil transaction attracts criminal liability by virtue of Section 138 of Negotiable Instruments Act. Therefore, while Courts of Law are called upon to decide and fasten criminal liability in such circumstances, then a close judicial scrutiny of the facts and circumstances of the case is absolutely necessary. Now, if we examine Section 138 of the Negotiable Instruments Act, which runs as under:
138. DISHONOUR OF CHEQUE FOR INSUFFICIENCY, ETC. OF FUNDS IN THE ACCOUNT - Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, the whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that 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 that bank, such person shall be deemed to have committed an offence, and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both;
Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 20/52 Provided that nothing contained in this section shall apply unless --
(a) the 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,
(b) the payee or the holder in due course of the cheque, as the case may be, 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 fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
10. Pursuing Section 138 of the Negotiable Instruments Act, the part of the section, which is relevant for this matter is "for the discharge, in whole or in part, of any debt or other liability" the pre existing condition is, there must be the existence of any debt or any other liability, for which the cheque might have been issued and bounced. Reverting back to the facts of the case, it is an admitted case that the company i.e. the original accused No. 2 wanted to promote its production and, therefore, borrowed Rs. 15 lacs from the original complainant i.e. the present respondent No.
2. The Managing Director, at present absconding, original accused No. 2 on behalf of the company original accused No. Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 21/52 1, entered into an agreement, clearly binding himself and the company, to repay the amount within six months from the date of the execution of the agreement. It clearly appears that to ensure the due performance of the terms further accused No. 2 issued seven cheques of due dates to the complainant and necessary averments were also made in the agreement that for the due performance of the agreement i.e. repayment of the advances after the six months from the date of the agreement cheques are delivered. Some of the such cheques were bounced, for which the complaint is filed.
11. The crux of the matter, therefore, would be whether there was any existing liability on the part of the present petitioners, which required due discharge within the meaning of Section 138 of the Negotiable Instruments Act, and that whether the cheques which were bounced were issued to discharge such existing liability?
12. Considering the facts and circumstances of this case, the answer to the above question must be in the negative because as per the agreement executed between the parties, liability which was to be discharged within the meaning of Section 138 of the Negotiable Instruments Act, was still to be arisen only on 5.12.1995 i.e. after the six months of the execution of the contract. This clearly denotes that when the cheques were delivered, there was no liability on the part of the accused to discharge any debt.
13. The above view further strengthens from the agreement executed between the parties. It is amply clear in Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 22/52 the agreement that accused shall repay the amount after six months of the execution of agreement and it is also made clear that for due performance (in Gujarati is mentioned in the agreement) of the contract. The intention of the parties is clear from this averments that the cheques were issued as the collateral security for the due performance of the contract, by which the Company and the Director i.e. accused No. 2 bound themselves to repay the said amount. It is, therefore, clear that cheques were not issued to discharge any existing debt.
....****"
C. CHEQUE IN QUESTION ARE SECURITY
CHEQUES
t. That the Ld. Trial Court while holding that cheques
were issued in discharge of the existing liability and hence defence of security cheque is not available to the Petitioner,failed to appreciate that it is again an admitted fact that undated and signed blank cheques were forwarded to the complainant vide email dated 02.07.2011 and same is marked were Exhibited as DW 2/8.
u. That Ld. Trial Court while relying upon Section 313 Cr.P.C. statement failed to appreciate that complainant himself has admitted in his cross examination dated 23.07.2014 where he has stated that "yes, I had asked for issuance of post-dated cheques before providing this personal loan..........". That even after receipt of the mail and undated cheques for approval he denied the same in his cross- Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 23/52 examination regarding the receipt of the cheques and approval of the same. That while dealing with a similar issue in the matter of Indus Airways Pvt Ltd vs. Magnum Aviation Pvt. Ltd. reported in (2014) 12 SCC 539 Hon'ble Apex Court has held:-
"***.....
15. The above reasoning of the Delhi High Court is clearly flawed inasmuch as it failed to keep in mind the fine distinction between civil liability and criminal liability under Section 138 of the NI Act. If at the time of entering into a contract, it is one of the conditions of the contract that the purchaser has to pay the amount in advance and there is breach of such condition then purchaser may have to make good the loss that might have occasioned to the seller but that does not create a criminal liability under Section 138. For a criminal liability to be made out under Section 138, there should be legally enforceable debt or other liability subsisting on the date of drawal of the cheque. We are unable to accept the view of the Delhi High Court that the issuance of cheque towards advance payment at the time of signing such contract has to be considered as subsisting liability and dishonour of such cheque amounts to an offence under Section 138 of the NI Act. The Delhi High Court has travelled beyond the scope of Section 138 of the NI Act by holding that the purpose of enacting Section 138 of the NI Act would Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 24/52 stand defeated if after placing orders and giving advance payments, the instructions for stop payments are issued and orders are cancelled. In what we have discussed above, if a cheque is issued as an advance payment for purchase of the goods and for any reason purchase order is not carried to its logical conclusion either because of its cancellation or otherwise and material or goods for which purchase order was placed is not supplied by the supplier, in our considered view, the cheque cannot be said to have been drawn for an existing debt or liability.
........******"
D. ONUS ON THE COMPLAINANT v. That the Ld. Trial Court while holding that presumption under Section 118(a) and 139 of Negotiable Instruments Act is against the Petitioner, failed to appreciate that the complainant being the Head of Delhi operations was working on one project which was in Delhi only and after investing the amount in completion of the work bill was to be raised by which debts of the director would have been cleared. However, in the instant case same was not done by the complainant and hence it is respectfully submitted that at the time of payment of loan there was legally enforceable debt or other liabilities subsisting on the date of drawl of the cheques. That now the accused has proved beyond reasonable doubt that cheque was given as security and now the onus shifts on the complainant who has failed to discharge the Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 25/52 same.
Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal, (1999) 3 SCC 35 "12. Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 26/52 existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non- existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist. We find ourselves in the close proximity of the view expressed by the Full Benches of the Rajasthan High Court and the Andhra Pradesh High Court in this regard. w. That the Ld. Trial Court failed to appreciate that that in the present case the foundational case setup by the complainant so as to lead to any statutory presumption U/s. 118 read with 139 of N.I. Act, was absolutely missing and therefore, no such statutory presumption could have been drawn against the defence in the present case. It is stated that it is a settled principal of law that only after the complainant sets-up the fundamental ingredients of the offence punishable U/s. 138 of N.I. Act, the mandatory statutory presumption U/s 118 read with Sec. 139 could the drawn against the accused persons. However, as stated above, the present case, wherein apart from the cheques, return memos and the Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 27/52 purported legal notice, the complainant had failed to filed any document, which could have shown that there was any outstanding payments against the accused persons in course of the admitted business transactions that were entered into between the respondents and the appellants, was not a case wherein any such statutory presumption could be drawn. It was incumbent upon the complainant to setup a case much less a prima-facia case before any such statutory presumption could be drawn against the accused persons through the mechanism of documentary evidence. Therefore, in the facts & circumstances of the present case, the Ld. Trial Court in the first instance ought to have appreciated that no case so as to draw any statutory presumption against the appellants was made out and therefore, the impugned judgment is liable to be quashed and set aside.
x. Birender Singh -Vs.- State of NCT, Delhi (2008 1 JCC NI 15) "5. There is no doubt that the burden rests on the accused to rebut the presumption as raised under sections 139 and 118 of the Negotiable Instruments Act. However, this presumption can be rebutted by the accused not merely by examining his own witnesses but even by cross-examination of the complainant and his witnesses and bringing out on record, through cross-examination, that the complainant was aliar and there was no privity of contract between the complainant and the accused and cheques were misused. It must be kept in mind that once evidence is brought on record from both the sides, it is evidence of the case and Court can draw inference from the evidence in favor or against either of the parties.
Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 28/52 Evidence is a complainant's evidence and accused's evidence for the purpose of identifying it, but once it is adduced in the case, it is evidence in the case and evidence has to be read as a whole. The Court cannot read the evidence of the complainant only to the extent it favorsthe complainant and overlook the rest of the evidence which supports accused case on the ground that it is the complainant's evidence. Similarly, from the evidence adduced by the accused, the Court can draw inference in the favor of the complainant. The accused has a right to argue his case even on the basis of complainant's cross- examination and show to the Court that the presumption in favor of the complainant stands rebutted from its own evidence." "6. In the present case, the accused successfully showed that all the cheques were issued with an endorsement to be below of Rs. 10,000/-. Such an endorsement was not required to be made by the accused if he had issued cheques to different complainants, for repayment of loan, which was in all cases above Rs. 10,000/- There would have been no necessity for accused to issue 02 or 03 cheques of almost same amount in discharge of the loans to the complainants in same pattern, the accused could have issued one single cheque in discharge of respective amounts. The other fact which goes in favor of the accused is that in all the three cases same Advocate issued notice to the respondent taking similar plea of friendly loan and in the same manner and the loan amount and cheques amount was different. All this fortifies the case of the respondent that all these cheques were those cheques which were given by the respondent for Chit Fund Company and misused by the employees of the Chit Fund Company at the instance of the Director or owner of the Chit Fund Company to show personal loans. If the complainants had come up to the Court with clean hands stating that the cheques with filled-in amount were endorsed in their favor by the Chit Fund Company, the case would have been different but all the three complainants had Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 29/52 come to the Court with unclean hands, their testimony itself failed them. Their inability to explain during cross-examination various facts was enough to rebut the presumption raised against the accused."
y. It is stated that if the aforesaid Judgments and the law enunciated there under is taken into contemplation, the following conclusions can be drawn:-
a. That the presumption raised u/s 118 r/w 141 of NI Act is a rebuttable presumption.
b. That the presumption is to be rebutted by the accused on preponderance of probabilities only and not on the cannons of proof beyond reasonable doubt.
c. That for rebutting the presumption, it is not necessary for the accused to bring direct evidence.
d. That the accused in order to rebut the presumption can rely upon the complaint filed by the complainant, the pleadings, the evidence led, the documents relied upon.
e. That the accused for rebutting the presumption, can rely upon cross examination conducted, suggestions given to witnesses.
f. That the accused can rely upon circumstances enveloping the transactions.
g. That the accused can rely upon presumption of facts as entailed u/s 114 of the Indian Evidence Act.
h. That accused can surely also rely upon direct evidence brought before the court, oral or the documentary, as the case may be.
Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 30/52 E. ADMINISTRATION OF DELHI OFFICE BY THE COMPLAINANT z. That the Ld. Trial Court failed to appreciate the fact that the Company was working on various projects in Delhi. Hence, there was a need for appointment of Director and opening of Delhi office. That the Complainant was found to be suitable and hence he was appointed as the Additional Director and later as the Director. The Complainant started misappropriating the account and same was duly informed to him. That because of the negligent attitude of the complainant the Company started running into losses. That the complainant failed to attract any businesses in Delhi and started withholding of the monies and receivables of the company by the customer of the company in Delhi. That the complainant without even consulting the MD of the Company withdrawn himself from the projects because of which the company again suffered huge loss. That few products of the accused Company is lying with the complainant. That the complainant was solely operating the imprest account in Delhi and made payment without the approval of the managing director nor provided any account of such payment with expense details or voucher details. aa. That is respectfully submitted that approximately an amount of Rs. 50, 00,000/- is yet to be received from the projects on which the complainant was working. That because of all those reasons mentioned herein above the accused company suffered on account of mischief played by Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 31/52 the complainant as well as mismanagement and misappropriation of the affairs, business and funds of the Company.
F. PRESENT STATUS OF THE COMPANY bb. That the Ld. Trial Court failed to appreciate that the company was declared as NPA by the Bank under SARFESI Act, 2002 vide letter dated 04.06.2013. As well as the 53 company's master data as per the website of ROC shows that the Company defaulted in filing its statutory returns for the last two years i.e. 2016-17, 2017-18, the Company has been suspended from the stock exchange and date of last AGM is 31.08.2010 and last balance sheet as filed on 31.03.2010 which shows that companies running into huge losses and now is at the stage of winding up which will be done in sometimes. That further all the Directors of the Company were also barred for 5 years from 2014-2019 for non-filing of returns under Section 164(2) (a) of Companies Act.
cc. That the Ld. Trial court failed to appreciate and give findings upon the defence raised by the accused/appellant herein and therefore, the impugned order is liable to be set aside on the said ground only. That an unreasoned order without giving any findings upon the issue is non-est in the eyes of law.
6. It is prayed that the judgment dated 01.12.2022 and and the order on sentence dated 22.02.2023 may be set aside.
7. On the other hand, Ld. Counsel for the complainant has argued Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 32/52 that the accused persons have been correctly convicted by the Ld. Magistrate. He prays for dismissal of the appeal.
GROUNDS OF APPEAL CITED BY COMPLAINANT ANIL KHOSLA
8. The grounds cited by the complainant against the impugned Order on Sentence are as under :
A. Because the order on sentence dated 22.02.2023 passed by Ld. Trial Court is totally perverse and against the settled principles of law.
B. Because the sentence awarded to the respondent / convict for the offence u/s 138 NI Act is grossly inadequate and in fact rewards the convict by allowing him to escape his liability by undergoing a simple imprisonment of only 3 months. C. Because Ld. Trial Court failed to appreciate that it was a fit case where the maximum punishment in terms of Section 138 of NI Act, 1881 should have been awarded as the accused had managed to delay the trial for a period of more than 9 years and had thereby made the complainant suffer for no fault on his part.
D. Because Ld. Trial Court failed to appreciate that the loan was extended for a short term period of 90 days and an absolute interest for this period of 90 days which was agreed to be paid to the complainant was Rs. 50,000/- and the agreed rate of interest for the period beyond 90 days was 15%. So, this was a fit case where double the cheque amount should have been Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 33/52 awarded to the revisionist / complainant.
E. Because the Ld. Trial Court without any basis awarded a compensation of only Rs. 28,00,000/- to the revisionist / complainant when it was fit case where the accused were tried and found guilty after 10 years that an amount equal to double the cheque amount i.e. Rs. 31,00,000/- should hvea been awarded to the revisionist / complainant.
F. Because the Ld. Trial Court failed to appreciate that the respondent No. 1 and 2 had deliberately utilized the money of the revisionist / complainant for such a long period by putting the revisionist / complainant under severe hardship and so it was a fit case where the maximum punishment of 2 years imprisonment should have been awarded to the respondent No. 2 alongwith the compensation equal to double the cheque amount to the revisionist / complainant.
G. Because Ld. Trial Court failed to appreciate that the respondent No. 2 is a well educated man who very well knew the consequences for the dishonour of cheque and despite knowing the consequences, he had deliberately issued instructions to "Stop Payment" on his own without the approval of the Board of the respondent No.1 company clearly showing that he had scant regard for the laws and by showing such leniency, the Trial Court has failed to punish him adequately for his deliberate actions.
H. Because the Ld. Trial Court failed to appreciate that the revisionist / complainant is a senior citizen around aged 72 years who is also suffering from critical age related ailments Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 34/52 but has been made to suffer for such a long time on account of the fraudulent actions of the respondent No.2. I. Because Ld. Trial Court failed to appreciate that the Hon'ble Supreme Court in a catena of judgements have clearly held that the offences u/s 138 NI Act should be strictly dealt with to restore the confidence of the public in the instrumentality of cheque. However, by showing lenience to the respondent No. 2 / convict, the Ld. Trial Court has clearly gone against the spirit of the Hon'ble Supreme Court judgments. J. Because the Ld. Trial Court failed to appreciate that the Hon'ble Supreme Court in a catena of cases have also held that adequate compensation must be awarded to the complainant so as to restore the confidence of the general public in the instrumnetality of cheque as a Negotiable Instrument. However, the Ld. Trial Court has gone against the spirit of these Hon'ble Supreme Court judgments by showing leniency to the convict and giving him an option to go to jail for 3 (three) months in lieu of not making the payment of compensation to the complainant.
K. Because the Ld. Trial Court failed to appreciate that the Hon'ble Supreme Court has held in a number of cases that the complainants are interested in recovery of their money and their interests are not served if the accused is convicted and sent to jail without compensating the complainant. However, in this case which is a fit case for awarding of double the cheque amount as compensation to the revisionist / complainant and sentencing the convict to two years in prison, the Ld. Trial Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 35/52 Court without any basis has shown great leniency towards the respondent No.2 / convict and has sentenced him to 3 months in prison in lieu of not paying the compensation to the revisionist / complainant.
L. Because the Ld. Trial Court failed to appreciate that the revisionist / complainant who is presently around 72 years of age had given a loan of Rs. 15,00,000/- to the respondent No. 1 company out of his savings and even after more than 10 years he is yet to get his money when he requires it the most as he has no other source of income and is entirely dependent on his savings to take care of his expenses.
9. It is prayed that the impugned Order on Sentence may be modified appropriately against the accused persons.
DISCUSSION
8. This Court has considered the oral submissions as well as the records.
9. Recently, the Hon'ble Supreme Court was pleased to define the contours of the law relating to the provision u/s 138 of Negotiable Instruments Act in Rajesh Jain Vs. Ajay Singh 2023 INSC 888. The relevant extracts of the observations are reproduced below for ready reference:-
Section 138 of the NI Act - Necessary Ingredients
25. Essentially, in all trials concerning dishonour of cheque, the courts are called upon to consider is whether the ingredients of the offence enumerated in Section 138 of the Act have been met and if so, whether the accused was Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 36/52 able to rebut the statutory presumption contemplated by Section 139 of the Act.
26. In Gimpex Private Limited vs. Manoj Goel (2022) 11 SCC 705 , this Court has unpacked the ingredients forming the basis of the offence under Section 138 of the NI Act in the following structure:
(1) The drawing of a cheque by person on do account maintained by him with the banker for the payment of any amount of money to another from that account;
(i) The cheque being drawn for the discharge in whole or in part of any debt or other liability;
(iii) Presentation of the cheque to the bank arranged to be paid from that account,
(iv) The return of the cheque by the drawee bank as unpaid either because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount
(v) A notice by the payee or the holder in due course making a demand for the payment of the amount to the drawer of the cheque within 30 days of the receipt of information from the bank in regard to the return of the cheque; and
(vi) The drawer of the cheque failing to make payment of the amount of money to the payee or the holder in due course within 15 days of the receipt of the notice.
Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 37/52
27. In K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC 510 this Court had summarised the constituent elements of the offence in fairly similar terms by holding:
"14. The offence Under Section 138 of the Act can be completed only with the concatenation of a number of acts.The following are the acts which are components of the said offence: (1) drawing of the cheque, (2) presentation of the cheque to the bank, (3) returning the cheque unpaid by the drawee bank, (4) giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, (3) failure of the drawer to make payment within 15 days of the receipt of the notice."
28. The five (5) acts as set out in K Bhaskaran's case (supra) are, generally speaking, matters of record and would be available in the form of documentary evidence as early as, at the stage of filing the complaint and initiating prosecution. Apart from the above acts, it is also to be proved that cheque was issued in discharge of a debt or liability (Ingredient no. (ii) in Gimpex's case). The burden of proving this fact, like the other facts, would have ordinarily fallen upon the complainant. However, through the introduction of a presumptive device in Section 139 of the NI Act, the Parliament has sought to overcome the general norm as stated in Section 102 of the Evidence Act and has, thereby fixed the onus of proving the same on the accused. Section 139, in that sense, is an example of a reverse onus clause and requires the accused to prove the Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 38/52 non-existence of the presumed fact, i.e., that cheque was not issued in discharge of a debt/liability.
Burden of Proof and Presumptions: Conceptual Underpinnings
29. There are two senses in which the phrase 'burden of proof' is used in the Indian Evidence Act, 1872 (Evidence Act, hereinafter). One is the burden of proof arising as a matter of pleading and the other is the one which deals with the question as to who has first to prove a particular fact. The former is called the 'legal burden' and it never shifts, the latter is called the 'evidential burden' and it shifts from one side to the other. [See Kundanlal v. Custodian Evacuee Property (AIR 1961 SC 1316)]
30. The legal burden is the burden of proof which remains constant throughout a trial. It is the burden of establishing the facts and contentions which will support a party's case. If, at the conclusion of the trial a party has failed to establish these to the appropriate standards, he would lose to stand. The incidence of the burden is usually clear from the pleadings and usually, it is incumbent on the plaintiff or complainant to prove what he pleaded or contends. On the other hand, the evidential burden may shift from one party to another as the trial progresses according to the balance of evidence given at any particular stage; the burden rests upon the party who would fail if no evidence at all, or no further evidence, as the case may be is adduced by either side (See Halsbury's Laws of England, 4th Edition Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 39/52 para 13). While the former, the legal burden arising on the pleadings is mentioned in Section 101 of the Evidence Act, the latter, the evidential burden, is referred to in Section 102 thereof. [G.Vasu V. Syed Yaseen (AIR 1987 AP139) affirmed in Bharat Barrel Vs. Amin Chand [(1999) 3 SCC 35] ]
31. Presumption, on the other hand, literally means "taking as true without examination or proof". In Kumar Exports v. Sharma Exports (2009) 2 SCC 513, this Court referred to presumption as "devices by use of which courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence."
32. Broadly speaking, presumptions are of two kinds, presumptions of fact and of law. Presumptions of fact are inferences logically drawn from one fact as to the existence of other facts. Presumptions of fact are rebuttable by evidence to the contrary. Presumptions of law may be either irrebuttable (conclusive presumptions), so that no evidence to the contrary may be given or rebuttable. A rebuttable presumption of law is a legal rule to be applied by the Court in the absence of conflicting evidence (Halsbury, 4th Edition paras 111, 112]. Among the class of rebuttable presumptions, a further distinction can be made between discretionary presumptions ('may presume') and compulsive or compulsory presumptions ('shall presume'). [G. Vasu V. Syed Yaseen (Supra)] Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 40/52
33. The Evidence Act provides for presumptions, which fit within one of three forms: 'may presume' (rebuttable presumptions of fact), 'shall presume' (rebuttable presumption of law) and conclusive presumptions (irrebuttable presumption of law). The distinction between 'may presume' and 'shall presume' clauses is that, as regards the former, the Court has an option to raise the presumption or not, but in the latter case, the Court must necessarily raise the presumption. If in a case the Court has an option to raise the presumption and raises the presumption, the distinction between the two categories of presumptions ceases and the fact is presumed, unless and until it is disproved, [G.Vasu V. Syed Yaseen (Supra)] Section 139 NI Act-Effect of Presumption and Shifting of Onus of Proof
34. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that 'unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability'. It will be seen that the 'presumed fact' directly relates to one of the crucial ingredients necessary to sustain a conviction under Section 138.
35. Section 139 of the NI Act, which takes the form of a Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 41/52 'shall presume' clause is illustrative of a presumption of law. Because Section 139 requires that the Court 'shall presume' the fact stated therein, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. But this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary as is clear from the use of the phrase 'unless the contrary is proved'.
36. The Court will necessarily presume that the cheque had been issued towards discharge of a legally enforceable debt/liability in two circumstances. Firstly, when the drawer of the cheque admits issuance/execution of the cheque and secondly, in the event where the complainant proves that cheque was issued/executed in his favour by the drawer. The circumstances set out above form the fact(s) which bring about the activation of the presumptive clause. [Bharat Barrel Vs. Amin Chand] [(1999) 3 SCC 35]
37. Recently, this Court has gone to the extent of holding that presumption takes effect even in a situation where the accused contends that 'a blank cheque leaf was voluntarily signed and handed over by him to the complainant. [Bir Singh v. Mukesh Kumar (2019) 4 SCC 197]. Therefore, mere admission of the drawer's signature, without admitting the execution of the entire contents in the cheque, is now sufficient to trigger the presumption.
38. As soon as the complainant discharges the burden to Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 42/52 prove that the instrument, say a cheque, was issued by the accused for discharge of debt, the presumptive device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further.
39. John Henry Wigmore12 on Evidence states as follows:
"The peculiar effect of the presumption of law is merely to invoke a rule of law compelling the Jury to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge's requirement of some evidence), the presumption 'disappears as a rule of law and the case is in the Jury's hands free from any rule."
40. The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the non- existence of the presumed fact beyond reasonable doubt. The accused must meet the standard of 'preponderance of probabilities', similar to a defendant in a civil proceeding. [Rangappa vs. Mohan (AIR 2010 SC 1898)]
41. In order to rebut the presumption and prove to the Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 43/52 contrary, it is open to the accused to raise a probable defence wherein the existence of a legally enforceable debt or liability can be contested. The words 'until the contrary is proved' occurring in Section 139 do not mean that accused must necessarily prove the negative that the instrument is not issued in discharge of any debt/liability but the accused has the option to ask the Court to consider the non-existence of debt/liability so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist. [Basalingappa Vs. Mudibasappa (AIR 2019 SC 1983) See also Kumar Exports Vs. Sharma Carpets (2009) 2 SCC 513]25
42. In other words, the accused is left with two options. The first option-of proving that the debt/liability does not exist-is to lead defence evidence and conclusively establish with certainty that the cheque was not issued in discharge of a debt/liability. The second option is to prove the non- existence of debt/liability by a preponderance of probabilities by referring to the particular circumstances of the case. The preponderance of probability in favour of the accused's case may be even fifty one to forty nine and arising out of the entire circumstances of the case, which includes: the complainant's version in the original complaint, the case in the legal/demand notice, complainant's case at the trial, as also the plea of the accused in the reply notice, his 313 statement or at the trial as to the circumstances under which the promissory Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 44/52 note/cheque was executed. All of them can raise a preponderance of probabilities justifying a finding that there was 'no debt/liability'. [Kumar Exports and Sharma Carpets, (2009) 2 SCC 513]
43. The nature of evidence required to shift the evidential burden need not necessarily be direct evidence i.e., oral or documentary evidence or admissions made by the opposite party; it may comprise circumstantial evidence or presumption of law or fact.
44. The accused may adduce direct evidence to prove that the instrument was not issued in discharge of a debt/liability and, if he adduces acceptable evidence, the burden again shifts to the complainant. At the same time, the accused may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling the burden may likewise shift to the complainant. It is open for him to also rely upon presumptions of fact, for instance those mentioned in Section 114 and other sections of the Evidence Act. The burden of proof may shift by presumptions of law or fact. In Kundanlal's case- (supra) when the creditor had failed to produce his account books, this Court raised a presumption of fact under Section 114, that the evidence, if produced would have shown the non- existence of consideration. Though, in that case, this Court was dealing with the presumptive clause in Section 118 NI Act, since the nature of the presumptive clauses in Section 118 and 139 is the same, the analogy can be extended and Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 45/52 applied in the context of Section 139 as well.
45. Therefore, in fine, it can be said that once the accused adduces evidence to the satisfaction of the Court that on a preponderance of probabilities there exists no debt/liability in the manner pleaded in the complaint or the demand notice or the affidavit-evidence, the burden shifts to the complainant and the presumption 'disappears' and does not haunt the accused any longer. The onus having now shifted to the complainant, he will be obliged to prove the existence of a debt/liability as a matter of fact and his failure to prove would result in dismissal of his complaint case. Thereafter, the presumption under Section 139 does not again come to the complainant's rescue. Once both parties have adduced evidence, the Court has to consider the same and the burden of proof loses all its importance. [Basalingappa vs. Mudibasappa, AIR 2019 SC 1983; See also, Rangappa vs. Sri Mohan (2010) 11 SCC 441] EXISTENCE OF STATUTORY PRESUMPTIONS
9. Admittedly, the cheques in question were dishonoured upon being presented for encashment by the complainant. Legal notice was then sent by the complainant to the accused persons demanding the amount due under the cheques in question. Service of the said legal notice is admitted by the accused persons. Admittedly, the accused persons did not make any payment demanded vide the said legal notice within the period prescribed u/s 138 of NI Act. The record reveals that the accused persons have Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 46/52 admitted at the time of framing of notice u/s 251 Cr.PC that the cheques in question were handed over to the complainant, albeit for a different purpose than what is claimed by the complainant. It is not denied that the cheques in question bear the signatures of accused No.2. All the above facts are sufficient to invoke the presumptions available to the complainant u/s 118 NI Act and u/s 139 NI Act. As such, the evidential burden stood transferred upon the accused persons to prove that the cheques in question were not issued towards discharge of any liability. Until the said evidential burden is discharged by the accused persons, the presumptions available against the accused persons u/s 118 NI Act and u/s 139 NI Act will have to be assumed to be true, without expecting the complainant to do anything further. The said burden could be discharged by the accused persons either by leading defence evidence to conclusively establish that the cheques were not issued in discharge of a debt / liability or by proving the non existence of debt / liability on preponderance of probabilities by referring to the particular circumstances of the case. The nature of evidence required to shift the evidential burden need not necessarily be direct evidence. Once the accused persons produce such evidence, the burden shifts back to the complainant and the above mentioned presumptions disappear.
REBUTTAL OF STATUTORY PRESUMPTIONS
10. Now, the question left to be decided is whether the said presumptions have been successfully rebutted by the accused persons or not. In order to adjudicate the same, this Court must deal with the facts adduced on record by the accused persons during the cross-examination of complainant.
11. The said adjudication requires an understanding of the respective stand taken by the parties. As per complainant, accused No. 2, who is the Managing Director of accused No.1, had taken a short term loan of Rs. 15 Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 47/52 lakh from him for a period of 90 days in order to fulfill the commitments of accused No. 1 towards third parties. The said loan was repayable with an interest of Rs. 50,000/-. Accused No. 2 had promised that in case he was unable to pay the loan amount within the aforesaid period of 90 days, he would pay an interest @ 15% per annum for the extended period. In order to repay the said loan and interest, accused No. 2 had issued the cheques in question in favour of the complainant (paras 1 to 3 of the complaint). In this regard, the complainant examined himself as CW-1 and also certain bank witnesses to prove the transfer of funds.
12. On the other hand, the accused persons deny any such liability and rather claim, in response to notice framed upon them u/s 251 Cr.PC, that the cheques in question were handed over as a 'security' to the complainant at the time of execution of a loan agreement between the complainant and the accused No. 1 and that all the cheques were undated at the time they were handed over to the complainant. In the statement recorded u/s 313 Cr.P.C, the accused No. 1 admits that the said loan was availed by it from complainant and the cheques were issued in faovour of the complainant after the approval of the Board of Directors which included the complainant also. Accused No. 2 claims in his statement recorded u/s 313 Cr.P.C. that he was the Managing Director of accused no.1 when the said loan was availed by the accused No. 1 from the complainant. He admits that he signed the cheques in question in terms of the Board Resolution adopted by the accused No. 1. Accused persons examined accused No. 2 as DW-2 and one S. Balaji Singh as DW-3 in defence evidence. Both the said witnesses deposed that the said loan was availed from the complainant by accused no.1 in terms of a Board Resolution dated 30.06.2011, at which time the Board of Directors of accused no.1 also included the complainant. Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 48/52 However, both the said witnesses claimed that the complainant never transferred the entire sum of loan amount in favour of the accused No. 1. Both the witnesses deposed that the complainant deposited only a sum of Rs. 13,50,000/- with the accused no. 1. Both the witnesses claim that no liability exists in favour of the complainant or against the accused persons vis-a-vis the cheques in question.
13. Now, this Court hereby proceeds to assess whether the accused persons have been able to rebut the legal presumptions. For the said purpose we need to delve into the testimony of the complainant, who examined himself as CW-1. Complainant deposed in line with the claim made in the present complaint against the accused persons. However, during his cross-examination, he conceded that the loan of Rs. 15 lakhs, which he claims in the complaint to have been advanced personally to accused No.2, was actually advanced in pursuance of the Board Note dated 30.06.2011 Ex.DW2/8 (colly) (also marked as Mark-B). The said Board Note was approved by all the Board of Directors of accused No.1, which Board at the relevant time also included the complainant. The said Board Note clearly reflects that the complainant, in his individual capacity, has proposed to advance a sum of Rs. 15 lakh as a short term Business Loan to accused No. 1. The loan was repayable within a period of 90 days alongwith interest @ Rs. 50,000/-. In case of failure of accused No.1 to repay the said loan, a higher rate of interest was to be levied. The objective of the utilization of said loan amount is also mentioned in the said Board Note. In order to ensure the repayment of said loan amount and interest, the post dated cheques were to be issued in favour of the complainant. The Board Note contains the details of the cheques in question as well, being the post dated cheques referred to therein. After the receipt of said post Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 49/52 dated cheques, complainant was to deposit / transfer the short term loan amount in favour of the accused No.1. The same is a very material document which has a direct effect on the fate of this case. Admittedly, the complainant has not bothered to disclose anything about the existence of said Board Note in his complaint nor has he bothered to explain as to why he withheld the said document. Moreover, the complainant has not bothered to explain as to why he plead contrary to the contents of said Board Note in his complaint regarding the identity of the person to whom the said loan was advanced by him. This omission by complainant could not be taken lightly as the said document clearly establishes that the said 'loan' was not availed by accused No.2 in his personal capacity, rather the same was availed by accused No.1 after a due approval of the Board of Directors which was headed by accused No.2 as a Managing Director and of which the complainant was also a part, being the Director. For this misrepresentation and withholding of material facts, the complaint is liable to be dismissed summarily.
14. Be that as it may, since it is admitted by all the parties to the complaint that the cheques in question were issued by accused No.1 under the signature of accused No. 2 in favour of the complainant, accordingly, it would be appropriate that this Court proceeds to assess the merits of the case in order to put the entire controversy to rest.
15. It has been established on record that the cheques in question were 'post dated cheques' issued in pursuance of Board Note dated 30.06.2011. Complainant deposes that the complete loan amount was transferred in favour of the accused No.1. It must be noted here that complainant claims in his cross-examination dated 23.07.2014 that he had transferred the entire loan amount of Rs. 15 lakh in favour of accused No.1 through bank. Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 50/52 Complainant has examined Bank witnesses (CW-2 and CW-3 respectively) in order to prove that the said loan amount was indeed transferred from his bank account to the bank account of accused No.1. The relevant statements of account of the complainant's bank account and the bank account of accused No. 1 (CW-2/2 and CW-3/1 respectively) reflect that a sum of Rs. 13,50,000/- was indeed transferred by complainant to accused No. 1 on 05.07.2011 i.e. after the Board Resolution dated 30.06.2011. However, the said statements of account do not reflect any credit entry regarding transfer of remaining amount of Rs. 1,50,000/- in favour of accused No. 1. This fact seems to demolish the claim of the complainant that the entire loan amount was transferred to accused No.1 through bank transactions. No doubt there is an entry dated 25.06.2011 in the statement of account of complainant Ex.CW2/2 regarding the transfer of Rs. 1,50,000/- to the bank account of accused No.1. But, the said credit entry in favour of the accused No. 1 from the bank account of complainant could not be presumed as a part of the loan advanced in view of the said Board Note dated 30.06.2011. Reason being the fact that the said Board Note itself records that the loan amount shall be transferred by complainant to accused No. 1 only after the cheques in question, being the post dated cheques referred to in the Board Note, are handed over to the complainant. Complainant has not bothered to mention as to when the cheques in question were handed over to him by accused No. 1. As such, this Court presumes that the post dated cheques (i.e. the cheques in question) were handed over only after 30.06.2011. In such circumstances, a credit entry dated 25.06.2011, which is neither referred to nor discussed in the said Board Note dated 30.06.2011, could not assumed to have been made in pursuance of the said Board Note. The above inference is fortified by the fact that despite being a signatory to the said Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 51/52 Board Note the complainant has not explained as to why he failed to ensure that the Board Note contains a reference of the said credit entry worth Rs. 1,50,000/- in favour of the accused No.1. Had it been the intention of the parties that the said credit entry of Rs. 1,50,000/- shall be considered as a part of the loan referred to in the Board Note, the same would have been explicitly mentioned therein. All these facts lend credence to the case of the accused persons who claim that the entire loan amount of Rs. 15 lakhs was never transferred in favour of accused No.1 by the complainant in pursuance to the Board Note dated 30.06.2011. Admittedly, the complainant has not placed any other material on record regarding transfer of the loan amount of Rs. 15 lakh in entirety in favour of accused No.1 in pursuance of the Board Note dated 30.06.2011. The above inferences and facts are sufficient to hold that the statutory presumptions existing in favour of complainant stand rebutted / dislodged as the complainant miserably fails to establish on record that he actually transferred the sum of Rs. 15 lakhs in pursuance of Board Note dated 30.06.2011. Consequently, this Court must hold that the accused persons are liable to be acquitted as the complainant has not placed any other material to substantiate his allegations against them. Ordered accordingly. The appeal filed by the accused persons stands allowed in above terms.
16. Having ruled so, the revision petition preferred by the complainant for enhancement of sentence imposed upon accused persons by the Ld. Magistrate stands dismissed, being not maintainable any longer.
17. A copy of this judgment be placed on both the files.
Announced & Dictated in the
Open Court today i.e. 18.04.2024 (Lovleen)
ASJ-03 (South East)
Saket Courts, Delhi
Crl. Appeal No:107/2023 Ravinder Burju vs Anil Khosla
Cr Rev 189/2023 Anil Khosla Vs. M/s. Texcel Infortech Pvt. Ltd. 52/52