Delhi District Court
Anoop Kumar Gupta vs State (Nct Of Delhi) on 3 July, 2018
Criminal Appeal No.52/2018
IN THE COURT OF SH. PULASTYA PRAMACHALA
SPECIAL JUDGE (PC ACT) CBI : EAST DISTRICT
KARKARDOOMA COURTS, DELHI
Criminal Appeal No. : 52/2018
Under Section : 138 of Negotiable Instruments Act, 1881.
Police Station : Shakarpur
CC No. : 53011/2016
CNR No. : DLET01-003040-2018
In the matter of :-
1. ANOOP KUMAR GUPTA
(Proprietor M/s. ARN Sales Agencies)
2. M/S. ARN SALES AGENCIES
Both at :-
29,30 Chaudhary Amar Singh Market,
Sangam Vihar, New Delhi-110080.
............APPELLANTS
VERSUS
1. STATE (NCT OF DELHI)
2. M/S. KAPIN TRADING COMPANY PVT. LTD.
O/o. 83-A, Chander Vihar,
I.P. Extension, Delhi-110092.
............RESPONDENTS
Date of Institution : 11.05.2018
Date of reserving judgment : 02.07.2018
Date of pronouncement : 03.07.2018
Decision : Appeal is allowed.
JUDGMENT
1. This criminal appeal is directed against the judgment of conviction and order on sentence both dated 28.04.2018, passed by trial court, in a case titled as M/s. KAPIN Trading Co. Pvt. Ltd. v. A. Kumar, Page 1 of 14 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi Criminal Appeal No.52/2018 bearing CC No. 53011/2016, under Section 138 of NI Act (hereinafter referred to as the Act), PS Shakarpur. Vide impugned judgment of conviction, trial court convicted accused (appellants herein) for aforesaid offence and on the same day vide impugned order on sentence, trial court sentenced convict to TRC and to pay fine of Rs.1.25 lac. Out of total fine of Rs.1.25 lac, Rs.1.15 lac was payable to the complainant as compensation and remaining amount of fine of Rs.10,000/- was to be deposited with State. In default of fine, the convict was to suffer simple imprisonment for a period of three months.
BRIEF FACTS OF THIS CASE : -
2. Briefly stated, the relevant facts giving rise to this appeal are that Sh. Dharam Chand Sharma being Attorney of M/s. Kapin Trading Co. Pvt. Ltd. filed a complaint for offence punishable under Section 138 NI Act against accused company i.e. M/s. ARN Sales Agencies and its proprietor namely Sh. Anoop Kumar Gupta. In his complaint, complainant alleged that during the course of business dealing accused no.1 (Mr. Anoop Kumar Garg/ Mr. A. Kumar/ appellant no.1 herein) had purchased goods from complainant firm on credit. In discharge of his liability, accused no.1 had issued six cheques in favour of complainant firm, which are as follows :-
S. Cheque Cheque Amount Drawn on
No. No. dated (in Rs.)
1. 257759 29.09.2006 10,000 Oriental Bank of Commerce
bearing A/c. No. 06291011000255,
Batra Hospital, 1, Tughlakabad
Institutional Area, Mehrauli,
Badarpur Road, New Delhi-110062.
2. 257760 01.11.2006 10,000 -do-
3. 257761 01.11.2006 10,000 -do-
4. 257762 01.11.2006 10,000 -do-
Page 2 of 14 (Pulastya Pramachala)
Special Judge (PC Act) CBI, East District
Karkardooma Courts, Delhi
Criminal Appeal No.52/2018
5. 257763 01.11.2006 10,000 -do-
6. 257764 01.11.2006 9,000 -do-
Total 59,000
3. When complainant firm presented aforesaid six cheques, said cheques were returned unpaid with remarks of "Insufficient funds"
vide return memos dated 02.11.2006. Legal demand notice dated 30.11.2006 was sent to accused persons through Blazeflash Couriers Ltd. vide Courier receipts bearing nos.217230426, 217230427 dated 01.12.2006 and UPCs dated 01.12.2006, which were served upon them, but despite service of legal notice, they did not make any payment.
GROUNDS :-
4. Being aggrieved of impugned judgment of conviction and order on sentence, appellants have preferred this appeal mainly on the following relevant grounds :-
● That trial court ordered fine of Rs.1.25 lac, which exceeded twice the amount of dishonored cheques (Rs.59,000/-) and same is without jurisdiction as per mandate under Section 138 NI Act. ● That trial court ignored that the legal notice as contemplated under Section 138 (b) of NI Act, had not been proved as per law. ● That trial court ignored that case of complainant is without cause of action. Complainant failed to prove sending as well as service of legal notice of demand upon accused, which is sine qua non to maintain a complaint under Section 138 NI Act. ● That trial court ignored about mentioning of correct address in the notice as complainant, did not prove that the envelope containing the notice, too, bore the correct and complete address of the accused.Page 3 of 14 (Pulastya Pramachala)
Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi Criminal Appeal No.52/2018 ● That trial court glossed over the material fact that the legal notice ought to had been dispatched in terms of Section 27 of the General Clauses Act.
● That trial court ignored that dispatch slip of Blazeflash Courier neither bore sender's address nor complete address of the accused nor was it signed or initialed by the staffer of Blazeflash Courier Services issuing the dispatch slip. No POD is on record. ● That trial court committed grave error in not following the ratio laid down by High Court of Delhi in HDFC Bank Ltd. v. Amit Kumar Singh.
● That trial court ignored that there was no Board Resolution of the complainant Company authorizing its Director Mr. Inder Chand to appoint any person as its Attorney/ AR. The appointment of Mr. Subhash Chander Sharma (CW1) as Attorney/AR of the complainant company is vitiated in law.
● That trial court ignored that Mr. Subhash Chander Sharma (CW1) had not even proved his GPA document in his evidence. ● That trial court ignored that as per law, CW1/Mr. Subhash Chander Sharma was neither a legally appointed AR nor was he competent to depose on behalf of complainant company and for that reason, his testimony could not had been considered. ● That trial court committed manifestly grave error in not following the authoritative judgment of three judges Bench of Supreme Court in A.C. Narayanan & Anr. v. State of Maharashtra & Anr., IV (2013) DLT (Crl) 552 (SC), despite the same having been brought to the notice of trial court and filed along with written arguments on behalf of accused.
● That trial court ignored that complainant had neither pleaded any Page 4 of 14 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi Criminal Appeal No.52/2018 specific amount due towards the accused nor produced any documentary evidence showing any dues whatsoever towards the accused nor even produced any oral evidence to this effect. ● That trial court ignored that case of complainant was without evidence. CW1 in his entire cross-examination was not able to answer any of the question put by the cross-examiner. Rather CW1 had taken evasive stand in his replies throughout his cross- examination, saying "i do not remember or I can tell only after going through the records of the complaint company." ● That trial court ignored that CW1, when confronted with the account statements issued by complainant company vide Ex.CW1/D-1, Ex.CW1/D2 and Ex.CW1/D4, had not denied the same, which documents clearly show that the entire dues in the sum of Rs.37,500/- were cleared in full and final by the accused, thereby successfully rebutting the presumption under Section 139 of The Act.
● That trial court ignored the material fact that maintaining a running account with accused, complainant stealthily presented security cheques on 01.11.2006 while continuing to supply goods to the accused till 25.10.2008 and accused made last payment in October, 2010.
ARGUMENTS :-
5. Ld. counsel for appellant argued that legal demand notice was not served. He further argued that AR of the complainant company is not competent witness because he did not prove GPA in his favour. He further argued that director of the complainant company was not empowered to appoint any AR because there was no resolution of board of Directors to empower Mr. Sharma to appoint any AR. Ld. Page 5 of 14 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi Criminal Appeal No.52/2018 counsel further argued that Ex.CW1/A referred to a different company i.e. M/s. Smart Mart Stores Pvt. Ltd. and Subhash Chander Sharma proved this GPA, which was not in his favour. He further argued that complaint referred to Sh. Dharam Chand Sharma as being well conversant of facts and if AR was changed then any director should have come to the court and deposed that Sh. Subhash Chander Sharma was also conversant with facts. Even complainant said that appellant purchased the goods on credit, but complaint did not disclose as to what was exact liability and against which bill such liability was existing. He further argued that CW1 did not know the relevant facts and could not stand his cross-examination. Ld. counsel further argued that if appellant had to discharge debt, then he would had given single cheque rather than five cheques of same date.
6. Per contra, ld. counsel for respondent no.2/complainant firm submitted that lacunae related to GPA was already decided by revisional court stating that it could be rectified. He further argued that there is presumption against the accused, which has to be rebutted by proving the defence/document and no evidence was produced by accused to rebut the presumptions. He relied upon the case of C.C. Alavi Haji v. Palapetty Muhammed, 2007 Crl.L.J. 3214, to counter defence of non receipt of notice. Ld. counsel for respondent no.2 further argued that in his cross-examination, accused admitted the transaction.
7. Later on, ld. counsel for appellant filed certain judgments in support of his arguments, which are as follows :-
● State of Maharashtra & Anr. v. G. Kamalkar, IV (2013) DLT (Crl.) 552 (SC).
● Sri Murugan Financiers v. P.V. Perumal, 2005 CRI.L.J. 269. ● Tristar Consultants v. M/s. Vcustomer Services India Pvt. Ltd.Page 6 of 14 (Pulastya Pramachala)
Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi Criminal Appeal No.52/2018 & Anr., C.R.P. No. 365/2006, decided by High Court of Delhi on 05.03.2007.
● M/s. Pine Product Industries & Anr. v. M/s. R.P. Gupta & Sons & Anr. 2007 I AD (Cr.) (DHC) 213.
APPRECIATION OF ARGUMENTS AND FINDINGS :-
8. In this case it is admitted fact that cheques in question were signed by appellant and were handed over to the complainant company. Appellant no.1 at the stage of framing of notice under Section 251 Cr.P.C as well as at the stage of statement under Section 313 Cr.P.C took defence that the cheques were handed over by him to complainant company as security because he used to purchase goods from this company. However, he had already paid all the dues of the complainant company and he had no liability towards the complainant company. This defence had been one of the grounds in this appeal as well. However, besides aforesaid ground appellant took some other grounds as well and I shall deal with them first.
9. It was contention of appellant that legal demand notice was not proved nor its delivery to the appellant was proved by the complainant. According to ld. counsel, the advocate who had sent the legal demand notice could only prove the contents of legal demand notice, but he was not examined. His another contention was that notice was not sent as per Section 27 General Clauses Act.
10.However, this legal demand notice was filed along with complaint along with courier receipt and UPC. In the affidavit of CW1, it was also stated that this demand notice was got served upon accused by complainant. This means that complainant company vouched through CW1 that the legal demand notice placed on the record i.e. Ex.CW1/N was the legal notice, which was sent on behalf of the company to the accused. In that situation, there was no need to Page 7 of 14 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi Criminal Appeal No.52/2018 examine the advocate, who had actually drafted and sent this notice for complainant company. The notice is shown to be sent through courier as well as through UPC. Courier receipt was issued by officials of concerned agency and it is normal practice to mention short form of the given address. However UPC mentioned complete address of the accused and in his cross-examination accused admitted that the given address in this notice pertained to him. In these circumstances, on the basis of UPC, there is presumption of service of this notice upon the accused, by virtue of Section 27 of General Clauses Act. This presumption is rebuttable, but appellant did not lead any evidence to rebut this presumption to show that this notice was actually not served upon him. It has to be remembered that if the given address on the notice and UPC was admitted to be correct by the appellant, then it was for him to rebut this presumption.
11.Even otherwise, In C.C. Alavi Haji v. Palapetty Muhammed, 2007 Crl.L.J. 3214, three judges bench of Supreme Court held that "any drawer who claims that he did not receive the notice sent by post, can within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and therefore, the complaint is liable to be rejected." Therefore, this ground of appeal is not sustainable.
12.Another ground was taken that CW1 was not competent witness as he was not having any knowledge about this transaction and the initial AR of the company namely SH. Dharam Chand Sharma was also appointed as by a stranger company. Therefore, complaint was not properly filed. As far as complaint being filed by Sh. Dharam Page 8 of 14 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi Criminal Appeal No.52/2018 Chand Sharma is concerned, this matter was already raised by appellant in a criminal revision bearing no.10/14, wherein the court while relying upon the judgment passed in Associated Cement Company Ltd. v. Keshwananad (MANU/SC/0894/1998), held that this defect was curable and same could be rectified even at a later stage. Subsequently, Mr. Subhash Chander Sharma was appointed as AR on the basis of a board resolution and a GPA executed in his favour by one of the directors. If appellant was having any sincere doubt regarding due authorization of Mr. S.C. Sharma, then he could have asked this witness to produce the record of board resolution dated 05.10.2015, vide which he was shown to be authorized to represent complainant company. At this stage of appeal, I do not find this ground to be impressive so as to drop the proceedings against appellant, specially in view of the fact that such authorization even if found defective, could be rectified by the complainant company.
13.Now I shall deal with the actual defence of the appellant. Before I analyse evidence on the record to assess the defence of the appellant, it is appropriate to refer to guiding legal principles.
14.In Kumar Exports v. Sharma Carpets, (2009) 2 Supreme Court Cases 513, Supreme Court held that :-
"18. Applying the definition of the word 'proved' in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instruments was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 Page 9 of 14 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi Criminal Appeal No.52/2018 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.
19. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and 'shall presume' as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over.
20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the nonexistence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring Page 10 of 14 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi Criminal Appeal No.52/2018 on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act."
15.It is well settled law now that the statutory presumptions against the accused can be rebutted while relying upon the circumstances arising out of complainant's evidence itself. What accused is supposed to show that there was absence of legally recoverable debt and the burden cast upon him is based on preponderance of probability. However, complainant is under duty to prove its case beyond all reasonable doubt.
16.In the present case appellant examined himself as DW1 to affirm on oath that cheques in question were handed over by him to the owner of the complainant company namely Sh. Niranjan in the year 2005 or 2006 as security cheques to start business with that company. He deposed that after receiving electronic goods from the complainant, he used to make payment as per current account. In the complaint as well as in the affidavit of CW1, it was stated that accused had purchased goods on credit. In such circumstances it cannot be said that before supplying any goods to the accused, in order to secure its interest, complainant company would have obtained cheques Page 11 of 14 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi Criminal Appeal No.52/2018 towards security. The main issue is that what was the existing liability of the accused. The existing liability of the accused has to be projected and explained by the complainant in the complaint as well as in the evidence. Any concrete response in respect to projected liability from the accused can be expected only when there are concrete particulars provided for such liability. In the present case, complainant company had been supplying electronic goods to the accused. In that situation, it was for the complainant company to explain that against which particular supply and against which particular invoice, what exact amount was outstanding against the accused. However, complaint as well as affidavit of CW1 are completely silent in respect of the nature and particulars of existing liability of the accused. In the case of Pine Product Industries v. M/s. R.P. Gupta & Sons 2007 I AD (CR) (DHC) 213, Delhi High Court also took note of a vague incomplete pleading in the complaint in such case as well as absence of necessary details of the liability, so as to acquit the accused. Same situation is involved herein.
17.It is worth to mention here that complainant was aware of defence taken by appellant at the stage of framing of notice and therefore, at least at the subsequent stage of leading evidence, complainant company could have led evidence so as to prove the details of existing liability of the appellant. But, on the contrary CW1 during his cross-examination came up with a series of evasive reply so as to say that he did not remember details of first and last transaction with appellant. He also said that he did not remember, if his company took any security from the appellant for starting the business. However, he immediately modified his stand to deny taking any security cheque from the appellant. Interestingly, he deposed that his company Page 12 of 14 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi Criminal Appeal No.52/2018 stopped supplying goods to the appellant after dishonor of cheques in question. However, such statement of CW1 stood falsified because all these cheques were dishonored way back in the month of November 2006 and during cross-examination of DW1, it was suggested on behalf of complainant itself that appellant had been purchasing the goods from complainant against bills even after filing of the present case. It was also suggested that appellant had the liability to make the payment of the cheques amount in question as well as 12-13 bills. These 12-13 bills were those bills, which were based on transactions between the parties after 15.01.2007. Thus, there is clear cut contradiction in the stand taken by the complainant through CW1 and the stand taken during cross-examination of DW1, regarding continuation of supply of goods to the appellant despite dishonor of cheques in question and filing of the present case.
18.Appellant had taken plea during cross-examination of CW1 that complainant company continued selling goods to him, even after filing of present case (on 11.01.2007) up to 2008. But, CW1 could not give any concrete reply to such suggestion. He was confronted with certain documents in the nature of balance confirmation and statement of account purportedly issued by complainant company and he remained evasive to say that he could not say if such documents were issued by his company. Such evasive reply of CW1 and the contradiction in the stand taken by the complainant company, assume importance because it appears to be abnormal and improbable that despite dishonor of six cheques and alleged outstanding dues, complainant company would have continued delivering goods to the appellant. If such goods were continued to be supplied till 2008, then existence of liability against cheques in Page 13 of 14 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi Criminal Appeal No.52/2018 question become questionable.
19.Therefore, the absence of exact details of the existing liability and improbable situations arising out of complainant's evidence itself read with defence evidence, lead me to conclude that appellants had successfully rebutted the statutory presumptions so as to show improbability of existence of any legally recoverable debt. On the other hand, complainant failed to prove the liability of appellant at all. In these circumstances, I do find that conviction of appellants in this case cannot be sustained. Hence, appeal is allowed and impugned judgment of conviction and order on sentence both dated 28.04.2018 are set aside. Appellants are acquitted of the charges.
20.TCR along with copy of judgment be sent back. File be consigned to record room, as per rules.
Digitally signed by PULASTYA PRAMACHALA PULASTYA Location: Court
PRAMACHALA No.3, Karkardooma
Courts, Delhi
Date: 2018.07.03
17:16:54 +0530
Announced in the open court (PULASTYA PRAMACHALA)
today on 03.07.2018 Special Judge (PC Act) CBI, East
(This order contains 14 pages) Karkardooma Courts, Delhi
Page 14 of 14 (Pulastya Pramachala)
Special Judge (PC Act) CBI, East District
Karkardooma Courts, Delhi