Delhi District Court
Cc No. 1657/2017 Intec Capital Ltd. vs . Shaheel Interiors Pvt. Ltd. Page No. ... on 27 March, 2023
IN THE COURT OF ANKIT MITTAL,
METROPOLITAN MAGISTRATE - 04, N. I. ACT,
SOUTHEAST DISTRICT, SAKET DISTRICT COURTS, DELHI.
JUDGMENT
Intec Capital Ltd.
701, Manjusha Building 57, Nehru Place New Delhi.
..............Complainant Versus (1) M/s Shaheel Interiors Pvt Ltd.
H. No.7, Gali No.A23, Budhvihar, Akbarpur, Bahrampur, Vijay Nagar, Near KD Public School Ghaziabad, Uttar Pradesh201010 Also at:
LGF 11, Parsavnath Magestic, Arcade Indirapuram, Ghaziabad, Uttar Pradesh201010 (2) Ms. Shabanam D/o Newazi Anshari DirectorcumAuthorized Signatory H. No.7, Gali No.A23, Budhvihar, Akbarpur, Bahrampur, Vijay Nagar, Near KD Public School Ghaziabad, Uttar Pradesh201010 Also at:
LGF 11, Parsavnath Magestic, Arcade Indirapuram, Ghaziabad, Uttar Pradesh201010 (3) Mr. Mohammad Sabir S/o Sh. Abdul Rashid Ansari DirectorcumAuthorized Signatory H. No.7, Gali No.A23, Budhvihar, Akbarpur, Bahrampur, Vijay Nagar, Near KD Public School CC No. 1657/2017 Intec Capital Ltd. Vs. Shaheel Interiors Pvt. Ltd. Page No. 1/14 Ghaziabad, Uttar Pradesh201010 Also at:
LGF 11, Parsavnath Magestic, Arcade Indirapuram, Ghaziabad, Uttar Pradesh201010 ..............Accused PS - Kalkaji Under Section 25 of Payment and Settlement System Act, 2007 CNR No. DLSE020024912017
a) Sl. No. of the case : CT No. 1657/2017
b) Date of filing of complaint : 23.02.2017
c) Name of the complainant : Intec Capital Ltd.
701, Manjusha Building 57, Nehru Place New Delhi
d) Name of the accused person(s) : (1) M/s Shaheel Interiors Pvt Ltd. H. No.7, Gali No.A23, Budhvihar, Akbarpur, Bahrampur, Vijay Nagar, Near KD Public School Ghaziabad, Uttar Pradesh 201010 Also at:
LGF 11, Parsavnath Magestic, Arcade Indirapuram, Ghaziabad, Uttar Pradesh201010 (2) Ms. Shabanam D/o Newazi Anshari DirectorcumAuthorized Signatory, H. No.7, Gali CC No. 1657/2017 Intec Capital Ltd. Vs. Shaheel Interiors Pvt. Ltd. Page No. 2/14 No.A23, Budhvihar, Akbarpur, Bahrampur, Vijay Nagar, Near KD Public School, Ghaziabad, Uttar Pradesh201010 Also at:
LGF 11, Parsavnath Majestic, Arcade Indirapuram, Ghaziabad, Uttar Pradesh201010 (3) Mr. Mohammad Sabir S/o Sh. Abdul Rashid Ansari, Directorcum Authorized Signatory, H. No.7, Gali No.A23, Budhvihar, Akbarpur, Bahrampur, Vijay Nagar, Near KD Public School Ghaziabad, Uttar Pradesh 201010 Also at:
LGF 11, Parsavnath Majestic, Arcade Indirapuram, Ghaziabad, Uttar Pradesh 201010
e) Offence complained of :Under Section 25 of Payment and Settlement System Act, 2007
f) Plea of accused : Pleaded not guilty
g) Final order : Conviction
h) Date of such order : 27.03.2023.
BRIEF STATEMENT OF THE REASONS FOR DECISION : CC No. 1657/2017 Intec Capital Ltd. Vs. Shaheel Interiors Pvt. Ltd. Page No. 3/14
1. Vide this judgment, this Court shall dispose off complaint for for offence punishable under Section 25 of Payment and Settlement System Act, 2007 filed by the complainant against accused.
2. In gist, it is in the complaint that present complaint has been filed by Mr. Sandeep Singh, who has been duly authorized by the complainant company vide board resolution dated 28.05.2015 which is Ex.CW1/2 (OSR). Copy of authority letter dated 25.11.2016 is Ex.CW1/1 (OSR). It is in alleged in the complaint that accused no.1 is a private limited company and accused no. 2 and 3 are the directors of the accused company and are responsible for day to day affairs of the company. Accused no. 2 and 3 being the directors of the company approached the complainant company on behalf of accused company for availing loan facility to the tune of Rs. 24,40,000/ and accordingly, complainant company advanced the loan amount of Rs. 24,40,000/ to the accused. In lieu of loan sanctioned, accused company through accused no.2 signed the loan agreement bearing No.1649 and Loan No. LNNHP00213140003005 and also executed other documents and accepted all the terms and conditions of the loan. It was averred that the loan agreement was executed between the parties and complainant was financier and the accused no.1 to 3 as borrower cum guarantors.
3. It is further alleged in the complaint that the said loan was given for a period of 60 months from the date of agreement. Further, in discharge of legal liability, accused persons have opted for ECS system and accordingly, accused no.2 with consent and permission of accused no.3 on behalf of accused no.1 has signed and handed over the signed ECS mandate for clearance of monthly EMIs of Rs.64,000/ towards the repayment of the said loan. Copy of mandate is Mark A. CC No. 1657/2017 Intec Capital Ltd. Vs. Shaheel Interiors Pvt. Ltd. Page No. 4/14 When complainant company presented ECS bearing items sequence No.6543049734 of Rs.64,000/ with its banker HDFC Bank, New Delhi, the same got dishonoured vide return memo dated 02.01.2017 with remarks as "Funds Insufficient". Return memo is Ex.CW1/3. Thereafter, complainant company contacted the accused and informed them about the dishonour of the ECS but accused persons did not give any response and till date no payment has been made by them and the amount of Rs.64,000/ alongwith delay interest @ 36% p.a. as well as bouncing charges are remaining due to the complainant company on accused loan account against the said ECS. It is further averred that as accused has not made any payment, therefore, complainant sent a legal notice dated 28.01.0217 through speed post on 31.01.2017 on all the last known addresses of the accused persons demanding the payment within stipulated time from the receipt of said notice. Legal demand notice is Ex.CW1/4, postal receipts are Ex.CW1/5 (colly). Since, no reply or payment was made within statutory period of legal demand notice, hence, this complaint was filed.
4. Presummoning evidence was led by the complainant side and after hearing complainant side, accused was summoned for offence punishable Under Section 25 of Payment and Settlement System Act, 2007. After appearance of accused, it was ensured that copy of complaint has been supplied. Notice was framed against the accused persons for offence punishable Under Section 25 of Payment and Settlement System Act, 2007 on 29.04.2019 in which accused persons pleaded not guilty and claimed trial. However, accused persons in their defence recorded in their notices framed u/s 251 Cr.P.C, stated that they have not issued the ECS mandate and there is no liability towards the complainant. CC No. 1657/2017 Intec Capital Ltd. Vs. Shaheel Interiors Pvt. Ltd. Page No. 5/14
Further, since, accused persons did not preferred to file an application u/s 145(2) N. I. Act, therefore, their right to cross examine the complainant was closed and matter was listed for recording of statement of accused persons u/s 313 Cr.P.C
5. The statement of accused persons were recorded under Section 313 of The Code of Criminal Procedure, 1973 read with Section 281 of The Code of Criminal Procedure, 1973 on 25.11.2019. Incriminating evidence were put to them, however, they submitted that they want to settle the matter with the complainant company and did not opt to lead the defence evidence. Hence, matter was listed for final arguments.
6. Final arguments from both sides were heard at length. Written submissions was filed on behalf of accused persons. Case file perused. INGREDIENTS OF OFFENCE AND DISCUSSION
7. Before dwelling into the facts of the present case, it would be apposite to discuss the legal standards required to be met by both sides. In order to establish the offence under Section 25 of Payment & Settlement System Act, 2007, the prosecution must fulfill all the essential ingredients of the offence. It is relevant here to quote the relevant Section here which has been reproduced as below:
Section 25 Dishonour of Electronic Funds Transfer for insufficiency, etc., of funds in the account.
(1) Where an electronic funds transfer initiated by a person from an account maintained by him cannot be executed on the ground that the amount of money standing to the credit of that account is insufficient to honour the transfer instruction or that it exceeds the amount arranged to be paid from that account by CC No. 1657/2017 Intec Capital Ltd. Vs. Shaheel Interiors Pvt. Ltd. Page No. 6/14 an agreement made with a bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the electronic funds transfer, or with both: Provided that nothing contained in this section shall apply unless
(a) the electronic funds transfer was initiated for payment of any amount of money to another person for the discharge, in whole or in part, of any debt on other liability;
(b) the electronic funds transfer was initiated in accordance with the relevant procedural guidelines issued by the system provider;
(c) the beneficiary makes a demand for the payment of the said amount of money by giving a notice in writing to the person initiating the electronic funds transfer within thirty days of the receipt of information by him from the bank concerned regarding the dishonour of the electronic funds transfer; and
(d) the person initiating the electronic funds transfer fails to make the payment of the said money to the beneficiary within fifteen days of the receipt of the said notice.
(2) It shall be presumed, unless the contrary is proved, that the electronic funds transfer was initiated for the discharge, in whole or in part, of any debt or other liability.
(3) It shall not be a defence in a prosecution for an offence under subsection (1) that the person, who initiated the electronic funds transfer through an instruction, authorization, order or agreement, did not have reason to believe at the time of such instruction, authorization, order or agreement that the credit of his account is CC No. 1657/2017 Intec Capital Ltd. Vs. Shaheel Interiors Pvt. Ltd. Page No. 7/14 insufficient to effect the electronic funds transfer. (4) The Court shall, in respect of every proceeding under this section, on production of a communication from the bank denoting the dishonour of electronic funds transfer, presume the fact of dishonour of such electronic funds transfer, unless and until such fact is disproved.
(5) The provisions of Chapter XVII of the Negotiable Instruments Act, 1881 (26 of 1881) shall apply to the dishonour of electronic funds transfer to the extent the circumstances admit. Explanation.For the purpose of this section,debt or other liabilitymeans a legally enforceable debt or other liability, as the case may be.
8. Further, the term "electronic funds transfer" have been defined u/s 2(C) of Payment and Settlement System Act, 2007 which is reproduced as under:
S. 2 (c) : "electronic funds transfer" means any transfer of funds which is initiated by a person by way of instruction, authorization or order to a bank to debit or credit an account maintained with that bank through electronic means and includes point of sale transfers; automated teller machine transactions, direct deposits or withdrawal of funds, transfers initiated by telephone, internet and, card payment.
9. It is pertinent to note that Section 25(5) attracts the applicability of Chapter XVII of the Negotiable Instruments Act, 1881 to the dishonouring of an electronic funds transfer. Section 138 of the NI Act expressively provides provisions concerning the penalization of dishonoured cheques. Both these sections make the dishonouring of electronic funds and cheques an offence punishable with imprisonment, a fine or both. The prime difference between the two is that in the case of the former, the dishonour, which is the subject matter of the offence, is of CC No. 1657/2017 Intec Capital Ltd. Vs. Shaheel Interiors Pvt. Ltd. Page No. 8/14 electronic funds transfer rather than of a cheque.
10. In this regard I would like to rely upon a judgment of Hon'ble Delhi High Court In the case of Ritu Jain Vs. The State Through Standing Counsel & Anr. in Crl. M. C No. 555/2016 date of decision 12.03.2019, wherein it was held that by virtue of Section 25(5) of the Payments and Settlement Act, the provisions of Chapter XVII of the Negotiable Instruments Act, 1881 (26 of 1881) shall apply to the dishonour of an electronic funds transfer to the extent the circumstances admit. Therefore, when Section 25 of the Payment and Settlement Act is invoked, Section 138 of the NI Act is also applicable as the case may be.
11. Hence, once the accused admitted he has issued ECS Mandate, it relates to the accused is proved an initial presumption as contemplated u/s. 139 of Negotiable Instruments Act has to be raised by the court in favour of the Complainant. Section 139 of the Negotiable Instrument Act contemplates that it shall be presumed unless contrary is proved that the holder of the ECS received the nature referred to in the Section 138 of N. I Act and Section 25 of Payment and Settlement System Act, 2007 for the discharge of the whole or in part any debt or liability. The presumption referred to u/s 138 of Negotiable Instruments Act is mandatory presumption and in general presumption.
12. Since provisions of Section 25 (1) and 25 (2) of Payment and Settlement Systems Act, 2007 r/w explanation are similar to the provisions of Sections138 and 139 of N.I. Act, it is just and proper to consider the principles of law laid down in the landmark judgment passed by the Hon'ble Supreme Court of India in the case of Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption contemplated under Section 139 of N.I. Act includes the presumption of existence of a legally CC No. 1657/2017 Intec Capital Ltd. Vs. Shaheel Interiors Pvt. Ltd. Page No. 9/14 enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The principles pertaining to the presumptions and the onus of proof were recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarize the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence. Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
13. The presumptions raised under Section 118(b) and Section 139 NI Act are rebuttable presumptions. A reverse onus is cast on the accused, who has to CC No. 1657/2017 Intec Capital Ltd. Vs. Shaheel Interiors Pvt. Ltd. Page No. 10/14 establish a probable defence on the standard of preponderance of probabilities to prove that either there was no legally enforceable debt or other liability.
14. That the perusal of Section 25 of the Payment and settlement Systems Act shows that one of the basic ingredients of the offence under Section 25 of the aforementioned Act is that the electronics funds transfer is initiated by the accused out of the account maintained by him with a bank for payment of any amount of money to another person for the discharge, in whole or in part, of any debt or other liability, in accordance with the relevant procedural guidelines issued by the system provider. In other words not only the ECS mandate must be signed by the accused but also it should be initiated in accordance with relevant guidelines issued by system provider.
15. On going through the material available on record, it is the specific case of the complainant company is that, the accused persons took the loan of Rs. 24,40,000/ for the purpose of their business which was to be repaid with interest by way of 60 monthly installments of Rs.64,000/ by way of ECS system, however, the accused persons have utterly failed and neglected to regularize the loan account as when complainant company presented its request for clearance of ECS, same was dishonoured with the remark as "Insufficient Balance" which is Ex. CW1/3.
16. Admittedly, the ECS in question has not been disputed about initiated Electronic Fund Transfer by the accused persons. Since, the accused persons hav not disputed the ECS and the signature, the presumption u/s 139 of NI Act has to be drawn as held by the Hon'ble Supreme Court of India in Rangappa Vs. Sri Mohan (Supra).
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17. Adverting to the facts of the present case, herein accused persons neither took any plausible defence nor moved the application for cross examination of the complainant u/s 145(2) N. I. Act. Rather, accused persons stated in their statement u/s 313 Cr.P.C that they do not want to lead any defence evidence and will settle the present matter with the complainant company, as a result the complainant's version went unrebutted and the presumptions raised in the favour of the complainant stands proved, hence, the accused persons have failed to rebut the presumption in favour of complainant either on the basis of the material available on record or by adducing any cogent evidence.
18. The contention of the accused persons that they have not received the legal demand notice and same was disputed in their notices framed u/s 251 Cr.P.C as well, is frivolous in nature as the address mentioned on the legal demand notice was never disputed by the accused persons either by contradicting the complainant or by leading defence evidence. Moreover, it has been settled by the Hon'ble Apex Court in the Judgment reported as, C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555 that an accused who claims that he did not receive the legal notice, can, within 15 days of receipt of summons from the court, make payment of the cheque amount, and an accused who does not make such payment cannot contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the General Clauses Act and Section 114 of the Evidence Act. Hence, in the light of well settled as enunciated by the landmark judgment of C.C. Alavi Haji v. Palapetty Muhammed (supra) the defence of accused in the given situation is immaterial and devoid of merit.
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19. Furthermore, the written submissions filed on behalf of accused persons at the fag end of the trial is nothing but bald assertions as none of the submissions were proved by the accused side during the trial either by contradicting the complainant or by leading defence evidence. Hence, aforesaid contentions are dismissed.
20. Therefore, it can be concluded that the ECS in question was presented against the liability of the accused company which was duly established by the complainant, therefore, the accused company is liable u/s Under Section 25 of Payment and Settlement System Act, 2007.
21. In the present complaint, there are three accused persons, one being accused company ie. M/s Shaheel Interior Pvt. Ltd. Company and its directors, namely, accused no. 2 Ms. Shabnam and accused no. 3 Mr. Mohd. Shabir. The provision of Section 141 of the N. I. Act provides the vicarious liability of the accused persons especially in the context of the company. Further, the effect of reading of Section 141 is that when the company is principal offender in such cases, the remaining persons are made offenders by virtue of legal fiction created by Legislature as per the Section 141 NI Act. Hence, the actual offence should have been committed by the company and then alone other categories of the coaccused persons can also become liable by virtue of Section 141 N. I. Act.
22. Adverting to the given factual matrix of the present case, since there was specific averments in the complaint qua both the directors that they were actively involved and participated in day to day affairs of the accused company. Further, it was also alleged that the loan agreement was executed between the complainant company and financier and accused persons 1 to 3 as borrower cum guarantors. CC No. 1657/2017 Intec Capital Ltd. Vs. Shaheel Interiors Pvt. Ltd. Page No. 13/14 Furthermore, it was also stated in the complaint that accused no. 2 with the consent of accused no. 3 and on behalf of accused no. 1 signed and handed over the ECS mandate for clearance of monthly EMIs. It is pertinent to mention here that since accused persons neither they cross examined the complainant nor they lead any evidence, therefore, the version of complainant story went unrebutted, therefore, it can be said that both the directors can be made vicarious liable by virtue of Section 141 N. I. Act.
23. Hence, in view of the aforementioned facts and circumstances, this Court is of the opinion that complainant has duly proved its case against the accused persons for offence punishable under Section 25 of Payment and Settlement System Act, 2007 beyond shadow of any reasonable doubt. Accordingly, accused persons, namely, Shaheel Interiors and its directors, namely, Ms. Shabnam and Mr. Mohammed Shabir stands convicted for offence punishable under Section 25 of Payment and Settlement System Act, 2007 r/w 141 of N. I. Act.
Copy of the judgment be given dasti to the convicts free of cost.
Announced in the open Court (ANKIT MITTAL)
on 27.03.2023 M.M.04/N.I.Act/SouthEast,Saket/Delhi
27.03.2023
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