Delhi District Court
Complainant vs . on 21 April, 2014
IN THE COURT OF SHRI PUNEET PAHWA
METROPOLITAN MAGISTRATE 01 (N.I. ACT)
PATIALA HOUSE COURTS : NEW DELHI
Sh. Varun Chopra
E41, First Floor,
Greater Kailash, Part1,
New Delhi.
....................... Complainant
Vs.
Sh. Manish Tuli,
Proprietor of M/s Chaudhary Associates,
Hotel Eureka Crowne,
4/70, Krishna Market, Saraswati Marg,
W.E.A, Karol Bagh,
New Delhi.
................................Accused
Case Number. : 1122/1 & 1141/1
Date of Institution of Present Case. : 06.07.2005
Offence Complained Of. : U/s 138 NI Act
Case No. 1122/1 & 1141/1 Page 1 of 33
Plea of the Accused. : Not Guilty
Arguments Heard On. : 27.03.2014
Final Order. : Convicted
Date of Judgment. : 21.04.2014
- :: JUDGMENT ::
1.Vide this common judgment, I shall dispose of the present complaints bearing CC No.1122/1 & 1141/1 filed by the complainant u/s 138 Negotiable Instruments Act, 1881 (hereinafter referred to as "N.I Act").
2. Brief facts of the case as alleged by the complainant are that the complainant is engaged in the business of customs clearing agents and the accused was known to him. The accused and his brother Sh. Ashish Tuli were in the business of hotels, restaurants, bars and pubs etc. The accused and his brother invited the complainant to enter into the business of hotels and restaurants. Consequently a partnership firm was constituted between Manish Tuli, the accused, his brother Case No. 1122/1 & 1141/1 Page 2 of 33 Ashish Tuli, one Sh. Paras Bajaj and Varun Chopra, the complainant. The said partnership deed was executed between four persons on 04.11.2003. It was decided by the partners to carry on the business in the name and style of 'The Dome Entertainments'. As per the terms of the partnership deed, funds were to be introduced by the partners towards the capital in the ratio that the sum capital of first and second partners i.e. Manish Tuli and Ashish Tuli would be equal to the sum capital of the third and fourth partners i.e. Paras Bajaj and Varun Chopra. Accordingly the complainant had paid the capital amounting to Rs.17.50 lakhs to the accused and his brother. However, while the structure was under construction on the land taken on lease in the name of firm vide lease deed executed on 04.11.2003, the accused and his brother entered into new and separate partnership deal with two other persons and venture at the same premises, behind the back of the complainant and Sh. Paras Bajaj. When the complainant came to know about having been left in lurch though having paid the capital of Rs.17.50 lakhs to the accused and his brother, he approached them for settlement of accounts and refund of the amount of Rs.17.50 lakhs. On persistent requests, the accused agreed to repay the entire amount in installments from his sole proprietorship firm namely M/s Case No. 1122/1 & 1141/1 Page 3 of 33 Chaudhay Associates, having office at 4/70, Krishna Market, Saraswati Marg, W.E.A. Karol Bagh, New Delhi, the premises where the partnership firm 'The Dome Entertainments' was having its office. Towards part payment in discharge of the aforesaid debt and liability, the accused issued the following cheques : IN CC NO. 1122/1 Sl CHEQ EXHIBIT RETURN MEMO DATE OF AMOUNT No. UE EXHIBIT ISSUANCE NO. OF CHEQE 1 574752 Ex. CW 1/3 Ex. CW 1/10(A) 03.01.2005 5,00,000/ 2 574754 Ex. CW 1/2(A) Ex. CW 1/2(B) 17.01.2005 75,000/ 3 574756 Ex. CW 1/4 Ex. CW 1/6(A) 31.01.2005 75,000/ 4 574759 Ex. CW 1/5 Ex. CW 1/3(A) 14.02.2005 75,000/ 5 574761 Ex. CW 1/6 Ex. CW 1/4(A) 28.02.2005 75,000/ 6 574763 Ex. CW 1/7 Ex. CW 1/8(A) 14.03.2005 75,000/ 7 574765 Ex. CW 1/8 Ex. CW 1/9(A) 28.03.2005 75,000/ 8 574767 Ex. CW 1/9 Ex. CW 1/7(A) 11.04.2005 75,000/ 9 574769 Ex. CW 1/10 Ex. CW 1/5(A) 25.04.2005 75,000/ 10 574773 Ex. CW 1/11(A) Ex. CW 1/11(B) 09.05.2005 75,000/ 11 574775 Ex. CW 1/12(A) Ex. CW 1/12(C) 23.05.2005 75,000/ TOTAL 12,50000/ IN CC NO. 1141/1 Sl CHEQ EXHIBIT RETURN MEMO DATE OF AMOUNT No. UE EXHIBIT ISSUANCE NO. OF CHEQE 1 574784 Ex. CW 1/2 Ex. CW 1/3 & 4 25.07.2005 50,000/ 2 574785 Ex. CW 1/5 Ex. CW 1/6 & 7 02.08.2005 50,000/ Case No. 1122/1 & 1141/1 Page 4 of 33
3. All the above said cheques were drawn on Standard Chartered Bank, WEA Karol Bagh branch in favour of the complainant. However, when the said cheques were presented by the complainant with his banker, the same were returned back unpaid with the remarks "Payment Stopped By The Drawer". Thereafter a legal demand notice was issued by the complainant to the accused as required u/s 138 of N.I. Act asking the accused to make the payment of the said cheques within stipulated period of 15 days of receipt of the notice. Notices were duly served upon the accused but in spite of the receipt of the notices, the accused failed and neglected to make payment as demanded by the complainant. Hence, these complaints.
4. On finding a prima facie case against the accused, he was summoned. The accused appeared and was released on bail. Notice u/s 251 Cr. P.C was served upon the accused to which he pleaded not guilty and claimed trial. Thereafter the complainant was asked to lead CE.
5. To prove his case, the complainant examined himself as CW 1 and Sh. Lal Saheb Misra as CW 2 and thereafter he closed his Case No. 1122/1 & 1141/1 Page 5 of 33 evidence. Statement of accused u/s 313 Cr. P.C was recorded. To rebut the case of the complainant, the accused examined himself as DW 1. After the examination of DW 1, DE was closed and the case was fixed for final arguments. Final arguments were heard and the case was fixed for orders.
6. In his evidence the complainant has filed his affidavit in which he has reiterated the averments made by him in his complaint and fully supported his case. The partnership deed executed between the parties is Ex. CW 1/1.
7. During the crossexamination of the complainant, he was directed to bring copy of his Income Tax Returns for the year 20040506 and the complainant had complied with the directions though with resistance and had furnished ITRs which are Mark X1, X2 & X3. In his crossexamination when the question was put to him as to whether he has shown in his ITR about the amount of Rs.17.50 lakhs paid to the accused, he had replied that the amount of Rs. 2,50,000/ was shown to be paid in the name of The Dome Entertainment. The said Rs.2,50,000/ was contributed by each partner Case No. 1122/1 & 1141/1 Page 6 of 33 for the lease on behalf of the firm. Then again a question was put to the witness as to whether he had given any document showing that Rs. 15 lakhs was given to the firm besides Rs.2,50,000/ as stated above. To this the witness had replied that the documents Ex. CW 1/X1 and Mark X4 to X7 shows that payments were made to the accused. Voluntarily he further deposed that the amount may not total up to Rs. 15 lakhs. He further deposed that rest of the amount was given from his personal savings and loan taken from his parents and grand parents. He had further deposed that all payments were not made through cheques. He further deposed that the payments that were to be made to carpenters and other construction workers and other staff were made in cash and the cheques were signed by him and the accused. He had further deposed that the amount given in cash to staff and workers was not withdrawn from accounts of the firm, these payments were made by all the partners from their own pocket as and when required.
8. The complainant had also examined Sh. Lal Saheb Mishra, Clerk, Standard Chartered Bank, ITO Branch, New Delhi as CW 2. He had produced certified copy of the statement of account of M/s Case No. 1122/1 & 1141/1 Page 7 of 33 Chaudhary Associates which is Ex. CW 2/2, certified copy of the front side and back side of the cheque bearing no. 574787, Ex. CW 2/3 and certified copy of the front side and back side of the cheque bearing no. 574757 Ex. CW 2/4. Thereafter, the complainant had closed his evidence.
9. Statement of the accused u/s 313 Cr. P.C was recorded. In his statement, the accused had admitted that he was friends with the complainant and during the course of their conversation the idea was floated amongst him, his brother and the complainant to join his business. He had also admitted that consequently a partnership firm was constituted in the name and style of 'The Dome Entertainment' and executed a partnership deed on 04.11.2003 between him, his brother, the complainant and Mr. Paras Bajaj. He had also admitted that funds were to be introduced by the partners towards the capital of the partnership in the ratio of 5050, the first 50 being the contribution of the complainant and his brother and the second 50 to be the contribution of the complainant and Mr. Paras Bajaj. However, he had denied that the complainant had paid capital amount to Rs.17.50 lakhs to him and his brother. He had admitted that when the structure of the said partnership firm was under construction on the land taken Case No. 1122/1 & 1141/1 Page 8 of 33 on lease in the name of the firm, he and his brother entered into a new partnership deal with other parties, but the same was entered into after the partnership entered into on 04.11.2003 was dissolved by mutual agreement. He had also denied that the complainant had approached him and his brother for settlement of accounts and for refund of amount of Rs.17.50 lakhs. He had also denied that he had shown his inability to refund the amount but agreed to repay the entire amount in installments from his sole proprietorship firm M/s Chaudhary Associates. When the question was put to him to the effect that Ex. CW 2/2 containing the bank statement of M/s Chaudhary Associates dated 24.12.2004 was filed by CW 2, the accused shown his ignorance by stating that he was not aware as he did not receive any copy of the same. He had denied that the cheques in question were given by him to the complainant. He had admitted the receipt of legal demand notice. The accused had further stated that the cheques were stolen from his office and he had lodged a complaint for the same and informed his bank also in the year 2004.
10. When the accused was called upon to lead DE, he had filed a defence affidavit admitting that a partnership deed was recorded Case No. 1122/1 & 1141/1 Page 9 of 33 between the complainant and Paras Bajaj on the one part and Sh. Ashish Tuli and he himself on the other part. However, the said deed was not witnessed by anybody nor it was registered under the Partnership Act. He had further submitted in his affidavit that all the partners contributed Rs.2.5 lakhs each to Mr. Mahinder Chaudhary towards the rent for the business premises hired. However, at the preliminary stage, the functioning of the business misfired because the other set of partners i.e. complainant and Paras Bajaj, could hardly contribute for the funds required to start the business of the firm. He categorically denied that the complainant Varun Chopra and Paras Bajaj had contributed Rs.17.50 lakhs each as alleged by them. He further stated that in fact they did not have the financial status to contribute that much amount to start the business. Referring to the Income Tax Return of complainant Varun Chopra the accused stated that the complainant did not give Rs.2.50 lakhs or Rs.62,000/ to the firm. He has further submitted that in his ITRs the complainant has not shown investments to the tune of Rs.17.50 lakhs except a payment of Rs.2.50 lakhs to The Dome Entertainment. He has further submitted that even after the collapse of partnership firm the complainant Varun and Paras continued to remain friendly with him Case No. 1122/1 & 1141/1 Page 10 of 33 and his brother and off and on they visited at his office at Karol Bagh. On 04.01.2005 the complainant and Paras Bajaj had come to his office and stole the cheque book and misused the same by filling in their favour. He had further submitted that he had gone from office to Saraswati Marg, New Delhi where he left his bag containing cheque book of Standard Chartered Bank containing some signed cheques and other documents but on return finding the said bag missing, he filed an NCR on the same day with PS: Karol Bagh vide DD No. 57B on 04.01.2005 itself. It has been categorically stated by the accused that Varun Chopra and Paras Bajaj had come to his office on that day and the cheque book had been stolen by them. He had further submitted that on coming to know about the misuse of the said cheque book he had filed a complaint case in 2007 against Paras Bajaj and Varun Chopra in Tis Hazari Courts, Delhi. The said court had taken cognizance thereof and notice had been issued to them. The accused had admitted that the cheques in question bear his signatures but name and amount was not in his handwriting.
11. In his crossexamination the accused had admitted that he had received legal demand notice on 02.06.2005 and he has not filed any Case No. 1122/1 & 1141/1 Page 11 of 33 reply to the said legal notice. He had further admitted that when he first appeared in the court he did not inform the court regarding loss of the cheques in question. However, he had informed Branch Manager, Standard Chartered Bank vide his undated letter Ex. DW 1/2. In his letter he had mentioned about the lost cheques from cheque no. 574753 to 574800. He had admitted that cheque no. 574757 was honoured by his bank as a self cheque of Rs.15,000/ on 04.12.2004. Similarly cheque no. 574787 was issued in the name of the firm Printer & Adv for payment of Rs.2,140/ which was encashed on 23.10.2004. He had further deposed that he had not shown the amount allegedly incurred as expenditure towards the security made by him with regard to his share in the partnership firm in any of his income tax returns. When the question was put to him that whether he has lodged any report regarding the loss of cheque no. 574752, drawn on Standard Chartered Bank, issue in favour of Sh. Varun Chopra for a sum of Rs.5 lakhs, the accused had submitted that he had not issued any cheque in the name of Varun Chopra and he did not remember if he had mentioned the abovesaid cheque number in any missing report. He had further categorically denied that the cheque was issued in discharge of his liability. He had not denied that he had joined Kiran Case No. 1122/1 & 1141/1 Page 12 of 33 Ahuja W/o Sh. Rajkumar and Sh. Gaurav Katila S/o Sh. Som Chand Patia and Ms. Meenakshi Bedi D/o Mr. B.K. Bedi as partner without informing the complainant and without dissolving the already existing partnership firm. He had admitted that when he lodged NCR with the police station Karol Bagh he had mentioned that the cheques had got misplaced / lost. He had further admitted that he had not mentioned in the NCR that the cheques in question were taken by Varun Chopra. Voluntarily he stated that at that time he was not aware of the fact. He had further stated that the cheques were signed by him for a car loan and they were kept in his cheque book. Subsequently when asked as to whether he had actually got a car financed in the month of January, 2005 and issued some other cheques to the finance company, he stated that he brought a cheaper car i.e. Skoda lateron but he did not remember the date, month of year of its purchase. The same was financed by ICICI bank. He did not remember he had issued instructions to the bank regarding stop payment of the cheque bearing no. 574752 drawn on Standard Chartered Bank. However, he had admitted that as per Ex. DW 1/2, stop payment instructions were issued on the letterhead of Bulbul Bar & Restaurants which was undated.
Case No. 1122/1 & 1141/1 Page 13 of 33
12. Ld. Counsel for the complainant has argued that the complainant has sufficiently proved its case beyond all reasonable doubt and now it is upon the accused to rebut the presumptions raised against him and the accused has not brought on record even iota of evidence to rebut those presumptions and therefore he is liable to be convicted u/s 138 of N.I. Act. It has been further argued that the accused claims in his evidence that signed cheques from 574753 to 574800 were lost, whereas cheque no. 574757 was duly encashed for an amount of Rs.15,000/ as self cheque and cheque no. 574787 was cleared for the sum of Rs. 2140/ which was issued in favour of Lucky Printers & Advertisers and the same has been proved by CW 2 therefore the only defence put forth by the accused has been negated by this fact. Moreover, the factum of loss of signed cheques has been reported by the accused to the police on 29.10.2006 i.e. almost more than one year after receiving of notice u/s 138 of N.I. Act. It has been further argued that one cheque bearing no. 574752 for an amount of Rs.5,00,000/ given by the accused to the complainant was also bounced and the accused has not reported the loss of the said cheque. It has been further argued that the accused claimed that he had signed the cheques for the purpose of car loan but has not proved anything on Case No. 1122/1 & 1141/1 Page 14 of 33 record to prove the loss of cheques or that he had signed the cheques for the purpose of EMIs to be paid for the alleged car loan. In fact the loss of cheques has also not been proved by the accused. The accused has admitted that he had received the legal demand notice issued by the complainant but he did not reply to the said notice nor he had raised any such defence when he appeared in the court, therefore it can be said that the defence raised by the accused was just an afterthought to defeat the case of the complainant. It has been further argued that the complainant had shown the funds invested in the partnership firm M/s The Dome Entertainment in his ITR as loan taken from his father Sh. V.K. Chopra and loan taken from his company Tranzfreight and he had also taken loan from his grandparents and also out of pocket expenses, payment of which has been made in cash. In his crossexamination the accused had admitted that all the partners had contributed equally towards the security of the premises. Therefore, case of the complainant has been sufficiently proved and guilt of the accused has been established beyond all reasonable doubt.
13. On the other hand Ld. Counsel for the accused has argued that Case No. 1122/1 & 1141/1 Page 15 of 33 the complainant has miserably failed to bring on record any document to prove as to when the business was suspended and subsequently closed. It has been further argued that the complainant during the course of his crossexamination on 21.01.2010 failed to tell the court as to why Chaudhary Associates was not made party to his case despite the fact that cheques had been issued on behalf of the Chaudhary Associates. It has been further argued that the complainant was specifically directed to produce before the court books of account and ITRs for the years ending 31st March 20040506 however on 24.12.2010 the complainant could produce only one photocopy of cash deposit receipt showing a cash deposit of only Rs.12,000/ in account no. 4991 of Dome Entertainment. He also produced photocopies of his ITRs for the year ending 2004 which shows that he drew a net salary of Rs.1,35,900/ plus income from interest Rs.13,816/ totalling to Rs.1,49,716/. As per ITR only a sum of Rs.2,50,000/ has been paid to the Dome Entertainment. From the ITR it is clear that he was a salaried employee with gross salary of Rs. 2,10,000/ with tax deduction of Rs.30,000/ and Transport Allowance of Rs.9,600/, showing his net salary income of Rs.1,74,400/ and a house property income of Rs.77,727/ and had sought a refund of Rs. Case No. 1122/1 & 1141/1 Page 16 of 33 2,004/. This shows and proves that the complainant was an indolent and indigent person and lacked financial resources to even think of partnering a project of hotel / pub / entertainment centres or contributing 17.5 lakh rupees in 2004. It has been further argued that as per the bank account maintained by Dome Entertainment in Corporation Bank was jointly operated by two sets of partners. In the said account, entire expenditure including lease amount of Rs. 2,50,000/ is shown. Only cash deposit of Rs.93,000/ is shown and cash withdrawal of Rs.2,10,000/. This indicates that cash payments were made after withdrawing cash from the bank account of the firm. This account shows total expenditure of Rs.5,35,856/ and credits of Rs.5,53,000/ leaving a balance of Rs.17,144/. It is crystal clear that total operational expenses did not exceed a sum of Rs.5.5 lakhs. This by itself falsifies the tall claims made by the complainant that he had contributed Rs.17.5 lakhs and if one goes by this version, a matching contribution ought to have come from Tuli Brothers. Even in the crossexamination also on 24.12.2010 when confronted with all these documents the complainant had admitted that amount does not total to even Rs.15 lakhs. But then the complainant took a turn around from his earlier stand of paying the amount from his saving bank account Case No. 1122/1 & 1141/1 Page 17 of 33 and stated that money was given from his personal savings and loan taken from parents and grand parents. Loan entries have not been shown in his personal account books nor its deposit in the account of Dome Entertainment.
14. The defence of the accused was that only four cheques have been issued by firm that show that Rs.2.5 lakhs were paid to Blue Star for buying fridge and all the cheques bear the signatures of Varun and either of the Tuli brothers. It has been further argued that on one hand the complainant admits the partnership deed but when its clauses demolished the concocted story advanced by him, then he took the stand contrary to its clauses.
15. Basically the defence of the accused was that after making some payment to Blue Star and Tata Tele Security, both Bajaj and Varun abandoned the business as they lacked financial resources to start the business and thus for all intents and purposes the said firm and its deed remained a dead entity / document. The rent of Rs.2.5 lakh paid by each partner to Mohinder Chaudhary was adjusted by complainant and never returned to either the accused or his brother Ashish. The Case No. 1122/1 & 1141/1 Page 18 of 33 accused categorically denied receiving funds of Rs.17.5 lakhs from the complainant. The complainant and accused were friendly to each other and the complainant off and on visited the office of the accused. On 04.01.2005 the complainant stole the cheque book and utilized the same by filling date and his own name and after keeping quite from some time he sent notices of bouncing of cheques in June 2006 whereafter he filed separate complaints in this court. It has been argued that before receipt of any notice, the accused had filed report with P.S Karol Bagh on 04.01.2005 vide DD No. 57B about loss of cheques and other documents and informed the bank to close the account and issued stop payment instructions. When the report was filed, he did not suspect the complainant however, when he received legal notices and filing of complaint in court, he filed a case before Ld. MM Tis Hazari Courts having jurisdiction over P.S. Karol Bagh.
16. To counter the arguments deposed by Ld. Counsel for complainant regarding cheque no. 574752, 574757 and 574787, Ld. Counsel for the accused has submitted that the cheque book was lost by the accused. However the accused did not exactly remember the number of cheques. A pattern of loss of cheques shows that except Case No. 1122/1 & 1141/1 Page 19 of 33 two cheques of Rs.50,000/, all were for an amount of Rs.75,000/ which were prepared by him for payment of EMIs for purchasing a car. Cheque no. 574752 for Rs.5,00,000/ was meant for upfront payment for purchase of Mercedes car which the accused had forgotten to report. The cheque bearing no. 574757 and 574787 were encashed prior to the date of loss of cheque book which loss was reported by the accused on 04.01.2005. Thus the cheque books were utilized earlier in a bonafide manner by Chaudhary Associates. It has been further submitted that while any person is in the process of preparing EMI cheques, a couple of cheques may be issued to meet business needs in between. It has been argued that as the present case is a summary trial case, there is no provision of discharge u/s 251 Cr. PC, no defence is entertained at the time of framing of charges and therefore there was no need for the accused to disclose his defence at that stage. Another issue on which Ld. Counsel for the accused has argued that as per Section 269 SS of Income Tax Act any cash payment more than Rs.20,000/ should be made by an account payee cheque and since in the present case payment has not been made by way of cheque, it can not be said to be a legally recoverable debt. Ld. Counsel for the accused has relied upon the decision in Krishna Case No. 1122/1 & 1141/1 Page 20 of 33 Janardhan Bhatt Vs. D.G. Hegde (2008) 4 SCC 54 and Sajay Mishra Vs. Ms. Kanishka Kapoor 2010 (5) RCR (Cri) in which it was observed that failure to disclose the amount in ITRs or Books of Accounts of the complainant my be sufficient to rebut the presumption u/s 139 of the Act. Ld. Counsel for the accused has also relied upon the following case laws P. Venugopal Vs. Madan P Sarthi, AIR 2009 SC 568, Bharat Barrel & Drum Manufacturing Company Vs. Amin Chand Pyare Lal (1999) 3 SCC 35, M.S. Narayana Menon Vs. State of Kerala (2006) 6 SC 39, Sanjay Mishra Vs. Ms. Kanishka Kapoor @ Nikki & Anr Cri. App No. 4694 of 2008 and G. Panakhakshi Amma Vs. Mathai Mathew (2004) 12 SCC 83.
17. I have heard the arguments advanced by Ld. Counsels for both the parties and have also perused the case file.
18. Bare perusal of Section 138 of the NI Act clarifies that five essential ingredients for completing the offence under Section 138 of the Act are as below:
i. Drawing of the cheque, Case No. 1122/1 & 1141/1 Page 21 of 33 ii. Presentation of the cheque with the bank, iii. Returning of the cheque unpaid by the drawee bank, iv. Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, and v. failure of the drawer to make payment within 15 days of the receipt of the notice.
19. It is pertinent to mention here that there are two presumptions of law as mandated by the Negotiable Instruments Act. According to Section 118 (a) of the Act, it shall be presumed that every negotiable instrument was made or drawn for consideration. By virtue of this clause, the Court is obliged to presume that the promissory note was made for consideration or until the contrary is proved. In Mallavarapu Kasivisweswara Rao Vs. Thadikonda Ramulu Firm and Others AIR 2008 SC 2898 it was held as under: "... ... ... 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, 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 nonexistence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist...."
Case No. 1122/1 & 1141/1 Page 22 of 33
20. According to Section 139 of NI Act "it shall be presumed, unless the contrary is proved that the holder of a cheque received the cheque for discharge in whole or in part, of any debt or other liability." Under Section 139 NI Act there is a legal presumption that the cheque was issued for discharging a liability and that presumption can be rebutted only by the person who drew the cheque. This presumption can be rebutted by the accused by adducing evidence. So the burden of proof is on the accused.
21. In Hiten P. Dalal Vs. Bratindranath Banerjee AIR 2010 SC 1898 it was held as under: "The words 'unless the contrary is proved' which occur in this provision (Section 139) make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted......".
Case No. 1122/1 & 1141/1 Page 23 of 33
22. From the entire defence raised by Ld. Counsel for the accused it can be deduced that defence of the accused is mainly three fold. One that he had not issued the cheques to the complainant. In fact the said cheques were lost by the accused and the same have been misused by the complainant. Second that the complainant has failed to show that he had financial resources to pay such a heavy amount of Rs. 17.5 lakhs. Third defence of the accused is that the complainant has not shown the said transaction in his ITRs therefore the same amounts to an illegal transaction and thus Section 138 of N.I.Act does not apply in such a case.
23. So far as first contention of the accused is concerned that the cheques in question were lost and the same have been misused by the complainant is concerned, the same does not inspire confidence at all. It has been alleged by the accused that the cheques in question were lost on 04.01.2005. However, it is admitted case of the accused that he had received the legal demand notice sent by the complainant but despite the fact that he had received the legal demand notice, the accused did not bother to reply the said notice. Notice was sent by the Ld. Counsel for the complainant on 01.10.2005 i.e. almost after 10 months of lost of the cheques and the accused has failed to show Case No. 1122/1 & 1141/1 Page 24 of 33 as to what was he doing during the period of 10 months. Keeping in view that he had lost so many cheques, duly signed by him, no reasonable man will be sitting idle waiting for the misuse of the cheques if he had lost so many blank signed cheques unless and until he knew as to with whom those cheques are lying. From the defence of the accused it appears that it is just an afterthought and a concocted story of loss of cheques.
24. Moreover the fact that he has lodged the complaint regarding loss of cheque from Sl. No. 574753 to 574800 that too blank signed cheques with amount filled in it, the explanation given by the accused is to the effect that he had kept the blank signed cheques filled with amount for the payment of EMIs of one car. However, when asked as to how the cheque bearing no. 574757 got encashed as self cheque, he failed to show any plausible explanation for the same. Similarly the encashment of cheque no. 574787 has also not been satisfactorily explained by the accused. Moreover, cheque no. 574752, which is the subject matter of present complaint, issued in the name of the complainant, has not been reported as a lost cheque. It is hard to believe that how a reasonable man would leave 23 cheques in between when he has prepared more than 40 cheques for Case No. 1122/1 & 1141/1 Page 25 of 33 the purpose of EMIs.
25. The defence of the accused is further weakened by the fact that in his affidavit the accused has alleged that blank signed cheques were lost by him and the complainant had filled the details such as his name and amount in the lost cheques. Whereas in his written arguments he had submitted as under:
"A pattern of loss of cheques shows that except two cheques of Rs.50,000/, all were for an amount of Rs.75,000/ (being prepared for payments of EMIs for purchasing a car). Cheque No. 52 for Rs. 5 Lakhs was meant for upfront payment for purchase of Mercedes car which the accused had forgotten to report."
This shows that on the one hand he is alleging that the amount was not filled by him and on the other hand he is alleging that he had kept the cheques for the EMIs after duly filling the amount. Both are contradictory to each other and shows that story of EMIs is just an afterthought.
26. So far as second contention of the accused is concerned that the complainant had no financial resource to pay such a heavy amount of Rs.17.5 lakhs is concerned, it can be said that onus was on the accused to prove that the complainant did not have financial resources. In view of the presumption provided under the N.I. Act, the onus was on the accused to rebut those presumptions and mere Case No. 1122/1 & 1141/1 Page 26 of 33 bald averment that the complainant did not have financial resources to pay such a heavy amount do not rebut the presumptions raised against the accused. Otherwise also the complainant had produced on record ITR of assessment year 200405. Copy of which is in complaint case bearing CC No. 1141/1. Copy of balance sheet of the complainant as on 31.03.2004 is also on record which shows that the complainant has paid Rs.2,50,000/ to Dome Entertainment. It also shows loan amount of Rs.4,55,000/ which has been taken from Sh. V.K. Chopra i.e. father of the complainant. The complainant had also submitted that he had also taken some loan from his firm Tranzfreight. It has been shown in the balance sheet produced by the complainant. The onus was upon the accused to rebut the presumption raised against him which he has failed to rebut. Whereas the complainant has produced sufficient evidence on record to show that he had advanced money from his account for the purpose of partnership business, even though it may not total up to Rs.17.5 lakhs. Therefore second contention of the accused is also overruled.
27. So far as third contention of the accused that the complainant Case No. 1122/1 & 1141/1 Page 27 of 33 has not shown the alleged transactions in his ITRs is concerned, it can be said that merely because the complainant has not shown this amount in his ITRs, does not make the transactions illegal per se, as envisaged u/s 138 N.I. Act. As per Section 269 SS of Income Tax Act no person shall take or accept from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft if.
a) the amount of such loan or deposit or the aggregate amount of such loan and deposit is more than Rs.20,000/
28. Penalty for failure to comply with the provisions of Section 269 SS of Income Tax Act has been provided in Section 271 D of Income Tax Act. It provides that if a person take or accepts any loan or deposit in contravention of the provision of section 269 SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted.
29. A bare reading of these sections shows that although loan taken or deposit of an amount more Rs.20,000/ in cash is prohibited Case No. 1122/1 & 1141/1 Page 28 of 33 however in the considered opinion of this court if the penalty is imposed upon the defaulter and he pays the penalty imposed, the transaction is deemed to be legalized. Therefore if the person fails to comply with provisions of Section 269 SS of I.T. Act it can not be said that the transaction is altogether illegal in terms of Section 138 of N.I. Act and that the same can not be recovered from the person to whom it has been made. Therefore this contention of the accused that the transaction was not in compliance of Section 269 SS of Income Tax Act and the same does not fall within the purview of Section 138 of N.I. Act, also stands overruled.
30. There was one more contention raised by the accused that as per the partnership deed all the disputes between the partners were to be referred to arbitration therefore in the light thereof the complaint is not maintainable. This contention of the accused is also not sustainable as the proceedings u/s 138 of N.I. Act are criminal in nature and it is well settled that no arbitration agreement or arbitration clause can prevent any person from initiating criminal proceedings against the other person. Criminal complaints are not barred by arbitration agreement entered between two parties. Case No. 1122/1 & 1141/1 Page 29 of 33
31. I have gone through the case law referred to by Ld. Counsel for the accused. However, no case law referred to by Ld. Counsel for the accused comes to the aid of the accused as facts of those case law are apparently distinguishable from the facts under consideration.
32. The decision in the case G. Panakhakshi Amma Vs. Mathai Mathew (supra) referred to by the accused is not applicable in the present case as the same is related to chit fund transactions between the parties and the complainant was a money lender who failed to produce his books of accounts.
33. In Sanjay Mishra Vs. Ms. Kanishka Kapoor @ Nikki & Anr (supra) the case was of advancing a friendly loan of Rs.15 lakhs to the accused persons and it was agreed between the parties that the accused shall repay the amount within 3 months. In this case also the complainant had not mentioned the transaction of loan in his ITR and therefore the complaint of the complainant was dismissed. Case No. 1122/1 & 1141/1 Page 30 of 33
34. However, both the above case law are distinguishable from the facts in hand as the present complaint is regarding partnership deed executed between the parties and the same has been admitted by the accused. There is no dispute as to existence of partnership between the parties. Moreover the accused has himself admitted that some amount was paid by the complainant for the purpose of partnership business. The present case is neither a case of friendly loan nor of chit fund transaction. Moreover the complainant has produced copy of his ITRs of the relevant period and books of accounts which corroborated the case of the complainant to some extent. In fact the accused has himself admitted the case of the complainant to some extent and defence placed by him seems to be just an afterthought. Further the accused has failed to satisfactorily explain as to how these cheques came into the possession of the complainant.
35. The other case law P. Venugopal Vs. Madan P Sarthi (supra), M.S. Narayana Menon Vs. State of Kerala (supra) and Bharat Barrel & Drum Manufacturing Company Vs. Amin Chand Pyare Lal (supra) are also of no assistance to the accused. In fact Case No. 1122/1 & 1141/1 Page 31 of 33 observations made in those case law go against the accused. In Bharat Barrel's case it was observed by Hon'ble Supreme Court as under:
"The burden upon the defendant of proving the nonexistence of the consideration can be either direct or by brining 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 nonexistence 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 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.".
FINAL ORDER.
36. In view of above it can be said that the story put forth by the complainant is more believable. Whereas the story put forth by the accused does not inspire confidence and the accused has Case No. 1122/1 & 1141/1 Page 32 of 33 failed to rebut the presumptions raised against him under Section 118 & 139 of Negotiable Instruments Act. Accordingly, the accused is convicted under Section 138 of Negotiable Instruments Act.
Announced in the open Court on 21st April, 2014 (PUNEET PAHWA) MM (NI ACT1) PATIALA HOUSE COURTS NEW DELHI Case No. 1122/1 & 1141/1 Page 33 of 33 IN THE COURT OF SHRI PUNEET PAHWA METROPOLITAN MAGISTRATE 01 (N.I. ACT) PATIALA HOUSE COURTS : NEW DELHI CC No. 1122/1 & 1141/1 Sh. Varun Chopra E41, First Floor, Greater Kailash, Part1, New Delhi.
....................... Complainant Vs. Sh. Manish Tuli, Proprietor of M/s Chaudhary Associates, Hotel Eureka Crowne, 4/70, Krishna Market, Saraswati Marg, W.E.A, Karol Bagh, New Delhi.
................................Accused ORDER ON SENTENCE Present: Sh. Puneet Ahluwalia, Ld. Counsel for complainant alongwith complainant in person.
Case No. 1122/1 & 1141/1 Page 34 of 33 Sh. S.N. Mehrotra, Ld. Counsel for convict alongwith convict in person.
Arguments on sentence heard.
Ld. Counsel for Complainant has argued that the convict is a habitual and hardened criminal and several cases are pending against him. The convict has illegally kept with him hard earned money of the complainant. The complainant had arranged for the money from various sources including the loan from his parents and grand parents. Moreover the present complaints are old matters which were filed way back in the year 2005 and since then the convict has been enjoying the money of the complainant.
On the other hand Ld. Counsel for the convict has argued that the convict is not a habitual criminal and he can not be termed as hardened criminal unless he is proved to be guilty in the cases pending against him. The convict had entered into a partnership business with bonafide intention to carry on the business and it was the wish of all the partners to start the said business. However, now it is the convict only who is facing the consequences of failure of the said partnership deed. It has been further argued that the convict is a young person and he did not have any intention to commit any criminal offence and it was just due to Case No. 1122/1 & 1141/1 Page 35 of 33 misfortune he got into this trouble. All the partners agreed to share the profit & loss equally and now the accused has been left alone to bear the consequences of failed partnership. He has prayed for lenient view to be taken against the convict.
Heard.
Since the offences u/s 138 NI Act are on the rise and to maintain the sanctity of the negotiable instruments, the legislature has even provided for imprisonment in case of offence u/s 138 NI Act. Perusal of the files shows that the present complaints were filed in the year 2005, and since then the convict has been regularly appearing in this court, therefore, delay in trial can not be solely attributed to the convict. Moreover since the convict is of young age, this court is not inclined to impose punishment of imprisonment upon the convict. However, the convict is sentenced to pay a fine of Rs.2,00,000/ (Rs. Two Lakhs Only) in CC No. 1141/1 & Rs. 25,00,000/ (Rs. Twenty Five Lakhs) in CC No. 1122/1 i.e. the double cheque amount as compensation to the complainant to be paid within 1 month from today and in case of default in payment of compensation to the complainant, the convict shall be liable to undergo Simple Imprisonment for 10 days.
Copy of order on sentence be given to the convict free of Case No. 1122/1 & 1141/1 Page 36 of 33 cost. File be consigned to record room after due compliance. Announced in the open Court on 5th May, 2014 (PUNEET PAHWA) MM (N.I ACT1) PATIALA HOUSE COURTS NEW DELHI Case No. 1122/1 & 1141/1 Page 37 of 33