Delhi District Court
Technology Information, Forecasting ... vs Ms Stanpack Pharma Pvt Ltd Ors on 21 December, 2024
IN THE COURT OF SH. SIDDHANT KUMAR,
JUDICIAL MAGISTRATE FIRST CLASS (NI ACT)-06,
SOUTH DELHI DISTRICT, SAKET, NEW DELHI
JUDGMENT
DLST020015272015 CT Cases 466070/2016 Technology Information, Forecasting And Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors PS : Safdarjung Enclave Technology Information, Forecasting and Assessment Council (TIFAC) Regd. Office at Vishwakarma Bhavan, Shaheed Jeet Singh Marg, New Delhi-110016 ..............Complainant Versus M/s Stanpack Pharma Pvt. Ltd., Regd. Office at A-13, Three Star, CHS, Chedda Nagar, Chembur, Mumbai-400089 Also at Factory; Manpura-Dhela Road, Village-Doduwal, PO-Lodhi Majra, Tehsil-Nalagarh, (near Baddi) Distt-Solan, Himachal Pradesh-174101 .............. Accused No.1 Sh. Sanjay K Prasad, (Managing Director of M/s Stanpack Pharma Pvt. Ltd.) Regd. Office at A-13, Three Star, CHS, Chedda Nagar, Chembur, Mumbai-400089 Also at Factory; Manpura-Dhela Road, Village-Doduwal, PO-Lodhi Majra, Tehsil-Nalagarh, (near Baddi) Digitally signed by SIDDHANT SIDDHANT KUMAR KUMAR Date:
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Distt-Solan, Himachal Pradesh-174101 Also at 201, Sunrise Apartment, Plot No.100, Sector-16, Koperkhairne, Navi Mumbai-400709 .............. Accused No.2 Date of registration : 05.08.2015 Date of Judgment : 21.12.2024 Decision : Conviction FACTS
1. The instant proceedings have originated out of a complaint filed by Technology Information, Forecasting and Assessment Council (TIFAC) against Ms Stanpack Pharma Pvt Ltd Ors for the offense under Section 138, Negotiable Instruments Act, 1881 (hereinafter referred to as "NI Act").
2. Brief facts of the complaint is that the complainant is a society registered under the Societies Registration Act of 1860. The accused no.1 is a company, and accused no.2 is the Managing Director of the company. The accused company approached the complainant for Technology Development Assistance (TDA) of Rs. 1,60,00,000/- for the development of the products 'Stevioside and Lycopene'. Pursuant to this, the parties entered into a Technology Development Assistance Agreement (TDA Agreement) on 11.09.2008. In compliance with the TDA Agreement, the accused company executed a Deed of Hypothecation dated 24.11.2008, creating security for the repayment of the aforesaid TDA Assistance by hypothecating all Digitally signed by SIDDHANT SIDDHANT KUMAR KUMAR Date:
2024.12.21 16:11:48 CT Case No. 466070/2016 +0530 Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.2 of 23 movable properties, machinery, equipment, etc.
3. Pursuant to the TDA Agreement, the complainant disbursed and released the said amount of Rs. 1,60,00,000/- as financial assistance to the accused. As per the terms of the TDA Agreement, the accused was required to repay the complainant an amount of Rs. 1,92,00,000/- in ten equal half-yearly installments of Rs. 19,20,000/- each. The installments were scheduled to commence from 12.03.2011 to 12.09.2015, as per Annexure III of the TDA Agreement.
4. In terms of the agreement, the accused issued 10 post- dated cheques, to be presented on the due dates for the respective installments. Out of the 10 post-dated cheques, the cheque in question, for Rs. 19,20,000/-, duly signed by accused no.2, was presented for encashment. The cheque was returned unpaid with remarks "NPA account". The complainant sent a legal notice to the accused, demanding payment of the cheque amount. Despite the notice, the accused failed to pay the amount. Consequently, the present complaint was filed under Section 138 of the NI Act.
5. Additionally, 8 complaints filed by the complainant against the accused are pending adjudication in this court. These complaints arise out of the same transaction, involving the same facts, and evidence has been recorded together in all these cases. Each case pertains to one of the cheques issued under the TDA Agreement. Therefore, all these cases are being decided together.
Digitally
signed by
SIDDHANT
SIDDHANT KUMAR
KUMAR Date:
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6. In support of their case, the complainant had led pre summoning evidence by way of affidavit i.e. Ex.CW-1/A which reiterated the contents of the complaint. He relied upon the following documents filed alongwith the complaint :
(i) Authority letter dated 01.11.2023 as Ex.CW-1/1;
(ii) Technology Development Agreement dt 11.09.2008 (TDA) and Hypothecation deed dt 24.11.2008 as Ex.CW-1/2 (colly);
(iii) Minutes of meetings of Advisory & Monitoring Committee (AMC) as Ex.CW-1/3 (colly);
(iv) Letter dt 28.03.2011, 24.05.2011 & 13.06.2011 of the accused addressed to the complainant as Ex.CW-1/4 (colly);
(v) Letters sent by complainant to accused dt 06.05.2011, 17.06.2011 & 20.07.2011 as Ex.CW-1/5 (colly);
(vi) Letter dt 01.08.2011 sent by complainant to accused as Ex.CW-1/6;
(vii) The original cheque as Ex.CW-1/7;
(viii) Original cheque deposit slip as Ex.CW-1/8;
(ix) Original cheque return memo as Ex.CW-1/9;
(x) Legal Notice as Ex. CW-1/10;
(xi) Original postal receipts as Ex.CW-1/11;
Digitally
signed by
SIDDHANT
SIDDHANT KUMAR
KUMAR Date:
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(xii) Original returned envelopes containing the original demand letter/notice as Ex.CW-1/12;
(xiii) Original AD card/postal delivery report as Ex.CW-1/13.
7. Summons were issued to the accused company and its director on 17.11.2015. The accused entered their appearance on 27.05.2019. As the offense is bailable, the accused was granted bail.
8. Substance of accusation/notice u/s 251 Cr.P.C. was served to the accused on 30.09.2021. The accused pleaded not guilty and claimed trial. Accused no.2 (managing director of accused no.1) admitted that the cheque belongs to him and also admitted his signatures on the same but denied filling the rest of the details. He denied receiving the legal demand notice. He stated that he entered into a partnership agreement with the complainant and he had given blank signed cheques as prerequisite to sign the agreement. Thereafter, the Government of India banned the product in respect of which the agreement had entered into. He denied liability towards the complainant.
9. In view of the nature of evidence sought to be brought on record and the allegations made, the trial proceeded as a summons trial. The accused was allowed to cross examine the complainant witness u/s 145 (2) of NI Act.
Digitally
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SIDDHANT
SIDDHANT KUMAR
KUMAR Date:
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10. The AR of the complainant was examined as a complainant witness CW-1, who tendered his affidavit Es.CW-1/A into evidence. He also relied upon various documents on record from Ex.CW-1/1 to Ex.CW-1/12. CW-1 was duly cross examined by Ld. counsel for the accused on 29.01.2024, 28.03.2024 and 12.04.2024. Several questions with respect to the agreement between the parties as well as the authority of the AR to represent the complainant were asked from the witness. No other witness was examined by the complainant and thereafter CE was closed.
11. Statement of accused u/s 313 Cr.P.C was recorded on 13.08.2024. In his statement, the accused stated that he had issued blank signed undated cheques which was a precondition for signing the agreement by TIFAC. The accused had approached them for a grant, the amount contributed by TIFAC was to be converted into a grant. He further stated that it was a joint venture wherein both parties had to invest in terms of understanding and exploit the benefit jointly. The date on the agreement has not been countersigned by him. The complainant was supposed to return the blank signed cheques and issue new ones after mutual discussion which never happened. Article 12 of the agreement clearly mentions that profitability and the patenting rights had to be shared. He also stated that his account had turned NPA in the year 2011. He denied liability for the cheques amount. He also stated that Annexure 3 of the agreement dated 11.09.2008 had to come into picture only once Digitally signed by SIDDHANT SIDDHANT KUMAR KUMAR Date:
2024.12.21 CT Case No. 466070/2016 16:12:07 +0530 Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.6 of 23 commencement of the product happened. However, in the present case no commencement happened as the product was declared illegal thus there was no liability against the cheques in question. The accused chose to lead defense evidence and thereafter the matter was listed for DE.
12. Ld. Counsel for the accused filed an application u/s 315 CrPC to examine the accused as a witness. The accused testified on oath as DW-1. He filed his evidence by way of affidavit Ex.
AW-1/A and relied upon documents Ex.AW-1/1 and Ex.AW-1/2(colly). In his chief he stated that the complainant, TIFAC, and Accused No. 1 entered into a joint venture to develop the "Stevia" product with shared profitability and patent rights. TIFAC was to provide Rs. 169 lakhs, and Accused No. 1 was to contribute Rs. 162.05 lakhs. The project costs exceeded the estimates due to additional expenditures by Accused No. 1. However, the project became unviable after the government declared "Stevia" illegal in 2011, resulting in its failure. Clauses in the agreement outlined fund recovery based on project success or failure. As the project did not commence, repayment obligations under Clause VI were nullified. Accused No. 1 issued undated blank cheques to TIFAC as a pre-condition to demonstrate seriousness, not for repayment. The cheques were not linked to any enforceable liability. TIFAC contributed Rs. 1.60 crores, while Accused No. 1 contributed Rs. 1.84 crores. Although the bank account was not a joint account, TIFAC monitored expenditures. The cheques were dishonored without Digitally signed by SIDDHANT SIDDHANT KUMAR KUMAR Date:
2024.12.21 16:12:11 CT Case No. 466070/2016 +0530 Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.7 of 23 prior notice due to the account being declared NPA in 2011.
13. He was duly cross examined and in his cross, the witness admitted signing the TDA agreement and deed of hypothecation but alleged that some pages were blank or altered. TIFAC's financial assistance of Rs. 1.60 crores was received and monitored through Advisory and Monitoring Committee (AMC) meetings. Accused No. 1 utilized these funds appropriately, with no discrepancies reported. The witness stated that the undated cheques were issued to satisfy TIFAC's demand for "demonstrating seriousness" toward the project and were not intended for repayment. The project failed after the Food Safety and Standards Authority of India (FSSAI) declared "Stevia" illegal, leaving the venture unviable. The account of Accused No. 1 was classified as NPA in 2011, leading to the dishonor of cheques. The witness denied any prior notice before dishonor and reiterated that the cheques were not tied to legal liability.
14. Defense evidence was closed and the matter was listed for final arguments thereafter.
ARGUMENTS
15. The learned counsel for the complainant submitted that the liability for the cheques in question arises directly from the agreement dated 11.09.2008 (TDA), which has not been denied Digitally signed by SIDDHANT SIDDHANT KUMAR KUMAR Date:
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Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.8 of 23 by the accused. The accused has admitted to signing both the agreement and the cheques. Counsel emphasized the terms and conditions of the agreement, wherein both parties were required to invest their respective shares, and the accused issued 10 post- dated cheques to the complainant towards the repayment of Rs. 196 lakhs as per the agreed disbursement schedule. Furthermore, an advisory committee, including accused no. 2 as a member, was appointed, and meetings were held to implement the terms of the agreement.
16. It was argued that the cheques were issued in discharge of a legally enforceable liability arising out of the agreement, which provides documentary support for the complainant's claim. The complainant presented the cheques for encashment, but they were dishonored upon presentation. A legal demand notice was duly issued to the registered address of the accused, yet no payment was made within the statutory time period.
17. The learned counsel further contended that the statutory presumption under Section 139 of the Negotiable Instruments Act is in favor of the complainant since the signatures on the cheques are admitted. While the initial burden of proof lies on the complainant, once the statutory presumption is invoked, the onus shifts to the accused to rebut the presumption on a preponderance of probabilities. In this case, it was argued that the accused has failed to discharge this burden and rebut the presumption.
Digitally
signed by
SIDDHANT
SIDDHANT KUMAR
KUMAR Date:
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18. Lastly, counsel highlighted that the liability is unequivocally supported by the agreement, and the accused's failure to provide a credible defense reinforces the complainant's case. Thus, the complainant's claim under Section 138 of the NI Act is fully established based on the evidence and statutory presumptions.
19. The learned counsel for the accused argued that the agreement dated 11.09.2008 between the parties was not a loan agreement but a joint venture arrangement. Both parties had invested funds in the project, and these funds were to be exclusively utilized for the intended project. It was submitted that the project could only be deemed completed when the advisory committee provided a written certification, but Annexure 1, which purportedly contained this certification, was blank. Consequently, no legally enforceable debt or liability arose at the time the cheques were presented for encashment.
20. Counsel emphasized that the cheques were not issued in discharge of any liability but were instead given merely to demonstrate the seriousness of the accused in the project. Furthermore, the accused contended that neither party possessed the requisite license to produce stevia, which was the project's subject. The accused's inability to obtain the license, coupled with the declaration of the product as illegal, rendered the agreement unenforceable. Hence, the cheques could not be Digitally signed by SIDDHANT SIDDHANT KUMAR Date: KUMAR 2024.12.21 16:12:24 CT Case No. 466070/2016 +0530 Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.10 of 23 considered as representing a legally enforceable debt.
21. The learned counsel further pointed out that some of the cheques in question were barred by limitation as they should have been presented for encashment by April 30, per the repayment schedule outlined in the agreement. It was also argued that the complainant's witness (CW-1) was not duly authorized to depose on behalf of the complainant society. As per law, only the Registrar of the registered society could issue such authorization, which was not done in this case.
22. Finally, the accused relied on the evidence on record, particularly the cross-examination of CW-1, to substantiate their defense. Counsel submitted that the complainant had failed to establish the existence of a legally enforceable liability, and the statutory presumption under Section 139 of the NI Act stood rebutted. Thus, the accused prayed for acquittal in the absence of conclusive proof of liability.
LEGAL POSITION
23. The presumptions under Section 139 of the NI Act are well established through judicial pronouncements. As elucidated in Basalingappa v. Mudibasappa, 2019 SCC OnLine SC 491, once the execution of the cheque is admitted, the presumption arises that the cheque was issued for the discharge of a debt or liability. This presumption, however, is rebuttable, and the onus is on the Digitally signed by SIDDHANT SIDDHANT KUMAR KUMAR Date:
2024.12.21 CT Case No. 466070/2016 16:12:29 +0530 Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.11 of 23 accused to raise a probable defense by demonstrating on a preponderance of probabilities that no such liability exists. The accused may rely on evidence brought by themselves or on materials submitted by the complainant and other surrounding circumstances to meet this standard of proof. Importantly, this evidentiary burden does not necessitate the accused entering the witness box.
24. In Rajesh Jain v. Ajay Singh, SLP (Crl.) No. 12802 of 2022, the Hon'ble Supreme Court emphasized that the activation of the presumption under Section 139 shifts the evidential burden to the accused. If the accused fails to rebut the presumption, conviction may follow, subject to the satisfaction of the other ingredients of Section 138. Conversely, if the evidential burden is discharged, the complainant must independently establish the liability through evidence without relying on the presumption. The Court must then adopt a holistic approach based on the evidence to decide the matter.
APPRECIATION OF EVIDENCE and FINDINGS
25. The issuance of the cheques and the signatures on them are not disputed by the accused. Consequently, the statutory presumptions under Section 118 read with Section 139 of the NI Act are triggered. These presumptions establish that the cheques were issued in discharge of a legally enforceable debt or liability in favor of the complainant. As held in Basalingappa v.
Digitally signed by SIDDHANT KUMAR SIDDHANT Date: KUMAR 2024.12.21 CT Case No. 466070/2016 16:12:35 +0530
Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.12 of 23 Mudibasappa, 2019 SCC OnLine SC 491, once the presumption is activated, the evidential burden shifts to the accused to rebut it on a preponderance of probabilities. Similarly, in Rajesh Jain v. Ajay Singh, SLP (Crl.) No. 12802 of 2022, it was reiterated that unless successfully rebutted, the Court must proceed on the presumption that the cheques were issued for a lawful liability. In the present case, these principles apply squarely in favor of the complainant.
26. The legal notice was duly sent to the registered address of the accused company. Section 114 of the Indian Evidence Act, read with Section 27 of the General Clauses Act, enables the Court to presume that the notice, once properly addressed and dispatched by post, was received by the addressee. The Hon'ble Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed & Anr., (2007) 6 SCC 555, clarified that the requirement of notice under Section 138 NI Act is distinct from typical criminal law procedures and aims to afford the drawer an opportunity to make the payment within 15 days of receiving summons, if not earlier. The judgment further underscores that a drawer cannot evade liability by disputing the receipt of notice when statutory presumptions under Section 27 of the General Clauses Act and Section 114 of the Evidence Act apply. In the present case, the dispatch of the legal notice to the correct and registered addresses suffices to meet the statutory requirement.
27. To determine whether the accused have successfully Digitally signed by SIDDHANT SIDDHANT KUMAR KUMAR Date:
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Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.13 of 23 rebutted the statutory presumption under Sections 118 and 139 of the NI Act, the defenses raised by them are analyzed as follows:
a) No liability arising out of the agreement - The accused argued that the cheques were not issued in discharge of any legally enforceable debt or liability but were merely security instruments to demonstrate their seriousness in the joint venture. They relied upon the terms of the agreement, which, according to them, established a joint venture between the parties. It was further contended that the funds were to be utilized solely for the project, which could not be completed due to the alleged illegality of the product (stevia) and the failure to obtain the requisite license. This, they claim, negates the existence of any enforceable liability at the time of presentation of the cheques.
b) Liability Time-Barred: The accused asserted that the liability, if any, was barred by limitation at the time of presentation of the cheques, as the agreement did not contemplate an enforceable debt arising beyond the stipulated timeline for performance.
c) Lack of Authorization of AR: The accused challenged the authority of the complainant's witness, asserting that the authorization relied upon was defective. They contended that the complainant, being a registered society, could only have issued authorization through the registrar. In the absence of valid authorization, the testimony of the complainant's representative, they argued, cannot be relied upon to substantiate the claim.
Digitally signed by SIDDHANT SIDDHANT KUMAR KUMAR Date:
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28. To determine whether the liability existed at the time of the presentation of the cheques, the following analysis is derived from the terms and conditions of the agreement.
29. Clause IX of the agreement unequivocally provides that the accused company was required to repay the Technology Development Assistance (TDA) through post-dated cheques furnished at the time of executing the agreement. It expressly states that repayment was to be made "without any conditions,"
eliminating any dependency on the project's progress, performance, or the accused's financial circumstances. The liability to repay was crystallized at the time of signing the agreement, and the issuance of cheques was the mechanism for fulfilling this binding obligation.
30. This provision establishes a clear financial liability on the accused company for repaying the amount as per the agreed schedule, irrespective of the project's progress or completion. The accused has admitted to executing the agreement, acknowledging receipt of TDA from the complainant (TIFAC), and signing the post-dated cheques, including the eight cheques in question in the connected cases. These admissions reinforce that the liability under Clause IX was valid and enforceable. The cheques in question are part of the ten post-dated cheques required under the repayment schedule provided in Annexure III. The accused admitted to issuing and signing these cheques.
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signed by
SIDDHANT
SIDDHANT KUMAR
KUMAR Date:
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Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.15 of 23 Therefore, their presentation reflects the enforcement of an agreed repayment schedule and not any newly created liability.
31. The agreement provides a clear timeline for repayment in Annexure III. The accused company agreed to repay the principal amount along with a predetermined markup (1.2 times the financial assistance) in ten installments. This structured repayment obligation was not conditional upon any other factors. The cheques' presentation for payment aligns with the predetermined installment plan, signifying that liability existed when each installment became due. The cheques represent pre- existing financial commitments agreed upon in the contract.
32. The accused company admitted to executing the agreement, receiving TDA from the complainant (TIFAC), and issuing post-dated cheques as stipulated. This acknowledgment of receipt of financial assistance underlines that a repayment obligation arose at the very inception of the contractual relationship. The issuance of cheques was not merely symbolic or intended for security but served as a binding repayment mechanism as per the explicit terms.
33. Clause VI of the agreement further reinforces the independence of the repayment obligation from the project's progress or outcome. It mandates that funds be utilized strictly for the project and prohibits their diversion for other purposes. Additionally, it grants TIFAC the right to unilaterally foreclose Digitally signed by SIDDHANT SIDDHANT KUMAR Date: KUMAR 2024.12.21 16:12:55 CT Case No. 466070/2016 +0530 Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.16 of 23 the project and recover the released TDA amount with interest in case of significant delays or lack of progress. This clause demonstrates that TIFAC's financial assistance was provided with the expectation of unconditional repayment. The accused company's obligation to repay was not tied to the success, failure, or completion of the project but was enforceable regardless of these factors.
34. Clause XVI explicitly disclaims any joint venture or shared risk arrangement between the parties. It states that TIFAC shall not be responsible for any loss or damage suffered by the accused company in the course of executing the project. This provision undermines the accused's defense that the agreement constituted a joint venture or that repayment was contingent upon mutual benefits or shared liabilities. The clause solidifies the arm's-length nature of the agreement, wherein TIFAC acted solely as a financial and technical facilitator, while the accused company assumed full responsibility for the project and repayment.
35. The issuance of post-dated cheques, as per Clause IX and Annexure III, was an integral part of the agreement. These cheques were furnished at the time of signing and were meant to ensure the accused company's compliance with its repayment obligations. Since the cheques were issued to discharge a pre- existing debt, the liability for the amounts stated on the cheques existed from the outset and continued until the cheques were Digitally signed by SIDDHANT SIDDHANT KUMAR KUMAR Date:
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36. In Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd. (Criminal Appeal No. 867 of 2016), the Hon'ble Supreme Court held that the determination of whether a post-dated cheque represents a legally enforceable liability under Section 138 NI Act depends on the nature of the transaction. If a liability or debt exists at the time the cheque is issued or becomes due as per an agreement, the dishonor of such cheques attracts Section 138. Even if the cheques are described as "security," they will still represent liability if issued in repayment of installments for a loan already disbursed. This principle directly applies to the present case. In Sampelly Satyanarayan Rao, the Court noted that cheques described as "security" could still represent liability if linked to repayment obligations in an agreement. The cheques in the present case, though issued as part of a structured repayment mechanism, were not contingent or conditional but were enforceable under the agreed terms. Hence, the accused's defense that the cheques were mere security instruments is untenable.
37. Based on the agreement's terms, the accused's admissions, and the purpose of the post-dated cheques, it is clear that liability existed at the time of their presentation. The accused's obligation to repay the TDA, as per Clause IX and Annexure III, was binding, unconditional, and enforceable. The cheques in question are a direct representation of this liability. Therefore, the defense Digitally signed by SIDDHANT SIDDHANT KUMAR Date: KUMAR 2024.12.21 16:13:04 +0530 CT Case No. 466070/2016 Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.18 of 23 of non-existence of liability is wholly untenable in light of the terms and conditions of the agreement.
38. The accused have argued that even if the complainant's case is prima facie made out, the cheques in question pertain to a time-barred debt, relying on the repayment schedule outlined in Annexure III of the agreement. According to the accused, the first installment was due 30 months after the first payment from TIFAC, with subsequent installments to follow as per the specified intervals. It was contended that the cheques in question, issued for these installments, were presented beyond the stipulated timeline and, therefore, pertain to a time-barred liability.
39. This defense is unsustainable both in law and on the basis of the terms of the agreement. Article 55 of the Schedule to the Limitation Act, 1963, prescribes a limitation period of three years for initiating legal action from the date of the breach of contract. Further, Article 113 provides a period of three years from the date the right to sue accrues. In this case, the timeline for repayment under Annexure III allows TIFAC to recall the entire outstanding amount upon default, thereby extending the enforceability of the liability. The agreement explicitly provides that the complainant is not obligated to recall the amount immediately upon any default, preserving the right to recover the outstanding amount at any point after the breach within the limitation period. Thus, the liability remains alive and Digitally signed by SIDDHANT SIDDHANT KUMAR Date: KUMAR 2024.12.21 16:13:08 +0530 CT Case No. 466070/2016 Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.19 of 23 enforceable under the agreement, keeping the complainant's case well within time.
40. Moreover, the repayment clause in Annexure III explicitly states that, in the event of default in paying any installment within the stipulated time, TIFAC "will have a right but it will not be obligatory on its part to recall from the company the whole amount of Rs. 1,92,00,000/- less paid by the company." This provision confers a continuing right on TIFAC to demand repayment of the entire outstanding liability at its discretion, thereby keeping the debt alive and enforceable beyond the initial installment timeline. The accused's contention that the liability become time-barred overlooks this crucial contractual provision, which expressly preserves the complainant's right to recall and recover the outstanding amount in the event of a default.
41. In light of the terms of the agreement and the provisions of the Limitation Act, the liability associated with the dishonored cheques was well within the limitation period. Accordingly, the defense of the accused that the liability is time-barred is rejected as being without merit.
42. The accused have contended that the complainant's Authorized Representative (AR) lacked the requisite authority to represent the complainant, a registered society, and argued that only the registrar could issue such authorization. However, this defense is without merit, as the complainant has duly placed on Digitally signed by SIDDHANT SIDDHANT KUMAR Date: KUMAR 2024.12.21 16:13:13 CT Case No. 466070/2016 +0530 Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.20 of 23 record documentary evidence in the form of Ex. CW-1/1, which establishes the AR's authority. As per Ex. CW-1/1, Mr. Mukesh Mathur, empowered by the Governing Council of the complainant via agenda item no. 7(B) of the minutes of the meeting held on 29.10.2012, duly authorized Mr. Chandrashekhar Tenikella to represent the complainant in matters concerning the accused company. This evidence demonstrates procedural compliance and negates the accused's contention regarding the AR's lack of authority.
43. The Hon'ble Supreme Court in M/S M.M.T.C. Ltd. v. M/S Medchl Chemicals & Pharma P. Ltd., 2002 (1) SCC 234, addressed similar concerns and held that for juristic entities, such as companies or societies, a natural person must represent the entity in court. It was clarified that as long as the person representing the entity is authorized through proper documentation, the complaint is valid. The Court further observed that even if there were any initial defect in authorization, it could be rectified at a later stage, and such a defect would not vitiate the proceedings. In the present case, the authorization was provided through Ex. CW-1/1, and was duly supported by the Governing Council's decision. Furthermore, in M.M.T.C. Ltd., it was emphasized that the complainant need only satisfy the requirements under Section 142 of the Negotiable Instruments Act, which mandates that the complaint must be filed by the payee or the holder in due course of the cheque. The AR in this case merely represents the payee complainant, Digitally signed by SIDDHANT SIDDHANT KUMAR KUMAR Date:
2024.12.21 16:13:17 CT Case No. 466070/2016 +0530 Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.21 of 23 fulfilling the procedural requirement for a juristic entity to act through a natural person.
44. The accused's objection to the AR's authority appears to be a technical argument without substantive merit. The authorization through Ex. CW-1/1, coupled with the complainant's compliance with statutory requirements, sufficiently establishes the AR's competence to prosecute the case. Therefore, this defense, being unsupported by law or facts, is rejected.
CONCLUSION
45. The ingredients of the offense under Section 138 of the Negotiable Instruments Act are fully satisfied in this case. The cheques in question were dishonored vide return memo dated 04.04.2014. A legal demand notice was sent to the correct address of the accused company on 29.09.2014. Despite the notice, the accused failed to make the payment within the statutory period.
46. The cheques were issued for a legally enforceable liability arising from the agreement between the parties. The issuance of the cheques and the signatures on them were admitted by the accused, triggering the legal presumption under Sections 118 and 139 of the NI Act. The accused failed to rebut this presumption through the defenses raised. The liability of the accused is further Digitally signed by SIDDHANT SIDDHANT KUMAR Date: KUMAR 2024.12.21 CT Case No. 466070/2016 16:13:22 +0530 Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.22 of 23 supported by the documentary evidence and the terms and conditions of the agreement, which clearly established the repayment obligation. Therefore, the complainant has successfully proven its case beyond reasonable doubt.
47. Thus, on account of the appreciation of facts, evidence, materials on record and the settled legal positions as discussed above this court is of the considered opinion that the complainant has successfully proven their case. Consequently, the court is presented with a compelling basis to proceed with conviction, holding the accused no.1 (company) and accused no. 2 (Director) guilty for the offense under Section 138 of the Negotiable Instruments Act.
This Judgment contains 23 pages and each page bears the signature of Ld. Presiding Officer.
Copy of this judgment be given free of cost to the convict. A copy of the order be uploaded on District Courts website.
Pronounced in the open court Digitally
signed by
SIDDHANT
today i.e. on 21.12.2024 SIDDHANT
KUMAR
KUMAR
Date:
2024.12.21
16:13:27
+0530
(Siddhant Kumar)
JMFC (NI Act-06) South District,
Saket Courts, New Delhi
21.12.2024
CT Case No. 466070/2016
Technology Information, Forecasting and Assessment Council (TIFAC) Vs. Ms Stanpack Pharma Pvt Ltd Ors Page No.23 of 23