Delhi District Court
Laxmi Remote India Pvt Ltd vs Vineet Wadhwa & Anr on 19 October, 2015
IN THE COURT OF BHARAT CHUGH,
METROPOLITAN MAGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.275, TIS HAZARI COURT COMPLEX, DELHI
Laxmi Remote India Pvt Ltd.
VERSUS
Vineet Wadhwa & Anr.
JUDGMENT
Part A - The lis at a glance A. Serial No. of the Case 7768/13, 7769/13, 7770/13, 7771/13, 7772/13, 7773/13, 7774/13, 7775/13, 7776/13, 7777/13, 7778/13 (11 connected matters) B. Date of Commission of the offence 01.04.2013 C. Name of the Complainant Laxmi Remote India Pvt Ltd. D. Name of Accused person & his 1) Vineet Wadhwa r/o GH-234, parentage & residence Windsor Place, 5, Vaibhav Khand, Indirapuram, Ghaziabad, U.P. (Accused No.2 & 3 stand discharged)
4) Logic Eastern India Pvt. Ltd. 4, Road 53-B, Punjabi Bagh West, New Delhi - 110027.
E. Offence complained of Dishonor of cheque - culpable u/s 138 of the Negotiable Instruments Act.
F. Plea of the accused and his Pleaded not guilty. Pleaded that the examination in brief. cheques in question were not issued in discharge of a legally enforceable liability, but as security for future transactions. Liability of Rs.
1,48,00,000/- admitted, albeit with a caveat, that the present cheques were not issued in discharge of that liability but as security, and as on date of filing of the present complaints, the complainant was already prosecuting complaints worth Rs. 1,88,00,000/-
against a liability of Rs. 1,48,00,000/-.
G. Final Order Acquittal.
H. Judgment reserved on 15.10.2015 I. Judgment pronounced on 19.10.2015 In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 1 of 15 Part B - A brief statement of reasons for the decision (As mandated u/s 355(i) of the Code of Criminal Procedure, 1973.) Complainant's case
1. The complainant company is in the business of manufacturing of Remote Controls, Set Top Boxes and other electronic components such as integrated circuits. Complainant claims that the accused No.1 Vineet Wadhwa, acting on behalf of accused No.4 company M/s Logic Eastern, approached the complainant company seeking manufacture of set top boxes for the purpose of use by cable operators and individuals.
2. The accused No.4 Company Logic Eastern, acting through Accused No.1 became a bulk purchaser of Set Top boxes from the complainant and in discharge of liability towards the same, issued the following cheques to the complainant :-
S.No. Cheque No. Date Amount CC No. Date of Dishonor
1. 053870 24.12.2012 9,68,000/- 7771/13 16.02.2013
2. 053872 25.12.2012 9,68,000/- 7768/13 16.02.2013
3. 068406 27.12.2012 5,83,000/- 7772/13 16.02.2013
4. 068407 28.12.2012 5,83,000/- 7773/13 16.02.2013
5. 068408 29.12.2012 5,83,000/- 7769/13 16.02.2013
6. 068409 31.12.2012 5,83,000/- 7774/13 16.02.2013
7. 068410 01.01.2013 5,83,000/- 7775/13 16.02.2013
8. 068411 02.01.2013 5,83,000/- 7770/13 16.02.2013
9. 068412 03.01.2013 5,83,000/- 7778/13 16.02.2013
10. 068413 04.01.2013 5,83,000/- 7777/13 16.02.2013
11. 068414 05.01.2013 5,83,000/- 7776/13 16.02.2013 * Table 2.1 Cheques in question In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 2 of 15 Though the complainant has filed one individual complaint against each cheque.
All these cheques are all stated to have been issued in discharge of payments on the running account of the accused. Perusal of the record reveals that the broader factual controversy remains the same in all the cases. In view of common questions of fact, common defence of the accused and the identity of evidence in all the cases, all these cases proceeded together as connected cases during the trial. Accordingly, these cases are being disposed of vide this common judgment, as individual judgments would lead to an incomplete comprehension of the totality of the facts and circumstances.
3. Coming back to the facts; Much to the dismay of the complainant, the cheques in question got dishonored on presentation on account of 'insufficiency of funds', constraining the complainant to send a legal demand notice to the accused, which was replied to by the accused, however no payment was made to the complainant. This led to the filing of these eleven cases.
Initially, in addition to accused No.1 Vineet Wadhwa, the complainant had arranged two other directors of the accused No.4 company as accused No. 2 & 3 in this case. A2 & A3 were also summoned to face trial for an offence u/s 138 of the NI Act, however, proceedings against them were dropped subsequently at the stage of framing of notice, having regard to the fact that no prima facie material was brought on record to suggestion commission of an offence u/s 138 r/w S. 141 of the NI Act on their part. The order of dropping of proceedings was not agitated by the complainant, and therefore, attained finality. The complaint, therefore, remains against the Accused No.1 Vineet Wadhwa and Accused No.4 Company M/s Logic Eastern (represented by its Director/AR - Accused No.1) To prove his case the complainant company has examined its account manager Mr.Santosh Kumar Pathak, as CW-1, who has led on record the following documents to prove the liability of the accused :-
In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 3 of 15S.No. Exhibit Description of the Whether Admitted Document/Evidence or Denied by the Accused.
1. Ex. CW1/1 Copy of Board Resolution dated Admitted 24.12.2012, authorising the Manager of the Complainant/CW1 to file the present complaint.
2. Ex. CW1/2 Original Cheque. Admitted
3. Ex. CW1/3 Dishonor Memo Admitted
4. Ex. CW1/4 Statutory Legal Demand Notice Admitted
5. Ex. CW1/5-10 Postal Reciepts/AD Cards Admitted
6. Ex. CW1/11 Reply of the Accused Vineet Admitted Wadhwa (A1) & M/s Logic Eastern (A4), to the legal demand notice
7. Ex. CW1/12 Reply of Accused No.2 (later Admitted discharged) to legal notice
8. Ex. CW1/13 Reply of Accused No.3 (later Admitted discharged) to the legal demand notice.
The Defence.
4. Accused No.1 Vineet Wadhwa entered appearance in his individual capacity and also as the Director/AR of Accused No.4 M/s Logic Eastern. He pleaded not guilty and in his defence contended that the cheques in question were not issued to the complainant in discharge of a subsisting liability, but as security against future transactions. The accused argues that the quantum of business conducted with the complainant ran into crores and payments to that effect have been made to the complainant by the accused. The cheques in question are stated to have been handed over to one Ms. Arvinder Kaur, Executive Assistant in the complainant company on 09.05.2012, as security on the basis of trust and faith and anticipated delivery of goods. The cheques are stated to have been undated at the time of handing over. Payments are stated to have been made continually to the complainant through RTGS and other modes for the material received.
In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 4 of 15The accused has argued that the complainant has admitted in its emails sent to him, that the liability of the accused, as per the running account, was around Rs. 1,47,78,857/- prior to the filing of the present case. The accused further argues that against this liability, the complainant was already agitating two separate complaints u/s 138 of the NI Act against the accused with respect to the cheques amounting to Rs. 1,88,65,800/-, in which case, the accused had already admitted his liability of the aforesaid amount of Rs. 1,47,78,857/- and expressed willingness to make payments. To show his bona fides, he has paid a sum of Rs. 10,00,000/- to the complainant during those proceedings. The accused contends, that he was astounded to receive the notice in the present set of cases, since there was no independent liability against the cheques in question. The accused argues, that the complainant has misused the cheques in question with a view to arm-twist the accused company into continuing to buy the substandard products of the complainant company, at astronomical prices. The accused maintains that it is ready to pay the amount outstanding against them as on today, i.e around 1.34 crores.
As regards service of legal notice, the accused has admitted having received the legal notice and has relied upon his reply to counter the same.
To buttress his defence, the accused has relied upon the cross examination of the manager of the complainant company (CW1). The accused also entered the witness box himself as DW1 (after an application u/s 315 CrPC filed by him was allowed) and reiterated his defence story. In support of his case, the accused has relied upon the following documents :-
S.No. Exhibit Description of the Document/Evidence Admitted or Denied by the complainant.
1. Ex. CW1/D-1 Ledger Accounts of the Complainant Admitted by company. CW1 in cross examination dated 04.02.2015
2. Ex. CW1/D-2 Email dated 10.11.2012 sent by CW1 on Admitted by behalf of the complainant company, CW1 in cross In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 5 of 15 alongwith attachments, showing liability examination of the accused company as on 10.11.2012 dated to be Rs. 1,47,78,857/- 04.02.2015
3. Ex. CW1/-D-3 Certified Copies of two complaint cases Admitted by & D-4 u/s 138 of the NI Act filed by the CW1 in cross complainant against the accused examination (alongwith annexures) dated 04.02.2015
4. Ex. DW1/1 Photocopies of cheques in question with Denied.
the original acknowledgement of Ms.Arvinder Kaur, Executive Asst of complainant company showing receipt of cheques in question on 09.05.2012 The accused has argued, that the complainant has admitted the fact that the liability of the accused as on 10.11.2012 was Rs. 1,47,78,857/-. The accused has deposed that on 22.12.2012, the complainant suddenly presented cheques worth Rs. 1,88,65,800/- and filed two complaint cases (Ex. CW1/D-3 & D-4) on the basis of those cheques on 11.02.2013, against the accused, which are still pending consideration.
The accused claims, that in those two cases, the accused admitted his rightful liability to the tune of Rs. 1,47,78,857/- and also paid Rs.10,00,000/- to show their bona fides and commitment to amicably settle the cases.
The accused argues, that in cross examination dated 04.02.2015, CW1 has admitted, that as per CW1/D1 (ledger accounts of the complainant company), as on 16.02.2013 (date of dishonor of the present cheques in question), there were outstanding liabilities of Rs. 25,52,457, Rs. 91,08,482 & Rs. 60,27,024/- payable and due by the accused.
The accused argues that according to this candid admission by CW1, the total liability of the accused firm was Rs. 1,76,87,963/- as on 16.02.2013. It has also been admitted by CW1, that the complainants were already prosecuting two complaints (Ex. CW1/D3 & D4), against dishonor of cheques worth Rs. 1,88,65,800/- against the accused, wherein the accused had admitted the liability of Rs. 1,47,78,857/-. In such circumstances, it is argued by the In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 6 of 15 accused, that there was no occasion or legal justification for the complainant to present the cheques in question, worth about Rs. 71 lakhs and no concomitant liability on the part of the accused to honor the same.
The accused seek an exoneration on these counts.
This, in sum and substance, is the factual exposé.
The Law
5. The factual position being thus, Now let us quickly run through the legal benchmark which is to be satisfied in order to constitute an offence under S. 138 N.I. Act :-
(i) Person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;
(ii) The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
(iii)That cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier;
(iv)That cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
(v) The payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(vi) The drawer of such cheque fails to In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 7 of 15 make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
Being cumulative, it goes without saying that it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act.
The legal benchmark being thus. Let us apply it to the facts of the case.
Appreciation of Evidence and Application of law to the facts of the case.
6. The accused having admitted the receipt of legal notice, let us now turn to the core issue in this case and examine 'whether the cheques in question can be said to have been issued in discharge of a legal liability or not ?'
7. In that, let us again briefly recapitulate that the Accused No. 1 has admitted having drawn the cheque on a bank account maintained in the name of Accused No. 4 M/s Logic Eastern India Pvt. Ltd. & having signed the same. Now once these foundational facts are admitted and a factual basis is established, by virtue of Section 118(a) and Section 139 of the NI Act a presumption of the cheque having been issued in discharge of a legally sustainable liability and drawn for good consideration, arises.
Section 118 of the N.I Act provides :-
"Presumptions as to negotiable instruments:
Until the contrary is proved, the following presumptions shall be made: (a) of consideration - that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration;"
Section 139 of the N.I Act further provides as follows:
In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 8 of 15"Presumption in favour of holder - It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability"
Hence it is clear that, as per the scheme of the N.I Act, on proof of foundational facts - a presumption arises as to the cheque having been issued in discharge of a legal liability, and the burden of proof lies upon the accused to rebut the said presumption. This clearly is an instance of the rule of 'reverse onus' in action, where it is incumbent on the accused to lead what can be called 'negative evidence'. Evidence of a character, not to prove a fact affirmatively, but to lead evidence to show non existence of liability. Keeping in view, that this is a departure from the cardinal rule of 'presumption of innocence' in favour of the accused, and also keeping in mind that negative evidence is not easy to be led by its very nature. It is now fairly settled that the accused can displace this presumption on a scale of preponderance of probabilities and the lack of consideration or a legally enforceable debt need not be proved to the hilt or beyond all reasonable doubts. Preponderance is superiority in weight. Preponderance of probability, simply put, means more probable than not and superior in evidentiary weight than the case of the opposite side. The accused can either prove that the liability did not exist or make the non existence of liability so probable that a reasonable person ought under the circumstances of the case - act on the supposition that it does not exist. Simply put, the accused has to make out a fairly plausible hypothesis. This the accused can do either by leading own evidence in his defence or even by punching holes within the case of the complainant in the testing ordeal of cross examination.
8. In my opinion, the accused has succeeded in rebutting the presumption of legal liability. At the very outset, it is important to flag that the complainant has not filed on record any document substantiating the liability of the accused towards the complainant and has merely pressed into service the presumption of consideration and debt/liability as engrafted u/s 118 and 139 of the In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 9 of 15 Negotiable Instruments Act, 1883.
9. It is apposite to remind ourselves that the accused has taken the defence that the cheques in question had been issued at one go, and as security on 09.05.2012. CW1 has admitted the receipt of the cheques (which are in series) by Ms.Arvinder Kaur, their executive assistant. No attempt has been made on the part of the complainant to rebut or disprove the receipt of these undated cheques on 09.05.2012 by Ms.Arvinder Kaur, led in evidence by the accused as Ex. DW1/1. Although there is a suggestion made to DW1 in his cross examination to the effect that Ex. DW1/1 is a forged document, however the same is a bald suggestion. The complainant could have easily examined Ms.Arvinder Kaur, who is their employee and within their control, in order to disprove this document and her signatures on the same, or at any rate the fact that the same were undated and received on 09.05.2012. But no such attempt has been made by the complainant, which warrants drawing of adverse inference against the complainant. This raises an inference as to correctness of the version of the accused with respect to the handing over of the cheques, undated in 09.05.2012 and at one go.
10. In this background, let us examine the question of liability. With respect to the monetary liability of the accused, other than making a bald averment that the cheques in question were given against running credit account, the complainant has not filed on record any bills/invoices on record to substantiate the liability of the accused against each cheque. The complainant has also remained silent on as to on what date, and against which consignment of goods, the cheques in question had been issued. The cheques in question (all but two) are for identical amounts of Rs. 5,83,000/- and in series; From this, it appears that the cheques were not issued with respect to specific consignment of goods, but at one go and in advance for payments for anticipated delivery of goods, spread over a period of time.
11. The complainant has not filed on record, even the statement of In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 10 of 15 accounts/ledger entries pertaining to the accused. This leads to an adverse inference against the complainant; An inference of suppression of best evidence. This omission assumes great significance and appears to be a deliberate suppression and concealment on the part of the complainant, as the accused himself has confronted the complainant with the complainant's very own ledger statement, while CW1 was under cross examination. On being confronted with the ledger statements, CW1 has candidly admitted (in cross examination dated 04.02.2015) that as per CW1/D1 (ledger accounts of the complainant company), as on 16.02.2013 (date of dishonor of the present cheques in question), there were outstanding liabilities of Rs. 25,52,457, Rs. 91,08,482 & Rs. 60,27,024/- payable and due by the accused. These amounts total to a sum of Rs. 1,76,87,963/- outstanding payable by the accused as on 16.02.2013. It has also been admitted by CW1, that the complainant company was already prosecuting two complaints (Ex. CW1/D3 & D4), against the accused, with respect to dishonor of cheques worth Rs. 1,88,65,800/- (admittedly handed over to the complainant for clearance of dues in running account plus loan taken by the accused), and in those proceedings, the accused had admitted the liability of Rs. 1,47,78,857/-.
In such circumstances, the complainant has failed to explain as to what was the legal justification for the complainant to present the cheques in question, worth about Rs. 71 lakhs, when it was already agitating complaints worth Rs. 1,88,65,800/- against the accused and the liability of the accused, as on date of dishonor of these cheques was, only Rs. 1,76,87,963/-, which is less than the amount with respect to which cases had already been filed by the complainant. In such circumstances, the complainant cannot be said to have an independent cause of action with respect to the present cheques as no liability over and above that which is already covered in those cases (Ex. DW1/3 & 4), has been demonstrated by the complainant.
The complainant has also failed to prove any independent liability on the part of the accused, except, under the running account. The complainant has also In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 11 of 15 not disputed that the accused has conceded his liability for a sum of Rs. 1,47,78,857/- in those proceedings (Ex. CW1/-D3 & D4) and also paid a sum of Rs. 10,00,000/- to show his bona fides and commitment towards settlement of the case.
All these facts have considerable probative value and raise an inference that the cheques in question were not issued against subsisting liability, but as security, much prior in point of time. The lack of any material on record to prove the liability of the accused vis-a-vis cheques in question, and the admission as to pendency of previous cases of larger amount against the accused, raise the inference of there being no legally enforceable liability/debt with respect to the cheques in question.
12. The spontaneity of the accused in replying to the legal notice of the complainant (which, it must be added, was not replied to, by the complainant); the broad consistency of the defence of the accused throughout the trial; omission on the part of the complainant to bring even an iota of evidence on record to prove liability, all lead to an irresistible conclusion that the accused has succeeded in rebutting the presumption of liability operating against him by raising a probable defence. Once the presumption has been rebutted, it was incumbent on the complainant to positively prove the liability of the accused, which it has failed to do.
13. Before parting, it becomes important to underscore the established canon of criminal law that in order to pronounce a conviction in a criminal case, the accused 'must be' guilty and not merely 'may be' guilty. The mental distance between 'may be guilty' to 'must be guilty' is a long one & must be travelled, not on surmises and conjectures, but by cogent evidences. The complainant has failed to prove the basis of liability of the accused, but the accused has clearly raised a plausible defence and presented a case that is more superior in weight and his defence is more probable than not. And as per settled law, this is all that is required of the accused; Preponderance of In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 12 of 15 probabilities is not a rigorous standard of proof, but so much evidence as makes the court lean-in, in favour of one side and not the other. Consequently, the benefit of doubt must go to the accused. The material on record does not suggest that the accused 'must be guilty', whichever way one looks at it.
14. During the course of Arguments, Ld.Counsel for the complainant has placed reliance on V.S.Yadav v. Reena (Crl. A. No. 1136 of 2010, Date of Decision 21.09.2010, Hon'ble Delhi High Court), K.Bhaskaran v. Sankaran Vaidhyan (Para 10), Vijender Singh v. M/s Eicher Motors Limited & Anr. (Crl. MC No. 1454/2011) (Para 8), Ravi Chopra v. Satte & Anr (2008 (2) LRC 118 (Del).
Unfortunately for the complainant, none of these decisions, on a meaningful reading, advance the case of the complainant in any manner, as the factual matrix in which the cases came to be decided is completely different. It needs no gainsaying that no judicial decision is an euclid's theorem or a statute, and every judicial decision has to be read secundum subjectum materiam, i.e in the background of its facts and circumstances. A minute factual difference makes a lot of difference as far as precedential effect of a decision is concerned. This should suffice for the purposes of this judgment. However since every decision is an endeavor to utmost objectivity, the above decisions are being analyzed and distinguished as follows :-
I) V.S.Yadav (Supra) fails to advance the case of the complainant, as in that case the accused's defence of cheque having been issued as security had gone totally unsubstantiated. The accused had not replied to the legal notice of the complainant either. The accused had not entered the witness box himself or otherwise to prove the defence of security. In such circumstances, the Hon'ble Delhi High Court was pleased to hold his defence to be unworthy of credence.
In this instant case, the accused has not only replied to the legal notice, but also demonstrated his defence of lack of liability and cheques having been issued as security, through cross-examination of the complainant as well as his In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 13 of 15 own testimony as DW1.
II) Vijender Singh (supra) & Ravi Chopra (supra) also fail to advance the case of the complainant. There is no doubt to the legal preposition laid down therein to the effect, that there is no law that mandates the drawer of the cheque to fill-in all the particulars on the cheque. However, the question in the present case, is not whether the cheques in question have got invalidated on account of filling-in of dates by the complainant, but the question is of liability, as to whether the accused was liable for the amounts on the cheques to the complainant as on date of presentation of these cheques. The complainant has failed to substantiate the liability of the accused, as is apparent from the foregoing discussion.
III) K.Bhaskaran v. Sankaran Vaidhyan (supra) has no application to the facts of the case. Ld.Counsel for the Complainant has placed reliance on para 10 of the said judgment. Para 10 of the said ruling is reproduced as follows :-
10. Learned counsel for the appellant first contended that the trial court has no jurisdiction to try this case and hence the High Court should not have converted the acquittal into conviction on the strength of the evidence collected in such a trial. Of course, the trial court had upheld the pleas of the accused that it had no jurisdiction to try the case.
This para and the rest of the judgment has no application to the facts of the case, even on a bare reading. There is no identity of issues in the two cases. The said case primarily concerned the issue of lack of jurisdiction. Hence, this reliance also fails to come to the rescue of the complainant.
CONCLUSION In light of the foregoing reasons, it is clear that the accused has succeeded in rebutting the presumption of legal liability and the complainant has failed to prove the same affirmatively. As a result of which, the accused In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 14 of 15 Vineet Wadhwa and M/s Logic Eastern stand acquitted of offense u/s 138 of the NI Act.
Let bail bonds within the meaning of Section 437A of the CrPC be furnished, alongwith latest photographs and fresh ID proofs of the accused and the surety.
A copy of this judgment be placed on the official website of the District Court.
Announced in the open court today on 19.10.2015.
(Bharat Chugh) MM (NI Act)-01, Central District, Delhi 19.10.2015 * Judgment contains 15 signed pages In the case of Laxmi Remote India Pvt Ltd. Vineet Wadhwa & Anr. Page 15 of 15