Delhi District Court
Gadrab Sen vs Rakhi Chandola on 28 August, 2018
IN THE COURT OF SHRI PUNEET NAGPAL, MM (NI ACT)-01,
SOUTH-WEST DISTRICT: NEW DELHI
New CC No.4997923/16
Old CC no.7173/15
Under Section 138 of N.I. Act
In the matter of:
GADRAB SEN
s/o Shri Ram Swaroop
r/o C 83, Dasrath Puri
New Delhi.
... Complainant
Versus
RAKHI CHANDOLA
w/o shri Madhusudan Nair
R/o 18, Prayag Apartments
B1, Vasundhara Enclave,
Near Dharamshila hospital
New Delhi -110096.
... Accused
Date of Institution : 22.03.2013
Date on which judgment was reserved : 12.07.2018
Date of Judgment : 28.08.2018
JUDGMENT
1. Shorn off unnecessary details, the case of the complainant as narrated in the complaint is that the complainant is the sole proprietor of M/s United Worldwide Express Air Courier Services having its office in New Delhi and that the complainant is actively engaged in handling airlines baggage and courier services. The complainant knows the accused through her New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola husband namely Mr. Madhusudan Nair, who was the friend of the complainant. It has been averred in the complaint that the husband of the accused was working as a Manager in IGI Airport- II, New Delhi with Canada Airlines. In the year 2005, the complainant had started dealing with Canada Airlines as a baggage delivery agent and got himself acquainted with the husband of the accused. The husband of the accused had handed over the assignment of a baggage delivery service agent in Canada Airlines to the complainant. Gradually, the complainant and the husband of the accused developed friendly relations. Subsequently, this friendly relation fructified into family relations and the husband of the accused also introduced his wife, Rakhi Chandola (accused in the present case) to the complainant. Subsequently, the husband of the accused switched his job and started working for Star Alliance Group.
2. It has been averred in the complaint that during one of the interactions of the complainant with the accused and her husband, the latter represented to the complainant (Gadrab Sen) that they have extensive knowledge of financial matters and have done extensive researches in financial aspects, they both can get money invested in profitable ventures where the investments will not only be absolutely safe but, will also multiply manifolds in no time. Such representations were repeatedly advanced to the complainant by the accused and her husband. Consequently, the accused and her husband were successful in inducing the complainant to invest his hard earned money in the schemes proposed by them. Initially, the complainant was New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola apprehensive regarding the schemes proposed by the accused. However, later on, the complainant fell into their trap and invested a sum of Rs.5 lacs in such schemes proposed by the accused and her husband. In order to win the confidence of the complainant and to show their bonafidees, the accused and her husband, initially gave a post dated cheque amounting to Rs.7 lacs to the complainant. After a period of three months, the accused and her husband offered Rs.7 lacs in cash to the complainant in lieu of the investment of Rs.5 lacs and requested the complainant to return the aforementioned cheque of Rs.7 lacs. This transaction propelled the complainant to recourse faith in the accused and her husband. This casted a very good impression on the mind of the complainant and also dispelled the doubts which might have been there in the mind of the complainant regarding the genuineness of the claims made by the accused and her husband regarding the schemes proposed by them.
3. After passage of sometime, the accused and her husband, again made a similar representation to the complainant (Gadrab Sen) and conveyed him an another lucrative scheme which could yield exemplary returns in a short span of time. The accused and her husband further communicated to the complainant that for huge returns, a huge investment is required to be made and for the same, the complainant was required to make minimum investment of Rs.40-50 lacs. The complainant initially expressed his inability to arrange such a humongous amount as was demanded by the accused and her husband. However, as the New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola complainant was deceived into believing that the schemes proposed by the accused would fetch inflated returns, he shared this idea of investment with his family and friends. The brother, friends and the staff of the complainant were, however, not convinced with the schemes which was communicated by the complainant to them and therefore, they all expressed their desire to meet the accused and her husband personally. Thereafter, the accused and her husband, met the complainant alongwith his friends and family members, to reinforce their belief in the investment schemes proposed by them. In the said meeting, the accused and her husband made similar representations in respect of the investment schemes proposed by them. The accused and her husband also assured that they would send an email to the complainant, Gadrab Sen setting forth all the details of the investment and the returns therefore. Such email was sent setting forth various slabs of investment and their proposed returns and the same has been exhibited as Ex.CW1/A.
4. On the basis of the assurances and promises of the accused and her husband, the complainant alongwith four other close friends and staff members, arranged a sum of Rs.38.5 lacs (cumulatively) and gave the same to the accused and her husband. At the time of advancement of this amount of Rs.38.5 lacs, the accused and her husband had promised and assured the complainant that the sum of Rs.38.5 lacs would fetch returns to the tune of Rs.55 lacs. The complainant had advanced a sum of Rs.14 lacs, out of the above stated amount of Rs.38.5 lacs. At New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola the time of receipt of sum of Rs.38.5 lacs, the accused and her husband had issued six post dated cheques (cumulatively) drawn on their respective bank accounts in favour of the complainant and his friends and family members to the tune of Rs.55 lacs. Out of these six post dated cheques, two cheques bearing no.049988 and 049989 (Ex.CW1/B and Ex.CW1/B1) both dated 16.10.2012 for sum of Rs.10 lacs each drawn on Union Bank of India, Moti Bagh, New Delhi were issued in favour of complainant by the accused with the assurance that, when presented on its due date, the same shall be honoured. However, on 14.10.2012, the accused and her husband approached the complainant and requested that the cheques be not presented as the cash has not been transferred in their account. The complainant, believing so, did not present the same.
5. That after sometime, the complainant again contacted the accused and sought their permission to present the cheques in question for encashment. However, the accused and her husband again requested the complainant to wait for some more time. Thereafter, the accused and her husband repeatedly avoided the complainant on one pretext or the other. Thereafter, the complainant alongwith his friends and staff members, warned the accused and her husband that appropriate legal action would be initiated against both of them, in case, the accused and her husband, do not fulfill their promise of returning their investment alongwith promised returns. Upon this, the accused and her husband asked the complainant to present the cheques in New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola question for encashment and assured that the same shall be honoured on presentment. However, to the dismay of the complainant, the cheques in question were returned dishonoured vide return memo dated 11.01.2013 with the remarks ''Insufficient Balance'' Ex.CW1/C. Thereafter, the complainant contacted the accused and her husband, but they started to avoid the complainant. Left with no other option, the complainant issued a legal demand notice dated 04.02.2013 Ex.CW1/D to the accused which went unheeded and this led to the filing of the present complaint.
6. Complainant led his presummoning evidence and filed his affidavit Ex.CW1/1 and reiterated the facts averred in the complaint. Cognizance of the offence under Section 138 NI Act was taken against the accused and summons were issued. The accused entered appearance. Notice under Section 251 CrPC was framed against the accused to which she pleaded not guilty. In her plea of defence, recorded on 19.10.2013 accused submitted that she would lead defence evidence in rebutting the case of the complainant.
EVIDENCE OF THE COMPLAINANT
7. In Post Summoning Evidence, the complainant chose to examine himself as sole complainant's witness and appeared as CW1 and adopted his Pre-Summoning Evidence tendered by way of affidavit Ex.CW1/1. The accused had filed an application under Section 145(2) NI Act and the accused was allowed to cross New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola examine the complainant. However, nothing substantial could be elicited from the cross examination of the complainant which could support the defence of the accused or create doubts on the credibility of the witness. In his cross examination, the complainant deposed that he is into business of courier, cargo, baggage handling and delivery and that the complainant is the proprietor of M/s United Worldwide Express Air Courier Service. It was testified by the complainant that he got in touch with the husband of the accused as he was into courier business and the husband of the accused was working in Air Canada, which had awarded the contract to the complainant for baggage delivery services. It was the case of the complainant that he had invested a sum of Rs.14 lacs (in four installments of Rs.3.5 lacs each) in the investment schemes proposed by the accused and her husband. It was assured by the accused and her husband that the complainant would get, for each invested sum of Rs.3.5 lacs, a sum of Rs.5 lacs, on maturity after period of 90 days. Acting on this representation and on the promises of fantastic returns, the investment of Rs.14 lacs (Rs.3.5 lacs X 4 times) was made by the complainant. The complainant admitted that he was only having interaction with the husband of the accused and he was not in touch with the accused. It was also deposed by the complainant that though he had gone to the residence of the accused, however, the accused and her husband had not let the complainant enter their residence. The complainant also admitted that the husband of the accused had shown him the details of the research which were undertaken by the accused and her husband with respect to the investment schemes which New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola were proposed by the accused and her husband. It was also admitted by the complainant that he had met the accused for the first time at the time of making payment to the husband of the accused namely Madhusudan Nair. It was admitted by the complainant that the amount of Rs.7 lacs which was received by him from the accused and her husband against the initial investment of Rs.5 lac was not disclosed by him in his ITR for the relevant years. The complainant deposed that the accused and her husband had started making representations relating to the proposed investments plans / schemes from March 2012 till April 2012. The same culminated in the month of August 2012, when the husband of the accused had sent an email detailing the various slabs of investments and the proposed returns on 02.08.2012 to the complainant. It was also deposed by the complainant that the amount of Rs.14 lacs was advanced to the husband of the accused in the presence of his brother Bhupesh Kumar, his friend Ran Singh and his employee Swati Bansal. The complainant categorically denied that he has presented the cheques in question with the ulterior motive of pressurizing the husband of the accused. It is pertinent to mention that though the complainant was cross examined at length at the instance of the accused, however, not even a single suggestion was put, much less any cross-examination, to question the financial competency / prowess of the complainant was done by the accused. The complainant also testified that the inducement was done by the accused and her husband by use of certain documents / flow charts which were sent through emails.
New CC No.4997923/1 Old CC no.7173/15Gadrab Sen vs Rakhi chandola DEFENCE OF THE ACCUSED
8. At the outset, it needs to be emphasized that the accused has at different stages of trial, took different defences, which are totally unconnected with each other and at times, were contradictory. There is no consistency in the defence pleas of the accused and the perusal of record shows that the defence plea taken by the accused at a particular stage of trial, has been jettisoned by her at the subsequent stage of trial and some new defence plea has been substituted in its place.
9 At the stage of filing application under section 145(2) NI Act, the accused had averred in her application that she is a stranger to the complainant and has no acquaintance with the complainant. It was averred in the said application that accused had never visited the house of the accused. In respect of the possession of cheques in question by the complainant, it was the version of the accused that the husband of the accused used to frequently travel abroad and therefore, used to book airline tickets from the complainant who was running a travel agency and for the same, the husband of the accused had handed over some blank signed cheques of himself and of the accused to the complainant and he has misused those cheques.
10. However, the plea of defence averred by the accused in her application under section 145(2) NI Act was not put to the New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola complainant during his cross-examination. Contrary to the avernments made by the accused in her application under section 145(2) NI Act, accused has endeavored to prove from the cross-examination of the complainant, is that complainant had stolen the cheques in question from the residence of the accused when the complainant had visited the house of the accused for giving festival greetings. It was the plea of the accused that it was not the husband of the accused who had convinced the friends / relatives / employees of the complainant to invest money in the investment schemes proposed by the husband of the accused, but, it was the complainant Gadrab Sen, himself, who had convinced and collected money from his employees, relatives and friends and siphoned the same. At the same time, it was the defence of the accused that the cheques in question have been presented in order to pressurize the husband of the accused.
11. During recording of her statement under section 313 CrPC, the stand of the accused was that of bare denial and the accused did not utter the defences taken by her during the stage of cross-examination of the complainant. However, the accused admitted that the legal demand notice which was sent by the complainant was received by the mother-in-law of the accused namely Padmini Nair.
12. The accused chose to lead defence evidence and appeared herself as defence witness (DW1). In her testimony as DW1, the accused somersaulted and contrary to the avernments New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola made by her in the application under Section 145(2) NI Act, deposed that the cheques in question does not bear her signatures. The accused also deposed that she has met the complainant for the first time in the court after she had appeared in the present case.
13. At the same time, contrary to the stand taken by her during the cross-examination of the complainant, the accused deposed that she is not aware as to how the cheques in question came into the possession of the complainant. In her cross- examination, the accused admitted the fact of having received the legal demand notice sent by the complainant. It was deposed by the accused that she had gone to her counsel for legal opinion / advice after receiving the legal demand notice. However, the accused admitted that she had not sent any reply to the legal demand notice sent by the complainant. For the first time, in her testimony as DW1, the accused also raised doubts on the genuineness of the bank return memo Ex.CW1/C. In her cross- examination, the accused was evasive as to whether the email ID from which the email (copy of which has been exhibited as Ex.CW1/A) was sent, was the email ID of her husband. At the same time, contrary to her version of events, suggested to the complainant during his cross-examination to the effect that the cheques in question were stolen by the complainant when the complainant had visited the house of the accused, the accused in her cross-examination, testified that the complainant never visited her house. The accused denied the suggestion that the complainant used to visit the house of the accused on festive New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola occasions. In her cross-examination, the accused (DW1) also admitted that she is the proprietor of M/s Alpen Glacier Travels.
14. The accused also chose to examine her brother-in- law Shri Manish Nair as DW2. The said witness deposed that the accused got knowledge regarding the dishonour of the cheques in question after few days of receipt of the legal demand notice by his mother namely Padmini Nair. However, in his cross- examination, the witness admitted that he was not having any personal knowledge regarding the transaction which took place between the complainant, accused and the husband of the accused namely Madhusudan Nair.
15 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 u/s 138 NI Act-:
(i) that the person must have drawn a cheque on an account maintained by him in a bank for payment of certain amount of money to another person from out of that account.
(ii) that a cheque should have been issued for discharge, in whole or in part, or any debt or other liability.
(iii) that the cheque has been presented to the bank within a period of six months from the date on which it was drawn or within the period of its validity whichever is earlier.
(iv) that cheque is returned by the bank unpaid 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.New CC No.4997923/1 Old CC no.7173/15
Gadrab Sen vs Rakhi chandola
(v) that the payee or the holder in due course of the cheque makes a demand for the payment of said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of the information by him from the bank regarding the return of the cheque as unpaid.
(vi) the drawer of the said cheque fails to 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.
16. Being cumulative, it goes without saying that it is only when, all the aforementioned ingredients are satisfied, that a person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the NI Act.
17. On analysis of the facts and the legal position stated above, the court finds the parties to be at variance only one primary issue i.e. whether the cheques in question were issued by the accused to discharge legal liability to pay the maturity amount of Rs.20 lacs to the complainant in respect of the investment of Rs.14 lacs made by the complainant.
18. File perused and submissions heard. Let us determine, whether the accused has succeeded in establishing various defences taken by her.
19. Ld. Counsel for the complainant has submitted that the accused has failed to lead any affirmative evidence to rebut the presumptions under section 139 read with Section 118(a) of the NI Act, carved out in favour of the complainant. At the same time, it has been argued on behalf of the complainant that the New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola accused has taken different defence pleas and stands at the various stages of trial which itself are indicative of the fact that the accused has no probable defence in her favour.
20. Per contra, Ld. Counsel for the accused has argued that the complainant has failed to prove the facts which necessitate for raising presumption in favour of the complainant under section 139 read with section 118(a) NI Act. At the same time, it has been argued on behalf of the accused that all the ingredients of the offence under section 138 NI Act are not made out and therefore, accused cannot be convicted for the offence punishable under section 138 of NI Act.
21 To begin with, Ld. Counsel for the accused has argued that the cheques in question have not been drawn by the accused on a bank account maintained in her name. Ld. Counsel for the accused has argued that a naked eye perusal of the cheques in question show that the drawer of the cheque is not the accused, but has been drawn on a bank account maintained by M/s Alpen Glacier Travels and the accused is a mere signatory on behalf of M/s Alpen Glacier Travels.
22. It has been argued on behalf of the accused that the primary liability on account of dishonor of the cheques in question is that of M/s Alpen Glacier Travels and not of the accused. The accused can only be saddled with vicarious liability in view of section 141 of NI Act. However, as the complainant has failed to arraign M/s Alpen Glacier Travels as an accused, New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola therefore, no vicarious liability in terms of section 141 NI Act can be fastened on the accused.
23. To support and fortify his submission, Ld. Counsel for the accused has placed reliance on Judgment titled as 'Philip J. Vs. Ashapura Minechem Limited & Anr.' (2016) 3 RCR (Cri.) 450, passed by Hon'ble Bombay High Court and has argued that once a company is held to be essential party, then arraigning of company as an accused is imperative for prosecuting the signatory of such a cheque under section 141 of NI Act. It was also argued that arraigning of partnership firm is also imperative for prosecution against the partners. It has been argued that in the present case, as the complainant has failed to arraign M/s Alpen Glacier Travels as an accused and this will inexorably result in the acquittal of the accused as no liability under section 141 NI Act can be fastened on the accused, who happens to be a mere signatory on behalf of the M/s Alpen Glacier Travels.
24. In my opinion, this argument advanced on behalf of the accused is devoid off merits as the accused has admitted in her cross-examination (DW1) that M/s Alpen Glacier Travels is not a company nor a partnership firm, but is a proprietorship firm. At the same time, accused has admitted in her cross-examination that she is the sole proprietor of M/s Alpen Glacier Travels.
25. It is well settled law that a proprietorship concern is not an independent, legal and juristic entity having legal recognition in the eyes of law. Therefore, neither can it initiate New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola any proceedings nor can proceedings be initiated against it. In the case of proprietory concern, the proprietor is always the affected person, who can either indict or be indicted.
26. It is a settled law that the provisions of Section 141 and 142 of NI Act, to attract vicarious liability do not apply to a proprietorship firm. For the same, reliance can be placed on the Judgment passed by Hon'ble Apex Court in 'Raghu Laxminaryanan vs. Fine Tubes' 2007 (5) SCC 103 wherein it has been held that, a proprietorship concern is not a company within the meaning of term ''Company'' as envisaged in the explanation to Section 141 of NI Act. At the same time, a proprietorship firm, is distinct from a partnership firm and thus, a proprietory concern does not fall within the meaning of ''firm'' as envisaged in the explanation to section 141 of the NI Act.
27. Reliance can also be placed on the decision passed by Hon'ble Delhi High court in the case of 'M.M. Lal vs. State (NCT of Delhi), 2012 (4) JCC 284 (NI), wherein it has been held that:-
''5. It is well settled that a sole proprietorship firm has no separate legal entity and infact, is a business name of the sole proprietor. Thus, any reference to sole proprietorship firm means and includes sole proprietor thereof and vice versa. Sole proprietorship firm would not fall within the New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola ambit and scope of section 141 of the Act, which envisages that if the person committing an offence under section 138 is a company, every person who, at the time of offence was committed, was incharge of, and was responsible to the company, for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Company includes a partnership firm and any other association of individuals. The sole proprietorship firm would not fall within the meaning of partnership firm or association of individuals.''
28. At the same time, a bare perusal of Section 141 of NI Act, shows that vicarious liability can be fastened by aid of Section 141 of the NI Act on any person who falls within the meaning of term ''Director'', as envisaged in the explanation to section 141 of the NI Act. In the present case, the cheques in question are not drawn on an account maintained in the name, not of a company, firm or any association of individuals, but of a proprietorship firm. A proprietorship firm is nothing, but the proprietor. In case of a complaint against the proprietory concern, the complaint is maintainable against only the proprietor and nobody else. In the present case, the proprietor of M/s Alpen New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola Glaciers is the accused and therefore, the only person upon whom liability can be fastened on account of dishonor of the cheques under section 138 NI Act, is the accused. In view of the above discussion, this argument advanced on behalf of the accused lacks merit and the cheques in question are held to have been drawn on an account maintained by the accused.
29. Ld. Counsel for the accused has also argued that the accused has disputed her signatures on the cheques in question in her testimony as DW1 and therefore, it was imperative for the complainant to take steps for referring the cheques in question for FSL examination to conclusively prove that the cheques in question bear the signatures of the accused. As the complainant has failed to take any steps for referring the cheques in question to FSL examination or for taking an opinion from any handwriting expert, therefore, the claim of the accused that the cheques in question does not bear her signatures, gets corroborated and fortified and therefore, the claim of the complainant is liable to rejected.
30. In my opinion, this argument advanced on behalf of the accused is totally misconceived as the accused had herself admitted at the stage of filing of application Under Section 145(2) NI Act that the cheques in question bears her signatures. It was at the stage of defence evidence, that the accused had for the first time, disputed her signatures on the cheques in question. In my opinion, it was incumbent on the accused herself to prove with certainty that the cheques in question does not bear her New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola signatures. However, the accused has failed to take any steps to summon the concerned bank manager, who would have been the best witness in the circumstances of the case to help establish this defence of the accused. At the same time, no application was filed by the accused for examination of the cheques in question by an handwriting expert in order to prove that the cheques in question, which form the basis of complaint, were not signed by her. Thus, the accused has failed to discharge the onus of proving the defence that the cheques in question does not bear her signatures. It was not for the complainant to lead affirmative evidence to prove that the cheques in question bears the signatures of the accused.
31. I have myself compared the signatures appended by the accused on the cheques in question, by exercising the powers under section 73 of Indian Evidence Act, 1872, with her admitted signatures available on record ( i.e. the signatures appended on the application Under Section 145(2) NI Act, during her statement under section 313 CrPC and on her testimony) and I do not find any variance. Thus, in my opinion, this plea of the accused that the cheques in question does not bear her signatures, is an after thought and is a blatant lie. This inference is further bolstered by the fact that this plea has been taken by the accused at a belated stage and that too, at the fag end of the trial coupled with the fact that the cheques in question were not dishonored on account of variance in signatures, but ''Insufficient Funds''. Thus, I hold that the cheques in question bear the signatures of the accused.
New CC No.4997923/1 Old CC no.7173/15Gadrab Sen vs Rakhi chandola
32. Once the issuance of the cheque has been admitted or stands proved, a presumption arises in favour of the holder of the cheque that he had received the cheque of the nature referred to under section 138 of the Act for the discharge, in whole or in part of any debt or any other liability. This presumption arises in favour of the holder under section 139 of the Act which envisages that it shall be presumed unless the contrary is proved that the holder of a cheque received the cheque of the nature referred to under section 138 of the Act for the discharge, in whole or in part of any debt or any other liability. Of course, this presumption is a rebuttable presumption and has to be rebutted only by the person who had drawn the cheque. Therefore, it is now for the accused to lead affirmative evidence and prove that the cheques in question were not issued by her to the complainant to discharge any legally enforceable debt or liability.
33 It is an established proposition of law that once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under 139 NI Act has to be raised in favour of the complainant. It is a mandatory presumption though the accused is entitled to rebut the said presumption. In a catena of judgments, it has been laid down by the Hon'ble Apex court that such presumption in favour of the complainant cannot be rebutted by a mere plausible explanation but more than a plausible explanation by way of rebuttal evidence.
New CC No.4997923/1 Old CC no.7173/15Gadrab Sen vs Rakhi chandola ADVANCEMENT OF MONEY TO THE HUSBAND OF THE ACCUSED
34. Ld. Counsel for the accused has argued that before a person can be convicted for the offence punishable under section 138 of NI Act, it is imperative for the prosecution to prove beyond reasonable doubt that the dishonored cheque has been issued by the accused in discharge of a legally enforceable debt. It has been argued on behalf of the accused that even if the case of the complainant is accepted as gospel truth, the cheques in question cannot be said to have been issued in discharge of legally enforceable debt.
35. Ld. Counsel for the accused has referred to the testimony of the complainant and has submitted that the complainant has himself testified that he has given sum of Rs.14 lacs in cash to Shri Madhusudan Nair i.e. husband of the accused in four installments of Rs.3.5 lacs each. It has been argued on behalf of the accused that, admittedly, not even a single penny was handed to the accused for the purpose of alleged investment in the plans which were proposed by the accused and her husband. Thus, it has been contended on behalf of the accused that the liability, if any, is that of the husband of the accused and there is no personal liability of the accused to pay the alleged amount, and therefore, the accused cannot be said to have issued the cheques in question to discharge any ''legally enforceable debt or liability''.
New CC No.4997923/1 Old CC no.7173/15Gadrab Sen vs Rakhi chandola 36 Thus, the question which arises for consideration is whether the ingredients of Section 138 of NI Act, would get attracted, in cases where the drawer has issued a cheque not in discharge of his / her own liability but in order to discharge any debt or other liability of someone else. Ld. Counsel for the accused has submitted that the answer to the above stated question has to be in negative and a person cannot be convicted under section 138 NI Act, in case the cheque has not been issued in discharge of one's own debt or liability. However, I am not in concurrence with this submission advanced on behalf of the accused. In my opinion, this objection is liable to be rejected at the threshold as the same has been made in oblivion to the settled law laid down by Hon'ble High Court of Delhi in the case titled as 'M/s Jammu & Kashmir Bank vs Abhishek Mittal' Crl. Appeal no.294/2011.
37. In M/s Jammu & Kashmir Bank (supra), Hon'ble Delhi High Court has held :-
''10 - The language employed in Section 138 of the Act, makes it ample clear that this section does not confine its operation to the cases where cheque had been issued by a person in favour of other in discharge of his own personal debt or other liability.
Section 138 of the Act is attracted in relation to the cheque issued by a person to another for discharge of any debt or other liability. The explanation further specifies that such debt or other liability shall be legally enforceable. This section provides for discharge of debt or other New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola liability even if, it is a debt or other liability of another.................
13. It is, thus, clear that for whatever reason if a cheque is drawn on an account maintained by a drawer with its bank in favour of any person for the discharge of ''any debt or other liability'', the ingredients of offence under section 138 of the Act, gets attracted in case the cheque is returned dishonoured for insufficiency of funds and the cheque amount remains unpaid within the statutory period, despite service of notice. Legislature has been careful enough to record not only discharge in whole or in part of any debt but the same also includes other liability as well.
The words 'any' and 'other liability' used in the section assumes importance in the sense that if a cheque is issued by a person to discharge any debt or other liability of another person it would attract the penal consequences under section 138 of the Act''.
38. Thus, a bare perusal of Section 138 of the Act coupled with the law laid down by Hon'ble Delhi High Court, shows that neither does the explanation at the foot of Section 138, nor the charging provisions in Section 138 NI Act confines its operation to be only in relation to cases where cheques are issued in discharge of debt or liability of the person issuing the cheque. The law provides for discharge of debt by a person, even if, it is a debt of another. Such transactions, where one discharges debt of another, is an instance of discharge of debt or other liability. If ''A'' discharges a legally enforceable debt, or New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola other liability of ''B'', by making a payment to ''C'', then, if that is done by ''A'', issuing a cheque to ''C'', it becomes a cheque issued in discharge of legally enforceable debt or other liability of ''B'' and, is therefore, debt or other liability for the purpose of Section 138 of NI Act. It is thus clear that for whatever reason, if a cheque is drawn on an account maintained by a drawer with its bank, in favour of any person for the discharge of ''any debt or other liability'', the ingredients of offence under section 138 of the Act gets attracted in case, the cheque is returned dishonored for insufficiency of funds and the cheque amount remains unpaid within the statutory period, despite service of notice.
39 In the present case, assuming that the husband of the accused, Mr. Madhusudan Nair, and not the accused, had infact, promised and assured the complainant that if the complainant invests a sum of Rs.3.5 lacs for period of 90 days in the investment plan, proposed by the husband of the accused, then on maturity, the complainant shall be entitled to a sum of Rs.5 lacs. In the instant case, the complainant has invested sum of Rs.3.5 lacs on four occasions in the investment scheme proposed by the husband of the accused and therefore, the husband of the accused Madhusudan Nair was having legal liability to repay sum of Rs.20 lacs in lieu of the investment of Rs.14 lacs (cumulatively). At the same time, this promise of the husband of the accused made to the complainant cannot be said to have been made without any consideration, making the same unenforceable. It is a settled law that the term ''consideration'' within the meaning of Law of Contract, not only means some New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola right, interest, profit or benefit accruing to the promiser but also includes some detriment, loss, forbearance suffered by the promisee. Thus, the act of the complainant in investing the sum of Rs.14 lacs in the investment schemes proposed by the husband of the accused, is sufficient consideration to support the promise of the husband of the accused to pay the complainant the maturity sum of Rs.20 lacs. Therefore, the husband of the accused was legally bound to pay the complainant a sum of Rs.20 lacs. Thus, even if it is assumed for the sake of arguments that the cheques in question were issued by the accused to discharge the aforesaid legal liability of her husband Madhusudan Nair, in such case also, the accused is liable to be convicted under section 138 of NI Act provided all other ingredients of the offence are made out.
40. During the stage of final arguments, it was also argued on behalf of the accused that the case attempted to be built by the complainant, is suffering from fatal infirmities as the complainant has failed to show the source of alleged cash amount of Rs.14 lacs which was advanced to the accused and therefore, adverse inference ought to be drawn against the complainant. At the same time, it has been argued that the complainant has not disclosed the aforesaid sum of Rs.14 lacs which was allegedly invested by the complainant with the accused and her husband and therefore, the transaction, is hit by provisions of Section 269 SS of the Income Tax Act.
41. In my opinion, this submission of ld. Counsel for New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola the accused is specious and is liable to be rejected. Perusal of the cross-examination of the complainant shows that despite extensive cross-examination, the complainant was not cross examined on the aspect of his financial competency / prowess. It is pertinent to mention that not even a single suggestion disputing the financial competency / prowess was put to the complainant during his cross-examination. Therefore, it does not lie in the mouth of the accused to argue at the stage of final arguments that the complainant was not financially competent to invest such an humongous amount of Rs.14 lacs in the investment plans proposed by the accused and her husband.
42 Equally without merit, is the submission that the investment made by the complainant is hit by the provisions of section 269 S.S. of the Income Tax Act, 1961. Ld. Counsel for the accused has argued that complainant has admitted in her cross examination that the alleged sum was given in cash and the same has not been disclosed by him in his income tax returns, and therefore, the same cannot be termed as legally enforceable debt in view of the bar of section 269 S.S. of the Income Tax Act, 1961.
43. This argument advanced by Ld. Counsel for the accused is devoid off merits as it is a settled law that even if, any cash amount advanced by any person, as loan or as an investment with some other person, has not been disclosed by him in his / her income tax returns, the same would be inconsequential. It is now fairly settled that the mandate of New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola section 269 S.S. of the Income Tax Act extends only to the taker or receiver of such cash amount. A bare perusal of section 269 S.S. of the Income Tax Act, 1961 shows that no person can accept any loan or deposit of Rs.20,000/- or more otherwise then, by way of an account payee cheque or an account payee draft.
44. Consequences of contravention of section 269 S.S. of the Income Tax Act have been provided in section 271 D of Income Tax Act, 1961, which provides, that if, a loan or deposit is accepted in contravention of provisions of section 269 S.S. of the Income Tax Act, then a penalty equivalent to the amount of such loan, or deposit may be levied by the Joint Commissioner. Hence, even on a bare reading of these provisions, it is manifest that the bar relates to the receiving or taking of any amount in cash and not giving the same.
45 This aspect is very succinctly highlighted by Hon'ble High court of Bombay in the decision tilted as 'Krishna P. Morajkar vs. Joe Ferroa' decided on 19.07.2013, 2013 SCC online Bombay 862, which reads as follows:
''18. The Ld. Counsel for the respondent submitted that the observations of the Supreme Court in para 14 of the Judgment in Rangappa (supra) shows that the Supreme Court had not in any way casts any doubt on the correctness of the decision in Krishna Janardhan Bhat (supra), as it was based on specific facts and circumstances therein. Therefore, he submitted that observations in Krishna Janardhan Bhat (supra), about non-compliance of New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola provisions of section 269 S.S. of the Income Tax Act and implications of section 271 D of Income Tax Act would still stand as good law. The Ld. Counsel for the appellant submitted that even these observations would stand impliedly over ruled. He pointed out that what was held in Krishna Janardhan Bhat (supra), was that advance taken by way of loan of more than Rs.20,000/- was only to be made by way of an account payee cheque. He submitted that in Rangappa (supra), the Supreme Court was specifically considering the case of an advance of Rs.45,000/- made in cash and yet the Supreme court had upheld the conviction recorded. Thus, even those observations based on the provisions of section 269 S.S. and section 271 D of the Income Tax Act made in Krishna Janardhan Bhat (supra), would stand impliedly overruled. I am entirely in agreement with Ld. Counsel for the appellant because the Supreme court in Rangappa (supra) had specially noted the judgment in Krishna Janardhan Bhat (supra), that advance of more than Rs.20,000/- was to be made only by way of an account payee cheque, and yet the Supreme Court accepted the case of the complainant who claimed to have made an advance of Rs.45,000/- in cash and proceeded to uphold the conviction, even though the case rested on the fact that the cash advance of sum more than Rs.20,000/- was made. Thus, on this aspect, also, Krishna Janardhan Bhat (supra), stood impliedly overrule by Rangappa (supra), and the Judgment is to be held rendered on the facts of that case, not laying down the law. Therefore, judgments, which follow Krishna New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola Janardhan Bhat (supra), can be safely ignored.
19. There is another aspect of the matter. The Ld. Counsel for the respondent pointed out that in Krishna Janardhan Bhat (supra), attention of the Supreme Court was possibly not drawn to the actual wording of section 269 S.S. of the Income Tax Act. He submitted that section 269 S.S. of the Income Tax Act, in fact, does not cast any burden upon a person making advance in cash to record it in his returns and does not prevent any such cash advanced from being made.
........................''.
A plain reading of section 269 S.S. shows that no person can accept any loan or deposit of a sum of Rs.20,000/- or more otherwise then by way of an account payee cheque or account payee draft. It does not say that a person cannot advance more than Rs.20,000/- in cash to other person. It is clear that the restriction on cash advances was infact on the taker and not the person who makes the advance. The penalty for taking such advance or deposit in contravention of provisions of section 269 S.S. was to be suffered by the one who takes the advance. Therefore, it is obviously impermissible to invoke these provisions for preventing a person from recovering the advance which he has made..............''.
46. It is clear from the above that non disclosure of an advance / deposit would not make the same non recoverable as it New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola is incumbent on the person taking the advance / deposit to disclose the loan / deposit amount and not the person giving the same.
47. It is, therefore, clear that any claim does not become irrecoverable on account of alleged violation of section 269 S. S. of the Income Tax Act.
48. It has also been argued on behalf of the accused that the complainant has relied upon an alleged email (copy of which has been exhibited as Ex.CW1/A) which was sent by the husband of the accused to corroborate and support the version of events deposed by him. It has been vociferously argued on behalf of the accused that admittedly, the email (Ex.CW1/A) is not accompanied by a certificate under section 65B of Indian Evidence Act and therefore, the same is not admissible in evidence and thus, the same has to be eschewed from consideration and cannot be relied upon by the court. For the same, reliance has been placed on the Judgment titled as ''Anwar P. V. Vs. P. K. Basheer'', (2014), 10 SCC 473.
49. There is no dispute to the proposition that whenever any evidence which is a secondary form of evidence of any electronic record is filed, before a court, the same must be accompanied with a certificate as mandated under section 65B of the Indian Evidence Act. It is beyond any cavil that non- compliance with the provisions of Section 65B, would render the evidence of such electronic record inadmissible. Therefore, the New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola above stated objection taken by the accused is valid. However, even if the alleged email Ex.CW1/A is eschewed from consideration, in such case also, no doubts or infirmities are created in the version of events as have been profferred on behalf of the complainant. The complainant has relied upon Ex.CW1/A, (copy of an email), to prove and substantiate his testimony that the husband of the accused had induced him by promising exemplary returns on the investments which were to be made by the complainant. On the other hand, Ld. Counsel for the complainant has argued that even if, Ex.CW1/A, is eschewed from consideration and is obliterated from record, in such case also, the fact of sending the alleged email is proved on record. It has been submitted by Ld. Counsel for the complainant that in respect of the transaction in question, separate complaints titled as 'Swati Bansal vs Madhusudan Nair in CC no.4997303/16 and 'Ran Singh vs Madhusudan Nair CC no.4997924/16, have also been filed against the husband of the accused by the friend / staff of the complainant and the same are also being tried by this court itself. Ld. Counsel for the complainant has pleaded the court for taking judicial notice of the fact that in the connected case titled as 'Swati Bansal vs Madhusudan Nair' in CC no.4997303/16, the husband of the accused (accused in Swati Bansal vs Madhusudan Nair), has appeared as defence witness. In his testimony on 20.05.2017 as DW1, Mr. Madhusudan Nair, has, in the said case, admitted that he is the creator and sender of the alleged email. He has also admitted that he had indeed sent the email (the copy of which has been exhibited as Ex.CW1/A) to Gadrab Sen (complainant in the present case).
New CC No.4997923/1 Old CC no.7173/15Gadrab Sen vs Rakhi chandola Therefore, the fact that the alleged email Ex.CW1/A was sent by the husband of the accused to Gadrab Sen (complainant in the present case) is held to have been proved. I am in concurrence with the above stated submissions of the counsel for the complainant. In my opinion, the alleged email Ex.CW1/A was sent by the husband of the accused, namely Madhusudan Nair, vide which, he had proposed various schemes and slabs of investments to the complainant.
50 Ld. Counsel for the accused has also argued that for the sake of the arguments, if it is assumed that the complainant had invested the money with the accused and her husband as per the plan which was suggested to the complainant by way of email (copy of which is Ex.CW1/A), in such case also, the complainant is not entitled to receive sum of Rs.20 lacs from the husband of the accused. Ld. Counsel for the accused has referred to the testimony of the complainant and has submitted that in his cross-examination, the complainant has testified that he has invested his money in the scheme wherein sum of Rs.3.5 lacs was to be matured as Rs.5 lacs after a period of 90 days. Admittedly, the email suggesting the above stated scheme, was sent on 02.08.2012 to the complainant by the accused. It has also been admitted by the complainant that he has invested his money after the receipt of the email dated 02.08.2012. However, the cheques in question bear the date of 16.10.2012 and therefore, grave suspicion arises on the version of facts which have been deposed by the complainant. It has been argued by Ld. Counsel for the accused that as per the version of the facts New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola deposed by the complainant himself, he was entitled to sum of Rs.20 lacs after period of 90 days. Thus, assuming that the complainant had invested his money in the month of August 2012, in such case, the period of 90 days ends somewhere in the month of November 2012 and not October 2012. Therefore, on 16.10.2012, the complainant was not entitled to refund of Rs.20 lacs and therefore, it has been submitted on behalf of the accused that there is no enforceable debt or liability for which the cheques in question could have been issued by the accused.
51 In my opinion, this argument is also liable to be rejected as a perusal of the para no.11 of the affidavit filed by the complainant in lieu of his examination in chief shows that it has been deposed by the complainant that the accused and her husband had conveyed to the complainant that as they were having very close relations with the complainant, the accused and her husband had promised the complainant that the complainant would get even better returns as compared to his friends and staff and that too, in a short period of time. The accused has failed to cross examine the complainant on this aspect of the testimony of the complainant and therefore, the accused is deemed to have admitted this part of the testimony of the complainant. In view of the same, this submission advanced on behalf of the accused lacks force and is rejected.
52 As a last ditch effort, at the stage of final arguments, ld. Counsel for the accused has argued that the alleged agreement which forms the substratum of the case of the New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola complainant and in pursuance of which, the complainant had made investments in the schemes proposed by the accused and her husband is void in view of Section 23 of the Indian Contract Act and therefore, the same is not enforceable. Thus, any cheque which has been issued to discharge any liability under such void agreement, cannot be made basis of prosecution under section 138 of NI Act.
53 To decide this objection of Ld. Counsel for the accused, it needs to be delved as to whether the transaction between the complainant and the accused and her husband, is hit by the bar of Section 23 of the Contract Act. Section 23 lays down that the consideration and object of an agreement is lawful unless:-
1. It is forbidden by law.
2. It is of such nature that if permitted, it would defeat the provisions of any law or is fraudulent :
3. It involves or implies injury to the person or property of another ;
4. The court regards it as immoral or opposed to public policy.
54 In this case, the transaction between the complainant and the accused and her husband, will not come within the ambit of clauses (1) to (3) of Section 23 of the Contract Act as noted above. The only question for consideration is whether the transaction can be regarded as immoral or opposed to public policy.
New CC No.4997923/1 Old CC no.7173/15Gadrab Sen vs Rakhi chandola
55. It is a settled law that the court will assist any person that can prove that a contract it has entered into, has not been performed by the other side. This includes, if necessary, full access to the machinery of Judgment enforcement. At the same time, it is also settled position of law that the court will not lift a finger to help any person who claims under a contract, which is against public policy. An agreement is said to be against public policy, if they tend to promote breach of the law, of the policy behind a law, or tend to harm the state or its citizens.
56 Way back in the year 1938, Lord Atkin had in Fender vs Mildmay, (1938) AC1, had observed that the doctrine of public policy should only be invoked in clear cases in which the harm to the public if substantially incontestable and the same does not depend upon the idiosyncratic inference of a few judicial minds. This doctrine of public policy as has been laid down in English law, has been substantially adopted in Indian law. The Hon'ble Apex Court, has 'Gheru Lal vs Mahadeo Das Maya' AIR 1959 Supreme Court 781 has held that the doctrine of public policy is only a branch of common law and just like any other branch of common law, it is governed by precedents and the principles have been crystalized under different heads and though it is permissible for the court to expound and apply them to different situations, it should only be invoked in clear and incontestable cases of harm to the public. Though, the heads are not closed and though theoretically it may be permissible to evolve a new head under exceptional circumstance of a changing New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola world, it is advisable in the interest of stability of society not to make any attempt to discover new heads in these days.
57. In my opinion, in the present case, the transaction between the complainant on one hand with the accused and her husband does not fall within the heads which have been enunciated and propounded by the higher courts and therefore, the transaction in question in respect of which the present complaint has bee filed cannot be characterized as a transaction which is opposed to public policy.
58. Cumulatively seen, none of the defence pleas advanced on behalf of the accused is worthy of acceptance. At the same time, the sheer lack of even an iota of material on record, to prove the defence taken by the accused leads to the irresistible conclusion that all the defence pleas taken by the accused are figment of imagination and are without any merit.
59 Furthermore, it has already been proved on record that the legal notice was validly received by the accused. The non reply of the legal notice, is also circumstances that is to be marshalled against the accused..
60 Cumulatively seen, there is no evidence, much less cogent or credible, on record to prove the contention of the accused that the cheques in question were not issued by her to the complainant in discharge of any legally enforceable debt or liability and that the cheques in question have been misused by New CC No.4997923/1 Old CC no.7173/15 Gadrab Sen vs Rakhi chandola the complainant.
61 Therefore, all factors, cumulatively seen, go on to show that the accused has miserably failed to probablize the defence set up by her with respect to the cheques amounting to Rs.20 lacs (Ex.CW1/B and Ex.CW1/B1). The presumption of legal liability under Section 118 (a) read with Section 139 of the NI Act has gone unrebutted. The complainant has successfully proved the basic ingredients of the offence under Section 138 of the NI Act.
62. Resultantly, the accused Rakhi Chandola stands convicted for the offence under Section 138 of the NI Act.
63. Let the convict be heard on quantum of sentence.
64. Let a copy of the Judgment be supplied to the accused, free of cost and a copy of the Judgment be placed on record. Digitally signed by PUNEET PUNEET NAGPAL NAGPAL Date:
Decided on 28.08.2018 2018.08.30
15:50:06 +0530
Announced in open court.
(PUNEET NAGPAL)
MM (NI Act)-01/SW/DWK
New Delhi
New CC No.4997923/1
Old CC no.7173/15
Gadrab Sen vs Rakhi chandola