Delhi District Court
Punjab National Bank vs . Chhabra Textile & Ors. on 16 September, 2013
IN THE COURT OF SH. JITENDRA SINGH, METROPOLITAN MAGISTRATE
NORTHEAST04: KARKARDOOMA COURTS: DELHI.
CC No. 3325/2007
PS: Anand Vihar
U/s. 138 of N.I. Act.
Dated: 16.09.2013
PUNJAB NATIONAL BANK Vs. CHHABRA TEXTILE & ORS.
Date of Institution : 03.06.2004
Name of the Complainant:
Punjab National Bank, a body corporate constituted under The
Banking Companies (Acquisition & Transfer of Undertakings) Act,
1970, having its head office at 7, Bhika Ji Cama Palace, New Delhi
and amongst others a branch office at ANAND VIHAR, DELHI.
Name, Parentage and address
of the accused :
1. M/s. Chhabra Textile Corporation, through its sole
proprietor Mr. Vicky Kumar Rana, having its office at B6/1,
Ground Floor, Lal Quarter, Krishna Nagar, Delhi.
2. Shri Vicky Kumar Rana, S/o Sh. Vijai Kumar Rana, R/o; 20,
National Park, Lajpat NagarIV, New Delhi.
Offence complained of : U/s. 138 of N.I. Act.
Plea of accused : Pleaded not guilty.
Final Order : Convicted
Judgment reserved on : 16.09.2013
Date of judgment : 16.09.2013
JUDGMENT
Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 1 of 14 BRIEF SKETCH OF THE CASE
1. The present complaint under section 138 of the Negotiable Instrument Act was filed by "Punjab National Bank" (hereinafter referred as 'Complainant') against (1) M/s. Chhabra Textile Corporation, having its office at B6/1, ground Floor, Lal Quarter, Krishna Nagar, Delhi (hereafter referred as 'Accused No. 1') and Sh. Vicky Kumar Rana, S/o Shri Vijay Kumar Rana, R/o; 20, National Park, Lajpat NagarIV, New Delhi. (hereinafter referred as 'Accused No. 2').
2. The brief facts of the case are that the complainant bank is a body corporate constituted under The Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970, having its Head Office at 7, Bhika Ji Cama Palace, New Delhi and amongst other a branch office at Anand Vihar, Delhi. The present complaint was signed and verified by Sh. Gopal Aggarwal, Senior Manager of the Bank. The accused No. 1 is a sole proprietorship concern constituted by accused No. 2 as sole proprietor of accused No. 1, thus accused No. 2 is carrying on the business of textiles and suitings as sole proprietor in the name and style as accused No.1. The accused No. 2 is accordingly liable for all/any liability incurred in the name of accused No. 1. The accused No. 2 for the purpose to meet out the working capital requirements of accused No. 1 approached the complainant Bank to grant a cash credit limit and consequently since 29.04.2003 availed from the complainant a cash credit (H) limit within a tune of Rs. 50.00 Lacs (Rupees Fifty Lacs only) with interest payable @ PLR + 3.25% equal to @ 14.25% P.A. with quarterly rests subject to the changes in the interest rates made or to be made by RBI/Bank time to time. It was also agreed that in case of default in repayment of loan as agreed, the penal Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 2 of 14 interest @ 2% P.A. with quarterly rests on overdue loan amount shall also be payable by the accused to the Complainant. The accused No. 2 acting as sole proprietor of accused No. 1 failed to follow the financial discipline as they agreed in loaning documents executed by them in favour of complainant Bank, so the complainant recalled the total loan amount due by accused No. 1 & 2 as well as the guarantor/s to the loan and in order to liquidate the loan outstanding against the accused No. 2 acting as sole proprietor of accused No. 1 deposited a cheque bearing No. 390104 amounting Rs.50.00 Lacs (Rupees Fifty Lacs only) dated 30.04.2004 payable on account No. 3457 with Jai Lakshmi Cooperative Bank Ltd., Chatta Bhawani Shankar, New Delhi110006. The questioned cheque was presented for payment in clearing by the Complainant, but the same was returned unpaid with remark "Insufficient Funds" in the said account bearing No. 3457 of the accused No. 2.
3. It is further averred that on 12.05.2004, the complainant also issued/sent a legal notice through his counsel to the accused through regd. post AD and UPC, thereby demanding for the cheque amount from the accused. However accused did not reply to the said notice nor made any payment. It is further alleged that the accused willfully and intentionally failed to make the payment within stipulated period of 15 days from the date of receipt/intimation/deem service of the notice and accordingly the accused committed an offence punishable under section 138 of Negotiable Instrument Act. The complaint has been filed on 05.06.2004, alleged to be within the period of limitation.
4. After going through the complaint and annexed documents and after hearing the complainant, the court took cognizance of the offence and directed issuance of process against the accused. Thereafter, accused made Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 3 of 14 an appearance and documents were supplied to the accused in compliance of Section 207 Cr.PC and notice under section 251 Criminal Procedure Code (hereinafter referred to as Cr.P.C.) was framed against the accused on 24.06.2006, to which the accused pleaded not guilty and claimed trial.
5. The evidence was led on both sides. The complainant got examined Sh.
Gopal Aggarwal, Sr. Manager as CW1. Thereafter, statement of accused under section 313 Cr.P.C. was recorded, wherein all the incriminating evidence was put to the accused. The accused did not examine any witness in support of his defence.
6. I have heard the rival contentions and gone through the case file. To constitute an offence U/s. 138 Negotiable Instrument Act, it has to be proved that:
(a) There was a legally enforceable debt.
(b) That the cheque was drawn for discharge in whole or in part of any debt on liability.
(c) That the cheque so issued had been returned due to insufficiency of funds.
(d) That a demand notice was dully served on the accused and despite that he failed to make payment.
COMPLAINANT'S EVIDENCE
7. To establish his case, the complainant examined Sh. Gopal Aggarwal, Sr. Manager as CW1. The CW1 has relied upon the following exhibited documents namely: copy of GPA as Ex. CW1, original cheque bearing no. 390104 dated 30.04.2004 as Ex. CW2, original returning memo as Ex. CW3. Legal Notice dated 12.05.2004 as Ex. CW4, the postal receipts as Ex. CW5 and, UPC receipts as Ex. CW6. In the examination in chief of CW1, the CW1 has reiterated and reaffirmed the allegations as contained Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 4 of 14 in the complaint. The relevant extract of the same is reproduced below for ready reference: "2. I say that since 11/08/2003 to 31/07/2004, I deponent worked as Branch Manager with Punjab National Bank B.O. Anand Vihar, Delhi. I deponent being the Branch Manager of the complainant bank at the relevant time signed/verified & filed the above said complaint. Thus, I deponent am well conversant with the facts given herein below in this affidavit on the basis of official records & information derived from bank records and thus competent to swear the present affidavit accordingly I also state that I deponent am also the attorney of Punjab National Bank. Copy of GPA issued by the bank in my favour is annexed as Annexure1 of the list of documents and the same is marked as Exhibit CW1. 3. I say that the accused No. 1 is the sole proprietorship concern constituted by accused No. 2 as sole proprietor of accused No. 1. Accused No. 2 was carrying on the business of textiles and suiting as sole proprietor in the name and style as accused No.1, thus accused No. 2 is accordingly liable for all/any liability incurred in the name of accused No. 1. 4. I say that accused No. 2 for the purpose to meet out the working capital requirements of accused No. 1, approached the complainant Bank to grant a cash credit limit and consequently, since 29.04.2003 availed from the complainant a cash credit (H) limit within a tune of Rs.50.00 Lacs (Rupees Fifty Lacs only) with interest payable @ PLR + 3.25 % equal to @ 14.25% P.A. with quarterly rests subject to the changes in the interest rates made or to be made Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 5 of 14 by RBI/Bank time to time. It was also agreed that in case of default in repayment of loan as agreed, the penal interest @ 2% P.A. with quarterly rests on overdue loan amount shall also be payable by the accused to the complainant bank. 5. I say that the accused failed to follow the financial discipline as they agreed in loaning documents executed by them in favour of complainant Bank, so the complainant recalled the total loan amount due by accused Nos. 1 & 2 and guarantor/s to the loan. 6. I say that in order to liquidate the loan outstanding against the accused No. 2 deposited a cheque bearing No. 390104 amounting Rs.50.00 Lacs (Rupees Fifty Lacs only) dated 30.04.2004 payable on account No. 3457 with Jai Lakshmi Cooperative Bank Ltd., Chhatta Bhawani Shankar, Delhi06. Original cheque is annexed as Annexure No. 2 of the list of documents and the same is marked as Exhibit No. CW2.
7. I say that questioned cheque was presented in clearing by the complainant bank, but same was returned unpaid with remark "INSUFFICIENT FUNDS" in the said account bearing No. 3457 of the accused No. 2. Original return memo is annexed as Annexure No. 3 of the list of documents and the same is marked as Exhibit CW3. 8. I say that as per the facts stated as above it clearly reveals that the accused No. 2 wants to defraud the credit of complainant bank and with the said intention he deliberately/knowingly, has issued questioned cheque. 9. I say that on 12.05.2004, the complainant bank issued the legal notice upon the accused No. 1 & 2 through its counsel Sri Uttam Chand Mittal, Advocate partner of M/s.
Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 6 of 14 Mittal & Mittal Advocates, calling upon them to make the payment of questioned cheque alongwith interest due and cost of legal notice served within 15 days from the date of receipt of the said notice. The accused was called upon at the same time that on failure to make payment of questioned cheque within the stipulated time given in the legal notice, accused will be liable to face the trial in the form of complaint U/s. 138 of the NI Act, 1881. Copy of legal notice is annexed as Annexure4 of the list of documents and the same is marked as Exhibit CW4.
10. I say that legal notice dated 12.05.2004 u/s. 138 of the Negotiable Instruments Act was issued through the registered post dated 12/05/2004 bearing post office receipt nos. 5862, 5863, 5864, 5865, 5866 and also served through UPC but even after expiry of 15 days time awarded to the accused in the legal notice, they failed to pay the amount of questioned cheque, thus the presumption of dishonest intention is confirmed against them. Original post office receipts and UPC are annexed Annexure5 & 6 of the list of documents and the same are marked as Exhibit CW5 and CW6."
In his affidavit, complainant has reiterated the facts as mentioned in the complaint. CW1 was cross examined by the accused & thereafter complainant evidence was closed on the statement of the Complainant.
STATEMENT OF ACCUSED UNDER SECTION 313 Cr.PC
8. Statement of accused under Section 313 Cr.P.C. was recorded in which the accused submitted that he had not availed any loan from the complainant bank. However, he had signed certain papers at the instance of Sh. Niranjan Nangia. However, he had never availed the loan or utilized the Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 7 of 14 same nor he had issued or signed any cheque in favour of the complainant. No cheque was ever deposited with the complainant's bank at his instance or with his knowledge.
DEFENCE EVIDENCE
9. The accused did not examine any witness in support of his defence despite being given opportunities.
APPRECIATION OF FACTS, EVIDENCE AND ARGUMENTS
10. Before dwelling into the defence raised by the accused, I deem it appropriate to discuss the legal proposition regarding the presumption of law as laid down in the Negotiable Instrument Act. There are two presumptions of law as mandated by the Negotiable Instruments Act. According to Section 118 (a) it shall by presumed that every negotiable instrument was made or drawn for consideration. By virtue of this clause, the Court is obliged to presume that the promissory note was made for consideration or until the contrary is proved. In Mallavarapu Kasiviswesware Rao Vs. Thadikonda Ramulu Firm and Others AIR 2008 SC 2898, it was held as under: "12. Under Section 118 (a) of the Negotiable Instruments Act, the court is obliged to presume, until the contrary is proved, that the promissory note was made for consideration. It is also a settled position that the initial burden in the regard lies on the defendant to prove the nonexistence of consideration by brining on record such facts and circumstances which would lead the Court to believe the nonexistence of the consideration either by direct evidence or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal.... .... ..... The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 8 of 14 be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist. ... .... ...."
11. The accused has denied his signature on the impugned cheque Ex. CW2.
The accused in his statement U/s. 313 Cr.PC categorically stated that he has not signed the cheque. The complainant bank lead evidence and examined Sh. Gopal Aggarwal, Sr. General Manager as CW1. CW1 was cross examined at length by counsel for accused but he could not impeach the credibility of the witness nor could shake his testimony. Nothing came out in crossexamination which could raise doubt on the complainant's case. Perusal of the file reflects that the accused has been indulging in delaying tactics by moving various frivolous applications. In the instant case, the complainant bank has not disputed the signatures of the accused on the cheque. The cheque was dishonoured due to "Insufficiency of Funds" in the account of accused and not on the ground of "Signature differ". As a matter of practice, bank writes all the grounds for the dishonour of cheque. In the case at hand, the bank returning memo Ex. CW3 shows the reason as "Insufficient Funds" only. Therefore, this plea of the accused is baseless and without merits. I am enlightened by the judgment of Hon'ble Delhi High Court in S.Minj Vs. Madhu Bala Gupta in Crl. Rev. P. No. 573/2011, where it was held that in the case of denial of signature by the drawer of a cheque, the best witness would be concerned Bank Manager and not a handwriting expert. The relevant extract of the same is reproduced below for ready reference: Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 9 of 14 "7. In the case of L.C. Goyal (supra) the Supreme court observed in para (8) of its judgment observed as under: .................... The memos Ext. C6 and Ext. C8 issued by the bank clearly show that signature of the appellant on Ext. C4 was not objected to by the bank, but the same was returned with remark "insufficient funds". This circumstance shows that the signature on Ext. C4 was that of the appellant.................
9. This court recently in the case of Kashi Ram Bansal (supra) also relied upon the decision of L.C. Goyal (supra) and held that in the case of denial of signature by the drawer of a cheque, the best witness would be concerned Bank Manager and not a handwriting expert."
The accused had the opportunity to lead evidence to disprove his signature on the cheque. He deliberately chose not to lead any evidence despite being granted numerous opportunities.
12. It is the further defence of the accused that assuming the cheque was issued by the accused, then the same has been drawn from his saving account held by the accused to his own account. The cheque has not been issued to the complainant bank and the complainant bank cannot sue on the basis of being holder in due course of the said cheque. The accused has also stated that there is no endorsement on the cheque in favour of the complainant bank. According to Section 139 of NI Act "it shall be presumed, unless the contrary is proved that the holder of a cheque received the cheque for discharge in whole or in part, of any debt or other liability." Under Section 139 NI Act there is a legal presumption that the cheque was issued for discharging any antecedent liability and that presumption can be rebutted only by the person who draw the cheque. This presumption can be rebutted by the accused by adducing evidence. So the burden of proof is on the accused.
13. Section 9 of the N.I. Act defines "Holder in Due Course" as under: "Holder in due course" "Holder in due course, means any person Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 10 of 14 who for consideration became the prossessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or endorsee thereof, if [payable to order], before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title."
The accused has placed reliance on Punjab National Bank Vs. Himgiri Traders & Anr., (2005) 140 PLR 148, delivered by the Hon'ble Punjab & Haryana High Court, which states that the complainant bank is neither the payee nor the endorsee of the cheques and hence the complainant bank can never become holder of the cheque in due course. This point of defence raised by the accused is squarely covered by the judgment of the Hon'ble Delhi High Court in the case of Bank of India Vs. State & Ors., 2010 VII AD (Delhi) 885. The judgment relied upon the accused is of Hon'ble Punjab and Haryana High Court and as such have got only persuasive value. The relevant extract of Bank of India (supra) are quoted hereunder: "5. It is apparent from this definition that for being a 'holder in due course' of a bill or a cheque it was not necessary that there should be an endorsement on the bill or cheque. 'Holder in due course' has been defined as any person, who for consideration, becomes the possessor of the promissory note or cheque. There is no doubt that endorsee or the payee of such a bill or cheque are also considered as 'holder in due course', but, it is not the case that payee or endorsee alone are holders in due course. A person whose banking account is overdrawn if negotiates with his bankers a cheque, drawn by a third party, to reduce the overdraft, the banker becomes a holder for value of the cheque. The preexisting debt of the overdraft is a sufficient consideration for the negotiation of a cheque to the banker. If a person handovers cheque to the bank with the clear understanding to the bank that cheque is towards the debt payable by the company, though the cheque remains in the name of the company but the bank becomes holder of the cheque in due course. What is to be seen is that whether the bank Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 11 of 14 has come into possession of the cheque for a value pursuant to a contract between the parties express or implied. The credit given by a bank to its customer can be discharged by any third person and when the third person issues cheque in the name of the customer assuring bank that this would wipe out the overdraft or the other dues payable by the customer then the cheque in the hands of the bank is for consideration and the bank is 'holder in due course'.
14. In India Saree Museum v. P. Kapurchand, 1991 (1) BC 344, Hon'ble Karnataka High Court (referred to in the case of Bank of India (supra)) held that it is not only the endorsee who comes a holder in due course but also a person who gets possession of the negotiable instruments for consideration, which means, he need not be an endorsee to be a holder in due course. Once it is established to the satisfaction of the Court that the cheques were issued for discharge of the debt of the company, the bank who had given this debt to the company would be considered as 'holder in due course'. The 'holder in due course' of cheque means any person entitled to receive or recover the amount due thereon from the parties thereto.
15. It is thus clear that it is not necessary that the cheque should be endorsed in favour of the bank. What is to be seen is if the bank becomes holder for value and comes in possession of the instrument for consideration. The existing debt is always considered as a valid consideration. It is thus clear that there is no need to prove even endorsement on the cheque. The plea of the accused that there is no endorsement on the cheque and that the complainant bank is not a holder in due course is not sustainable in law.
16. With respect to the defence of the accused, the Complainant has categorically denied the suggestion that the Complainant was not a holder in due course. In the instant case, no such document has been executed or Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 12 of 14 filed on record or proved, which creates a serious doubt on the credibility of the complaint. The accused has miserably failed to discharge the statutory burden of proof cast upon him. In view of the above said discussion, I am of the considered opinion that the defence taken by the accused seems to be an after thought.
17. It is pertinent to mention here that the present case has been filed against M/s. Chhabra Textile Corporation (a proprietorship concern), through its sole proprietor Mr. Vicky Kumar Rana as well as Mr. Vicky Kumar Rana. In the eyes of law, a proprietorship concern is not a separate, legal and juristic entity and cannot be distinguished from its proprietor. A proprietory concern is synonym of proprietor. In fact, the proprietor is the person, who does business but for trading convenience business is done in the name of proprietory concern. Mr. Vicky Kumar Rana has not disputed the fact that he is the sole proprietor of M/s. Chhabra Textile Corporation. Reliance is placed upon B. Adarsh Rao Vs. M/s. Tamil Nadu Electricals, 1998 (3) Crimes 337.
DECISION AND REASONING
18. In the present case all the four ingredients have been proved beyond reasonable doubts. Issuance of cheque in question in discharge of legal liability is duly proved. Dishonor of cheque is not disputed, which is proved by returning memo. In view of the above discussion, service of legal notice on accused also stands proved. Thus, in my considered opinion, the essential ingredients of Sec. 138 of Negotiable Instrument Act stands proved beyond reasonable doubt. Complaint has been filed well within the period of limitation limitation.
19. For the above mentioned reasons, I have no hesitation in holding that the offence charged U/s. 138/142 of Negotiable Instrument Act against the Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 13 of 14 accused Vicky Kumar Rana, who is the sole proprietor of M/s. Chhabra Textile Corporation, has been proved beyond reasonable doubt. The accused is accordingly, convicted U/s. 138/142 of N.I. Act.
20. The arguments on the point of sentence shall be heard separately on 18.09.2013 at 02.00 PM.
21. A copy of this judgment be given to the accused free of cost.
Announced in the open courts
today itself. (JITENDRA SINGH)
MM/KKD/DELHI/16.09.2013
Punjab National Bank Vs. M/s. Chhabra Textile & Ors. Page No. 14 of 14