Delhi District Court
Cc No: 3193/12 M/S Bombay Metal ... vs Inderprastha Metal & Wires (P) Ltd on 26 April, 2014
1
IN THE COURT OF SHRI JAGMOHAN SINGH,
MM(NI ACT)03 DWARKA COURTS:NEW DELHI
CC NO: 3193/12
Unique Case ID No:02405R0070532012
M/s Bombay Metal Industries
B19, Gali No.7, Friends Colony,
G.T. Road, Shahdara, Delhi110095
(Through its AR) .............................. Complainant
Versus
1. Inderprastha Metal & Wires (P) Ltd
B116, PhaseI, Mayapuri Industrial Area, New Delhi
2. Sh. Narinder Narang
Director/Authorised Signatory
Indraprastha Metals Wires (P) Ltd.,
R/o B9, Near Din Dayal Upadhyay College,
Karampura, New Delhi
3. Shiv Kumar Sehgal
R/o E328, Greater Kailash,
PartI, New Delhi ................................ Accused
(Died. Case abated on 04.12.2012)
1. Name of the complainant : M/s Bombay Metal Industries
2. Name of the accused : (i) Inderprastha Metal & Wires (P)
Ltd
(ii) Sh. Narinder Narang
3. Offence Complained of or proved : Under section 138 of Negotiable
Instruments Act, 1881
4. Plea of the Accused : Pleaded not guilty
5. Date of filing : 28.08.2002
6. Date of Institution : : 28.08.2002
CC NO: 3193/12 M/s Bombay Metal Industries vs Inderprastha Metal & Wires (P) Ltd
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7. Date of reserving judgment/order : 20.03.2014
8. Final Order/Judgment : Acquitted
9. Date of pronouncement : 26.04.2014
JUDGMENT
BRIEF FACTS AND REASONS FOR THE DECISION OF THE CASE:
1. Vide this judgment, I shall dispose of the present complaint u/s 138 of the Negotiable Instruments Act filed by the complainant against the accused.
2. The case of the complainant is that the complainant firm is engaged in the business of manufacturing and providing Bare Copper wires. The accused was supplied bare copper wires of refined copper by the complainant. The accused issued a cheque bearing no. 913559 dated 31.03.2002 for a sum of Rs.1,25,000/drawn on State Bank of India, Pusa Road, (Shopping Complex), Rajendra Place, New Delhi. The aforesaid cheque when presented for payment was returned dishonoured vide return memo dated 05.07.2002, with the remarks "Insufficient Funds". Thereafter, the complainant sent a legal demand notice dated 18.07.2002 through Regd A.D and U.P.C to the accused. However, as per the complainant, despite service of the said legal notice of demand, the accused failed to pay the aforesaid dishonoured cheques. Hence, the present complainant.
3. The cognizance of offence under Section 138 of the Negotiable Instruments Act, 1881 was taken by the Ld. Predecessor Court and accused No.1 company and accused no.2 Narender Narang were summoned vide order dated 20.09.02. Summons issued against accused No. 1 Company were received back duly served under the signatures of accused No. 2 Narinder Narang. The said accused appeared in Court CC NO: 3193/12 M/s Bombay Metal Industries vs Inderprastha Metal & Wires (P) Ltd 3 and was admitted to bail. He also accepted Notice framed against the accused Company as well as himself by the Ld. Predecessor Court on 29.10.2004. However, it was submitted by the said accused on 02.01.2013 through his Ld. Counsel that he had no instructions to appear on behalf of the said Company. Thereafter, Court Notice was issued to the accused Compay but was received back with the report that there was no such company at the given address. In these circumstances, proceedings against the accused company were ordered to be conducted in its absecne in terms of Section 305 Cr. P. C. vide order of this Court dated 01.04.2013.
4. Initially only accused No. 1 Company and accused No. 2 Narinder Narang were arrayed as an accused. A third accused namely Shiv Kumar Sehgal was also impleaded vide order dated 30.05.2006 of the Ld. Predecessor Court on application of the Complainant on the ground that the said accused was also Director of the accused Company at the relevant time. Summons were accordingly ordered to be issued against the said accused as well. However, it came on record that the said accused died on 23.07.2012 and therefore prodeedings against the said accused were abated vide order of this Court dated 04.12.2012.
5. The present complaint was initially filed by AR Rajeev M. Aggarwal. The said AR was, however, was substituted by Rakesh Sodhi on 21.05.2013 upon application filed by the complainant.
6. Application u/s 145(2) NI Act filed by the accused No.2 Narender Narang seeking permission to cross examine CW was allowed. Accordingly, CW1/AR Sh. Rakesh Sodhi was examined cross examined and discharged. Vide separate statement of Ld. Counsel for complainant, CE was closed on 11.11.2013. Statement of the CC NO: 3193/12 M/s Bombay Metal Industries vs Inderprastha Metal & Wires (P) Ltd 4 accused no.2 Narinder Narang u/s 313 Cr.P.C was recorded on 22.11.2013. An application filed by the accused No.2 u/s 315 Cr.P.C seeking permission of the Court to get himself examined as DW was allowed and the said accused deposed as DW1. Vide separate statement of Ld. Counsel for the said accused, DE was closed on 03.03.2014.
7. Documents relied upon by the complainant are as follows: (i)Ex. CW1/A:
Copy of power of attorney in favour of initial AR Sh. Rajeev Aggarwal and substituted AR Sh. Rakesh Sodhi ; (ii) Ex. CW1/B: Original Cheque bearing no. 913559 dated 31.03.2012 for a sum of RS. 1,25,000/ drawan on State Bank of India, Pusa Road, (Shopping Complex), Rejendra Palace, New Delhi (iii)Ex. CW1/C and D Original cheque returning memos dated 05.07.2002 and 06.07.2002 (iv) Ex. CW1/E:
Copy of legal notice dated 18.07.2002; and (v) Ex. CW1/F to Ex. CW1/J: Regd. AD / UPC and Courier Recepits.
8. It is well settled position that to constitute an offence under S. 138 N.I. Act, the following ingredients are required to be fulfilled:
(i) a 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;
CC NO: 3193/12 M/s Bombay Metal Industries vs Inderprastha Metal & Wires (P) Ltd 5
(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;() the drawer of such 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.
9. Being cumulative, 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. Further, Section 141 NI Act provides that if the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge 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.
10. I have gone though the record and also heard both the parties. It has been held in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661 that for maintaining prosecution under section 141 of the NI Act against directors in case of dishonour of cheques issued by the company, arraigning company as an accused is imperative. It is also pertinent to reproduce the following observation verbatim: CC NO: 3193/12 M/s Bombay Metal Industries vs Inderprastha Metal & Wires (P) Ltd 6 "53.It is to be borne in mind that Section 141 of the Act is concerned with the offences by the company. It makes the other persons vicariously liable for commission of an offence on the part of the company. As has been stated by us earlier, the vicarious liability gets attracted when the condition precedent laid down in Section 141 of the Act stands satisfied. There can be no dispute that as the liability is penal in nature, a strict construction of the provision would be necessitous and, in a way, the warrant."
11. From the above judgment, it emerges that a finding has first to be given against the company being criminally liable u/s 138 NI Act and only then can the question of vicarious liability of its Directors/Officers under the said Act can arise.
12. The following two questions arise for my consideration in the present case in order to decide the criminal liability of the accused Company and vicarious liability of accued No. 2 Narinder Narang u/s 138 read with Section 141 NI Act:
(i) Whether the debt in question was time barred?
(ii) Whether legal demand notice was served by the Complainant upon the accused.
Discussion on question (i) and finding thereon
13. Section 118 of the NI Act inter alia provides that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the NI Act stipulates that unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque , for the discharge of, whole or part of any debt or liability. The said presumptions are CC NO: 3193/12 M/s Bombay Metal Industries vs Inderprastha Metal & Wires (P) Ltd 7 rebuttable in nature.
14. It was stated by Rakesh Sodhi CW1/AR of the Complainant in his affidavit of evidence Exh. CW1/K that the present cheque Exh. CW1/B orginially dated 03.05.1998 was issued by accused No. 2 Narinder Narang on behalf of the accused Company and that he also revalidated the same on 31.03.2002.
15. Accused No. 2 deposed as DW1 that he signed the cheque Exh. CW1/B only once i.e. on 03.05.1998. He further stated that he did not sign or reissue the said cheque on 31.03.2002 and that the said cheque did not bear his signatures at point A where a date 31.03.2002 has been written and his signature has been shown. He also stated that the ateration in the date of the cheque and forgery/imitation of his signature has been done illigally on behalf of the Complainant. He further stated that the said cheque was issued for a liability of accused No. 1 Company prior to the initial date on the cheque i.e., 03.05.1998. He also stated that he was an employee of the accused No. 1 Company and left its services in the year 2000. He also stated that the accused Company also cosed its business in the same year.
16. Ld. Counsel for the accused argued that the debt in question had already become time barred prior to the date of revalidation of the present cheque as there was no acknowledgement of the same before expiry of three years from the initial date. Ld. Counsel therefore contended that criminal liability u/s 138 NI Act was not attracted in the present case. Ld. Counsel also relied upn Kiran Finance Co. Vs. Sukhdev Kishan 2006 Crl.L.J. 766 (P&H); Sri Murugan Financiers Vs. P.V. Perumal 2005 Crl. L.J. 269 (Madras HC); Sasseriyil Joseph Vs Devassia 2001 Crl.L.J. 24 (Kerala HC) and Girdhari Lal Vs. P.T.V. Ramanujachari & Anr. CC NO: 3193/12 M/s Bombay Metal Industries vs Inderprastha Metal & Wires (P) Ltd 8 1997 (2) Crimes 658 (AP High Court) in support of the above argument.
17. Ld. Counsel for the accused further argued that even other wise, presumption u/s 139 arose only when the execution of the cheque was admitted/not disputed by the drawer. Ld. Counsel further argued that as revalidation of the cheque in the present case was denied by the accused, it was for the Complainant to prove the same as a matter of fact. Ld. Counsel further argued that AR/CW1 Rakesh Sodhi failed to prove revalidation of the cheque on 31.03.2002 and simply stated during his cross examination that he came to know from the previous AR regarding revalidation of the cheque. Ld. Counsel also argued that the above statement of the AR was inadmissible in law being hearsay evidence.
18. This Court is in complete agreement with the above cotentions of the Ld. Counsel for the accused.In Bharat Barrel & Drum Manufacturing Company V. Amin Chand Pyarelal (1993) 3 SCC 35, it was held by the Hon'ble Supreme Court that the presumption u/s 118 (a) arose in favour of the Complainant in case the signatures on the negotiable instrument were admitted by the accused. As revalidation of the cheque on 31.03.2002 was denied by the accused, the onus was on the Complainant to prove the said revalidation by cogent evidence. However, the Complainant did not examine any witness on that point. As rightly argued by the Ld. Counsel for the accused, staement of substituted AR/CW1 Rakesh Sodhi on this point is in the nature of hear say evidence and is not admissible in law.
19. Even otherwise, the above revalidation even if proved, was done more than three years after the initial date of the cheque. Thus, it would not revive the present debt which stood barred by lapse of time. No other written acknowledgement or past CC NO: 3193/12 M/s Bombay Metal Industries vs Inderprastha Metal & Wires (P) Ltd 9 payment on the part of the accused Company was brought on record by the Complainant to prove revival of the time barred debt in terms of Section 18 or 19 of the Limitation Act, 1963.
20. In view of the above discussion, I hold that crminial liability u/s 138 NI Act can not be fastened or the accused Company or its Director as the debt in question stood barred by time. The accused are entitled to acquittal on this grond alone and the second question remains only of academic importance now. However, in the interest of justice, I proceed to decide the same.
Discussion on question (ii) and finding thereon
21. It is also the defence of the accused No. 2 Narinder Narang that he did not receive any legal notice form the Complainant. The same may now be considered.
22. Section27 of the General Clauses Act, which raises a presumption of service by post, reads as under:
" Meaning of service by post Where any (Central Act) or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, where the expression "serve" or either of the expressions "give" or "send" or any other expression in used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing prepaying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post."
23. In C.C. Alavi Haji v. Palapetty Muhammed and Anr. (2007) 6 SCC 555 it has been held that Section 27 General Clauses Act gives rise to a presumption that CC NO: 3193/12 M/s Bombay Metal Industries vs Inderprastha Metal & Wires (P) Ltd 10 service of notice has been effected when it is sent to the correct address by registered post. It was further held as follows: "Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation." (para 17)
24. The legal notice Exh. CW1/E dated 18.07.2002 was sent to accused company as well as accused No.2 Narinder Narang at the address of the accused Company at Indraprastha Metal & Wires (P) Ltd., B 116, Phase - I, Mayapuri Industrial Area, New Delhi through Regd. Post, U.P.C. and Courier Receipts (Exh. CW1/G, H and I) of the same date. In these circumstances, presumption u/s 27 General Clauses Act arose in favour of the complainant which the accused failed to to rebut as he did not any evidence to the contrary.
25. In view of the above discussion and the legal position emerging from C.C. Alavi (supra), I hold that the legal notice is deemed to have been served upon both the accused.
CC NO: 3193/12 M/s Bombay Metal Industries vs Inderprastha Metal & Wires (P) Ltd 11 Order
26. In view of my finding in response to question (i) above that the Complainant failed to prove revalidation of cheque by accused No. 2 and also that the debt in question stood time barred, accused No. 1 Company and accused No. 2 Narinder Narang are acquitted of the offence under section 138 of the Negotiable Instruments Act.
Announced in open Court on (JAGMOHAN SINGH)
26th April, 2014 (11 pages) M.M.(NI Act)-03/Dwarka,
26.04.2014/Delhi
CC NO: 3193/12 M/s Bombay Metal Industries vs Inderprastha Metal & Wires (P) Ltd