Delhi District Court
Reported As National Small Industries ... vs . on 16 August, 2010
IN THE COURT OF SH. ANAND SWAROOP AGGARWAL
SENIOR CIVIL JUDGECUMRENT CONTROLLER
PATIALA HOUSE COURTS, NEW DELHI
Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05
Criminal Complaint (u/s 138 NI Act) New No.5841/1/09
Unique Case Identification No. 02403R0747092005
M/s Paramount International,
307, Meghdot Building,
94, Nehru Place,
New Delhi
Through its Proprietor
Sh. Munish Jain ........ Complainant
Versus
1. Deus Infocom Pvt. Ltd.
432, Nilgiri Appartments,
Alaknanda, New Delhi.
2. Shyam Shrama,
Director,
Deus Infocom Pvt. Ltd.
432, Nilgiri Appartments,
Alaknanda, New Delhi.
(Anand Swaroop Aggarwal)
SCJCumRC/New Delhi
Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05
Criminal Complaint (u/s 138 NI Act) New No.5841/1/09
Page 1/33
3. Sandhya Sharma
Director,
Deus Infocom Pvt. Ltd.
432, Nilgiri Appartments,
Alaknanda, New Delhi.
A. Date of institution of
the complaint : 04.06.05
B. Date of Judgment : 16.08.2010
C. Final Order : All accused convicted
for offence u/s 138 r/w
S.141 NI Act.
COMPLAINANT UNDER SECTION 138 OF THE
NEGOTIABLE INSTRUMENTS ACT.
J U D G M E N T
This complaint for the offence u/s. 138 N.I. Act has been filed with the averments that M/s Paramount International is a proprietorship firm of which Sh. Munish Jain is the proprietor. The complainant is engaged in the business of selling computers and (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 2/33 computers parts to its customers. The present complaint is being filed through the aforesaid proprietor,who is well conversant with the facts of the cases. As per complainant, accused is a private limited company and accused no. 2 and 3 are its directors and are incharge of and responsible to the conduct of the business and day to day affairs of accused No. 1. Accused No. 2 and 3 are jointly and severally liable for the acts and offences committed for and on behalf of accused No.
1. As alleged, in the course of the business, the accused no. 2 and 3 have been transacting with the complainant, for and on behalf of accused no. 1.
Further, as alleged, in pursuance of the business, the complainant sold computer parts to the accused as per the orders placed by them from time to time and a ledger account was duly maintained by the complainant, wherein the account was debited on the sale of goods to the accused and credited on the receipt of payments from the accused. As on 1st October,2004, as alleged, an amount of Rs.1,52,000/ became due and outstanding against the accused.
As alleged, the accused issued a cheque bearing No. 874760 (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 3/33 dated 05.10.2004 drawn on Bank of Punjab ltd., Alaknanda, New Delhi towards the part discharge of the liability incurred by them on the purchase of the aforesaid computer parts. The complainant presented the cheque for encashment on the due date, but the same was dishonoured by the bank of the accused. As per complainant, on being informed, the accused No. 2 and 3 expressed their financial difficulties and kept on requesting for deferring the presentation of the cheque on one pretext or the other, and finally, till end of March, 2005. Further, as alleged by the complainant, on instructions of the accused, complainant presented the aforesaid cheque for encashment, through its bank Dena Bank, Subzi Mandi, Shakti Nagar, Delhi, but the same was again dishonoured by the bank of the accused and returned with the remarks" Payment Stopped by Drawer" vide memo dated 02.04.2005. Thereafter on 30.04.2005, the complainant sent a legal notice by registered post and Under Postal Certificate, calling upon the accused to make the payment of the amount of the cheque within 15 days of the receipt of the same, but accused have failed to make the payment of the amount of the cheque till date, despite the service of the notice which was replied vide reply Ex. P9. Hence this (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 4/33 complaint.
2. SUMMONING ORDER Vide order dated 04.06.05, accused were summoned to face the trial for the offence under Section 138 N.I. Act.
3. NOTICE u/s. 251 Cr. PC On 17.07.06 accusation for the offence u/s 138 NI Act was explained to the accused to which their pleaded not guilty & claimed trial.
4. COMPLAINTANTS EVIDENCE To substantiate his case on judicial file complainant has himself appeared in witness box as CW1 Mr. Munish Jain and has filed his detailed affidavit Ex. X regarding his examination in chief. Vide order dated 20.08.07 CE was closed.
5. STATEMENT OF ACCUSED AND DEFENCE EVIDENCE On 12.10.07 statements of both the accused were recorded u/s 313/281 Cr. PC. Accused intended to lead DE and matter was adjourned for DE. In their defence, accused no.2 has examined himself DW1 Mr. Shyam Sharma, Director of M/s Dues Inforcom. On 25/05/2010 DE was closed by ld. counsel for accused by making a (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 5/33 statement to that effect.
6. I have heard Mr. Jitender Sareen, Adv. for the complainant and Sh. Ruchir Batra, Adv. for all the accused and have gone through the entire material available on case file very carefully. In the course of arguments, ld. counsel for the accused has relied upon one case law reported as National Small Industries Corporation Limited Vs. Harmeet Singh Paintal and Anr. (2010) 3 SCC 330.
7. ARGUMENTS OF LD. COUNSEL FOR COMPLAINANT Ld. counsel for the complainant has submitted that presumption u/s 139 NI Act is there in favour of the complainant and against the accused. Further it is submitted by ld. counsel for complainant that presumption u/s. 139 NI Act is to be rebutted by the accused by preponderance of probabilities. As submitted, accused have lied in the court. As per ld. counsel for the complainant, accused were duly served with the statutory demand notice & the said notice was even replied by accused. As per ld. counsel for complainant the stand of the accused is that one undated cheque was given to the complainant by the accused as security against some kachchi transaction regarding which payment has been made by accused, as alleged, in two (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 6/33 installments (i.e. Rs.48,000/ was paid on 9/11/2004 and Rs.22,000/ were paid on 6/12/2004). Ld. counsel for complainant has vehemently submitted that if the transaction was kachchi, one fail to understand how accused could have made payment, as alleged, with regard to the said kachchi transaction after withdrawing payment form the sole/only bank account maintained by the accused company. As per ld. counsel for complainant no kachchi transaction ever took place between the accused and the complainant.
As per ld. counsel for complainant the month May 2005 as written in 1st paragraph of Ex. P9 should have been May 2004 & there appears to be some typographical error in the said reply Ex. P9. As per ld. counsel for complainant para. 3 of Notice Ex. P4 takes care of/complies with the requirements of S.141 NI Act. As per ld. counsel for complainant existence of debt/liability has been proved by complainant. Further it is submitted on behalf of complainant that no entry in Ex. P1 has been disputed by the accused & Ex. DW1/1 has not been put to CW1 Mr. Munish Jain. As per ld. counsel for complainant, accused has not brought on record as to when stop payment instructions were given by accused to its banker. As per ld.
(Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 7/33 counsel for complainant the concept/aspect of kachchi and pucca transactions between the accused and complainant for the first time was introduced by the accused in the course of examination of DW1 Mr. Shyam Sharma. In the course of arguments ld. counsel for the complainant has drawn the attention of the court towards order dated 19/08/2008 whereby accused offered to pay Rs.70,000/ + Rs.10,000/ as litigation expenses to the complainant. As per ld. counsel for complainant, accused for the first time in his defence evidence while appearing as DW1 Shyam Sharma has deposed that the cheque when given was an undated cheque. As per ld. counsel for complainant presence of both the directors (i.e. accused no.2 and 3) is mandatory to complete the corum and merely because accused no.3 is a teacher or that accused no.3 has not been authorised to sign on behalf of accused no.1 company, it does not mean that accused no.3 cannot be punished u/s 138 r/w S.141 NI Act.
As per ld. counsel for complainant if it is taken that goods were supplied in October 2004 because part payment was made in December 2004, the cheque must have been bearing the date of December 2004 if two months credit was given by the complainant.
(Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 8/33 As per ld. counsel for complainant, accused has failed to produce ledger account pursuant to order dated 18/12/2009. As submitted, on 9/11/2004 Rs.48,000/ were withdrawn so that cheque given by accused may be bounced. As per ld. counsel for complainant 30 cheques of accused bounced in one year. As per ld. counsel for complainant all the payments received from accused have been reflected in Ex. P1 and accused are deliberately not producing the documents in his/their possession. As per ld. counsel for complainant stop payment instructions were given by accused either on 7/02/2005 or on 2/04/2005 & not immediately after 6/12/2004 and amount standing to the credit of accused as on 2/04/2005 is Rs.292.82. Lastly ld. counsel for complainant submitted that accused have failed to prove their defence even by preponderance of probabilities and they are liable to be convicted u/s 138 r/w S.141 NI Act.
ARGUMENTS OF LD. COUNSEL FOR ACCUSED On the other hand, ld. counsel for the accused has submitted that in view of case law reported as National Small Industries Corporation Ltd. Vs. Harmeet Singh Paintal & Anr. (Supra), accused (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 9/33 no.3 deserves to be acquitted in the present case. As per ld. counsel for the accused, how a particular director is related with the transaction in question has to be pleaded by the complainant in his complaint. As submitted, complainant has failed to prove as to how accused no.3 was concerned with the transaction in question. As per ld. counsel for accused, last few lines in para. 2 of the complaint have been added by complainant after receiving reply Ex. P9. As per ld. counsel for accused, accused no.3 is a teacher and in Form 16 of accused no.3 there is no mention of business income by accused no.3. As per ld. counsel for accused the stand as regards kachchi transaction has been taken by accused even in the beginning of the crossexamination of CW1 Mr. Munish Jain. Ld. counsel for accused has submitted that factum that none of the bill bears the signature of accused no.3 proves that accused no.3 had no concern with the transactions with complainant & she is not covered u/s 141 NI Act. As submitted, accused no.3 is a full time employee of the school where she is working as a teacher. As per ld. counsel for accused the month "May 2005" as written in reply Ex. P9 should be read as "October 2004". Ld. counsel for accused submitted that the mode of (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 10/33 dealing was credit transaction with 1530 days and as such cheque in question must have been realised within 1530 days.
As per ld. counsel for accused, there may be two situations; first situation that it was on 7/10/2004 that cheque was given to complainant & goods were delivered to accused by complainant and second situation may be that date of dealing was 15/30 days prior to the date of the cheque and in either of the situations cheque in question was not payable in April 2005. As per ld. counsel for the accused, even after the dishonour of the cheque in question in October 2004, credit transactions had taken place between the accused and complainant and it is very unlikely that, after the dishonour of the cheque given by accused, complainant/payee will deal with the accused on credit basis. As submitted, as complainant had received the payment of the kachchi transaction, complainant continued dealing with the accused on credit basis. As per ld. counsel for accused, "due date" means the date on which liability of the accused arose to make the payment. As submitted, when the cheque was dishonoured on the first occasion, complainant had told the accused that the cheque was presented by mistake and complainant (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 11/33 did not return the cheque in question to accused even after receiving the payment on the pretext that the same stands lost/misplaced. As per ld. counsel for accused at all points of time, complainant was in possession of at least one cheque given by accused. As per ld. counsel for accused, it cannot be said that accused has not disputed the transaction detailed in Ex. P1 in as much as it has been suggested to CW1 Mr. Munish Jain that Ex. P1 is a fabricated statement of account. Ld. Counsel for complainant further submitted that admittedly complainant has not taken any account confirmation/ balance confirmation letter from the accused and has not reconciled his account with the accounts of the accused at any point of time. Ld. counsel for accused further submitted that accused is not in a position to produce the record of dealings with complainant in as much as accused company is no more in business and is totally unoperational company and, further, accused no.2 is presently working with M/s. Babino Express Pvt. Ltd. as General Manager. As submitted business of accused company stood closed in May 2005 as per statement of account. As per ld. counsel for accused, no explanation has come on record as to why complainant waited for presentation of the cheque in (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 12/33 question for encashment uptil April 2005 when the last sale transaction had taken place between accused and complainant on 18/11/04.
REJOINDER ARGUMENTS OF LD. COUNSEL FOR COMPLAINANT In the rejoinder arguments, ld. counsel for complainant submitted that all the seven payments made by accused are reflected in Ex. P1. As per ld. counsel for complainant, accused deferred the payment of the cheque in question but accused continued to deal with the complainant. As submitted merely because suggestion has been given in the crossexamination of CW1 Mr. Munish Jain that Ex. P1 is fabricated, does not mean that Ex. P1 stands disproved. As per ld. counsel for complainant under the Income Tax Act, accused have to maintain the books of account etc. for several years irrespective of factum that business of the company stands closed. As per ld. counsel for complainant "May 2005" cannot be "October 2004" in as much as, despite the fact that credit period was 1530 days, but the, as per accused, payment were/was made by accused on 6/11/2004 and 6/12/2004. Further, as per ld. counsel for complainant, accused (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 13/33 has/have not produced the record of the meeting of the Board of directors of accused no.1 company, and thus it cannot be said that accused no.3 was not incharge of and responsible to accused no.1 company for the business of accused no.1 company.
8. I have given a considered thought to the rival submissions made by ld. counsel for parties keeping in view the facts and circumstances of this case as they arise on the basis of material available on judicial file. Also I have gone through the case law relied upon by ld. counsel for accused with utmost regards.
9. As per complainant as on 1/10/2004 an amount of Rs.1,52,000/ was due and outstanding against the accused. Further as per complainant, accused issued the cheque Ex. P2 towards the part discharge of the liability incurred by accused for the purchase of the computer parts. As per complainant cheque in question was not issued against a particular transaction between the accused and complainant but it was issued on "on account" basis i.e. in part discharge of liability of the accused as standing/outstanding as on the date of the cheque.
On the other hand, as per accused there were certain kachchi (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 14/33 transaction with complainant in cash without bill and as per understanding with the complainant for kachchi transactions as a security cheque used to be given to the complainant for the value of the goods and after making cash payments cheque used to be taken back. Further, as per accused, in this particular transaction, accused had taken goods valued Rs.70,000/ from the complainant and as security had given a cheque of Rs.70,000/ with understanding that after payment in cash the cheque will be returned. Further, as per accused, an employee of the complainant used to come to his office to collect cash and he paid Rs.70,000/ to the complainant in cash after withdrawing the same from the bank in two installments i.e. Rs.48,000/ on 9/11/04 after withdrawing from the account of the company vide cheque no. 874797 and Rs. 22,000/ on 6/12/04 after withdrawing from the account of the company vide cheque no.891452. Further, as per accused, when accused demanded his cheque back after making full payment of Rs.70,000/ in cash the complainant informed him (the accused) that he (the complainant) has misplaced the cheque and accused may give stop payment instructions in respect of this cheque to the bank and accordingly (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 15/33 accused gave stop payment instructions to the bank regarding which the complainant was informed. Also, as per accused, the cheque was an undated cheque.
As such accused admits the issuance of the cheque. But as per accused it was an undated cheque. Further accused admits existence of debt/liability to the tune of cheque amount on the date the cheque in question was given to the complainant. However, as per accused, he has made payment of the cheque amount to complainant in two installments as detailed hereinabove.
ISSUE AS REGARDS DATE OF THE CHEQUE In the present case, in notice Ex. P4 the specific and express case of the complainant was that accused issued cheque no.874760 dated 5/10/2004 drawn on Bank of Punjab Ltd. Alaknanda New Delhi for a sum of Rs.70,000/ towards part payment of liability of accused incurred by accused on the purchase of computer parts. In reply Ex. P9, accused stated that complainant as security had taken cheque no.874760 dated 5/10/2004 for Rs.70,000/ drawn on Bank of Punjab Ltd. Alaknanda New Delhi from the accused. Thus in the reply it is not the case of the accused that cheque when given to complainant (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 16/33 was undated. Also in the crossexamination of CW1 Mr. Munish Jain it has not even been suggested to him that cheque when given to him was undated and that date on the cheque has been put by complainant himself. Even in his/her/their statement 313/281 Cr. PC accused has/have not stated that cheque given to complainant was an undated cheque.
For the first time, accused no.2 in his statement while appearing as DW1 Mr. Shyam Sharma, stated/deposed that the cheque in question was undated cheque. DW1 Mr. Shyam Sharma in his cross examination has deposed that the cheque Ex. P2 was given at the time when the goods were taken by accused but at the same time, accused no.2/DW1 Mr. Shyam Sharma has further deposed that he does not remember as to when he had taken goods valued at Rs.70,000/ from the complainant pertaining to this particular transaction and that he does not remember the exact date when he had delivered the cheque Ex. P2 to the complainant. Further DW1 Mr. Shyam Sharma has deposed as under :
"I cannot say whether I had delivered the cheque Ex.P2 in May 2004, July 2004 or August 2004 or (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 17/33 later on vol. they used to be a two month credit and therefore the cheque in question should have been dated about two months back as it is given as security at the time of taking goods. The goods pertaining to this kachchi transaction must have been taken in sometime first week of October 2004".
This all suggest that cheque when given to complainant must have been bearing its date as 5/10/2004 and on the date of the cheque accused was under liability towards the complainant. Even otherwise much importance cannot be attached to the factum as to whether the cheque was dated or undated in as much as it was delivered as against value of the goods delivered to the accused at the time of giving of this cheque by accused to complainant and thus complainant was having an authority to fill date on the cheque. But as per accused the cheque was given as a security with the understanding that it will be returned to accused after accused making payment of the cheque amount to complainant. Also in any case it is not the case of the accused that the cheque in question pertains to any time barred debt. Merely because the date on the cheque is in different ink/handwriting then the other parts of the cheque does not mean that it was undated at (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 18/33 the time it was issued by accused.
ISSUE WHETHER KACHCHI TRANSACTION(S) TOOK PLACE BETWEEN ACCUSED AND COMPLAINANT The complainant CW1 Mr. Munish Jain in his cross examination has been made to depose as under : "I have been dealing with the accused since the beginning of April 2004. the mode of dealing was credit transaction with 1530 days credit period. It is wrong to suggest that there were some dealings whereby goods were supplied without bills for which payment was made in cash. Before selling goods on credit I never took any cheque by way of security."
As such as per complainant, there was/were no kachchi transaction(s) between the accused and complainant and complainant never took any cheque by way of security.
On the other hand accused no.2/DW1 Mr. Shyam Sharma in his examination in chief has deposed as under: "As per business practice they were kachi transaction i.e. transactions in cash without bill and pakki transactions i.e. transactions for which bill used to be raised on the company. As per the (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 19/33 understanding with the complainant for kachi transactions as a security cheque used to given to the complainant for the value of the goods and after making cash payments cheque used to be taken back. In this particular transaction I had taken goods valued Rs. 70,000/ from the complainant and as security had given a cheque of Rs. 70,000/ with the understanding that after payment in cash the cheque will be returned." But in his crossexamination, DW1 Mr. Shyam Sharma has deposed as under : "I do not remember the date when the kachchi transactions were done with the complainant. Vol. It was since the beginning of the business dealings with the complainant. I do not remember the amount of the kachchi transactions done with the complainant during business dealings. I do not remember as to when I had taken goods valued at Rs.70,000/ from the complainant pertaining to this particular transaction. I have not maintained any record of kachchi transaction to which I could have referred to tell the date on which the goods of Rs.70,000/ were taken ............................ ............................................. I do not remember what all goods were taken by me from the complainant with regard to this kachchi (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 20/33 transaction. There were many other kachchi transactions with the complainant during the course of a business dealings. I do not remember the dates and the value of the other kachchi transactions. I do not remember the particulars of the cheques given as security in the other kachchi transactions. Vol. The cheques were taken back by me. I cannot produce the said cheques .................. ............................"
In my considered opinion from the above depositions of DW1 Mr. Shyam Sharma it can be concluded that accused has failed to substantiate the stand that there used to be kachchi transactions between accused and complainant and cheques used to be issued as security to be returned after payment in cash. To inspire confidence in his version the accused at the least could have produced/given details of the cheques which were issued by him as security for kachchi transactions and after, as alleged, making payment in cash were taken back by the accused from the complainant. Accused as a normal practice must have been making entries of all the cheques issued by him in the counter fail available in the cheque books but even the said counter fail has not been produced by accused. Further the stand of (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 21/33 the complainant that the goods supplied to accused were all tax paid items and therefore there was no question of any kachchi transaction in dealing with the complainant has not be falsified by accused by showing to the Court that all the goods supplied to accused were, in fact, not tax paid goods. This could, easily, have been shown to the court by producing any book an Sales Tax in Delhi.
WHETHER ACCUSED HAS PAID RS.70,000/ TO COMPLAINANT IN INSTALLMENTS i.e. RS. 48,000/ ON 9/11/04 AND RS. 22,000/ ON 6/12/2004 The onus is on the accused to prove that he has paid Rs.70,000/ to complainant in two installments i.e. Rs.48,000/ on 9/11/04 after withdrawing from bank vide cheque no.874797 and Rs.22,000/ on 6/12/04 which were withdrawn vide cheque no.891452. It is pertinent to note that accused in reply Ex. P.9, instead of giving details and manner of payment of Rs.70,000/, as alleged, simply stated that in parts accused has made full payment for the goods purchased from complainant. Accused remained silent as to the source of money which was, as alleged, paid to complainant and as to in how many parts/installments the money was paid to complainant.
(Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 22/33 Accused also remained silent as to the time/dates on which such parts/installments were paid, as alleged, to complainant. This silence was maintained even in the crossexamination of CW1 Mr. Munish Jain. The requisite details as to source of money, number of parts/installments and the date(s) of, alleged, payment have for the first time came on judicial file in the course of examination of DW1 Mr. Shyam Sharma. In my considered opinion to inspire confidence in his stand all the abovesaid requisite details must have been mentioned by accused in the reply Ex. P. 9 and further they must have been put in the crossexamination of CW1 Mr. Munish Jain and by not doing so complainant has been taken taken by surprise as to as regards abovesaid details. This is not permissible in law.
Further DW1 Mr. Shyam Sharma in his crossexamination has deposed that payment of Rs.70,000/ in two installments was received by the employee of the complainant. But accused has not given the name/description of the employee who had come to collect the cash of Rs.48,000/ and Rs.22,000/ on the two occasions. This is despite the following depositions of DW1 Mr. Shyam Sharma :
"Vol. As a normal practice telephonic (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 23/33 confirmation used to be given by the complainant that so and so person is coming to collect the money and the money was to be handed over to the person after taking the telephonic confirmation from the complainant."
In my opinion in view of the above depositions accused must have come to know about the name(s)/description of the person(s) to whom he, as alleged, had given Rs.48,000/ and Rs.22,000/. But he/accused has expressed his inability in this regard. Even in his examination in chief accused has not disclosed the name/other description of any of the persons employed by complainant to whom accused had made cash payment with regard to kachchi transactions on any of the occasion(s). Further as per accused the payment of Rs.48,000/ & Rs.22,000/ was made to employee of complainant at the office of accused but accused has not deposed about the specific time of payment. Also accused has not cited the name(s) of any of his employees who had witnessed the payment to the employee of the complainant. Further to my mind, with regard to the transaction in question, accused could very well have taken a "kachchi receipt" in as much as, as per accused, complainant had not returned the cheque of (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 24/33 accused which was, as alleged, was given as security. But it was not done so by accused.
The stand of the accused as regards his giving "stop payment"
instructions as advised by complainant to his banker is also not much convincing. Accused has not brought on record the specific date on which he had issued stop payment instructions to the bank. The letter written to bank in this regard has not been produced/proved on judicial file. The reply Ex. P.9 suggest that accused had demanded back the cheque after 6/12/2004 when, as alleged, 2nd installments of Rs.22,000/ was paid. In this regard DW1 Mr. Shyam Sharma in his examination in chief has deposed as under : "When I demanded back my cheque after making full payment of Rs.70,000/ in cash,the complainant informed me that he has misplaced the cheque and I may give stop payment instructions in respect of this cheque to the bank and accordingly I gave stop payment instructions to the bank regarding which the complainant was informed. The cheque in question was undated cheque and was presented twice, first time before stop payment instructions for which complainant told me that accidentally the cheque has been (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 25/33 presented for encashment and second time after stop payment instructions and that to just one day before becoming a sale cheque."
But inconsistent with the above depositions, accused no.2/DW1 Mr. Shyam Sharma in his cross examination has deposed as under : "I came to know about the dishonour of the cheque in question for the first time through a call from an official of the bank. Immediately on the same day receipt of the call, I gave instructions to the bank to stop the payment of the cheque in question. The cheque was represented in the bank after about 45 months of my instructing the bank to stop its payment."
As per above depositions stop payment instructions were given even before the payment of first installment on 9/11/2004 in as much as cheque was for the first time dishonoured on 6/10/2004. Thus stand of accused regarding his demanding the cheque back after making full payment of Rs.70,000/ on 6/12/2004 (i.e. when second installment of Rs.22,000/ was paid) & on the unability of complainant to return the said cheque to accused, accused issuing stop payment instructions to his banker under intimation to complainant, does not inspire confidence. This further suggest that accused never paid Rs.70,000/ (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 26/33 in two installments and thus no occasion arose for accused demanding back the cheque or issuing stop payment instruction to bank after the complainant expressing his unability to return the same on the pretext that the cheque has been misplaced in as much as immediately after the first dishonour of the cheque stop payment instructions had already been issued by accused to his bank.
The complainant in his cross examination has deposed that even after 5/10/2004 complainant was having credit sales dealings with accused no.1 uptil 31/03/2005. This does not necessarily mean that accused had made payment of the dishonoured cheque & on this account only complainant continued to deal with the accused on credit basis even after dishonour of the cheque in question. The possibility of complainant accepting the request of accused for deferring the payment of cheque is question, cannot be altogether ruled out. The factum that on the second occasion cheque was presented immediately before the expiry of the cheque in question is also inconsequential. Also merely because accused had withdrawn Rs.48,000/ on 9/11/2004 and Rs.22,000/ on 6/12/04 through self cheques does not necessarily man that the said money was paid to (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 27/33 complainant. Except Ex. DW1/1, DW1/2 and Ex.S1 accused has not produced any document. No document to falsify Ex. P1 has been produced by accused despite the fact that as per depositions made by DW1 Mr. Shyam Sharma, accused no.1 company was maintaining the books, balance sheet etc. as per law and accounts of the company were being regularly audited. Further as deposed by accused no.2/DW1 Mr. Shyam Sharma accused also regularly maintained minute book, as per law and board meetings were regularly held and resolutions and decisions were passed for business purposes. But accused did not produce record on the pretext that accused company is no more in business and is totally unoperational company. But that does not mean that the accused company has lost/could have destroyed all the record of the business dealings without preserving the same for the statutory period of certain years for Income Tax/Sales Tax purposes. On account of nonproduction of documents by accused, adverse inference is liable to be drawn against the accused. Thus in the absence of the documents of the accused it cannot be said that Ex.P1 is a fabricated statement of account. In the course of his examination, complainant had brought office copies of (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 28/33 all the bills as reflected in the statement of account. The only suggestion which has been given in the crossexamination of complainant as regards these bill is that these bills does not bear the signature of the accused no.3. Correctness of these bill has not been put to challenge by accused. In view of above discussion it can be said that accused has failed to prove that accused made payment of Rs.70,000/ in parts to complainant. Balance in the account of accused on 2/04/2005 was Rs.292.85 which was not sufficient to honour the cheque in question.
WHETHER ACCUSED NO.3 IS ALSO LIABLE FOR THE OFFENCE U/S 138 r/w S. 141 NI ACT As per complainant the cheque in question was issued as "on account" payment cheque rather than transaction wise/based cheque. Regarding the involvement of accused no.3 in the business transactions of accused no.1 company, complainant has made necessary averments, in view of S.141 NI Act in paragraphs. 2 and 4 of the complaint. In the facts and circumstances of this case, to my mind, present complaint complies with the requirements of the case law relied upon by ld. counsel for accused. In my considered opinion (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 29/33 statutory demand notice need not be drafted in the same manner in which a complaint u/s 138 NI Act is to be drafted particularly keeping in view the provisions of Section 141 NI Act. It is also a settled law that it is not mandatory that statutory demand notice is to be served on each and every director/person incharge of and responsible to the company for the business of the company; notice to the company as such is sufficient for prosecution of the company and it director(s) concerned/such person as aforesaid.
Now in the present case as per DW1 Mr. Shyam Sharma, since the incorporation of accused company & till March 2005, accused no.2 and accused no.3 were the only directors. In such circumstances obviously in all the board meetings accused no.3 must have participated & played her role in the decision making process for conducting of business by accused no.1 company. Accused has not produced/proved on record document(s) which may suggest otherwise. In these circumstances accused no.3 can also be said to be incharge of and responsible to accused no.1 company for the business of the accused no.1 company. Merely because accused no.3 is a full time teacher in a school, or because Form 16 does not show business (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 30/33 income of accused no.3 does not mean that, accused no.3 cannot be covered u/s. 141 NI Act. Obviously Form 16 cannot show business income in as much as Form 16 has been issued by school authorities, where accused no.3 is working as a teacher, giving details of her salary & tax deducted at source by school authorities. School authorities have no concern whatsoever about the business income of accused no.3.
Matter can be looked from one more aspect/angle. Para. 37 of the case law relied upon by ld. counsel for accused reads as under : "37. A combined reading of Sections 5 and 291 of Companies Act, 1956 with the definitions in clauses (24), (26), (30), (31) and (45) of Section 2 of that Act would show that the following persons are considered to be the persons who are responsible to the company for the conduct of the business of the company:
(a) the Managing Director(s);
(b) the wholetime Director(s);
(c) the Manager;
(d) the Secretary;
(e) any person in accordance with whose directions or instructions the Board of Directors of the company is accustomed to act;
(Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 31/33
(f) any person charged by the Board of Directors with the responsibility of complying with that provision:
Provided that the person so charged has given his consent in this behalf to the Board;
(g) where any company does not have any of the officers specified in Clauses (a) to (c), any Director or Directors who may be specified by the Board in this behalf or where no Director is so specified, all the Directors:
Provided that where the Board exercises any power under Clause (f) or Clause (g), it shall, within thirty days of the exercise of such powers, file with the Registrar a return in the prescribed form."
Now the cheque in question has been signed by accused no.2 as Director of accused no.1. It has not been brought on record by accused that it has appointed officers as Managing Director (s), the whole time Directors or the Manager. Also it is not the case of accused company that any particular director has been specified by the Board as a person responsible to the company for the conduct of the business of the company. In such circumstances as per clause (g) which has been reproduced hereinabove all the directors are to be (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 32/33 treated as such responsible persons. Thus even accused no.3 is covered u/s. 141 NI Act.
LIABILITY OF ACCUSED NO.1 COMPANY FOR THE OFFENCE U/S 138 NI ACT In the present case cheque in question has been signed by accused no.2 as director of accused no.1 company. The cheque has been issued for and on behalf of accused no.1 company and further no person other than accused no.2 and 3 ever remained as directors of accused no.1 company. In such circumstances alongwith accused no.2 and 3, accused no.1 company is also liable to be convicted for the offence u/s 138 NI Act r/w S.141 NI Act.
In view of above detailed discussion, in my opinion all the three accused are liable to be convicted for the offence u/s 138 NI Act r/w S.141 NI Act and they are convicted and held guilty as such. Let accused be heard on quantum of sentence. Pronounced in Open Court.
(Anand Swaroop Aggarwal) SCJCumRC/New Delhi 16.08.2010 (Anand Swaroop Aggarwal) SCJCumRC/New Delhi Criminal Complaint (u/s 138 NI Act) Old No.1287/1/05 Criminal Complaint (u/s 138 NI Act) New No.5841/1/09 Page 33/33